A Comment on the Political Rhetoric Used Against the System of Laissez-Faire

Politics certainly is full of hyperbole and exaggeration.  One of the phrases that really needs to be dropped from the political lexicon is that of "group XYZ is being exploited."  Exploitation is one of those terms that gets thrown around a lot; in fact, everyone seems to accuse everyone else of being an "exploiter."  The general line seems to be "my philosophy will help out the masses of the poor" but "the wonderful reforms are being stopped by some evil exploiters."  Now, it does not take an expert to identify such sentiments as being the stock-in-trade of leftist writers.  At the heart of Marxian propaganda is, after all, the so called "Iron Law of Wages," which claims that the evil capitalist exploiters set the wage rates so low that if wage rates were to fall any further then the entire exploited labor classes would be wiped out and would quite literally drop dead.  So, the exploiters, the capitalist class, must, assuming that they want to keep their slave laborers alive for future plundering, then keep the wages set at the "subsistence level."  To raise the wages any higher would be pointless; why pay a slave more money if you don't have to?  To lower the wages any lower would be pointless; how can you exploit dead people?  Ignoring the obvious logical contradiction here in this process of Marxian thought (since it is illogical to say that wages are set by the capitalists at a subsistence level and then to insist that the lot of the workers "progressively" gets "worse and worse"), one might be surprised to learn that laissez-faire capitalist writers make exactly the same claims against socialism.  Socialism is the system of exploitation, not laissez-faire.  Socialism is a system of tyranny.  Socialism will lead to the progressive pauperizing of the laboring classes; capitalism will pour a horn of plenty out on them.


In fact, these types of accusations are among some of the oldest criticisms made against socialism in general.  According to F. A. Hayek, socialism, at least modern socialism, (since one can easily study pre-Marxian communism, the so called utopian socialists, and one can go back even further in history to some very early communist-like experiments such as the Munster experiment in the 16th century) has its origins in a reaction against classical [not to be confused with the modern American or Canadian usage; the modern usage of "liberalism" is totally different from what is being described here] liberalism steaming from the French Revolution.  Hayek is rather blunt in his observations regarding the totalitarian origins of socialism.  Hayek states in his famous work, The Road to Serfdom, that

the extraordinary thing is that the same socialism that was not only early recognized as the gravest threat to freedom, but quite openly began as a reaction against the liberalism of the French Revolution, gained general acceptance under the flag of liberty.  It is rarely remembered now that socialism in its beginnings was frankly authoritarian.  The French writers who laid the foundations of modern socialism had no doubt that their ideas could be put into practice only by a strong dictatorial government.  (76)

In Mises's 1947 work, which was originally published by the Foundation for Economic Education under the title of Planned Chaos, now simply called the Epilogue to Socialism, he mentions the writings of the "heretic" Trotsky, who was a rival and a later a victim of comrade Stalin.  Trotsky, writes Mises, "saw things realistically" when he describes the inner workings of the Soviet Union.  Trotsky declared that

in a country where the sole employer is the State, opposition means death by slow starvation.  The old principle:  who does not work shall not eat, has been replaced by a new one:  who does not obey shall not eat."  This confession settles the issue.  (Epilogue to Socialism, 538)

In other words, under socialism, the only liberty that a person has is either to obey or to die.  Just as socialist writers accuse capitalism of offering a "false liberty" (and socialism will then bring "full liberty") so capitalist writers accuse the socialists of offering up "totalitarianism under the banner of liberty."  For example, Mises in his article entitled The Individual in Society, has to this to say about "socialist freedom":

They define liberty as the opportunity to do the "right" things, and, of course, they arrogate to themselves the determination of what is right and what is not.  In their eyes government omnipotence means full liberty.  To free the police power from all restraints is the true meaning of their struggle for freedom.

To really emphasis this point in which each side accuses the other of being the "real villain," consider the "plight of the laboring classes."  Even here it might be a bit misleading on my part to suggest that the socialists are the natural allies of the "workers."  (See Mises, Theory and History,  82).   Socialism is more of a product of the intellectuals in ivory towers than a philosophy of the shop floor worker.  The actual workers, the actual people who get their hands dirty, are more likely to favor interventionism and syndicalism than pure Marxian socialism.  All I am trying to say is that capitalism is normally vilified as the enemy of the laboring classes by most anti-capitalist schools of thought.

Mises, in his work on theoretical capitalism, called Liberalism:  The Classical Tradition, notes that there are actually five different systems of organizing the cooperation of individuals:  the system of private ownership of the means of production, the system of private ownership of the means of production with periodic confiscation of all wealth and its subsequent redistribution, syndicalism, the system of public ownership of the means of production, and the system of interventionism (37).  The fact remains, that all systems claim to be workable, whether or not that is true or false is the job for scientific reasoning to ascertain.  Moreover, no system claims that it is purposefully trying to harm the "poor" and the "laboring classes."  Again, what one claims to be true and what actually happens in reality can be very different things or even contradictory things.  The point is that laissez-faire asserts that it is the only system that can benefit the "poor" and the "laboring classes."  Actually, laissez-faire goes further and asserts that everybody wins under its system.  Mises asserts in Liberalism:  The Classical Tradition that

Liberalism [i.e., laissez-faire capitalism] has demonstrated that the antagonism of interests, which, according to a widely prevalent opinion, is supposed to exist among different persons, groups, and strata within a society based on private ownership of the means of production, does not, in fact, occur.  Any increase in total capital raises the income of capitalists and landowners absolutely and that of workers both absolutely and relatively.  As regards their income, any shifts in the various interests of the different groups and strata of society--the entrepreneurs, capitalists, landowners, and workers--occur together and move in the same direction as they pass through different phases in their fluctuations; what varies is only the ratio of their shares of the social product.  (127, emphasis mine)

In conclusion,  all of the claims made by "leftist" authors against capitalism have been turned around and used against them.  Laissez-faire capitalist authors have argued that socialism and interventionism are the real villains, the real tyrants who want to enslave humanity to the omnipotent state.  Socialism and interventionism provide a "false liberty" because they are really just forms of totalitarianism; socialism and interventionism harm the workers or benefit some workers at the expense of others.  Since everybody accuses everybody else of being the evil exploiters while still asserting that his own system is the only path to an improved standard of living for the masses, how does one decide who is right and who is wrong.  The starting point is to realize that judgments of value are not scientific.  Calling your opponent "an exploiter" is not a legitimate approach to a scientific discussion.  The solution is to study the cause and effect nature of each proposed system.  For example, if I were to implement a system of government interventions in the labor market, what will be the result.  Will it benefit some labor?  All labor?  No labor?  By studying cause and effect, one can get around the name calling, which is just a distraction.