Thursday, October 4, 2012

Problems with Tom Woods's Claim of Misesian "Immutability" in the Face of Rockefeller Foundation Funding

Today (October 4, 2012), thanks to a Facebook comment, I noticed that there is a problem with Tom Woods claim that Mises never changed his views even though he received Rockefeller Foundation funding from roughly the late 1920s to the early 1940s. Moreover, in trying to formulate a cogent response to what Tom Woods wrote, I have lost my faith in the claim that Mises was an anarchist or a quasi-anarchist. The famous "anarchist" quote found in Mises's Liberalism (i.e., the one about self-determination) is not an endorsement of anarchy at all; it is, on the contrary, an endorsement for the creation of a whole bunch of new "pure language" states.

Let's begin with Woods's statement regarding the alleged Misesian immutability, i.e., the claim that somehow Mises never changed his views in the face of receiving Rockefeller Foundation funding:
 After he [Mises] was off RF money [Rockefeller Foundation money], Mises continued to profess and develop exactly the same views that he had already professed and developed BEFORE he got to meet any RF people. That's not the behavior of an intellectual prostitute. You would rather expect him to change his tune to the likings of his sponsors. (Tom Woods, Was Mises Bankrolled by the Financial Elite?, bold emphasis mine)
There you go. The claim is that Mises was 100% faithful to his views. He never changed no matter what. I am not so sure.

As I mentioned above, Mises seems to have been receiving Rockefeller Foundation money in one capacity or another (there are different "incidents" such as the Geneva one or the Business Cycle Research Institute one or the one where he gets Hayek to start some campaign to get funding etc.) from maybe 1926 to maybe 1944 or thereabouts. So to do some sort of an analysis on whether Mises actually was as faithful as Woods claims, I picked two books to scrutinize. 

I picked Mises's Liberalism: The Classical Tradition and his Omnipotent Government: The Rise of the Total State and Total War. In both cases, I am using the Liberty Fund editions (just in case my page numbers don't match up with the electronic versions of these books). There is "method" to my madness so to speak.

  1. Mises wrote Liberalism around 1927, i.e., just at about the time the Rockefeller Foundation started interacting with him. (It sounds as though there was some meeting in 1926)
  2. Mises wrote Omnipotent Government around 1944, near the end of his time with the Rockefeller Foundation.
  3. In other words, I am trying to get a "before" and "after" look at what Mises is professing to believe.
 On the surface, it appears as though Mises makes a huge change in his views. As I will explain later, I think that this might be an erroneous interpretation. Nevertheless, I want to present it. I fear that there is a false perception that Mises was an anarchist or quasi-anarchist. I think that he was a statist. It is because Mises is being painted as an anarchist or near-anarchist that this very weird interpretation of him can be offered up.  So bear with me as I try to present some possible explanations and interpretations.

Let us begin by assuming that Hans-Hermann Hoppe is correct in his claim that Mises pretty much "crosses over" into anarchism based on Mises's statement in Liberalism. Let me cite Hoppe at length:
The right of self-determination in regard to the question of membership in a state thus means: whenever the inhabitants of a particular territory, whether it be a single village, a whole district, or a series of adjacent districts, make it known, by a freely conducted plebiscite, that they no longer wish to remain united to a state...their wishes are to be respected and complied with. This is the only feasible and effective way of preventing revolutions and civil and international wars....If it were in any way possible to grant this right of self-determination to every individual, it would have to be done. (Mises, Liberalism, pp. 109-10)
Essentially, with this statement Mises has already crossed the line separating classical liberalism and Rothbard's private property anarchism; for a government allowing unlimited secession is of course no longer a compulsory monopolist of law and order but a voluntary association. Thus notes Rothbard with regard to Mises' pronouncement, "[o]nce admit any right of secession whatever, and there is no logical stopping-point short of the right of individual secession, which logically entails anarchism, since then individuals may secede and patronize their own defense agencies, and the State has crumbled." (Hans-Hermann Hoppe, Democracy--The God That Failed, footnote 29, page 238, bold emphasis mine)
So let us pretend for the moment that the Hoppe-Rothbard version of Mises's Liberalism is correct. Mises was really an anarchist because of his support for the right of self-determination. This now implies that the Tom Woods "immutable, never-changing Mises" hypothesis MUST BE FALSE.

If Mises is "immutable" then he must be a consistent anarchist. He must be an anarchist BEFORE receiving Rockefeller Foundation money and he must still be an anarchist AFTER receiving Rockefeller Foundation money. Let's now go look at Mises's Omnipotent Government for evidence of anarchism in Mises's writings. What we are going to find is this: Mises sounds like a horrible statist--if he really were an anarchist in 1927 then he certainly is NOT one in 1944.

 What alerted me to this fact was actually a comment made by a poster at the Mises Institute. It is a comment at the bottom of the page that allows you to download a free copy of Omnipotent Government. The comment can be found here. I will reproduce it verbatim (i.e., I won't change any of the grammatical or spelling mistakes made by "Roger"):
I read the book and the final chapter seems to me to be saying exactly what Bush said.
We must abondon the free market to save the free market. Huh?
He spends the whole book defending free markets and in the end succoms to socialsit ideals. 
He calls for a centrally planned economy in europe in the absence of laissez faire economics, or anywhere else it may be needed. 
He calls for a unitary government. ( which is what the US has devolved into, in my opinion ) 
Where else would Obama or Holder or any other beaurocrat get the idea that they have any say whatsoever in legally passed laws in the supposedly sovereign states.
A government where all power is seated in one all knowing central planner. 
He sees a need to force soverign nations to comply with a central government which answers to no one, and so long as they do they shall remain free. ( or what? ) 
Mises goes way off the reservation in this one.
  Now, when I consulted my copy of Omnipotent Government, I, too, was a bit shocked by the comments made by Mises. For example, Mises writes that
if we want to abolish all discrimination against minority groups, if we want to give to all citizens actual and not merely formal freedom and equality, we must vest all powers in the central government alone. (304, bold emphasis mine)
 It sounds as though Mises is talking about a "regional government" for all of Eastern Europe--sort of like a 1944 version of the European Union. He seems to think that national states should be reduced to province-like status under a powerful central state:
Let us call this new political structure the "Eastern Democratic Union" (EDU). Within its framework the old political units may continue to function. A dislocation of the historically developed entities is not required. Once the problem of borders has been deprived of its disastrous political implications, most of the existing national bodies can remain intact. Having lost their power to inflict harm upon their neighbors and upon their minorities, they may prove very useful for the progress of civilization and human welfare. Of course, these former independent sovereign states will in the framework of the EDU be nothing more than provinces. Retaining all their honorary forms, their kings or presidents, their flags, anthems, state holidays, and parades, they will have to comply strictly with the laws and administrative provisions of the EDU. But so long as they do NOT violate these laws and regulations, they will be free. The loyal and law-abiding government of each state will not be hindered but strongly supported by the central government. (305-6, bold emphasis mine)
No anarchist would ever write this. These former states will be reduced to province-like status and they will have to "comply strictly" with all of these rules made by a central government! They will be "free" as long as they obey the orders of their superiors. In other words, they will be slaves under Mises's system.

Mises does not even sound like a supporter of laissez-faire any more! On the next pages, pages 3078, Mises is advocating for state-subsidized education! Again, no anarchist would ever suggest state involvement in the school system:
The governments of Eastern Europe abused the system of compulsory education in order to force minorities to give up their own languages and to adopt the language of the majority. The EDU would have to be strictly neutral in this respect. There would be private schools only. Any citizen or group of citizens would have the right to run an educational institution. If these schools complied with standards fixed by the central government, they would be subsidized by a lump sum for every pupil. The local governments would have the right to take over the administration of some schools, but even in these cases the school budgets would be kept independent of the general budget of the local government; no public funds but those allocated by the central government as subsidies for these schools should be used. (307-8, bold emphasis mine)
 As one last example, Mises writes "Democracy can be maintained in the East only by an impartial government" (308). I find it shocking that Hoppe, the ultra-adversary of democracy, would claim that Mises can effectively be an anarchist when he openly calls for democracy. An anarchist wold never support democracy, nor would he or she support this claim that an "impartial government" exists. An anarchist would say that the government is biased in favor of benefiting the ruling class at the expense of the ruled over class.

Consequently, there is no way that Mises is an anarchist in 1944. This refutes Woods's claim of an "immutable Mises."

Or does it? Maybe Woods's claim of an "immutable Mises" is, in fact, correct! Maybe the problem is the claim that Mises was some sort of 1927 anarchist or near-anarchist based on his comment about the right of self-determination.

My gut feeling is that Tom Woods's "immutable Mises" hypothesis is probably correct but not in a way consistent with Hoppe or Rothbard. I get the impression that the "official version" is this: Mises was intellectually compatible with Rothbard when it comes to the question of anarchy. This way, there is a rather small gap or even no gap between Mises and Rothbard when it comes to their political views. Or put it this way: Mises is compatible with Rothbard's anarcho-capitalism.

I think that this is all nonsense. I think that Mises was NOT an anarchist and Rothbard and Hoppe are trying to "invent" a non-existent "anarchist" Mises. Consequently, I think that Tom Woods's is correct in saying that Mises is "immutable." Mises doesn't change. MISES DOESN'T CHANGE--HE STAYS CONSISTENTLY STATIST, regardless of Rockefeller Foundation funding intervention.

To demonstrate why I think that the correct interpretation is to assert a "consistently Statist" Mises, I think that all I have to do is this: to show that Mises was statist BEFORE really being sucked into the Rockefeller Foundation sphere of influence. It is obvious that he was a statist with his proposal for a gigantic central state for all of Eastern Europe found in his book Omnipotent Government. So let us go look at Mises's Liberalism in order to see if Mises was a statist back in 1927 as well.

The first, and in my opinion most obvious problem for the Hoppe-Rothbard interpretation, is that it violates the author's stated thesis! Mises comes out explicitly in Liberalism and say in no uncertain terms that HE IS NOT AN ANARCHIST! So it is a bit shocking that Hoppe and Rothbard can use a book that explicitly denies anarchism in order to prove that Mises really was an anarchist. This is what Mises says in his own book in 1927:
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. (17, bold emphasis mine)
On the same page, Mises denigrates anarchism as basically a utopian dream. Mises writes, "anarchism misunderstands the real nature of man. It would be practicable only in a world of angels and saints" (17). Yet, Hoppe and Rothbard, using THIS same book, claim that Mises really was advocating anarchy in 1927 by mentioning later on in this book the "right of self-determination."

If this is true, then should we not then accuse Mises of being totally incapable of developing a consistent argument? In one part of his book he totally condemns anarchy as impossible for us mere mortals, but later in the same book he thinks anarchy should be implemented under the title of "right of self-determination." That seems really inconsistent to me. I, of course, do not believe that Mises is that bad of an author that he can't maintain a consistent argument in a relatively short book. I think that Rothbard and Hoppe are imposing an alien interpretation on Mises's book by trying to make him appear as a Rothbardian anarchist (anarcho-capitalist) when Mises clearly is no such thing.
Maybe Mises is attacking one version of anarchy since there are, in fact, many different variations on anarchism out there. This seems to be the line of defense taken by Jörg Guido Hülsmann in his book Mises: The Last Knight of Liberalism. Hülsmann argues that Mises was not attacking Rothbardian- style anarchism. He was only attacking Proudhonian-style anarchism. Hülsmann writes that
Mises used the term "anarchism" to refer to the Proudhonian idea of a society without the defense of private property rights, and "anarchy" to designate the chaos he believed to be inevitable for such a society. He did not have in mind the anarchism of his later student Murray Rothbard, who used these same words to advocate a free market society without a modern state--a system in which even the defense of property rights would be provided privately. (Jörg Guido Hülsmann, Mises: Last Knight of Liberalism, end note 44, chapter 13, bold emphasis mine)
Maybe Hülsmann is thinking of what Mises wrote in Liberalism with regard to anarchy and property: "if private property were abolished, then everyone, without exception, would spontaneously observe the rules demanded by social cooperation" (16).  Maybe that is why Hülsmann is framing Mises's definition of anarchy as an anti-property type anarchy.

I do not understand why Hülsmann then calls this "Proudhonian." He seems to be accusing Proudhon of wanting to have absolutely no defense of private property whatsoever. I am not a mutualist, but I think that this is a rather unfair and inaccurate representation of what Proudhon stood for.  In the book Anarchy and the Law: The Political Economy of Choice, edited by Edward P. Stringham, we find a fascinating article (chapter 33) by David Osterfeld entitled Freedom, Society, and the State: An Investigation Into the Possibility of Society without Government (excerpt). Osterfeld's portrayal of Proudhon differs sharply from that of Hülsmann. To me, Hülsmann seems to be painting Proudhon as some sort of anti-property communist, but this is certainly not how Osterfeld portrays him. Osterfeld writes this about Proudhon: "Proudhon, in fact, proclaims that property 'is the only power that can act as a counter weight to the State...' Thus, property he says, 'is the basis of my system of federation'" (511-12).

I don't know what could possibly be clearer with regard to Mises's political philosophy than this:
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. (Liberalism, 19, bold emphasis mine)
Now let us return to the alleged "proof" that Mises was really an anarchist because--in this same book of denouncing anarchy--he came out in favor of anarchy by supporting the "right of self-determination." This "proof" quote that Rothbard and Hoppe pounced upon is found on pages 79-80 of Mises's Liberalism. (The page numbers differ between Hoppe and me because I am using the Liberty Fund edition.) The first thing I want to do is reproduce the FULL QUOTE without Hoppe's deletions. When we stick back in the deleted part, we will quickly see that: Mises is NOT talking about setting up an anarchy at all. There is NO talk of private defense forces, nor is there any talk of individual secession. Mises IS talking about ESTABLISHING NEW STATES.

In order to see this, I will reproduce the ENTIRE QUOTATION and I will especially highlight the part that Hoppe deleted in his quotation above. (I faithfully copied out Hoppe verbatim above, at the start of my blog).
The right of self-determination in regard to the question of membership in a state thus means: whenever the inhabitants of a particular territory, whether it be a single village, a whole district, or a series of adjacent districts, make it known, by a freely conducted plebiscite, that they no longer wish to remain united to the state to which they belong at the time, but wish either to form an independent state or to attach themselves to some other state, their wishes are to respected and complied with. This is the only feasible and effective way of preventing revolutions and civil and international wars. (79)
 The part that Hoppe deleted above is the crucial part. Mises didn't say "go declare anarchy" or "go become a Rothbardian anarcho-capitalist!" He said that the people WISH to either form a NEW STATE or JOIN an existing state. This is NOT ANARCHY at all!

Notice how Mises is clearly stating that this right of self-determination leads to the FORMATION OF STATES. This is totally inconsistent with the anarchistic spin provided by Rothbard and Hoppe.  Mises writes that
so far as the right of self-determination was given effect at all, and wherever it would have been permitted to take effect, in the nineteenth and twentieth centuries, it led or would have led to the FORMATION OF STATES composed of a single nationality (i.e., people speaking the same language) and to the dissolution of states composed of several nationalities, but only as a consequence of the free choice of those entitled to participate in the plebiscite. THE FORMATION OF STATES COMPRISING ALL THE MEMBERS OF A NATIONAL GROUP WAS THE RESULT OF THE EXERCISE OF THE RIGHT OF SELF-DETERMINATION, not its purpose. (Liberalism, 80, bold emphasis mine)
Notice that Mises is not talking about the resulting anarchy of this process. It sounds like he is expecting just the opposite: he seems to be fairly confident that new states would form, based on a "purity" of language.

Mises does NOT use the term "right of self-determination" to imply "individual sovereignty" or "individual secession." This seems to be something that Rothbard is "reading into" Mises, and I think that it is totally unjustified. In fact, Mises seems to be saying the complete opposite of what Rothbard is saying. Mises speaks of restricting this right--in a way that sounds suspiciously similar to democracy and "majority rule." Mises writes "that the right of self-determination be restricted to the will of the majority of the inhabitants of areas large enough to count as territorial units in the administration of the country" (Liberalism, 80, bold emphasis mine).

In conclusion, I think that I have demonstrated the following points:
  • Mises never was an anarchist
  • Mises was "immutably" a statist--so Tom Woods is right in claiming that Mises remained consistent in his beliefs 
  • The Rockefeller Foundation funding did not change the essential beliefs of Mises. Mises was statist in 1927, and he was still statist in 1944.
  • Hülsmann, Hoppe, and Rothbard are trying way too hard to make Mises appear to be an anarchist (they are trying too hard to make him look Rothbardian/anarcho-capitalist)
  • The "right to self-determination" passage in Mises's Liberalism does not prove that Mises supported anarchism; it actually shows Mises's support for "pure language" states
  • Proudhon's position on property is misrepresented in order to create a false dichotomy of "anti-property" anarchists and "pro-property" anarchists

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