– January 15, 2019
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We live at a time when one of the worst accusations that can be thrown at someone is the charge of “racist.” Have that word tied to your name and it not only results in moral condemnation, it potentially throws into discredit almost anything and everything that person has said or done. That makes it a serious matter when an individual never identified with such racist views or values has that accusation attached to them.

Wellesley College historian, Quinn Slobodian, has recently attempted to attach such a charge to Austrian economist Ludwig von Mises. In an article on, “Perfect Capitalism, Imperfect Humans: Race, Migration, and the Limits of Ludwig von Mises’s Globalism” (Contemporary European History, Dec. 2018), Professor Slobodian says that Mises, in some of his writings, rationalized racist attitudes and policy perspectives, especially concerning race relations in the United States. The actual facts show this is a fundamentally baseless accusation that attempts to taint and tarnish the reputation of one of the leading economists of the 20th century, and one of the most consistent and outspoken defenders of the classical liberal ideal of political, social and economic liberty and the free society.  

Historians Always Have an Interpretive Schema

Every writer of history offers a narrative from within the context of some interpretive schema. The notion of a “just the facts” history is virtually impossible. Every writer has to come to his subject-matter with some conceptual ordering ideas in his mind. Otherwise, how would he proceed and decide what are the relevant events, activities, and people to include in his narrative, and which to set aside as not pertinent to his study?

However imbedded or tentative it may be, the historian implicitly approaches his topic with a theory of what connects one action or event with another. How various causal chains work to bring about their effects. The historian may modify or even significantly change his mind about all this as he studies the evidence, the historical events, and realizes that what he thought were the forces and factors at work were not really so.

Indeed, the study of the historical record may lead the historian to the conclusion that his starting hypotheses about social, political and economic causes and effects have been totally or partly falsified. Intellectual honesty should lead him to modify his interpretive schema for a factually more accurate and consistent narrative.

Professor Quinn Slobodian has just such an interpretive framework in the context of which he approaches his studies of intellectual history. He does not wear it on his sleeve as an explicitly pronounced “theory” of social and economic events, but it is there, nonetheless. I do not criticize him for having one. I have one, and so does every other serious writer devoted to understanding the past, interpreting the present, and anticipating the future.

Embarrassing Slipshod Scholarship

But before getting to his interpretive framework and his critique of Ludwig von Mises, it is necessary to point out what must be one of the most embarrassing observations that can made about an author’s work, that being slipshod scholarship. Professor Slobodian has 93 footnotes in his article. Over 50 of them reference Mises’s writings or correspondence. Looking them up, I found many instances in which the page reference to a paraphrase of a passage or a quote in one of Mises’s works was not to be found where Professor Slobodian indicated it to be.

In some instances, this was not simply being off a page or two; the page referenced turned out to be in a portion of one of Mises’s works that had nothing to do with the theme or idea that Professor Slobodian was referring to in the text of his own article. Hence, the paraphrase or quote literally had to be taken on good faith as being accurate or even there in one of Mises’s writings.

In addition, there are instances in which Professor Slobodian asserts or implies views or states of mind held by Mises at some point in time. But the footnoted reference sometimes refers to some other scholar’s work that when looked up did not refer to or imply anything about Ludwig von Mises. For example, at one point (p. 4), Professor Slobodian says, “But for Mises, a war had shaken him the most. Japan’s defeat of Russia in 1905 brought about a non-white power into the elite white club of empires. The event resonated with the rhetoric of the ‘yellow peril’ widespread at the turn of the century, understood as both a racial demographic and commercial threat.” And he footnotes a work about Asian intellectuals in the period before the First World War.

Professor Slobodian then says, “Mises’s response was different but no less radical,” and then references how Mises saw the economic significance of increased global competition from Asia for European countries such as England and Germany. The juxtapositioning of these two ideas, one following the other, easily creates the impression that Mises, while having a “different” response, was part of the group worried about a “yellow peril.” There is nothing to suggest in Mises’s writings actually referenced that he held or expressed any such race-based fear in the wake of the Japanese victory over Russia. But the implication is easily left in the reader’s mind.

Elitist Capitalism vs. People’s Democracy in Quinn Slobodian

The worldview that permeates Quinn Slobodian’s narrative and critique of Mises’s policy views in the period between the two World Wars is based on a presumed conflict between the interests of the owners of “capital” who wish to freely and unrestrictedly have access to and exploit all corners of the globe, and the worker-citizens in the respective nations of the world yearning to use their democratic rights to restrict and prohibit the economic oppression of themselves and their countries.

In other words, it is capitalism vs democracy. Capitalism is a system of ownership by an elite few to reap gains for themselves at the expense of the many in society. Since “the people” surely do not want to be exploited and victimized, then an unrestricted expression of their democratic will would be the means to thwart the invidious attempts of “capital” to go hither and yon in the pursuit of global profits in place of the true interests of the people.

I am, admittedly, expressing this more clearly and starkly than Professor Slobodian chooses to concisely articulate it. But, I strongly suggest, this is the essence of the interpretive framework that guides his narrative, in such larger works as his 2018 book, Globalists: The End of Empire and the Birth of Neoliberalism. (See my article, “Quinn Slobodian and the Academic Attack on Mises and Hayek”.)

The informed reader will notice a family resemblance with the older Marxist-Leninist theory of capitalist imperialism. No doubt, my suggesting this may open me up to accusations in some quarters of being an old fashioned “red-baiting.” But something may still be true, even if it seems, to some ears, to be name calling. I am not suggesting that Professor Slobodian is a “Marxist” or that he is an apologist for what was done in many countries in the 20th century in the name of Marxism. But, nonetheless, the analytical assumptions behind his narrative, the template that guides his story, presumes a worldview concerning the nature of capitalism and the interests of worker-citizens very similar to that older theory.

In this mindset, those who view themselves as proponents of liberty, prosperity, and a free society are transformed into rationalizers and justifiers of the nefarious needs of those who want nothing but more profit-based ill-gotten gains for themselves. Nary a good word or presumed benefit of the doubt, therefore, for those free market liberals of the interwar years. They are all, tacitly, “enemies of the people.” Opponents of “democracy.” Implied lackeys and dupes of the interests of “capital.”

Liberalism and the Interwar Threat of Totalitarianism

The great challenge of the post-World War I era was the shocking and clearly dangerous rise of anti-liberal totalitarianism in their Marxist and fascist forms. As noted British historian G. P. Gooch expressed it in August 1934 (Current History, pp. 513-520):

“Only men and women who, like myself were adult citizens at the turn of the [20th] century can realize the enormous contrast between the years preceding and following the World War. I grew to manhood in an age of sensational progress and limitless self-confidence. Civilization was spreading across the earth with giant strides; science was tossing us miracle after miracle; wealth was accumulating at a pace undreamed of in earlier generations; the amenities of life were being brought within the range of an ever-greater number of our fellow-creatures . . .

“No one spoke of a possible return to the Dark Ages or wondered whether we could keep civilization afloat . . . The Europe that emerged from the four years of carnage contrasted sensationally from that which we had known . . . Half of Europe is ruled by dictators who scoff at democracy and trample human rights under their feet. Meanwhile the Communists look on with grim satisfaction awaiting their hour.”

For the classical and more moderate liberals, such as Gooch, the postwar period in which they were living seemed to be threatening the most fundamental ideals and institutions of a free society: the loss of freedom of speech and the press, replaced with government-monopolized propaganda; the reign of secret polices and arbitrary arrests, rather than an impartial rule of law with protected civil liberties; self-appointed dictators in power with their ideological thugs, rather than representative democracies with safeguards against political abuse and corruption; the abolition or straightjacketing of all freedom of enterprise through forms of government centralized planning and command, rather than any spirit and practice of competitive markets with businessmen pursuing profit through satisfactions of consumer demands.

These were the circumstances and the context in which classical liberals and market-oriented economists such as Ludwig von Mises were attempting to analyze why the world had made this twisted turn during and after the First World War, and how might liberal ideas and ideals be reborn and institutionally secured against the collectivist and totalitarian ideologies reflected in the regimes run by dictators like Stalin, Hitler and Mussolini.

Classical Liberalism’s Foundations: Rights, Peace and Prosperity

From the beginning the classical liberal ideal was not about protecting or apologizing or justifying “capital.” Its intellectual origins are in an appreciation for – indeed, a near deep reverence for – the sanctity and dignity of the individual human being, said to be endowed as a reasoning being with certain inherent rights which no government should be considered above or with the discretion to violate or deny. While as the 19th century liberal era developed there may have been changing explanations and justifications and rationales for the liberty of the individual, all classical liberals believed that society began with the individual, and that he should not be arbitrarily sacrificed for the State, whether that was a ruling monarch or a democratic majority, without the social order losing its ethical basis for existence.

Nor was the defense of private property an excuse for a few to oppress the many. The institution of property was considered the foundation stone of civilization and human betterment. Said the British classical economist James R. McCulloch in his Principles of Political Economy (5th ed., 1864):

“Let us not, therefore, deceive ourselves by supposing that it is possible for any people to emerge from barbarism, or to become wealthy, prosperous, and civilized without the security of property. Security is indispensable to the successful exertion of the powers of industry. Where it is wanting, it is idle to expect either riches or civilization . . . (p. 33)

“The right to property has not made poverty, but it has powerfully contributed to make wealth . . . The protection afforded to property by all civilized societies, though it has not made all men rich, has done more to increase their wealth than all of their other institutions put together.” (p. 35)

Ludwig von Mises came out of this tradition, though as a rule-based utilitarian liberal. For Mises the momentous human discovery was the greater productivity that emerges from a social system of division of labor. This runs through his many books, especially, Socialism (1922), Liberalism (1927), Human Action: A Treatise on Economics (1949), and Theory and History (1957). Ricardo’s theory of comparative advantage, Mises reasoned, could be generalized as the general law of human association (Human Action, 3rd ed. 1966, pp. 157-165).

The economically most and least productive, the weak and strong, can and are able to find a place at the table of human cooperation through a niche in the division of labor. Society becomes a system of mutual betterment and gain from interdependent production and exchange. Peaceful production replaces the notion of plunder and privilege for the acquisition of wealth and improvement.

The logic of such a system of division of labor for bettering the human condition is not merely within a town or village, or between those in a particular province or region, or those residing together inside the same nation-state. Its logical limit is the community of all human beings around the entire world. For each addition to the total number of participants brings improvements in the conditions both of those already partnering in the existing system of division of labor and those who join the market arena of specialization and trade.

Mises’s Critique of Socialism Leads to the Idea of Global Cooperation

One of Ludwig von Mises’s singular contributions to economics was his critique of the “impossibilities” of socialist central planning due to the abolition of private ownership of the means of production, and the resulting end to markets in the factors of production – land, labor and capital. With the end to competitive market exchange, there was no market-based pricing process for reflecting consumer preferences for final goods and services, and entrepreneurial appraisements of the value of those factors of production in their changing alternative productive uses. Socialist planners would have done away with the institutional tools for rational economic calculation, and, hence, with the ability for efficient use of the scarce means of production in the service of better satisfying consumer demands through profit-oriented decision-making. (See my eBook, “Austrian Economics and Public Policy” [2016], chapter 17)

But this critique of socialism also implied its positive side, that being that through the competitive pricing processes of the marketplace it was possible to integrate and coordinate the diverse and dispersed economic activities of multitudes of millions, now, billions of people all around the globe. This resulted in the great idea that humanity may be thought of as one family of human beings, each valuing and pursuing their own ends, goals, and purposes, yet bound together to benefit and gain in their pursuits from the potentials and possibilities of all of the rest of humanity through the peaceful means of competitive exchange.

Or as Mises expressed it: “The pricing process is a social process. It is consummated by an interaction of all members of society. All collaborate and cooperate, each in the particular role he has chosen for himself in the framework of the division of labor. Competing in cooperation and cooperating in competition all people are instrumental in bringing about the result,” that being the prices of the market, the allocation of the means of production in alternative uses for consumer betterment, and the relative income shares from each’s contribution producing the various outputs of the economy. (Human Action, p. 338)

The Cosmopolitan Ideal and Anti-Colonialism

Mises emphasized the universalist quality of this potentially global market system and the classical liberal ideal of bringing together all of mankind, regardless of who or where:

“The goal of the domestic policy of liberalism is the same as that of its foreign policy: peace. It aims at peaceful cooperation just as much between nations as within each nation . . . The ultimate ideal envisioned by liberalism is the perfect cooperation of all mankind, taking place peacefully and without friction. Liberal thinking always has the whole of humanity in view and not just parts. It does not stop at limited groups; it does not end at the border of the village, or the province, of the nation, or of the continent. Its thinking is cosmopolitan and ecumenical: it takes in all men and the whole world. Liberalism is, in this sense, humanism; and the liberal, a citizen of the world, a cosmopolite.” (Liberalism [Liberty Fund ed.], pp. 76)

What denigration or disrespect is to be found here of other people, or any particular nation, or any specific race or culture?  At one point in his article Professor Slobodian attempts to make much that Mises seemed to defend the imposition of European empires on other parts of the world to include them in the global network of production and exchange (p.6). But Mises makes very clear that the path that European powers followed in building and maintaining their empires was one of inexcusable death and destruction:

“The whole Idea of colonial policy was to take advantage of the military superiority of the white race over the members of other races. The Europeans set out, equipped with all the weapons and contrivances that their civilization placed at their disposal, to subjugate weaker peoples, to rob them of their property, and to enslave them . . . If, as we believe, European civilization really is superior to that of the primitive tribes of Africa or to the civilizations of Asia – estimable though the latter may be in their own way – it should be able to prove its superiority by inspiring these peoples to adopt it of its own accord. Could there be a more doleful proof of the sterility of European civilization than that it can be spread by no other means than fire and sword?

No chapter of history is steeped further in blood than the history of colonialism. Blood was shed uselessly and senselessly. Flourishing lands were laid to waste; whole peoples destroyed and exterminated. All this can in no way be extenuated or justified. The dominion of Europeans in Africa and in important parts of Asia is absolute. It stands in the sharpest contrast to all the principles of liberalism and democracy, and there can be no doubt that we must strive for its abolition. The only question is how the elimination of this intolerable condition can be accomplished in the least harmful way possible.” (Liberalism, p. 93-94)

Whether or not, in our new era of cultural relativism, it is properly politic to consider one’s own civilization better than others in any way, there can be no doubt of Mises’s vehement criticism of the means and methods by which some other parts of the world were drawn into the sphere of European society and economic association. It is unequivocally condemnatory in its harsh description of “the white race” imposing its will on “other races” through force of arms.

The issue now, that is, in those middle decades of the 20th century, was how to extricate the European powers from their colonial empires? And to do so in ways that would minimize the economic disruption of a far more integrated and interdependent world, given the existence of those empires and the international division of labor of which they were apart, and to prevent the violence and destruction that might follow the European withdrawal from these areas in the face of ethnic, racial and religious tensions and hatreds among these groups in those lands. Mises’s answer was to transform many of these colonial areas into League of Nations trusteeships as the steppingstone to an orderly and relatively stable transition to the political independence of these areas. (Liberalism, pp. 96-97)

Freedom to Move and a Global Free Society

Professor Slobodian also talks of Mises’s views on freedom of migration as an implied requirement for what he refers to as Mises’s “categorical imperative”: that “the consumer receive access to the greatest possible volume and variety of objects. To facilitate this goal in their role of consumers, people should be encouraged as laborers to navigate the world’s surface for the optimal site to expend their creative energies.” (p. 6)

Mises was one of the early formulators of the idea of an “optimal population” from the perspective of general economic productive efficiency in his book, Nation, State, and Economy (1919). His idea was that it may be said that a region or area of the world is “over-populated” (all other things given, of course), if a marginal decrease in its population would bring about net increase in its total output, or it would generate a larger net increase in global output if these marginal workers were transferred from the work they were doing in their home area to another part of the world (pp. 57-59).

People search out opportunities to improve their personal and family circumstances. This has often shown itself in migrations to different parts of the world, where the migrant considers that his economic (or other) situation will be better than remaining in the “old country.” In the 19th century, it has been estimated that 60 million or more people emigrated from Europe to other parts of the world, including the United States, which received approximately 35 million of these searchers for a better life. (See my article, “The Freedom to Move: Personal Liberty or Government Control, Part I”.)

Mises, over and over again, returned to this theme, wearing his economist policy hat, arguing that modern migration barriers in parts of the world like the United States and Australia restricted the opportunity of many in more highly populated areas of the globe, such as in parts of Europe and Japan in Asia, from having the opportunities that could be theirs for economically better lives from immigrating to those places where the value of their marginal product would be higher than in their home countries. More generally, Mises stated:

“The liberal demands that every person has the right to live wherever he wants. This is not a ‘negative’ demand. It belongs to the very essence of a society based on private ownership of the means of production that every man may work and dispose of his earnings where he thinks best. This principle takes on a negative character only if it encounters forces aiming at a restriction of freedom of movement.

“In this negative aspect, the right of movement has, in the course of time, undergone a complete change. When liberalism arose in the 18th and 19th centuries, it has to struggle for freedom of emigration. Today, the struggle is over freedom of immigration . . . The trend began some decades ago with laws against the immigration of Chinese coolies. Today in every country in the world that could appear inviting to immigration, there are more or less stringent laws either prohibiting it entirely or at least restricting it severely.” (Liberalism, pp. 103-104)

The barriers to freedom of movement had its basis in two concerns by those already living in the attracting countries. First, that waves of new immigrants will lower wages and standards of living; based on this reasoning trade unions then demanded from their governments policies of labor protectionism against foreign workers. Mises was able to show why and how, from the wider economic perspective, the general longer-run tendency from the arrival of newcomers into the workforce are gains in society-wide standards of living.

But he also argued that there was a second reason that in places like the United States or Australia there were concerns about large migrations of new residents and future citizens. This had to do with cultural and ethnic fears of being flooded by peoples significantly different than those long settled in the host country, a flood that would turn the original majority into a minority in their own land looking to a longer-term future.

Mises pointed out that, “This issue is of the most momentous significance for the future of the world.” The heart of the problem, in Mises’s view, was that, “The present inhabitants of these favored lands fear that someday they could be reduced to a minority in their own country and they could then have to suffer all the horror of national persecution,” like a number of linguistic and ethnic minority groups were, then, experiencing in some Central and Eastern European countries at the hands of majorities belonging to different linguistic or ethnic groups. (p. 107).

Mises on Nationalism, Self-Determination and Freedom of Choice

Again, Professor Slobodian concludes from this this that Mises was antagonistic to rights of national self-determination and therefore called for an international enforcement of freedom to move “to allow for the endless ebb and flow of nations” in the form of changing population demographics due to migration, and the minimizing of the administrative autonomy of nation-states to domestically in any way hinder “a never-ending movement of people and [to] resist the demands of individual groups from special economic treatment.” (p. 9)

What Mises expressed concern and even despair about was the postwar growth in political and economic nationalism that had exacerbated the type of ethnic and linguistic group tensions and conflicts that had already been brewing in the era before the First World War, especially in Central and Eastern Europe. New postwar governments in these parts of the world used their regulatory and interventionist policy powers to discriminate against, mistreat, and reduce the qualities and standards of living of such ethnic and linguistic minorities living in their political jurisdictions for the economic and social benefit of larger majorities in these nation-states.  

Many of these governments were increasingly authoritarian and dictatorial as the 1920s and 1930s progressed. But part of their support was from the ethnic and linguistic majorities in those countries who viewed the minorities in their midst as threats and dangers to their own economic, social and cultural well being. And in this sense, the dictatorial policies of discrimination and abuse reflected the “democratic” desires of the larger population.

Mises’s proposed solution to, if not eliminate, at least minimize the impact of such linguistic and ethnic tensions was to reject the 19th and early 20th century notion of “national” self-determination, that called for all peoples of the same language, ethnicity, or cultural heritage be enveloped within their own nation-state. In places like Central and Eastern Europe, the demographics often were such that no matter how the borders might be drawn to incorporate a majority of such national groups in one political entity, there would remain in that created territory various ethnic and linguistic minority groups who were then likely to be subject to majoritarian nationalist discrimination and harm.

Thus, instead, Mises proposed “individual self-determination.” That is, in every village, town, region and district, the population should be allowed to vote through a plebiscite as to which political entity they wished to belong. The residents might opt for remaining in the jurisdiction of the political authority to which they currently belonged; or they could choose to be annexed and incorporated into some other nation-state, whether that other country was contiguous to it or not; or the voting residents could choose to form their own separate nation-state.

Fewer people, by such a self-determining process, would find themselves under a government not of their own choosing by having been outvoted in a larger electoral area, or through political force imposing another particular “nation’s” right of rule over a territory that included them. But even so, there still might be linguistic and ethnic minorities still remaining under another majoritarian group. (Liberalism, pp. 78-80; see, also, my article “Ludwig von Mises on Liberalism, Nationalism, and Self-Determination”.)

The Depoliticizing of the Free Marketplace

The other key to Mises’s proposal was the depoliticizing of social and economic life. Private individuals may choose to discriminate and shun another on prejudicial grounds. But in the arena of private property and competitive free market enterprise, there are costs for the discriminator from such conduct. If a private enterpriser chooses not to do business with customers of a particular ethnic or linguistic background he loses potential consumer revenues that could have been his. If he refuses to hire as employees those of such groups, he forfeits the opportunity to employ possibly  more cost-efficient and experienced workers who could have helped to better minimize his expenditures of doing business.

Either way he must bear the cost of foregone revenues and profits that could have been his. He may still choose to discriminate, but he must incur the price for following his prejudices. In an open competitive market, he has no way to prevent a market rival for seeing those profit opportunities and ignoring any prejudices he may have, and by doing so reap the gains by winning that shunned consumer business and hiring workers who make him more competitive by lowering his costs of production. This puts pressure on the discriminator to decide what is of greater importance: his bigotry that clouds his business judgment, or the profits that could be his but which his rival is taking away from him due to the competitor not having such prejudices or setting them aside to maximize his potential net revenues.

In his book, Omnipotent Government: The Rise of the Total State and Total War (1944), Mises explained that anti-Semitism had existed in Germany long before the Nazis came to power. Some people’s words and attitudes made it clear that they did not like the Jews among them in Germany. But before the full imposition of the anti-Jewish laws, for instance, during the Weimar Republic days in Germany before 1933, many anti-Semitic Germans still hired Jewish doctors and lawyers, and shopped in stores owned by Jews. Talk is cheap when it finally comes to selecting a lawyer or doctor to handle a court case or a medical problem. And for all the stereotype remakes some Germans might have made about Jews in business, they chose to shop where the market opportunities were most attractive as consumers and enterprisers. (pp. 183-184)

Government Intervention as the Key to Effective Discrimination

What makes discrimination systematically and persistently possible, Mises argued, were interventionist policies by governments, whether such policies are directed against Jews or any other ethnic, religious, or linguistic group in a country. “Interventionism,” he said, “means compulsory discrimination, which furthers the interests of a minority of citizens at the expense of the majority. Nevertheless, discrimination can be applied in a democratic community as well. Various minority groups form an alliance and thereby a majority group in order to obtain privileges for each.” Looking at such interventionist policies in Germany, Mises concluded that, “The policy of protecting the less efficient domestic producer from the more efficient foreign producer, the artisan against the manufacturer, and the small shop against the department store and the chain stores would be incomplete if it did not protect the ‘Aryan’ from the Jew . . . Whoever wanted to get rid of his Jewish competitors could not rely on a alleged hatred of Jews; he was under the necessity of asking for legal discrimination against them.” (pp. 182 & 184)

Thus, matching Mises’s case for a system of individual self-determination, as he called it, through plebiscite, was the argument for a thorough and consistent policy of free market, economic liberalism. The depoliticizing of the marketplace, Mises reasoned, removed the power and ability for the use and misuse of government power and intervention bestowing benefits and privileges on some at the expense of others. Removing government from the marketplace could reduce if not eliminate the means for compulsory discrimination and prejudice from harming any minority groups finding themselves in a country in which a majority or a coalition of interest groups making up a majority on election day could use the State as a coercive weapon against ethnic, linguistic or other such minorities living around them.

Mises’s Idea of a Central Government Limiting Political Discrimination

It is true, as Professor Slobodian suggests, Mises became noticeably despondent about individual nation-states following such social and economic enlightened policies for minimizing the impact of prejudice and discrimination within their jurisdictions. As a result, during the Second World War, now exiled and residing in the United States after leaving war-torn Europe in the summer of 1940, Mises offered his own ideas for postwar reconstruction and reform that would be necessary after the defeat of Nazi Germany.

One of them was for a “Eastern Democratic Union” that would incorporate all of Eastern Europe from the Baltic to the Aegean Seas and from the border of Germany to the frontier of Soviet Russia. It was meant, firstly, as a proposed political entity large and strong enough to resist any possible future aggressions from either Germany or the Soviet Union. But it was also meant as a vast free trade zone encompassing this part of Europe, which would at the same time be designed to secure and protect the personal and civil liberties of all people living in any of the member nation-states in such an Eastern Democratic Union.

Professor Slobodian clearly views this as an entity meant to encroach upon the sovereignty of the member nation-states, and serve as political vehicle for unrestrained market forces, a freedom for “capital” to invest and exploit unhindered by democratic majorities wishing to restrain the profit-seekers. (p. 11) He sees in this, as well, in Mises’s nostalgia for the old Hapsburg Empire, in which a dozen ethnic, linguistic and religious groups existed side-by-side, but in which the political national aspirations and wishes of the individual national groups were suppressed under a centralized government in Vienna, the capital of prewar Austria-Hungary.

And, no doubt, Mises conceived of what before the First World War was sometimes referred to as the “Austrian idea” – the ideal of a super-state over and transcending the particulars and disagreements among its member groups through an equality of civil liberties, rule of law, and wide market-based freedom – as an avenue to overcome the undercurrents of ethnic, linguistic and religious angers and animosities that if given free rein would threaten social disintegration and destruction.  

But whatever may be the merits or shortcomings or political unrealism of Mises’s specific proposal for such a post-World War II multinational state in Eastern Europe, the motive and intention behind it was not an anti-democratic agenda to serve “capital” or any other particular interest to restrain the electoral will of “the people.” To challenge it on this basis would require the critic to argue, equally, that constitutional restrictions such as those in the American Bill of Rights are indications of anti-democratic sentiments against the will of the people.

An essential element in liberal political thinking for more than three centuries is that even majorities must be restrained from overstepping certain agreed upon limits marking off an area around the individual which even the largest of majorities may not violate. True to his classical liberal roots and his economic analysis of the impact of government interventions within the marketplace, Mises included in this various restraints on democratic majorities hampering the economic freedom of individuals, also.

Slobodian’s False Accusations of Racism in Mises’s Ideas

Finally, in his conclusion, Professor Slobodian reaches what he considers to be the coup de grace in his critique of Ludwig von Mises’s “racist” ideas. He asserts that Mises “posited racial difference as the unavoidable grounds for departure from the principles of free migration in the 1940s . . . Mises proved incapable of extending a similar cosmopolitan attitude to populations of color. Even as he argued emphatically that ‘there are today no pure stocks within the class or race of white-skinned people,’ he did so by pointing out the difference with black populations. ‘Negroes and whites differ in racial – i.e., bodily – features,’ he wrote, ‘but it is impossible to tell a Jewish-German from a non-Jewish one by any racial characteristic.’ Mises’s rejection of anti-Semitism was premised on an affirmation of a white-black race difference.” (pp. 12-13)

Nowhere is Professor Slobodian’s interpretation of Mises’s views more incorrect and distorted. Throughout the interwar period, Mises continued to argue for the reasonableness and economic desirability of freedom of movement. For instance, for a Vienna newspaper in December 1935, he wrote an article on, “The Freedom to Move as an International Problem,” in which he concluded, “Without the reestablishment of freedom of migration throughout the world, there can be no lasting peace.” (reprinted in Richard M. Ebeling and Jacob G. Hornberger, ed. The Case for Free Trade and Open Immigration [1995], pp. 127-130)

Again, in 1938, Mises published an essay on, “The Disintegration of the International Division of Labor,” in which he emphasized the global hardships and tensions caused by barriers to immigration resulting in “a conflict when the citizens of some countries of Europe and Asia are prevented from moving to the countries where they may earn more than in their own country. The high standards of living in the United States and in the British Dominions have their corollary in the low standard of living in Eastern, Central and.Southern Europe, India, China, and Japan. The people of the United States and the British Dominions defend their higher standard by closing their doors to newcomers.” And Mises went on to say that migration barriers were “the most serious problem of contemporary international relations.” (Reprinted in Richard M. Ebeling, ed. Money, Method, and the Market Process: Essays by Ludwig von Mises [1990], pp. 132-135.

Mises sent a reprint of this essay to the Princeton University economist Frank A. Fetter. On March 16, 1938, Fetter wrote back to Mises (who was then a professor at the Geneva Graduate Institute of International Studies), in which he criticized Mises’s defense of free immigration into countries such as the United States, especially Mises’s “implied proposal to admit the Chinese and East Indians as well as all other people with lower standards of living into this country,” saying it “would mean the complete breakdown of our social as well political and economic conditions.” (Among Frank A. Fetter’s papers in the manuscript department of Lilly Library, Indiana University, in Bloomington, Indiana.)

Mises’s Continuing Anti-Racist Defense of Freedom of Movement

After coming to the United States in 1940, Mises continued to explain to American audiences how immigration barriers were condemning many in less productive and lower wage countries to poorer standards of living than if many of them could move to the United States. He admitted that immigration restrictions were often tied to reasons other than purely economic ones, but however polite he might have chosen to be as a recent arrival and “guest” in the U.S. during those war years, he never hesitated to remind Americans that their country’s immigration barriers came at the economic expense of those in many other parts of the world who would be better off if they had the opportunity to join the American labor force. (See, Richard M. Ebeling, ed., Selected Writings of Ludwig von Mises, Vol. 3 [2000], pp. 6-7; 54-55; 46-47)

But more directly in reference to the passage that Professor Slobodian quotes from in Mises’s Omnipotent Government, one can only say that either he read this part of Mises’s book too hastily to correctly understand the nature of the argument, or he chose to imply a meaning in the words of the author that are not there.

Mises was explaining the factual inconsistencies and logical contradictions that the Nazis had to pursue to define who was a “Jew” for purposes of legal discrimination and social and economic “separation” of all members of the Jewish community from the wider Germany society. If being a Jew was based on practice of the Jewish faith, then what was to be done with those Jews whose families at some point had converted to Christianity, or were not religious at all? Or if the definition of a Jew was “racial,” what physical and biological characteristics could definitively and unequivocally identify someone as “Jewish”? Said Mises:

“Finally, people have tried, especially in Germany, to discover the physical characteristics of an alleged Jewish or Semitic race as distinguished from the characteristics of European non-Jews. These quests, too, have failed completely. It has proved impossible to differentiate the Jewish-Germans anthropologically from the non-Jewish ones. In the field of anthropology there is neither a Jewish race nor Jewish racial characteristics.” (pp. 170-171)

The Nazis ended up looking for parentage and lineage. The Nazis required people to fill out a family tree form tracing their ancestors back at least four generations to demonstrate that they were not “tainted” on either the mother’s or father’s side of their family with Jewish “blood.”

Mises then made a factual statement that contains no normative implication or proposal. And that is:

“If Americans want to discriminate against Negroes, they do not go to the archives in order to study the racial affiliation of the people concerned; they search the individual’s body for traces of Negro descent. Negroes and whites differ in racial – i.e., bodily – features; but it is impossible to tell a Jewish-German from a non-Jewish one by any racial characteristic.” (p. 171)

There is no way to deduce or surmise from these passages that Mises was advocating or endorsing racial discrimination or segregation, or restrictions on immigrants from Africa or anywhere else. He was merely making the factual observation that those who chose to follow a racist policy had it easier in the United States than in Germany due to the fact that the biological characteristics of those whose ancestors originated from Europe are usually visually different from those whose forebears came from Africa.

And there is nothing to my knowledge in any of Mises’s writings either before or after his arrival in the United States to suggest that he supported racial discrimination in any form. Indeed, in an article on “Full Employment and Monetary Policy” published in National Review (June 22, 1957), Mises pointed out the race-based exclusionism of some trade unions to restrict the supply of labor in some corners of the market to benefit their white union members:

“In the age of liberalism (in the traditional classical connotation of the term) there were practically no migration barriers. In this age of welfarism and unionism well-nigh all governments have either completely prohibited immigration or—as for instance the United States and other American republics – stipulated definite quotas. Beyond that, some American unions have tried to reduce still more the number of jobseekers in their segments of the labor market by excluding colored people and by rendering entrance into certain branches extremely difficult.” (Reprinted in Bettina Bien Graves, ed., Economic Freedom and Interventionism: An Anthology of Articles and Essays by Ludwig von Mises [1990], pp. 76-77)

Conclusion: The “Racist” Card as Intellectual Dishonesty

We live in a strange and disturbing time when emotionally charged words and phrases are used as ideological weapons against intellectual and public policy opponents, rather than offering reasoned and logical arguments substantiated by facts and evidence to support a position held or defended.

“Racist” is one such word. American history before and after the Civil War of the 1860s has justifiably filled that word with deeply negative connotations. But precisely because of its power of conjuring up images of slavery, human cruelty based on the irrationality of judging and classifying someone based on the color of their skin, and the insensitivity of failing to look at everyone as a distinct individual deserving of respect for their rights as a human being, it can almost automatically place someone outside the arena of respectable public discourse.

Too often the “racist” card is a cheap trick to try to win points against an opponent rather than substantially reply to ideas different than one’s own. At its worst, it is a rhetorical device to restrict and monopolize the public square of political and economic debate by condemning some through a label that makes anything they say in immediate disrepute.

The technique was widely used in totalitarian regimes where the tag “enemy of the people” was enough to send one to the labor camp or the concentration camp. What kind of enemy? A “class enemy” or a “race enemy.”

Equally scurrilous is the misrepresentation of the facts about the words or deeds of someone to banish an intellectual opponent from “polite” scholarly society. Unfortunately, Professor Slobodian falls into this last category in his unscholarly critique and accusations about the writings and ideas of Ludwig von Mises.

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Richard M. Ebeling

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Richard M. Ebeling, an AIER Senior Fellow, is the BB&T Distinguished Professor of Ethics and Free Enterprise Leadership at The Citadel, in Charleston, South Carolina. Ebeling lived on AIER’s campus from 2008 to 2009.
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