11. A Treatise on Socialism

THE PUBLICATION OF THE essay on economic calculation in socialist commonwealths was the first installment of an entire treatise on socialism that Mises had begun in 1919. This new work would contain a detailed discussion of the profound implications of the calculation problem, but it was far more than that. With penetrating observations on virtually all aspects of socialist practice and doctrine, Mises painted an encompassing and breathtakingly original picture of socialism.

The production of the new opus occurred under the usual circumstances. On top of fulltime workdays and evening seminars, two years of writing after hours produced a 500-page manuscript. But it is safe to assume that his intellectual work during these two years was in creating a synthesis of the previous twenty years of reflection. All the discussions with his friends and opponents, all silent meditations on books he had read and lectures he had listened to ever since he became interested in the problems of social theory, found their way into Gemeinwirtschaft. In this way, at least, it was his greatest book to date. Like his other works, it was full of original insights. The present subject provided him with a greater variety of topics than, say, the nature of money and fiduciary media. Yet the subject was not too big to prevent him from writing a true treatise—dealing with virtually all aspects of the problem.

Moreover, in contrast with his later treatise on economics (Human Action, 1949), he did not burden himself or his readers with lengthy discussions of fundamental epistemological and conceptual problems.¹ The result can only be called astounding. It established Mises's reputation as “the greatest living mind in Austria.”² And it was the book that turned an entire generation of young intellectuals away from Marxism and toward classical liberalism. Lionel Robbins, Friedrich August von Hayek, Wilhelm Röpke, Eric Voegelin, and many others later testified that Gemeinwirtschaft had had a decisive impact on them in their formative years. Hayek compared Mises to Voltaire, Montesquieu, Tocqueville, and John Stuart Mill.³

As one correspondent observed, the success could have been even greater if Mises had managed to find a more striking title than the cumbersome Die Gemeinwirtschaft (literally: The Commonwealth, or, The Common Economy).⁴ Anglo-Saxon readers would have a less difficult time finding out what the book was all about when, thirteen years later, the English edition appeared under the title Socialism.

In the opening of part one, Mises analyzed socialism not on its own merits, but from a comparative point of view, contrasting it to the workings of a society organized according to classical-liberal principles. Following in the tradition of Frédéric Bastiat and other libertarian philosophers, Mises here emphasized the central role private property plays in the constitution of free societies. He also stressed the importance of contract and democracy for the peaceful resolution of conflicts, and made a brilliant application of these considerations to the case of the family or, as some would say today, gender relations.

In the next four parts of the book (parts two through five), Mises elaborated four general theses: (1) the promises of socialism were empty because its program for a central direction of production was a theoretical and practical impossibility; (2) there was no process of social evolution that necessarily led to socialist regimes; (3) none of the major ethical justifications of socialism stood up to rational scrutiny; and (4) the true character of socialism was not to improve the human condition, but to worsen it, because socialist policies destroy the capital base of society.