Editors note: One of the most important analysis of Ludwig von Mises’s social theory and his views on the origins of human society has been Dr. Joseph Salerno’s Ludwig von Mises as a Social Rationalist. This essay sparked an important debate among scholars within the Austrian school of the ideological differences between Ludwig von Mises and F.A. Hayek, enriching our understanding of the work of both great scholars.
For the benefit of readers, we will publish during this week in six separate parts. Part I. Part II. Part III. Part IV. Part V. The complete essay can be found here.
Part IV
Mises’s recognition of the ability of human reason to grasp the benefits of social cooperation and to identify and implement its intellectual and institutional preconditions leads him to affirm that “human action itself tends toward cooperation and association” (Mises 1966, p. 160). The progressive extension and intensification of the division of labor and the concomitant flowering of society is only a tendency in social evolution, however, subject to reinforcement, retardation, or even reversal by ideology. As Mises notes, “There is no evidence that social evolution must move steadily upwards in a straight line. Social standstill and social retrogression are historical facts which we cannot ignore. World history is the graveyard of dead civilizations” (1969, pp. 309–10).
Ideology, as defined by Mises, is the “totality of our doctrines concerning individual conduct and social relations” (1966, p. 178). Since all social interactions and relationships involve conscious human behavior necessarily guided by specific ideas, human society itself, at any point in its history, is an ideological, which is to say rational, creation. Mises is emphatic on this point, declaring:
Society is a product of human action. Human action is directed by ideologies. Thus society and any concrete order of social affairs are an outcome of ideologies. ...
Any existing state of social affairs is the product of ideologies previously thought out. Within society new ideologies may emerge and supersede older ideologies and thus transform the social system. However, society is always the creation of ideologies temporally and logically anterior. Action is always directed by ideas; it realizes what previous thinking has designed [1966, pp. 187–88].
For Mises, then, the complex of human social relations is, in a fundamental sense, the product of rational design. Society is hardly a “spontaneous” or “undesigned” formation, because it is inevitable that each individual excogitate and compare beforehand the prospective benefits and costs of his participation in exchange relations and the social division of labor. Nevertheless, as is clear from his discussion of the market’s price structure, Mises does not deny that there may be some unintended, and, at the same time, quite momentous consequences associated with deliberate yet decentralized choices to cooperate catallactically:
Any given social order was thought out and designed before it could be realized. This temporal and logical precedence of the ideological factor does not imply the proposition that people draft a complete plan of the social system as the utopians do. What is and must be thought out in advance is not the concerting of individual actions into an integrated system of social organization, but the actions of individuals with regard to their fellow men and of already formed groups of individuals. With regard to other groups. ... Before any act of barter takes place, the idea of mutual exchange of goods and services must be conceived. It is not necessary that the individuals concerned become aware of the fact that such mutuality results in the establishment of social bonds and in the emergence of a social system. The individual does not plan and execute actions intended to construct society. His conduct and the corresponding conduct of others generate social bodies [1966, p. 188].
As a social rationalist, however, Mises leaves no doubt that he considers such ignorance of the remoter consequences of catallactic activity not as a virtue to be hailed in the name of “spontaneity,” but as a vice which may ultimately prove destructive of the social division of labor. The reason is that the failure of participants in the division of labor to correctly comprehend the links between their individual actions and social outcomes invites the adoption of ideologies based on erroneous accounts of the nature of society and of social progress. Such falsely-grounded ideologies, in turn, may lead to conduct inconsistent with the continued maintenance of social relations. For example, the struggle for neomercantilist privileges by special interest groups, based on the ideology of interventionism or the “mixed economy,” constitutes, according to Mises,
antisocial conduct which shakes the very foundations of social cooperation. ... It is the outcome of a narrow-mindedness which fails to conceive the operation of the market economy and to anticipate the ultimate effects of one’s own actions.
It is permissible to contend that the immense majority of our contemporaries are mentally and intellectually not adjusted to life in the market society although they themselves and their fathers have unwittingly created this society by their actions. But this maladjustment consists in nothing else than in the failure to recognize erroneous doctrines as such. [Emphases mine; 1966, p. 319].
Social maladjustment, which is inspired by fallacious ideology, carries in its wake the possibility of social disintegration and is more likely to result the greater the degree to which the consequences of human actions are unintended, or, to use Mises’s term, “unwitting.” To the extent that social norms, policies, and institutions are “undesigned,” are not completely and correctly thought out in advance and accounted for in a logically consistent ideology, to that extent does the continued existence of society become problematic. Following up on this insight, Mises advances a speculative theory of spontaneous social disintegration which links up unwitting consequences with ideological failure:
The liberal conception of social life has created the economic system based on the division of labor. The most obvious expression of the exchange economy is the urban settlement, which is only possible in such an economy. In the towns the liberal doctrine has been developed into a closed system and it is here that it has found most supporters. But the more and the quicker wealth grew and the more numerous therefore were the immigrants from the country into the towns, the stronger became the attacks which Liberalism suffered from the principle of violence. Immigrants soon find their place in urban life, they soon adopt, externally, town manners and opinions, but for a long time they remain foreign to civic thought. One cannot make a social philosophy one’s own as easily as a new costume. It must be earned — earned with the effort of thought. Thus we find, again and again in history, that epochs of strongly progressive growth of the liberal world of thought, when wealth increases with the development of the division of labor, alternate with epochs in which the principle of violence tries to gain supremacy — in which wealth decreases because the division of labor decays. The growth of the towns and of the town life was too rapid. It was more extensive than intensive. The new inhabitants of the towns had become citizens superficially, but not in ways of thought. ... On this rock all cultural epochs filled with the bourgeois spirit of Liberalism have gone to ruin. ... More menacing than barbarians storming the walls from without are the seeming citizens within — those who are citizens in gesture, but not in thought [1969, p. 49].
If social disintegration may occur “spontaneously,” due to an ignorance of the remoter consequences of social action, social progress can only be assured by the widespread adoption of an ideology of social life which consciously and correctly accounts for these consequences. This ideology is liberalism. According to Mises:
In Liberalism humanity becomes conscious of the powers which guide its development. The darkness which lay over history recedes. Man begins to understand social life and allows it to develop consciously. ...
... History is a struggle between two principles, the peaceful principle, which advances the development of trade, and the militarist-imperialist principle, which interprets human society not as a friendly division of labor but as the forcible repression of some of its members by others. The imperialistic principle continually regains the upper hand. The liberal principle cannot maintain itself against it until the inclination for peaceful labour inherent in the masses shall have struggled through to full recognition of its own importance as a principle of social evolution [1969, pp. 48, 302].
The insight that social progress is contingent on the formulation and acceptance of a correct ideology of social life prompts Mises to emphatically reject the social meliorism of older or Enlightenment liberals, which optimistically projected a continuous, uninterrupted improvement in social conditions into the future. To Mises, this — and not the attempt to rationally design and construct the institutional framework proper to man’s nature as a cooperant in the social division of labor-constitutes the supreme abuse of reason (1966, pp. 864–65). A similar abuse was also committed by the social evolutionists of the nineteenth century — and, one might add, latter-day social evolutionists — who “smuggled into the theory of biological transformation the idea of progress” (Mises 1966, p. 192).
In contrast to the social meliorists and evolutionists, Mises, the social rationalist maintains that “Men are not infallible; they err very often. ... The good cause will not triumph on account of its reason ableness and expediency. Only if men are such that they will finally espouse policies reasonable and likely to attain the ultimate ends aimed at will civilization improve. ... Man is free in the sense that he must daily choose anew between policies that lead to success and those that lead to disaster, social disintegration, and barbarism” (1966, p. 193).
The rationalist view of social evolution, therefore, is not one of placid and automatic improvement insured by “unintended” consequences, “undesigned” institutions, “tacit” knowledge, and “natural selection” of rules of conduct. Social rationalism implies, instead, that human history is the outcome of a conflict between ideologies, which are consciously formulated and adopted by reasoning human beings. Whether an epoch is characterized by social progress, social retrogression, or even social disintegration depends upon which particular ideologies have become current and which individuals have attained ideological “might,” defined by Mises as “the power to influence other people’s choices and conduct” (1966, p. 188). Thus, according to Mises, “The power that calls into life and animates any social body is always ideological might, and the fact that makes an individual a member of any social compound is always his own conduct” (1966, p. 196).
The course of social evolution and the fortunes of humanity therefore are inextricably bound up with the fortunes of the ongoing ideological struggle. No social institution can or ever does evolve in a wholly spontaneous or unreflective way, unsullied, as it were, by ideological influences.
A case in point is language, generally cited by social evolutionists as the archetype of a social institution that develops in a basically unconscious fashion. But, as Mises argues, men’s conscious reflections on social relationships and their deliberate attempts to redesign them according to the ideologies such reflections give rise to, have a powerful impact on linguistic development. This is so because language, “the most important medium for social cooperation,” is at bottom ideological: “[I]t is a tool of thinking as it is a tool of social action” (Mises 1969, p. 321; Mises 1966, p. 177). As such, the abstract terms contained in a living language are “the precipitate of a people’s ideological controversies; of their ideas concerning issues of pure knowledge and religion, legal institutions, political organization, and economic activities. ... In learning their meaning the rising generation are initiated into the mental environment in which they have to live and to work. This meaning of the various words is in continual flux in response to changes in ideas and conditions” (Mises 1985, p. 232).
In addition, many momentous linguistic changes in history are directly attributable to ideological causes such as political and military events (Mises 1985, pp. 228–30). Gaelic is just one example of a language that first fell into oblivion and then was partially revived as a result of ideological factors (Mises 1944, p. 85; Mises 1985, pp. 229–30). Even in the case in which a particular language is entirely the outcome of peaceful evolution, it would still be the product of a conscious commitment to liberalism, which is the ideological framework necessary to secure the peaceful development of the social division of labor. For, as Mises (1969, pp. 302, 310–11) repeatedly argues, the “oecumenical society” itself, the product of the historical unfolding of social division of labor, is essentially an ideological creation, which has been “slowly forming itself during the last two hundred years under the influence of the gradual germination of the liberal idea. ... only when the modern liberal thought of the eighteenth century had supplied a philosophy of peace and social collaboration was the basis laid for the astonishing development of the economic civilization of that age.”
Ultimately, then, the degree and the direction of social evolution is governed wholly by ideological considerations. In Mises’s words “The flowering of human society depends on two factors: the intellectual power of outstanding men to conceive sound social and economic theories, and the ability of these or other men to make these ideologies palatable to the majority” (Mises 1966, p. 864).
References
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Butler, Eamonn. Ludwig von Mises: Fountainhead of the Modern Microeconomics Revolution. Brookfield, Vt.: Gower Publishing, 1988.
Kirzner, Israel M. “The Economic Calculation Debate: Lessons for Austrians.” The Review of Austrian Economics 2 (1988): 1–18.
Lavoie, Don. Rivalry and Central Planning: The Socialist Calculation Debate Reconsidered. New York: Cambridge University Press, 1985.
Mises, Ludwig von. Omnipotent Government: The Rise of the Total State and Total War. New Haven, Conn.: Yale University Press, 1944.
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____ . Liberalism: A Socio-Economic Exposition. Trans. Ralph Raico. 2nd ed. Kansas City, Kans.: Sheed Andrews and McMeel, 1978a.
____ . The Ultimate Foundation of Economic Science: An Essay on Method. 2nd ed. Kansas City, Kans.: Sheed Andrews and McMeel, 1978b.
____ . Theory and History: An Interpretation of Social and Economic Evolution. Auburn University, Ala.: The Ludwig von Mises Institute, 1985.
