The Individual in Society; L. v. Mises

Freedom and liberty are not to be found in nature. In nature there is no phenomenon to which these terms could be meaningfully applied. Whatever man does, he can never free himself from the reIn the tradition of the Austrians Carl Menger and Eugen von Bohm-Bawerk, Ludwig von Mlses (1881-1973) did more than any other to develop and bring to world attention the science and system of economics applicable to the purposive individual as he acts in the real world. This article is extracted from his book, Human Action (Yale University Press, 1949; Regnery, 1966). 624 straints which nature imposes upon him. If he wants to succeed in act ing, he must submit unconditionally to the laws of nature. Freedom and liberty always refer to inter hum an relations. A man is free as far as he can live and get on without being at the mercy of arbi trary decisions on the part of other people. In the frame of society everybody depends upon his fellow citizens. Social man cannot become independent without forsaking all the advantages of social cooperation.

The fundamental social phenom enon is the division of labor and its counterpart-human cooperation. Experience teaches man that cooperative action is more efficient and productive than isolated action of self-sufficient individuals. The natural conditions determining THE INDIVIDUAL IN SOCIETY 625 man's life and effort are such that the division of labor increases out put per unit of labor expended. These natural facts are: (1) the in nate inequality of men with regard to their ability to perform various kinds of labor, and (2) the unequal distribution of the nature-given, nonhuman opportunities of produc tion on the surface of the earth. One may as well consider these two facts as one and the same fact, namely, the manifoldness of nature which makes the universe a complex of infinite varieties. The division of labor is the out come of man's conscious reaction to the multiplicity of natural condi tions. On the other hand, it is itself a factor bringing about differentia tion. It assigns to the various geo graphic areas specific functions in the complex of the processes of pro ductIon. It It:lakes some areas urban, others rural; it locates the various branches of manufacturing,mining, and agriculture in different places.

Still more important, however, is the fact that it intensifies the innate inequality of men. Exercise and practice of specific tasks adjust indi viduals better to the requirements of their performance; men develop some of their inborn faculties and stunt the development of others. Vo cational types emerge, people be come specialists. The division of labor splits the various processes of production into minute tasks, many of which can be performed by mechanical devices. It is this fact that made the use of machinery possible and brought about the amazing improvements in technical methods of production. Mechanization is the fruit of the division of labor, its most beneficial achievement, not its motive and fountain spring. Power-driven specialized machinery could be employed only in a social environ ment under the division of labor. Every step forward on the road to ward the use of more specialized, more refined, and more productive machines requires a further specialization of tasks.

Innate Inequality Within Society Seen from the point of view of the individual, society is the great means for the attainment of all his ends. The preservation of society is an essential condition of any plans an individual may want to realize by any action whatever. Even the re fractory delinquent who fails to ad just his conduct to the requirements of life within the. societal system of cooperation does not want to miss any of the advantages derived from the division of labor. He does not consciously aim at the destruction of society. He wants to lay his hands on a greater portion of the jointly pro duced wealth than the social order assigns to him. He would feel miser able if antisocial behavior were to 626 THE FREEMAN October become universal and its inevitable outcome, the return to primitive in digence, resulted. Liberty and freedom are the con ditions of man within a contractual society. Social cooperation under a system of private ownership of the means of production means that within the range of the market the individual is not bound to obey and to serve an overlord. As far as he gives and serves other people, he does so of his own accord in order to be rewarded and served by the re ceivers. He exchanges goods and services, he does not do compulsory labor and does not pay tribute. He.is certainly not independent. He de pends on the other members of soci ety. But this dependence is mutual.

The buyer depends on the seller and the seller on the buyer. Self-Interest The main concern of many writers of the nineteenth and twentieth cen turies was to misrepresent and to distort this obvious state of affairs. The workers, they said, are at the mercy of their employers. Now, it is true that the employer has the right to fire the employee. But ifhe makes use of this right in order to indulge in his whims, he hurts his own interests. It is to his own disadvan tage if he discharges a better man in order to hire a less efficient one. The market does not directly prevent anybody from arbitrarily inflicting harm on his fellow citizens; it only puts a penalty upon such conduct. The shopkeeper is free to be rude to his customers provided he is ready to bear the consequences. The con sumers are free to boycott a pur veyor provided they are ready to pay the costs. What impels every man to the utmost exertion in the service of his fellow man and curbs innate tendencies toward arbitrariness and malice is, in the market, not com pulsion and coercion on the part of gendarmes, hangmen, and penal courts; it is self-interest. The member of a contractual society is free because he serves others only in serving himself. What restrains him is only the inevitable natural phenomenon of scarcity. For the rest he is free in the range ofthe market.

In the market economy the indi vidual is free to act within the orbit of private property and the market. His choices are final. For his fellow men his actions are data which they must take into account in their own acting. The coordination of the au tonomous actions of all individuals is accomplished by the operation of the market. Society does not tell a man what to do and what not to do. There is no need to enforce coopera tion by special orders or prohibi·tions. Non-cooperation penalizes it self. Adjustment to the require ments of society's productive effort and the pursuit of the individual's own concerns are not in conflict.

1978 THE INDIVIDUAL IN SOCIETY 627 Consequently no agency is required to settle such conflicts. The system can work and accomplish its tasks without the interference of an au thority issuing special orders and prohibitions and punishing those who do not comply. Beyond the Market, Compulsion and Coercion Beyond the sphere of private property and the market lies the sphere of compulsion and coercion; here are the dams which organized society has built for the protection of private property and the market against violence, malice, and fraud. This is the realm of constraint as distinguished from the realm of freedom. Here are rules discriminat ing between what is legal and what is illegal, what is permitted and what is prohibited. And here is a grim machine of arms, prisons, and gallows and the men operating it, ready to crush those who dare to disobey. It is important to remember that government interference always means either violent acti9n or the threat of such action. Government is in the last resort the employment of armed men, of policemen, gen darmes, soldiers, prison guards, and hangmen. The essential feature of government is the enforcement of its decrees by beating, killing, and im prisoning. Those who are asking for more government interference are asking ultimately for more compul sion and less freedom.

Liberty and freedom are terms employed for the description of the social conditions of the individual members of a market society in which the power of the indispensa ble hegemonic bond, the state, is curbed lest the operation of the market be endangered. In a totalitar ian system there is nothing to which the attribute ((free" could be attached but the unlimited arbitrar iness of the dictator. There would be no need to dwell upon this obvious fact if the champi ons of the abolition of liberty had not purposely brought about a semantic confusion. They realized that it was hopeless for them to fight openly and sincerely for restraint and ser vitude. The notions liberty and free dom had such prestige that no prop aganda could shake their popular ity. Since time immemorial in the realm of Western civilization liberty has been considered as the most pre cious good. What gave to the West its eminence was precisely its con cern about liberty, a social ideal foreign to the oriental peoples. The social philosophy of the Occident is essentially a philosophy of freedom.

The main content of the history of Europe and the communities founded by European emigrants and their descendants in other parts of the world was the struggle for lib erty. ((Rugged" individualism is the 628 THE FREEMAN October signature of our civilization. No open attack upon the freedom of the individual had any prospect of suc cess. New Definitions Thus the advocates of to talitarianism chose other tactics. They reversed the meaning of words. They call true or genuine liberty the condition of the individ uals under a system in which they have no right other than to obey orders. They call themselves true liberals because they strive after such a social order. They call democ racy the Russian methods of dictato rial government. They call the labor union methods of violence and coer cion ((industrial democracy." They call freedom of the press a state of affairs in which only the govern ment is free to publish books and newspapers. They define liberty as the opportunity to· do the ((right"

things, and, of course, they arrogate to thems~lves the determination of what is right and what is not. In their eyes government omnipotence means full liberty . To free the police power from all restraints is the true meaning of their struggle for free dom. The market economy, say these self-styled liberals, grants liberty only to a parasitic class of exploiters, the bourgeoisie; that these scoun drels enjoy the freedom to enslave the masses; that the wage earner is not free; that he must toil for the sole benefit of his masters, the em ployers; that the capitalists appro priate to themselves what according to the inalienable rights of man should belong to the worker; that under socialism the worker will enjoy freedom and human dignity because he will no longer have to slave for a capitalist; that socialism means the emancipation of the common man, means freedom for all; that it means, moreover, riches for all.

These doctrines have been able to triumph because they did not en counter effective rational criticism. It is useless to stand upon an alleged ((natural" right of individuals to own property if other people assert that the foremost ((natural" right is that of income equality. Such disputes can never be settled. It is beside the point to criticize nonessential, at tendant features of the socialist pro gram. One does not refute socialism by attacking the socialists' stand on religion, marriage, birth control, and art. A New Subterfuge In spite of these serious shortcom ings of the defenders of economic freedom it was impossible to fool all the people all the time about the essential features of socialism. The most fanatical planners were forced to admit that their projects involve the abolition of many freedoms peo1978 THE INDIVIDUAL IN SOCIETY 629 pIe enjoy under capitalism and ((plutodemocracy." Pressed hard, they resorted to a new subterfuge.

The freedom to be abolished, they emphasize, is merely the spurious ~~economic" freedom of the capital ists that harms the common man; that outside the ((economic sphere" freedom will not only be fully pre served, but considerably expanded. HPlanning for Freedom" has lately become the most popular slogan of the champions of totalitarian gov ernment and the Russification of all nations. The fallacy of this argument stems from the spurious distinction between two realms of human life and action, the ((economic" sphere and the ((noneconomic" sphere. Strictly speaking, people do not long for tangible goods as such, but for the services which these goods are fitted to render them. They want to attain the increment in well being which these services are able to con vey. It is a fact that people, in deal ing on the market, are motivated not only by the desire to get food, shelter, and sexual enjoyment, but also by manifold «ideal" urges. Act ing man is always concerned both with Hmateriai" and Hideal" things.

He chooses between various alterna tives, no matter whether they are to be classified as material or ideal. In the actual scales of value, material and ideal things are jumbled to gether. Freedom, as people enjoyed it in the democratic countries of Western civilization in the years of the old liberalism's triumph, was not a pro duct of constitutions, bills of rights, laws, and statutes. Those documents aimed only at safeguarding liberty and freedom, firmly established by the operation of the market econ omy, against encroachments on the part of officeholders. No government and no civil law can guarantee and bring about freedom otherwise than by supporting and defending the fundamental institutions of the market economy. Government means always coercion and compul sion and is by necessity the opposite of liberty. Government is a guaran tor of liberty and is compatible with liberty only if its range is adequately restricted to the preser vation of economic freedom. Where there is no market economy, the best-intentioned provisions of con stitutions and laws remain a dead letter.

Competition The freedom of man under capital ism is an effect of competition. The worker does not depend on the good graces of an employer. If his em ployer discharges him, he finds another employer. The consumer is not at the mercy of the shopkeeper. He is free to patronize another shop if he likes. Nobody must kiss other people's hands or fear their disfavor.

630 THE FREEMAN October Interpersonal relations are busi nesslike. The exchange of goods and services is mutual; it is not a favor to sell or to buy, it is a transaction dictated by selfishness on either side. It is true that in his capacity as a producer every man depends either directly, as does the entrepreneur, or indirectly, as does the hired worker, on the demands of the con sumers. However, this dependence upon the supremacy of the consum ers is not unlimited. If a man has a weighty reason for defying the sovereignty of the consumers, he can try it. There is in the range of the market a very substantial and effec tive right to resist oppression. No body is forced to go into the liquor industry or into a gun factory if his conscience objects. He may have to pay a price for his conviction; there are in this world no ends the attain ment of which is gratuitous. But it is left to a man's own decision to choose between a material advantage and the call of what he believes to be his duty. In the market economy the individual alone is the supreme ar biter in matters of his satisfaction.

Consumers Choose Capitalist society has no means of compelling a man to change his oc cupation or his place of work other than to reward those complying with the wants of the consumers by higher pay. It is precisely this kind of pressure which many people con sider as unbearable and hope to see abolished under socialism. They are too dull to realize that the only al ternative is to convey to the au thorities full power to determine in what branch and at what place a man should work. In his capacity as a consumer man is no less free. He alone decides what is more and what is less important for him. He chooses how to spend his money according to his own will. The substitution of economic planning for the market economy removes all freedom and leaves to the individual merely the right to obey. The authority directing all economic matters controls all aspects of a man's life and activities.

It is the only employer. All labor becomes compulsory labor because the employee must accept what the chief deigns to offer him. The economic tsar determines what and how much of each the consumer may consume. There is no sector of human life in which a decision is left to the individual's value judgments. The authority assigns a definite task to him, trains him for this job, and employs him at the place and in the manner it deems expedient. As soon as the economic freedom which the market economy grants to its members is removed, all political liberties and bills of rights become humbug. Habeas corpus and trial by jury are a sham if, under the pretext 1978 THE INDIVIDUAL IN SOCIETY 631 of economic expediency, the author ity has full power to relegate every citizen it dislikes to the arctic or to a desert and to assign him ((hard labor" for life. Freedom of the press is a mere blind if the authority con trols all printing offices and paper plants. And so are all the other rights of men.

A man has freedom as far as he shapes his life according to his own The Guaranteed Life plans. A man whose fate is deter mined by the plans of a superior au thority, in which the exclusive power to plan is vested, is not free in the sense in which the term Hfree" was used and understood by all peo ple until the semantic revolution of our day brought about a confusion of tongues. ® Reprints available, 10 for $1.00. IF the millions of workingmen in this country who are patiently paying their social security dues could glimpse the bureaucratic absolutism which that act presages for themselves and their children they would repudiate the whole monstrous and dishonest business overnight. When a government takes over a people's economic life it becomes absolute, and when it has become absolute it destroys the arts, the minds, the liberties and the meaning of the people it governs. It is not an accident that Germany, the first paternalistic state of modern Europe, was seized by an uncontrollable dictator who brought on the second world war; not an accident that Russia, adopting a centrally administered economy for humanitarian rea sons, has arrived at a tyranny bloodier and more absolute than that of the Czars. And if England does not turn back soon she will go the same way. Men who are fed by their government will soon be driven down to the status of slaves or cattle.

MAXWELL ANDERSON, Written in a preface to Knickerbocker Holiday A REVIEWER'S NOTEBOOK JOHN CHAMBERLAIN A PERVERSION OF TECHNOLOGY IN 1856 an eighteen-year-old En glish chemistry student, William Henry Perkin, thought he might find a source of synthetic quinine in coal tar. But serendipity, which has been defined as the faculty for mak ing important discoveries by acci dent, took over in his test tube. In stead of quinine, Parkin evoked from his coal tar a bright purple solution that was the first of the aniline dyes. Perkin tried to market his product in his own country, but the English went right on using berries, barks, flowers, eggs and insects for their dyestuffs. It took the Germans, with their genius for turning garbage into wealth, to build a fantastic chemical industry on Perkin's lucky mistake. What began in the Perkin test tube was to have momentous conse quences for the world, both for good and for ill. It was on dyestuffs that 632 I. G. Farben, the great German chemical cartel, grew to such tremen dous proportions. The bright reds and yellows and the subtle blues that came out of the German laboratories were profitable but harmless. But dyestuff science and technology and the funds they generated-had other, and more important, spin offs.