12 Systems of Social Cooperation

The impossibility of economic calculation in a socialist economy is the theory at the core of my book, Gemein Wirtschaft,¹ whose first edition appeared in 1922. Gemeinwirtschaft, Liberalismus² published in 1927, and the 1929 compilation of articles that appeared under the title Kritik des Interventionismus³ together offer a comprehensive analysis of the problems of social cooperation. In these volumes, I investigate all conceivable systems of cooperation and examine their feasibility. These studies found closure in Nationalökonomie.⁴ I had intended to include yet another essay in the collection, Kritik des Interventionismus, namely, “Die Verstaatlichung des Kredits,”⁵which had appeared in the Zeitschrift für Nationalökonomie in 1929. The Zeitschrift’s editors, however, mislaid the essay, and rediscovered it only after the collection had gone to press.

I believe that the theories presented in these volumes are irrefutable. I had introduced a new perspective in the handling of these problems, the only one that made possible a scientific discussion of political questions. I made inquiry into the usefulness of proposed measures, that is, whether the objective that the use of these measures was intended to achieve could actually be obtained through the means recommended and employed. I showed that the evaluation of the various systems of social cooperation is ineffective when conducted from arbitrarily chosen points of view.

It is another thing entirely to assert that the evolution of the system of private property in the means of production inevitably leads to socialism or interventionism. Even if this were true, it would not disprove my claims. Neither socialism nor interventionism gain meaning or purpose from the assertion that history inevitably leads to them. When the “return to capitalism” is ruled out, as is generally maintained, then the fate of our civilization is sealed. But I demonstrated that the theory of the inescapability of socialism and interventionism is untenable. Capitalism does not destroy itself. People wish to do away with it because it is in socialism or interventionism that they behold salvation.

From time to time I entertained the hope that my writings would bear practical fruit and point policy in the right direction. I have always looked for evidence of a change in ideology. But I never actually deceived myself; my theories explain, but cannot slow the decline of a great civilization. I set out to be a reformer, but only became the historian of decline.

In my works on social cooperation, I have spent much time and effort disputing socialists and interventionists of all varieties and trends. The matter at hand—the repudiation of contrary-to-purpose reforms—made the effort necessary.

I was charged with not having considered the psychological aspect of the problem of cooperation. After all, man has a soul. This soul is said to find itself uneasy in a capitalist system, and it would be willing to suffer a reduction in living standards in exchange for a society with a more satisfactory labor and employment structure.

Firstly, it is important to establish that this argument (we will call it the heart argument) is not compatible with what we will call the head argument, the original argument of the socialists and interventionists, and the one they still hold today. The head argument justifies socialist programs by asserting that capitalism hinders the full development of productive capabilities. Socialist methods would increase output immeasurably, thereby creating conditions that make ample provisions possible for all. Marxism is founded on the head argument entirely. Before Lenin, the Marxists never affirmed that the transition to socialism would lower the standard of living during the transition period. They announced immediate improvement in the material situation of the masses, here and there adding that the full blessings of socialist production methods would be manifest only in time. As a result of criticism wielded against socialist programs, the heart argument is the one socialists were compelled to enlist in fighting for their cause.

In judging the heart argument, of course, of decisive importance is the extent of the reduction in economic well-being brought about by a socialist production system. Since this cannot be ascertained objectively or measured precisely, the argument between the adherents and opponents of socialism is said to be scientifically insoluble; economics cannot resolve the conflict.

I took a turn in dealing with the problem that does not allow for the application of the heart argument. If a socialist system leads to chaos because it is a system wherein economic calculation is impossible, and if interventionism cannot attain the objectives desired by its proponents, then coming to the aid of these illogical systems through the heart argument is irrelevant.

I have never denied that emotional factors explain the popularity of anticapitalist policies. But inexpedient proposals and measures cannot be made expedient by factors of this type. If people cannot tolerate capitalism “psychologically,” then the culture of capitalism will fail.

I have been charged with overestimating the roles played by logic and reason in life. In theory there is no either/or. Life, I was told, consists of compromises. What appears incompatible in scientific analysis sometimes takes a feasible shape in praxis; politics will find a way of blending conflicting principles. The solution may well be called illogical, irrational, and senseless, but it can be fruitful. This alone is what matters.

The critics are mistaken. People wish to follow through on that which they deem suitable. Nothing is more remote to them than a half-realized desire. Here man makes no appeal to historical experience. It is true that those religions that call for a turning away from earthly concerns have gotten along quite well in this world. But the rigorous teachings of Christianity and Buddhism have never tamed the spirits. The stringent teachings of these two religions that have crossed over into the popular faith have not stood in the way of the activities of secular life. Compliance to religious commands was reserved for the monks. Even during the Middle Ages, princes of the Church did not allow their activities to be influenced by consideration of the commands of the Sermon on the Mount and other evangelical teachings. The small band of those who actually took Christianity and Buddhism seriously retreated from worldly affairs. The lives of those remaining were not a compromise, but simply un-Christian and un-Buddhist.

Today we face a problem of a different kind. The masses tend toward socialism or interventionism; in any case, they are anticapitalistic. But the individualist does not seek to rescue his soul from the world; he wants to refashion the world. He will see things through to the end. The masses are implacable in their consistency: they would rather destroy the world than be robbed of one iota of their agenda.

There is no consolation in recalling the fact that there had always been interventionism in the precapitalist past. Far fewer people lived on the earth’s surface then, and the masses were content with living conditions they would today find intolerable. One cannot simply withdraw from capitalism and return to a century gone by.