Liberty Fund Books

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This book must rank as the most devastating analysis of socialism yet penned. . . . An economic classic in our time.

—Henry Hazlitt

More than thirty years ago F. A. Hayek said of Socialism: "It was a work on political economy in the tradition of the great moral philosophers, a Montesquieu or Adam Smith, containing both acute knowledge and profound wisdom. . . . To none of us young men who read the book when it appeared was the world ever the same again."

This is a newly annotated edition of the classic first published in German in 1922. It is the definitive refutation of nearly every type of socialism ever devised. Mises presents a wide-ranging analysis of society, comparing the results of socialist planning with those of free-market capitalism in all areas of life.

Friedrich Hayek's foreword comments on the continuing relevance of this great work: "Most readers today will find that Socialism has more immediate application to contemporary events than it had when it first appeared."

Table of Contents

PUBLISHER'S PREFACE xv
FOREWORD BY F.A. HAYEK xix
PREFACE TO THE SECOND ENGLISH EDITION (1952) 1
TRANSLATOR'S NOTE (1936) 3
PREFACE TO THE SECOND GERMAN EDITION (1932) 5
INTRODUCTION 15
1 The success of socialist ideas 15
2 The scientific analysis of Socialism 17
3 Alternative modes of approach to the analysis of Socialism 21

PART I
LIBERALISM AND SOCIALISM

CHAPTER 1--OWNERSHIP
1 The nature of ownership 27
2 Violence and contract 32
3 The theory of violence and the theory of contract 36
4 Collective ownership of the means of production 39
5 Theories of the evolution of property 41

CHAPTER 2--SOCIALISM
1 The state and economic activity 45
2 The "fundamental rights" of socialist theory 47
3 Collectivism and Socialism 51

CHAPTER 3--THE SOCIAL ORDER AND THE POLITICAL CONSTITUTION
1 The policy of violence and the policy of contract 58
2 The social function of democracy 60
3 The ideal of equality 65
4 Democracy and social-democracy 67
5 The political constitution of socialist communities 72

CHAPTER 4--THE SOCIAL ORDER AND THE FAMILY
1 Socialism and the sexual problem 74
2 Man and woman in the age of violence 76
3 Marriage under the influence of the idea of contract 80
4 The problems of married life 83
5 Free love 87
6 Prostitution 91

PART II
THE ECONOMICS OF A SOCIALIST COMMUNITY

1. The Economics of an Isolated Socialist Community

CHAPTER 5--THE NATURE OF ECONOMIC ACTIVITY
1 A contribution to the critique of the concept "economic activity" 95
2 Rational action 96
3 Economic calculation 97
4 The capitalist 105
5 The narrower concept of the "economic" 107

CHAPTER 6--THE ORGANIZATION OF PRODUCTION UNDER SOCIALISM
1 The socialization of the means of production 110
2 Economic calculation in the socialist community 112
3 Recent socialist doctrines and the problems of economic calculation 116
4 The artificial market as the solution of the problem of economic calculation 119
5 Profitability and productivity 123
6 Gross and net product 126

CHAPTER 7--THE DISTRIBUTION OF INCOME
1 The nature of distribution under Liberalism and Socialism 131
2 The social dividend 132
3 The principles of distribution 134
4 The process of distribution 137
5 The costs of distribution 140

CHAPTER 8--THE SOCIALIST COMMUNITY UNDER STATIONARY CONDITIONS
1 Stationary conditions 142
2 The disutilities and satisfactions of labour 142
3 The "joy of labour" 149
4 The stimulus to labour 151
5 The productivity of labour 159

CHAPTER 9--THE POSITION OF THE INDIVIDUAL UNDER SOCIALISM
1 Selection of personnel and choice of occupation 163
2 Art and literature, science and journalism 165
3 Personal liberty 169

CHAPTER 10--SOCIALISM UNDER DYNAMIC CONDITIONS
1 The nature of the dynamic forces 173
2 Changes in population 174
3 Changes in demand 176
4 Changes in the amount of capital 177
5 The element of change in the socialist economy 180
6 Speculation 181
7 Joint stock companies and the socialist economy 184

CHAPTER 11--THE IMPRACTICABILITY OF SOCIALISM
1 The fundamental problems of a socialist economy under conditions of change 186
2 Attempted solutions 187
3 Capitalism the only solution 192

II. The Foreign Relations of a Socialist Community

CHAPTER 12--NATIONAL SOCIALISM AND WORLD SOCIALISM
1 The spatial extent of the socialist community 197
2 Marxian treatment of this problem 198
3 Liberalism and the problem of the frontiers 199

CHAPTER 13--THE PROBLEM OF MIGRATION UNDER SOCIALISM
1 Migration and differences in national conditions 201
2 The tendency towards decentralization under Socialism 203

CHAPTER 14--FOREIGN TRADE UNDER SOCIALISM
1 Autarky and Socialism 205
2 Foreign trade under Socialism 206
3 Foreign investment 206

III. Particular Forms of Socialism and Pseudo-Socialism

CHAPTER 15--PARTICULAR FORMS OF SOCIALISM
1 The nature of Socialism 211
2 State Socialism 212
3 Military Socialism 220
4 Christian Socialism 223
5 The planned economy 226
6 Guild Socialism 229

CHAPTER 16--PSEUDO-SOCIALIST SYSTEMS
1 Solidarism 233
2 Various proposals for expropriation 236
3 Profit-sharing 237
4 Syndicalism 239
5 Partial Socialism 244

PART III
THE ALLEGED INEVITABILITY OF SOCIALISM

I. Social Evolution

CHAPTER 17--SOCIALISTIC CHILIASM
1 The origin of Chiliasm 249
2 Chiliasm and social theory 254

CHAPTER 18--SOCIETY
1 The nature of society 256
2 The division of labour as the principle of social development 259
3 Organism and organization 261
4 The individual and society 263
5 The development of the division of labour 265
6 Changes in the individual in society 270
7 Social regression 272
8 Private property and social evolution 276

CHAPTER 19--CONFLICT AS A FACTOR IN SOCIAL EVOLUTION
1 The cause of social evolution 279
2 Darwinism 280
3 Conflict and competition 284
4 National war 286
5 Racial war 288

CHAPTER 20--THE CLASH OF CLASS INTERESTS AND THE CLASS WAR
1 The concept of class and of class conflict 292
2 Estates and classes 296
3 Class war 299
4 The forms of class war 305
5 Class war as a factor in social evolution 307
6 The theory of the class war and the interpretation of history 310
7 Summary 311

CHAPTER 21--THE MATERIALIST CONCEPTION OF HISTORY
1 Thought and being 314
2 Science and Socialism 317
3 The psychological presuppositions of Socialism 319

II. The Concentration of Capital and the Formation of Monopolies as Preliminary Steps to Socialism

CHAPTER 22--THE PROBLEM
1 The Marxian theory of concentration 323
2 The theory of anti?monopolistic policy 326

CHAPTER 23--THE CONCENTRATION OF ESTABLISHMENTS
1 The concentration of establishments as the complement of the division of labour 327
2 The optimal size of establishments in primary production and in transport 328
3 The optimal size of establishments in manufacturing 330

CHAPTER 24--THE CONCENTRATION OF ENTERPRISES
1 The horizontal concentration of enterprises 331
2 The vertical concentration of enterprises 332

CHAPTER 25--THE CONCENTRATION OF FORTUNES
1 The problem 334
2 The foundation of fortunes outside the market economy 335
3 The formation of fortunes within the market economy 336
4 The theory of increasing poverty 342

CHAPTER 26--MONOPOLY AND ITS EFFECTS
1 The nature of monopoly and its significance for the formation of prices 344
2 The economic effects of isolated monopolies 347
3 The limits of monopoly formation 348
4 The significance of monopoly in primary production 350

PART IV
SOCIALISM AS A MORAL IMPERATIVE

CHAPTER 27--SOCIALISM AND ETHICS
1 The socialist attitude to ethics 355
2 Eudaemonistic ethics and Socialism 356
3 A contribution to the understanding of eudaemonism 360

CHAPTER 28--SOCIALISM AS AN EMANATION OF ASCETICISM
1 The ascetic point of view 364
2 Asceticism and Socialism 367

CHAPTER 29--CHRISTIANITY AND SOCIALISM
1 Religion and social ethics 369
2 The Gospels as a source of Christian ethics 371
3 Primitive Christianity and society 373
4 The canon law prohibition of interest 376
5 Christianity and property 378
6 Christian Socialism 382

CHAPTER 30--ETHICAL SOCIALISM, ESPECIALLY THAT OF THE NEW CRITICISM
1 The categorical imperative as a foundation for Socialism 388
2 The duty of work as a foundation for Socialism 392
3 The equality of incomes as an ethical postulate 393
4 The ethical?aesthetic condemnation of the profit-motive 394
5 The cultural achievements of Capitalism 396

CHAPTER 31--ECONOMIC DEMOCRACY
1 The slogan "economic democracy" 399
2 The consumer as the deciding factor in production 402
3 Socialism as expression of the will of the majority 405

CHAPTER 32--CAPITALIST ETHICS
1 Capitalistic ethics and the impracticability of Socialism 407
2 The alleged defects of capitalist ethics 408

PART V
DESTRUCTIONISM

CHAPTER 33--THE MOTIVE POWERS OF DESTRUCTIONISM
1 The nature of destructionism 413
2 Demagogy 415
3 The destructionism of the literati 419

CHAPTER 34--THE METHODS OF DESTRUCTIONISM
1 The means of destructionism 424
2 Labour legislation 425
3 Compulsory social insurance 429
4 Trade unions 432
5 Unemployment insurance 438
6 Socialization 441
7 Taxation 444
8 Inflation 448
9 Marxism and destructionism 450

CHAPTER 35--OVERCOMING DESTRUCTIONISM
1 The "interest" as an obstacle to destructionism 453
2 Violence and authority 457
3 The battle of ideas 459

CONCLUSION

THE HISTORICAL SIGNIFICANCE OF MODERN SOCIALISM
1 Socialism in history 465
2 The crisis of civilization 466

APPENDIX
A CONTRIBUTION TO THE CRITIQUE OF ATTEMPTS TO CONSTRUCT A SYSTEM OF ECONOMIC CALCULATION FOR THE SOCIALIST COMMUNITY 471

EPILOGUE

INTRODUCTORY REMARKS 481
1 The Failure of Interventionism 483
2 The Dictatorial, Anti-Democratic and Socialist Character
of Interventionism 488
3 Socialism and Communism 497
4 Russia's Aggressiveness 506
5 Trotsky's Heresy 513
6 The Liberation of the Demons 518
7 Fascism 524
8 Nazism 528
9 The Teachings of Soviet Experience 532
10 The Alleged Inevitability of Socialism 539
INDEX TO WORKS CITED 541
INDEX TO SUBJECTS AND NAMES 555
BIOGRAPHICAL NOTE 569