Economic Freedom and Interventionism

It is self-evident that human beings are not omniscient; they cannot know everything. And they are not omnicompetent; they make mistakes. However, Mises was convinced that they would have more knowledge and would make fewer mistakes if they were free and if their voluntary actions were not hampered. Mises’ understanding of economic theory convinced him that men who are free to seek their respective goals by peaceful means, to compete, cooperate, bargain and exchange with one another, to adjust and adapt to changing conditions, will learn by reason and experience. They will often be able to correct their mistakes, misjudgments and miscalculations before the effects become serious. Everyone concerned will benefit as a result.

Realizing the advantages of peaceful social cooperation, Mises was led to advocate the protection of free markets and private property. The role of government was to act as “night watchman.” It should not otherwise interfere with the peaceful and voluntary actions of individuals. It should not try to be both God and Santa Claus. Government should use its power, as Mises says, “only to protect decent law-abiding people against violent or fraudulent attacks.”

The articles in this section point out the unfortunate consequences when government goes beyond this limited role. Some of the articles in this section date from the period of the post-World War II “Cold War” against Communism and the Korean War (1950-1953). The effects of inflation (monetary expansion) were then in the news and price controls were imposed temporarily. Among the issues discussed here are government spending, special privileges, artificially maintained wage rates, credit expansion and inflation, all of which persist to this day.

The people, Mises said, must come to understand the consequences of these programs. It is “diabolic,” Mises writes in one article, “to egg various pressure groups on to ask for more and more government spending to be financed by credit expansion. The bill for such government extravagance is always footed by the most industrious and provident people,” to the disadvantage of all the people.