Mises Supported Laissez Faire against Anarchism

Ludwig von Mises

[Note: In the following excerpts from the works of Ludwig von Mises, American readers must keep in mind the differences in terminology which are sometimes encountered between the way Americans use political labels today and the way those same words were used by Nineteenth Century and early Twentieth Century European scholars such as Mises. For example, the term "liberal' does not here refer to the Big-Government, welfare-statist tax-and-tax, regulate-and-regulate, and spend-and-spend modern American "liberalism" which characterizes political life in the United States at this time and which is advocated most avidly by the American Democrat Party. Quite the contrary, what Mises means by "liberalism" is classical liberalism -- the system of limited constitutional government, politically unhampered markets, respect for private property, and freedom for the adult individual who lives at peace with his neighbors. In the United States, these ideals are generally called "conservatism" today as the U.S. has strong classical liberal traditions and institutions including the Constitution, the Bill of Rights, private ownership of property, free enterprise (in earlier times of our history at least), respect for the rule of law, etc. When Mises extols the benefits of what he calls "liberalism" here, he does not mean the Big-Government authoritarian leftism of modern American liberalism as demanded by such politicians as Teddy Kennedy, John Kerry, Albert Gore, Barbara Boxer, Maxine Waters, Nancy Pelosi, or the Clintons, but rather the free and open society that emerged as a result of imposing on government (both kings and parliaments) constitutional and legal restrictions -- and especially the general policy of laissez faire with respect to non-violent activities of production and trade -- so that individual freedom and enterprise could thrive without coercive interference.]

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We call the social apparatus of compulsion and coercion that induces people to abide by the rules of life in society, the state; the rules according to which the state proceeds, law; and the organs charged with the responsibility of administering the apparatus of compulsion, government.

There is, to be sure, a sect that believes that one could quite safely dispense with every form of compulsion and base society entirely on the voluntary observance of the moral code. The anarchists consider state, law, and government as superfluous institutions in a social order that would really serve the good of all, and not just the special interests of a privileged few. Only because the present social order is based on private ownership of the means of production is it necessary to resort to compulsion and coercion in its defense, [they claim}. If private property were abolished, then [they assume] everyone, without exception, would spontaneously observe the rules demanded by social cooperation.

It has already been pointed out that this doctrine is mistaken in so far as it concerns the character of private ownership of the means of production. But even apart from this, it is altogether untenable. The anarchist, rightly enough, does not deny that every form of human cooperation in a society based on the division of labor demands the observance of some rules of conduct that are not always agreeable to the individual, since they impose on him a sacrifice, only temporary, it is true, but, for all that, at least for the moment, painful. But the anarchist is mistaken in assuming that everyone, without exception, will be willing to observe these rules voluntarily. There are dyspeptics who, though they know very well that indulgence in a certain food will, after a short time, cause them severe, even scarcely bearable pains, are nevertheless unable to forgo the enjoyment of the delectable dish. Now the interrelationships of life in society are not as easy to trace as the physiological effects of a food, nor do the consequences follow so quickly and, above all, so palpably for the evildoer. Can it, then, be assumed, without falling completely into absurdity, that, in spite of all this, every individual in an anarchist society will have greater foresight and will power than a gluttonous dyspeptic? In an anarchist society is the possibility entirely to be excluded that someone may negligently throw away a lighted match and start a fire or, in a fit of anger, jealousy, or revenge, inflict injury on his fellow man? Anarchism misunderstands the real nature of man. It would be practicable only in a world of angels and saints.

Liberalism is not anarchism, nor has it anything whatsoever to do with anarchism. The liberal understands quite clearly that without resort to compulsion, the existence of society would be endangered and that behind the rules of conduct whose observance is necessary to assure peaceful human cooperation must stand the threat of force if the whole edifice of society is not to be continually at the mercy of any one of its members. One must be in a position to compel the person who will not respect the lives, health, personal freedom, or private property of others to acquiesce in the rules of life in society. This is the function that the liberal doctrine assigns to the state: the protection of property, liberty, and peace.

The German socialist, Ferdinand Lassalle, tried to make the conception of a government limited exclusively to this sphere appear ridiculous by calling the state constituted on the basis of liberal principles the "night-watchman state." But it is difficult to see why the night-watchman state should be any more ridiculous or worse than the state that concerns itself with the preparation of sauerkraut, with the manufacture of trouser buttons, or with the publication of newspapers. In order to understand the impression that Lassalle was seeking to create with this witticism, one must keep in mind that the Germans of his time had not yet forgotten the state of the monarchical despots, with its vast multiplicity of administrative and regulatory functions, and that they were still very much under the influence of the philosophy of Hegel, which had elevated the state to the position of a divine entity. If one looked upon the state, with Hegel, as "the self-conscious moral, substance," as the "Universal in and for itself, the rationality of the will," then, of course, one had to view as blasphemous any attempt to limit the function of the state to that of serving as a night watchman.

It is only thus that one can understand how it was possible for people to go so far as to reproach liberalism for its "hostility" or enmity towards the state. If I am of the opinion that it is inexpedient to assign to the government the task of operating railroads, hotels, or mines, I am not an "enemy of the state" any more than I can be called an enemy of sulfuric acid because I am of the opinion that, useful though it may be for many purposes, it is not suitable either for drinking or for washing one's hands.

It is incorrect to represent the attitude of liberalism toward the state by saying that it wishes to restrict the latter's sphere of possible activity or that it abhors, in principle, all activity on the part of the state in relation to economic life. Such an interpretation is altogether out of the question. The stand that liberalism takes in regard to the problem of the function of the state is the necessary consequence of its advocacy of private ownership of the means of production. If one is in favor of the latter, one cannot, of course, also be in favor of communal ownership of the means of production, i.e., of placing them at the disposition of the government rather than of individual owners. Thus, the advocacy of private ownership of the means of production already implies a very severe circumscription of the functions assigned to the state.

The socialists are sometimes wont to reproach liberalism with a lack of consistency, It is, they maintain, illogical to restrict the activity of the state in the economic sphere exclusively to the protection of property. It is difficult to see why, if the state is not to remain completely neutral, its intervention has to be limited to protecting the rights of property owners.

This reproach would be justified only if the opposition of liberalism to all governmental activity in the economic sphere going beyond the protection of property stemmed from an aversion in principle against any activity on the part of the state. But that is by no means the case. The reason why liberalism opposes a further extension of the sphere of governmental activity is precisely that this would, in effect, abolish private ownership of the means of production. And in private property the liberal sees the principle most suitable for the organization of man's life in society.

Liberalism is therefore far from disputing the necessity of a machinery of state, a system of law, and a government. It is a grave misunderstanding to associate it in any way with the idea of anarchism. For the liberal, the state is an absolute necessity, since the most important tasks are incumbent upon it: the protection not only of private property, but also of peace, for in the absence of the latter the full benefits of private property cannot be reaped.

These considerations alone suffice to determine the conditions that a state must fulfill in order to correspond to the liberal ideal. It must not only be able to protect private property; it must also be so constituted that the smooth and peaceful course of its development is never interrupted by civil wars, revolutions, or insurrections.

--Mises, Liberalism (In the Classical Tradition),
pp 36-39, published by Sheed Andrews, &
McMeel, Inc. 1978

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by Sam Wells

Thus, the great Austrian economist advocated and recognized the necessity of political states, laws, and governments while he was one of history's most powerful intellectual opponents of statism.  Contrary to a common misunderstanding by some followers of the late Murray Rothbard, "statism" is not the mere existence of a political state or when a given geographical area has one government.  Statism is the doctrine or policy of subordinating the individual unconditionally to a state or government with unlimited powers.  Statism includes welfare statism (modern American "liberalism"), mercantilism, fascism, and other systems of systematic positive government interventionism on up to and including full socialism. (See Mises, Bureaucracy pp. 74-76 & 78 and Omnipotent Government pp. 5, 44-78, & 285)

Statism is not the same thing as the state, and the classical liberal political system of a constitutional republic and the concomitant private property order and unhampered market economy which Mises advocated fervently until his death is not a system of statism and is in contradistinction to statism.  Under a policy of laissez faire, the scope of authority of government is limited by the rule of law to the protection of the private properties and individual liberties of peaceful citizens from violence and fraud, and the government itself is proscribed from interfering with non-violent, non-fraudulent activities of production and exchange.  Under statism, in contrast, the state may do whatever it wants to an individual or his property unconditionally and without limitation.

While always aware of the potential for abuse of any coercive powers, Mises makes it clear that such powers are necessary and that constitutional and legal restrictions on the use of such powers are also necessary if enclaves of freedom are to flourish:

"State and government are the social apparatus of violent coercion and repression. Such an apparatus, the police power, is indispensable in order to prevent anti-social individuals and bands from destroying social co-operation. Violent prevention and suppression of anti-social activities benefit the whole of society and each of its members. But violence and oppression are none the less evils and corrupt those in charge of their application. It is necessary to restrict the power of those in office lest they become absolute despots. Society cannot exist without an apparatus of violent coercion. But neither can it exist if the office holders are irresponsible tyrants free to inflict harm upon those they dislike.
"It is the social function of the laws to curb the arbitrariness of the police. The rule of law restricts the arbitrariness of the Officers as much as possible. It strictly limits their discretion, and thus assigns to the citizens a sphere in which they are free to act without being frustrated by government interference.
"Freedom and liberty always mean freedom from police interference. In nature there are no such things as liberty and freedom. There is only the adamant rigidity of the laws of nature to which man must unconditionally submit if he wants to attain any ends at all. Neither was there liberty in the imaginary paradisaical conditions which, according to the fantastic prattle of many writers, preceded the establishment of societal bonds. Where there is no government, everybody is at the mercy of his stronger neighbour. Liberty can be realized only within an established state ready to prevent a gangster from killing and robbing his weaker fellows. But it is the rule of law alone which hinders the rulers from turning themselves into the worst gangsters.
"The laws establish norms of legitimate action. They fix the procedures required for the repeal or alteration of existing laws and for the enactment of new laws. They likewise fix the procedures required for the application of the laws in definite cases, the due process of law. They establish courts and tribunals. Thus they are intent upon avoiding a situation in which the individuals are at the mercy of the rulers.
"Mortal men are liable to error, and legislators and judges are mortal men. It may happen again and again that the valid laws or their interpretation by the courts prevent the executive organs from resorting to some measures which could be beneficial. No great harm, however, can result. If the legislators recognize the deficiency of the valid laws, they can alter them. It is certainly a bad thing that a criminal may sometimes evade punishment because there is a loophole left in the law, or because the prosecutor has neglected some formalities. But it is the minor evil when compared with the consequences of unlimited discretionary power on the part of the 'benevolent' despot." (Mises, Planned Chaos, Foundation for Economic Education, 1970, pp. 63-64)

In his book Planned Chaos (pp. 27-28), Mises also points out in passing that "A government abdicates if it tolerates any non-governmental agency's use of violence.  If the government forsakes its monopoly of coercion and compulsion, anarchic conditions result."  Mises agreed that "socialism is planned chaos, and anarchism is unplanned chaos" (from The Love of Liberty by Leonard E. Read), but it is clear that he regarded the classical liberal republic and the policy of laissez faire -- not anarchy --  as the antipode of totalitarian socialism. (See "Laissez Faire or Dictatorship" in Planning for Freedom, published by Libertarian Press, Grove City, PA.1996, pp 34-47)

Since anarchy does not in any way have a policy that seeks to end the subordination of the peaceful individual unconditionally to the coercive power of others, in practice it amounts to a form of statism itself and not its opposite as many falsely suppose. There is no such thing as a constitutional anarchy and no way to limit the coercion involved.  Whatever flaws and imperfections may be seen to accompany a constitutional republic because of its human composition, such flaws and imperfections are just as true for "anarchy" as well which is likewise made up of humans who wield power.