never fully abandoned, now seems to me factually mistaken. It certainly was not rational insight into its general benefits that led to the spreading of the market economy. It seems to me that the thrust of Mises’ teaching is to show that we have not adopted freedom because we understood what benefits it would bring: that we have not designed, and certainly were not intelligent enough to design, the order which we now
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have learned partly to understand long after we had plenty of opportunity to see how it worked. Man has chosen it only in the sense that he has learned to prefer something that already operated, and through greater understanding has been able to improve the conditions for its operation.
It is greatly to Mises’ credit that he largely emancipated himself from that rationalist-constructivist starting point, but that task is still to be completed. Mises as much as anybody has helped us to understand something which we have not designed.
There is another point about which the present-day reader should be cautioned. It is that half a century ago Mises could still speak of liberalism in a sense which is more or less the opposite of what the term means today in the United States, and increasingly elsewhere. He regarded himself as a liberal in the classical, nineteenth-century meaning of the term. But almost forty years have now elapsed since Joseph Schumpeter was constrained to say that in the United States the enemies of liberty, “as a supreme but unintended compliment, have thought it wise to appropriate this label.”
In the epilogue, which was written in the United States twenty-five years after the original work, Mises reveals his awareness of this and comments on the misleading use of the term “liberalism.” An additional thirty years have only confirmed these comments, as they have confirmed the last part of the original text, “Destructionism.” That shocked me for its inordinate pessimism when first I read it. Yet, on rereading it, I am awed rather by its foresight than by its pessimism. In fact, most readers today will find that Socialism has more immediate application to contemporary events than it had when it first appeared in its English version just over forty years ago.
August 1978
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PREFACE TO THE SECOND ENGLISH EDITION
13
The world is split today into two hostile camps, fighting each other with the utmost vehemence, Communists and anti-Communists. The magniloquent rhetoric to which these factions resort in their feud obscures the fact that they both perfectly agree in the ultimate end of their programme for mankind’s social and economic organization. They both aim at the abolition of private enterprise and private ownership of the means of production and at the establishment of socialism. They want to substitute totalitarian government control for the market economy. No longer should individuals by their buying or abstention from buying determine what is to be produced and in what quantity and quality. Henceforth the government’s unique plan alone should settle all these matters. ‘Paternal’ care of the ‘Welfare State’ will reduce all people to the status of bonded workers bound to comply, without asking questions, with the orders issued by the planning authority.
Neither is there any substantial difference between the intentions of the self-styled ‘progressives’ and those of the Italian Fascists and the German Nazis. The Fascists and the Nazis were no less eager to establish all-round regimentation of all economic activities than those governments and parties which flamboyantly advertise their anti-Fascist tenets. And Mr. Peron in Argentina tries to enforce a scheme which is a replica of the New Deal and the Fair Deal and like these will, if not stopped in time, result in full socialism.
The great ideological conflict of our age must not be confused with the mutual rivalries among the various totalitarian movements. The real issue is not who should run the totalitarian apparatus. The real problem is whether or not socialism should supplant the market economy.
It is this subject with which my book deals.
14
World conditions have changed considerably since the first edition of my
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essay was published. But all these disastrous wars and revolutions, heinous mass murders and frightful catastrophes have not affected the main issue: the desperate struggle of lovers of freedom, prosperity and civilization against the rising tide of totalitarian barbarism.
In the Epilogue I deal with the most important aspects of the events of the last decades. A more detailed study of all the problems involved is to be found in three books of mine published by the Yale University Press:
Omnipotent Government, the Rise of the Total State and Total War;1 Bureaucracy;2 Human Action, a Treatise on Economics.3
LUDWIG VON MISES
New York, July 1950
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The following work is translated from the second German edition (published 1932) of the author’s Die Gemeinwirtschaft (originally published in 1922). The author, who has lent assistance at every stage, has inserted certain additions, notably on the problem of economic calculation and on unemployment (pp. 137 ff., 485 ff.), which are not to be found in the German edition, and certain changes have been made in terminology to meet the convenience of English readers.
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PREFACE TO THE SECOND GERMAN EDITION
15
It is a matter of dispute whether, prior to the middle of the nineteenth century, there existed any clear conception of the socialist idea—by which is understood the socialization of the means of production with its corollary, the centralized control of the whole of production by one social or, more accurately, state organ. The answer depends primarily upon whether we regard the demand for a centralized administration of the means of production throughout the world as an essential feature in a considered socialist plan. The older socialists looked upon the autarky of small territories as ‘natural’ and on any exchange of goods beyond their frontiers as at once ‘artificial’ and harmful. Only after the English Free-Traders had proved the advantages of an international division of labour, and popularized their views through the Cobden movement, did the socialists begin to expand the ideas of village and district Socialism into a national and, eventually, a world Socialism. Apart from this one point, however, the basic conception of Socialism had been quite clearly worked out in the course of the second quarter of the nineteenth century by those writers designated by Marxism as “Utopian Socialists.” Schemes for a socialist order of society were extensively discussed at that time, but the discussion did not go in their favour. The Utopians had not succeeded in planning social structures that would withstand the criticisms of economists and sociologists. It was easy to pick holes in their schemes; to prove that a society constructed on such principles must lack efficiency and vitality, and that it certainly would not come up to expectations. Thus, about the middle of the nineteenth century, it seemed that the ideal of Socialism had been disposed of. Science had demonstrated its worthlessness by means of strict logic and its supporters were unable to produce a single effective counter-argument.
