Bauer and Lenin: The Problem of Economic Calculation

By Ludwig von Mises (written in 1920)

 

Since recent events helped socialist parties to obtain power in Russia, Hungary, Germany and Austria, and have thus made the execution of a socialist nationalization program a topical issue, Marxist writers have themselves begun to deal more closely with the problems of the regulation of the socialist commonwealth. But even now they still cautiously avoid the crucial question, leaving it to be tackled by the despised "Utopians." They themselves prefer to confine their attention to what is to be done in the immediate future; they are forever drawing up programs of the path to Socialism and not of Socialism itself. The only possible conclusion from all these writings is that they are not even conscious of the larger problem of economic calculation in a socialist society.

 

To Otto Bauer the nationalization of the banks appears the final and decisive step in the carrying through of the socialist nationalization program. If all banks are nationalized and amalgamated into a single central bank, then its administrative board becomes

 

“the supreme economic authority, the chief administrative organ of the whole economy. Only by nationalization of the banks does society obtain the power to regulate its labor according to a plan, and to distribute its resources rationally among the various branches of production, so as to adapt them to the nation's needs.”

 

Bauer is not discussing the monetary arrangements which will prevail in the socialist commonwealth after the completion of the nationalization of the banks. Like other Marxists he is trying to show how simply and obviously the future socialist order of society will evolve from the conditions prevailing in a developed capitalist economy. "It suffices to transfer to the nation's representatives the power now exercised by bank shareholders through the Administrative Boards they elect, "in order to socialize the banks and thus to lay the last brick on the edifice of socialism. Bauer leaves his readers completely ignorant of the fact that the nature of the banks is entirely changed in the process of nationalization and amalgamation into one central bank. Once the banks merge into a single bank, their essence is wholly transformed; they are then in a position to issue credit without any limitation. In this fashion the monetary system as we know it today disappears of itself.

 

When in addition the single central bank is nationalized in a society, which is otherwise already completely socialized, market dealings disappear and all exchange transactions are abolished. At the same time the Bank ceases to be a bank, its specific functions are extinguished, for there is no longer any place for it in such a society.

 

This is excerpted from Economic Planning in the Socialist Commonwealth.  Read or download the entire book at the AntiMarxists Internet Archive e-library.

 

Image and book courtesy of the Ludwig von Mises Institute

Marx and the Violence of Socialism and Communism

Battle at Soufflot Barricades, 24 June 1848
by Horace Vernet

In the terminology of Marx and Engels the words communism and socialism are synonymous. They are alternately applied without any distinction between them. The same was true for the practice of all Marxian groups and sects until 1917. The political parties of Marxism which considered the Communist Manifesto as the unalterable gospel of their doctrine called themselves socialist parties. The most influential and most numerous of these parties, the German party, adopted the name Social Democratic Party. In Italy, in France and in all other countries in which Marxian parties already played a role in political life before 1917, the term socialist likewise superseded the term communist. No Marxian ever ventured, before 1917, to distinguish between communism and socialism.

 

In 1875, in his Criticism of the Gotha Programme of the German Social Democratic Party, Marx distinguished between a lower (earlier) and a higher (later) phase of the future communist society. But he did not reserve the name of communism to the higher phase, and did not call the lower phase socialism as differentiated from communism.

 

One of the fundamental dogmas of Marx is that socialism is bound to come "with the inexorability of a law of nature." Capitalist production begets its own negation and establishes the socialist system of public ownership of the means of production. This process "executes itself through the operation of the inherent laws of capitalist production." It is independent of the wills of people. It is impossible for men to accelerate it, to delay it or to hinder it. For "no social system ever disappears before all the productive forces are developed for the development of which it is broad enough, and new higher methods of production never appear before the material conditions of their existence have been hatched out in the womb of previous society."

 

This doctrine is, of course, irreconcilable with Marx's own political activities and with the teachings he advanced for the justification of these activities. Marx tried to organize a political party which by means of revolution and civil war should accomplish the transition from capitalism to socialism. The characteristic feature of their parties was, in the eyes of Marx and all Marxian doctrinaires, that they were revolutionary parties invariably committed to the idea of violent action. Their aim was to rise in rebellion, to establish the dictatorship of the proletarians and to exterminate mercilessly all bourgeois. The deeds of the Paris Communards in 1871 were considered as the perfect model of such a civil war. The Paris revolt, of course, had lamentably failed. But later uprisings were expected to succeed.

 

This is an excerpt from Planned Chaos by Ludwig von Mises.  Read or download the full book at the Anti-Marxists Internet Archive.

Book file at the AMIA e-library is courteously hosted by the Ludwig von Mises Institute. The Vernet painting is in the public domain.

Reactionary Socialism

By Ludwig von Mises

 

From the very beginnings of the socialist movement and the endeavors to revive the interventionist policies of the precapitalistic ages, both socialism and interventionism were utterly discredited in the eyes of those conversant with economic theory. But the ideas of the revolutionaries and reformers found approval with the immense majority of ignorant people exclusively driven by the most powerful human passions of envy and hatred.

 

The social philosophy of the Enlightenment that paved the way for the realization of the liberal program — economic freedom, consummated in the market economy (capitalism), and its constitutional corollary, representative government — did not suggest the annihilation of the three old powers: the monarchy, the aristocracy, and the churches. The European liberals aimed at the substitution of the parliamentary monarchy for royal absolutism, not at the establishment of republican government. They wanted to abolish the privileges of the aristocrats, but not to deprive them of their titles, their escutcheons and their estates. They were eager to grant to everybody freedom of conscience and to put an end to the persecution of dissenters and heretics, but they were anxious to give to all churches and denominations perfect freedom in the pursuit of their spiritual objectives. Thus the three great powers of the ancien régime were preserved. One might have expected that princes, aristocrats and clergymen who indefatigably professed their conservatism would be prepared to oppose the socialist attack upon the essentials of Western civilization. After all, the harbingers of socialism did not shrink from disclosing that under socialist totalitarianism no room would be left for what they called the remnants of tyranny, privilege, and superstition.

 

However, even with these privileged groups resentment and envy were more intense than cool reasoning. They virtually joined hands with the socialists disregarding the fact that socialism aimed also at the confiscation of their holdings and that there cannot be any religious freedom under a totalitarian system… (Read more)

 

Source: Mises.org

The AMIA now offers FREE e-books!

Yes, it's true!  Thanks to the generosity of the Ludwig Von Mises Institute, the Anti-Marxists Internet Archive is proud to offer FREE e-books (EPUB) at the E-Library.  Apart from the 100+ books and articles that can be read online and the dozens of books that can be downloaded as PDFs, the EPUB e-books can be read on your Kindle, Nook, or other e-reader devices.  All for free!

We have just added:

-The Bastiat Collection, including Frederic Bastiat's most important piece, "That Which Is Seen and That Which Is Not Seen"

-Karl Marx and the Close of His System by Egen Bohm-Bawerck

-Out Of Step by Frank Chodorov

-The Anti-Capitalistic Mentality by Ludwig Von Mises

-Planned Chaos by Ludwig Von Mises

More will come soon!

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Introducing Böhm-Bawerk!

Eugen Ritter von Böhm-Bawerk (February 12, 1851 in Brno – August 27, 1914 in Vienna, or Kramsach) was an Austrian economist who made important contributions to the development of the Austrian School of economics.

While studying to be a lawyer at the University of Vienna, he read Carl Menger's Principles of Economics. Though he never studied under Menger, he quickly became an adherent of his theories. Joseph Schumpeter said that Böhm-Bawerk "was so completely the enthusiastic disciple of Menger that it is hardly necessary to look for other influences." During his time at the Vienna university, he became good friends with Friedrich von Wieser, who later became Boehm-Bawerk's brother-in-law. After Vienna, he studied political economy and social science at the universities of Heidelberg, Leipzig and Jena, under Karl Knies, Wilhelm Roscher und Bruno Hildebrand.

He wrote extensive critiques of Karl Marx's economics in the 1880s and 1890s, and several prominent Marxists—including Rudolf Hilferding—attended his seminar in 1905-06. He returned to teaching in 1904, with a chair at the University of Vienna. He taught many students including Joseph Schumpeter, Ludwig von Mises and Henryk Grossman.

Eugen Böhm-Bawerk’s writings are now available at the Anti-Marxists Internet Archive e-library.  The AMIA highly recommends his book Karl Marx and the Close of His System, acclaimed by Austrian School economists and has yet to be effectively refuted by Marxist “thinkers.”

Introducing Ludwig Von Mises

Though the e-library will be under construction for quite some time, it already contains a wealth of knowledge in over a dozen authors and over a hundred books and articles.  The Anti-Marxists Internet Archive is proud to add the hailed Austrian economist Ludwig Von Mises to the e-library with ten full-length books, including Planned Chaos, Marxism Unmasked, The Anti-Capitalistic Mentality, and his manga opus Socialism.

Ludwig Von Mises is remembered not only for being one of the leading economists of all time, but is especially lauded for his ability to predict the exact downfall of the Soviet Union while it was still new under Lenin.

These books are available in their entirety and are waiting to be read.