Liberalism

Summary

Liberalism is Ludwig von Mises's short statement of the classical liberal program, published in German as Liberalismus in 1927. Ralph Raico translated it into English in 1962 under the title The Free and Prosperous Commonwealth; later editions restored the title Liberalism, adding the subtitle In the Classical Tradition. Where Mises's earlier Socialism had criticized collectivism at great length, this book sets out positively what liberalism, in the nineteenth-century European sense, stands for. Mises presents liberalism as a doctrine concerned with the material welfare of human beings and the conditions of peaceful social cooperation, rather than with any promise of inner happiness. In the first chapter he names private property in the means of production as its central demand and derives from it the others: freedom, peace, equality before the law, toleration and limited government. He argues that inequality of wealth serves society by directing resources to those who satisfy consumers, that democracy allows peaceful changes of government and so avoids civil war, and that the state should be confined to protecting life, liberty and property. In this chapter he also discusses the doctrine of force and the Fascist movement in Italy, which he judged a temporary emergency measure whose reliance on violence would prove self-defeating; the passage has been much debated. The second chapter applies these principles to economic policy, contrasting the market economy with socialism and with interventionism, and discussing cartels, monopolies and bureaucratic management. The third chapter, on foreign policy, argues for free trade, free migration and the right of self-determination, and maintains that economic nationalism and the conquest of overseas territories lead to war. A further chapter examines political parties, which Mises criticizes for representing special interests, and the book closes with reflections on the future of liberalism, which he believed depended on persuading the public by reasoned argument. The book was little noticed when it appeared, as liberal ideas were in retreat across Europe. After Raico's translation it found readers in the postwar American revival of classical liberal and libertarian thought, and it is often recommended as the most accessible introduction to Mises's political views.

Plot or Argument

• Introduction

  Mises explains that liberalism aims at human welfare in this world and rests on the findings of economics and sociology.

• Chapter 1: The foundations of liberal policy

  He identifies private property as the core of the liberal program and discusses freedom, peace, equality, inequality of wealth, the state, democracy, the doctrine of force, the limits of government and toleration.

• Chapters 2 and 3: Economic and foreign policy

  He compares the market economy with socialism and intervention, then argues for free trade, free migration, self-determination and peace.

• Chapters 4 and 5: Parties and the future

  He criticizes parties of special interest and argues that liberalism can succeed only by persuading public opinion.

Characters

• Ludwig von Mises, author

  Viennese economist defending classical liberalism.

• Ralph Raico, translator

  American historian who translated the book in 1962.

• Adam Smith, authority

  Classical economist whose ideas Mises treats as part of the liberal tradition.

• David Ricardo, authority

  Classical economist whose theory of comparative advantage underlies Mises's case for free trade.

Lessons

• Property and peace

  Mises argues that private property and the division of labor make peaceful cooperation possible. Students can trace how he links economic and political questions.

  • Why does Mises place property at the center of liberalism?
  • Do you agree that trade between nations makes war less likely?

• Democracy as a peaceful method

  Mises defends democracy chiefly as a way to change rulers without violence. The argument invites discussion of what democracy is for.

  • Why does Mises think democracy prevents civil war?
  • Are there other reasons to value democracy?

• Persuasion over force

  Mises insists that liberal ideas can prevail only by convincing people. Students can consider the role of argument in public life.

  • What does Mises say about the use of force in politics?
  • How are public opinions changed?

Context

Mises wrote in Vienna in the mid-1920s, after the collapse of the Habsburg Empire, the Austrian hyperinflation of 1921 to 1922 and the rise of Bolshevism in Russia and Fascism in Italy. Liberal parties were weak across Central Europe.

Composition

Liberalismus was published by Gustav Fischer in Jena in 1927. Ralph Raico's translation, edited by Arthur Goddard, appeared in 1962 as The Free and Prosperous Commonwealth (Van Nostrand). Later English editions use the title Liberalism: In the Classical Tradition, and the Liberty Fund published an edition in 2005.

Reception

The book had few readers in interwar Europe. In the United States after 1962 it became a common introduction to classical liberal ideas. Its brief remarks on Italian Fascism have been criticized and defended, often with attention to Mises's description of it as an emergency measure that would fail.

Comparisons

• Socialism: An Economic and Sociological Analysis

  Mises's earlier treatise is the critical counterpart to Liberalism, examining at length the collectivist ideas this book answers.

• The Law

  Bastiat's essay that law should protect person, liberty and property anticipates Mises's account of the proper limits of government.

• The Wealth of Nations

  Smith's case for free trade and the division of labor is the classical foundation of Mises's economic and foreign policy.

• On Liberty

  Mill's defense of individual liberty is a nineteenth-century statement of liberalism that places more weight on personal development than Mises does.

• Capitalism and Freedom

  Friedman's 1962 book, published the same year as Raico's translation, makes a similar case for economic freedom as a condition of political freedom.

• The Road to Serfdom

  Hayek, Mises's student, warns that central planning endangers the liberal institutions this book defends.

• The Communist Manifesto

  Marx and Engels call for the abolition of private property, the institution Mises names as the core of liberalism.

• A Humane Economy

  Röpke shares Mises's defense of markets but argues that they depend on moral and social foundations Mises treats less fully.

Quotes

For Students

A reading companion for classical Christian high school students. See the student guide.

Reading Guide

Watch for

• How Mises defines liberalism and what he leaves out of it.
• The order in which he derives freedom, peace and equality from property.
• His view of democracy.
• His arguments about trade, migration and war.

Key terms and names

Classical liberalism

The nineteenth-century doctrine of private property, free markets, limited government and individual liberty.

Interventionism

Government interference in a market economy short of full socialism.

Self-determination

The right of a population to choose the state it belongs to.

Free trade

Trade between nations without tariffs or quotas.

Division of labor

Specialization that makes cooperation more productive.

Seminar Questions

1. Comprehension What does Mises name as the central demand of liberalism?
2. Comprehension Why does Mises support democracy?
3. Interpretation How does Mises connect free trade with peace?
4. Interpretation Why does Mises say liberalism concerns only material welfare?
5. Big Question Can a political philosophy rest on economics alone?
6. Big Question Should people be free to move between countries?

Faith Connections

• Micah 4:4 (Scripture)

  'They shall sit every man under his vine and under his fig tree; and none shall make them afraid': an ancient image of secure property and peace, the two goods Mises joins.

• John Locke, Second Treatise of Government (Great Conversation)

  Locke's argument that government exists to preserve property is a forerunner of Mises's case, though Locke grounds it in natural law and Mises in social utility.

Logic and Rhetoric

Central argument: Social cooperation under the division of labor requires private property in the means of production; from this follow the other liberal demands of freedom, peace, equality before the law, toleration and limited government.

Rhetorical device: derivation from a first principle. Mises condenses liberalism into a single word, property, and then shows how each further demand follows from it.

Debate: Resolved: Free trade between nations makes war less likely.

Writing Prompts

Essay: Explain how Mises derives liberal policies from private property. Which step in his reasoning is weakest?

Comparison with On Liberty: Compare Mises's and Mill's reasons for valuing liberty. Which do you find more persuasive?

Creative Prompts

• Essay

  Mises says all liberal demands follow from property. Choose one, such as peace or toleration, and explain how he connects it to property; then assess the connection.

• Classroom

  Have students draft a short party platform based on Mises's book and a second based on another political tradition, then compare them.

Further Reading

• Socialism: An Economic and Sociological Analysis, Ludwig von Mises

• Omnipotent Government, Ludwig von Mises

• Classical Liberalism: The Unvanquished Ideal, David Conway

• Ludwig von Mises: The Man and His Economics, Israel M. Kirzner