The Clash of Group Interests
By Ludwig von Mises
Synopsis: This short book is comprised of two essay/lectures by Ludwig von Mises which shed light on how government intervention creates artificial classes with opposed interests, and how, in contrast, a market economy tends to harmonize people’s interests.
Strong Points: For a little book, it packs a powerful punch. Its message is relevant and insightful. There are many brilliant thoughts brought to light on the issue, and several quotable passages. The book is also concise enough to make for an evangelizing tool.
Weak Points: If the book is to be used as an evangelizing tool, there are some references within the text to individuals and ideologies to which the layman may not be entirely familiar. Those who most desperately need to read this book – thoughtless, ideological leftists who regurgitate platitudes and view government intervention as the answer to societal problems (and not the cause) – are probably the least likely to take an interest in the contents of the book.
Interesting: 3.9/5
Must Read: 3.9/5
Overall: 3.9/5
Pages: 54
Selected Quote: “Our age is full of serious conflicts of economic group interests. But these conflicts are not inherent in the operation of an unhampered capitalist economy. They are the necessary outcome of government policies interfering with the operation of the market. They are not conflicts of Marxian classes. They are brought about by the fact that mankind has gone back to group privileges and thereby to a new caste system.
“In a capitalist society the proprietary class is formed of people who have well succeeded in serving the needs of the consumers and of the heirs of such people. However, past merit and success give them only a temporary and continually contested advantage over other people. They are not only continually competing with one another; they have daily to defend their eminent position against newcomers aiming at their elimination. The operation of the market steadily removes incapable capitalists and entrepreneurs and replaces them by parvenus. It again and again makes poor men rich and rich men poor. The characteristic features of the proprietary class are that the composition of its membership is continually changing, that entrance into it is open to everybody, that continuance in membership requires an uninterrupted sequence of successful business operations, and that membership is divided against itself by competition. The successful businessman is not interested in a policy of sheltering the unable capitalists and entrepreneurs against the vicissitudes of the market. Only incompetent capitalists and entrepreneurs (mostly later generations) have a selfish interest in such ‘stabilizing’ measures. However, within a world of pure capitalism, committed to the principles of a consumers’ policy, they have no choice to secure such privileges.
“But ours is an age of producers’ policy. Present day ‘unorthodox’ doctrines consider as the foremost task of a good government to place obstacles in the way of the successful innovator for the sole benefit of less efficient competitors and at the expense of the consumers. … It is a return to the restrictive economic policies abandoned by the liberal countries in the course of the eighteenth and nineteenth centuries. If people had not discarded these policies then, the marvelous economic progress of the capitalist era would never have been achieved.” (p. 10-12).
“Permit me to recapitulate some well-known facts. While under precapitalistic conditions superior men were the masters on whom the masses of the inferior had to attend, under capitalism the more gifted and more able have no means to profit from their superiority other than to serve to the best of their abilities the wishes of the majority of the less gifted. In the market, economic power is vested in the consumers. They ultimately determine, by their buying or abstention from buying, what should be produced, by whom and how, of what quality and in what quantity. The entrepreneurs, capitalists, and landowners who fail to satisfy in the best possible and cheapest way the most urgent of the not-yet-satisfied wishes of the consumers are forced to go out of business and forfeit their preferred position. In business offices and in laboratories, the keenest minds are busy fructifying the most complex achievements of scientific research for the production of ever-better implements and gadgets for people who have no inkling of the theories that make the fabrication of such things possible. The bigger an enterprise is, the more it is forced to adjust its production to the changing whims and fancies of the masses, its masters. The fundamental principle of capitalism is mass production to supply the masses. It is the patronage of the masses that makes enterprises grow big. The common man is supreme in the market economy. He is the customer who ‘is always right.’
“In the political sphere, representative government is the corollary of the supremacy of consumers in the market. Office-holders depend on the voters as entrepreneurs and investors depend on the consumers. The same historical process that substituted the capitalistic mode of production for precapitalistic methods substituted popular government – democracy – for royal absolutism and other forms of government by the few. And wherever the market economy is superseded by socialism, autocracy makes a comeback. It does not matter whether the socialist or communist despotism is camouflaged by the use of aliases like ‘dictatorship of the proletariat’ or ‘people’s democracy’ or ‘Führer principle.’ It always amounts to a subjection of the many to the few.” (p. 30-31).