Control

A commentator at reddit leaned on my post that carried an excerpt from Rauschning’s book in support of his (I presume) anti-socialism position. The reply he got-

The article you present fails to mention that the book is considered plagiarized and fabricated. According to Wikipedia, “Historians generally regard this book as discredited.” It’s plausible that the author would want to discredit Socialism with his book due to his Conservative views.

But let me humor you for a moment and assume that the book is completely genuine. I fail to see an endorsement of the idea that people ought to democratically operate the means of production, which is what Socialism is. I doubt Adolph Hitler subscribed to that idea…

I have no intention of arguing over trifles. I only wish to say that to maintain that only an economy wherein the state nationalizes the “means of production” can be said to be a socialist one is to intentionally ignore the big picture. In the end, it all boils down to control-

If “ownership” means the right to determine the use and disposal of material goods, then Nazism endowed the state with every real prerogative of ownership. What the individual retained was merely a formal deed, a contentless deed, which conferred no rights on its holder. Under communism, there is collective ownership of property de jure. Under Nazism, there is the same collective ownership de facto.

This is what Peikoff writes in his book. And, if one believes Rauschning, Hitler says something very similar-

“Why bother with such half-measures when I have far more important matters in hand, such as the people themselves?” he exclaimed. “The masses always cling to extremes. After all, what is meant by nationalization, by socialization? What has been changed by the fact that a factory is now owned by the State instead of by a Mr. Smith? But once directors and employees alike have been subjected to a universal discipline, there will be a new order for which all expressions used hitherto will be quite inadequate.”

…They themselves are changed. What are ownership and income to that? Why need we trouble to socialize banks and factories? We socialize human beings.”

Even if all this is fabricated, I doubt if anyone would argue that Nazi Germany was a country where businessmen were free to take any business decision they wanted without worrying about what the State would do to them.

Control is key.

To wrap this post up, here’s a Rand quote from the comments to the “control” post-

I have stated repeatedly that the trend in this country is toward a fascist system with communist slogans. But what all of today’s pressure groups are busy evading is the fact that neither business nor labor nor anyone else, except the ruling clique, gains anything under fascism or communism or any form of statism—that all become victims of an impartial, egalitarian destruction.

Statolatry and chaos

I was reading Ludwig von Mises’ “Planned Chaos” (also available from FEE) when I moved to his “Memoirs” some days back. This book is 90 odd pages of rhetoric, an unmasking of the “peaceful” nature of the Welfare State, a critique of interventionism and the “command economy” – a “planned” economy, and discusses the motives of the followers of communism and socialism, including the dictators of USSR, and Hitler. Basically its an analysis of the totalitarian political and economic philosophy. If such material were added as additional reading at the high school or junior college level, I have no doubt the State, which sings paeans to the “mixed economy,” would have an apoplectic fit. I could quote 10 different passages from the book and still not be able to quote everything I want. But then one has to draw the line somewhere.

—

From “Introductory Remarks”-

The dogma that the State or the Government is the embodiment of all that is good and beneficial and that the individuals are wretched underlings, exclusively intent upon inflicting harm upon one another and badly in need of a guardian, is almost unchallenged. It is taboo to question it in the slightest way. He who proclaims the godliness of the State and the infallibility of its priests, the bureaucrats, is considered as an impartial student of the social sciences. All those raising objections are branded as biased and narrow-minded. The supporters of the new religion of statolatry are no less fanatical and intolerant than were the Mohammedan conquerors of Africa and Spain.

History will call our age the age of the dictators and tyrants. We have witnessed in the last years the fall of two of these inflated supermen. But the spirit which raised these knaves to autocratic power survives. It permeates textbooks and periodicals, it speaks through the mouths of teachers and politicians, it manifests itself in party programmes and in plays and novels. As long as this spirit prevails there cannot be any hope of durable peace, of democracy, of the preservation of freedom or of a steady improvement in the nation’s economic well-being.

From “The Failure of Interventionism”-

No economist ever dared to assert that interventionism could result in anything else than in disaster and chaos. The advocates of interventionism–foremost among them the Prussian Historical School and the American Institutionalists—were not economists. On the contrary. In order to promote their plans they flatly denied that there is any such thing as economic law. In their opinion governments are free to achieve all they aim at without being restrained by an inexorable regularity in the sequence of economic phenomena Like the German socialist Ferdinand Lassalle, they maintain that the State is God.

The interventionists do not approach the study of economic matters with scientific disinterestedness. Most of them are driven by an envious resentment against those whose incomes are larger than their own. This bias makes it impossible for them to see things as they really are. For them the main thing is not to improve the conditions of the masses, but to harm the entrepreneurs and capitalists even if this policy victimizes the immense majority of the people.

In the eyes of the interventionists the mere existence of profits is objectionable. They speak of profit without dealing with its corollary, loss. They do not comprehend that profit and loss are the instruments by means of which the consumers keep a tight rein on all entrepreneurial activities. It is profit and loss that make the consumers supreme in the direction of business.It is absurd to contrast production for profit and production for use. On the unhampered market a man can earn profits only by supplying the consumers in the best and cheapest way with the goods they want to use. Profit and loss withdraw the material factors of production from the hands of the inefficient and place them in the hands of the more efficient. It is their social function to make a man the more influential in the conduct of business the better he succeeds in producing commodities for which people scramble. The consumers suffer when the laws of the country prevent the most efficient entrepreneurs from expanding the sphere of their activities. What made some enterprises develop into “big business” was precisely their success in filling best the demand of the masses.

Anti-capitalistic policies sabotage the operation of the capitalist system of the market economy. The failure of interventionism does not demonstrate the necessity of adopting socialism. It merely exposes the futility of interventionism. All those evils which the self-styled “progressives” interpret as evidence of the failure of capitalism are the outcome of their allegedly beneficial interference with the market. Only the ignorant, wrongly identifying interventionism and capitalism, believe that the remedy for these evils is socialism.

Mises says that it is important to differentiate between interventionism and socialism. Interventionism is when the state controls only certain sectors of the economy. Here the costs of inefficiency are still extracted from the end consumer in some way or the other. “The market and its inescapable law are supreme,” he says. Socialism, on the other hand comes in two varieties, the communist one, and the nazi one. The first is where all means of production are owned by the state. The second is where the ownership lies with the people, but the orders, on production and pricing, still emanate from the top.

All interventionism is bound to fail because as long as entrepreneurs have “some” choice, they will make that choice. Thus capitalism cannot be “protected” or “improved” by State intervention – its either capitalism or socialism. And therefore the following, from the second chapter, is one of the most important conclusions of the book-

The conflict between capitalism and socialism is not a contest between two groups of claimants concerning the size of the portions to be allotted to each of them out of a definite supply of goods. It is a dispute concerning what system of social organization best serves human welfare. Those fighting socialism do not reject socialism because they envy the workers the benefits they (the workers) could allegedly derive from the socialist mode of production. They fight socialism precisely because they are convinced that it would harm the masses in reducing them to the status of poor serfs entirely at the mercy of irresponsible dictators.

In this conflict of opinions everybody must make up his mind and take a definite stand. Everybody must side either with the advocates of economic freedom or with those of totalitarian socialism. One cannot evade this dilemma by adopting an allegedly middle-of-the-road position, namely interventionism. For interventionism is neither a middle way nor a compromise between capitalism and socialism. It is a third system. It is a system the absurdity and futility of which is agreed upon not only by all economists but even by the Marxians.

There is no such thing as an “excessive” advocacy of economic freedom. On the one hand, production can be directed by the efforts of each individual to adjust his conduct so as to fill the most urgent wants of the consumers in the most appropriate way. This is the market economy. On the other hand, production can be directed by authoritarian decree. If these decrees concern only some isolated items of the economic structure, they fail to attain the ends sought, and their own advocates do not like their outcome. If they come up to all-round regimentation, they mean totalitarian socialism.

Men must choose between the market economy and socialism. The state can preserve the market economy in protecting life, health and private property against violent or fraudulent aggression; or it can itself control the conduct of all production activities. Some agency must determine what should be produced. If it is not the consumers by means of demand and supply on the market, it must be the government by compulsion.

The rest of the book is interesting if one wants to know what is the difference between communism and socialism, and fascism and nazism, and about the murderous stupidity of Marx and his followers. Lenin and Stalin were no torch bearers of Marxism. They were your run-of-the-mill tin-pot dictators of your run-of-the-mill banana republic. That Indian communist parties, and those across the world licked their feet, only shows that their claim to intellectual superiority, or at least such a pretense, was nothing but a delusion of grandeur, an example of communist kookiness.

I will end with what Mises wrote about the Stalin-Trotsky rivalry, the race for, to paraphrase Marx, the dictatorship of the kooks-

As an exegetic of Marxian dogmas Stalin was certainly inferior to Trotsky. But he surpassed his rival by far as a politician. Bolshevism owes its successes in world policies to Stalin, not to Trotsky.

In the field of domestic policies, Trotsky resorted to the well-tried traditional tricks which Marxians had always applied in criticizing socialist measures adopted by other parties. Whatever Stalin did was not true socialism and communism, but, on the contrary, the very opposite of it, a monstrous perversion of the lofty principles of Marx and Lenin. All the disastrous features of public control of production and distribution as they appeared in Russia were, in Trotsky’s interpretation, brought about by Stalin’s policies. They were not unavoidable consequences of communist methods. They were attendant phenomena of Stalinism, not of communism. It was exclusively Stalin’s fault that an absolutist irresponsible bureaucracy was supreme, that a class of privileged oligarchs enjoyed luxuries while the masses lived on the verge of starvation, that a terrorist regime executed the old guard of revolutionaries and condemned millions to slave labour in concentration camps, that the secret police was omnipotent, that the labour unions were powerless, that the masses were deprived of all rights and liberties. Stalin was not a champion of the egalitarian classless society. He was the pioneer of a return to the worst methods of class rule and exploitation. A new ruling class of about 10 per cent of the population ruthlessly oppressed and exploited the immense majority of toiling proletarians.

Trotsky was at a loss to explain how all this could be achieved by only one man and his few sycophants. Where were the “material productive forces,” much talked about in Marxian historical materialism, which—”independent of the wills of individuals”—determine the course of human events “with the inexorability of a law of nature”? How could it happen that one man was in a position to alter the “juridical and political superstructure” which is uniquely and inalterably fixed by the economic structure of society? Even Trotsky agreed that there was no longer any private ownership of the means of production in Russia. In Stalin’s empire, production and distribution are entirely controlled by “society.” It is a fundamental dogma of Marxism that the superstructure of such a system must necessarily be the bliss of the earthly paradise. There is in Marxian doctrines no room for an interpretation blaming individuals for a degenerative process which could convert the blessing of public control of business into evil. A consistent Marxian—if consistency were compatible with Marxism—would have to admit that Stalin’s political system was the necessary superstructure of communism.

All essential items in Trotsky’s programme were in perfect agreement with the policies of Stalin. Trotsky advocated the industrialization of Russia. It was this that Stalin’s Five-Year Plans aimed at. Trotsky advocated the collectivization of agriculture. Stalin established the Kolkhoz and liquidated the Kulaks. Trotsky favoured the organization of a big army. Stalin organized such an army. Neither was Trotsky when still in power a friend of democracy. He was, on the contrary, a fanatical supporter of dictatorial oppression of all “saboteurs.” It is true, he did not anticipate that the dictator could consider him, Trotsky, author of Marxian tracts and veteran of the glorious extermination of the Romanovs, as the most wicked saboteur. Like all other advocates of dictatorship, he assumed that he himself or one of his intimate friends would be the dictator.

Trotsky was a critic of bureaucratism. But he did not suggest any other method for the conduct of affairs in a socialist system. There is no other alternative to profit-seeking private business than bureaucratic management.

The truth is that Trotsky found only one fault with Stalin: that he, Stalin, was the dictator and not himself, Trotsky. In their feud they both were right. Stalin was right in maintaining that his regime was the embodiment of socialist principles. Trotsky was right in asserting that Stalin’s regime had made Russia a hell.

Synthesis

Thanks to Chandra’s comment on Sauvik’s blog, I found this interview of the late V. Prabhakaran conducted by N. Ram of The Hindu 25 years ago. The interesting part (the whole interview is a must read)-

I would like to ask you a few questions on your ideological outlook and politics. Various things have been said and written about you and the LTTE, and obviously everyone goes through some kind of political evolution. I would like to get an insight into how you see yourself, your political evolution and ideology, over time. To start with, how would you characterise the ideology of the LTTE?

Socialism and Tamil Eelam form our political ideology, our cause.

When journalists or external observers try to interpret the Tamil militant phenomenon, they characterise some of the organisations as “nationalist” in orientation or perspective and some others as “socialist” or Left. For example, they would say the LTTE (and earlier TELO) came to the struggle from a “nationalist” angle whereas EROS and EPRLF brought a somewhat different outlook with an emphasis on socialism or left-oriented politics. Would you like to comment on this differentiation?

To me the activities of all the (militant) organisations look the same. What is the difference in the practice of those who are supposed to be committed to “nationalism” and those who profess the other thing (laughter)? You know that brands of socialism vary according to who professes and interprets it. Everyone claims to be a socialist. You can judge the product only when those who profess socialism put it into practice. We advocate a socialism that fully reflects our people’s interests and aspirations, a socialism that harnesses the creative abilities of the masses. Some time ago, I made a reference to the ‘Yugoslav pattern’ (in a positive light). We consider it socialist experimentation — where democracy has to be enhanced in the political process. Through workers’ self-management, democratic participation is allowed in a socialist set-up.

Yugoslav pattern

Our objective is to allow, to a great extent, people’s democracy in a socialist system. We do not consider the ‘Yugoslav pattern’ to be our model. We will work out our own pattern in the future. Let’s look, for a moment, at another thing Yugoslavia has sought to do. It tried to create a ‘third force’ during Nehru’s time, in cooperation with him; that was the origin of the nonaligned movement. They have an active role in (progressive) struggles; at the same time, they take an independent stand without aligning themselves with anyone. Aspects such as these appeal to us; we consider these aspects seriously and think along these lines. We are thinking of a pattern of socialism that is suited to our people, our culture, our historical heritage. We have a special social structure and, in fact, in our land there are no big capitalists. There is, however, a numerous middle class.

One idea that has been put forward (in an interview you gave recently and perhaps in other statements as well) is that your organisation believes in a one-party state after the achievement of liberation. That has raised apprehensions…

It depends on what the people want and go for. They can choose freely the party they want. Take, for example, India. Has not the Congress party dominated political life here over a long period? Does not it rule even today? You mention the doubts and suspicions our position has given rise to. My impression is that they are created mainly by those who want to become leaders without fighting! What we said has made a special impact on the minds of those who have stood aloof from the struggle, but nurse high leadership ambitions.

Look at the entire range of socialist countries. What prevails there? Is it not one party which, having worked for the revolution and having been approved by the people, wields power? Look at Cuba, the Soviet Union, every socialist country… By the way, I consider this in the nature of a necessary examination. Journalists can be regarded as the examiners of politicians. You represent the public and mediate between us and the people. What we are able to convey to you with effort and precision, as in an examination, reaches the people. But, in truth, you are the danger for us (laughter)!

It’s very interesting to note that everyone – from mahatmas, to US presidents, to dictators, to terrorists, to mass murderers – is attracted to socialism. Even more interesting is Prabhakaran’s comment on “nationalism” vs. “socialism.” More so because of what Peikoff refers to as the “nazi synthesis”-

The German right characteristically denounced socialism, while supporting the welfare state, demanding government supervision of the economy, and preaching the duty of property-owners to serve their country. The German left characteristically denounced nationalism, while extolling the feats of imperial Germany, cursing the Allied victors of the war, and urging the rebirth of a powerful Fatherland. (Even the Communists soon began to substitute “nation” for “proletariat” in their manifestos.)

The nationalists, at heart, were socialists. The socialists, at heart, were nationalists.

The Nazis took over the essence of each side in the German debate and proudly offered the synthesis as one unified viewpoint. The synthesis is: national socialism.

Nationalism, said Hitler—echoing German thinkers from Fichte to Spengler—means the power of the nation over the individual in every realm, including economics; i.e., it means socialism. Socialism, he said, means rule by the whole, by the greatest of all wholes, Germany.

Kelley writes about Rand’s view on the communism-fascism false dichotomy-

During World War II, Rand understood that the battle between German Nazis and Russian communists was a family feud; they were both collectivists. The real battle was between individualism and collectivism in any form, left or right. That’s common knowledge now, but Rand knew it from the beginning; she knew it because she saw past the political level to the underlying ethic of sacrifice and epistemology of unreason.

There is a lesson to be learnt – on choosing the “lesser” of two evils – from the exploits of Prabhakaran – protector turned predator turned corpse.

The individual and the collective

Abheek Barman writes-

Over the years, Mumbai managed to redevelop its mill areas into bustling centres of trade, manufacturing and commerce. Bengal’s Left prefers to wait for decades before hawking off bits and pieces of the rust belt to property speculators and then go looking for farmland to set up industries, losing both worker and farmer along the way.

In 1930, the Soviet Union invited a unusually perceptive observer over for a guided tour. Instead of being impressed by what he saw, the visitor wrote: “It’s not clear to me whether they’ve understood the differences between individual and collective needs. In that respect they’re similar to fascists. They smother individual needs for the good of the collective. They forget that you can’t strengthen the collective by weakening the individual.” The visitor was Rabindranath Tagore. Bengal’s Left should listen.

Parallels

I finally finished reading Peikoff’s book (“The Ominous Parallels”) yesterday, two-odd months after I started it. I will (hopefully) write about it in some future post, but the following extract shows the parallels between the Germany of the 1930s and the USA of today. This is not to say that the US will adopt National Socialism to the extent Germany did, but the signs are there and the fact that the US is philosophically bankrupt means that the idea is within the realm of possibility with no “politically relevant” block available to question it. Well, more on that later. The following paragraphs are from the chapter “The Killers Take Over”, p. 215-218-

The Great Depression merely forced the issue, which had been implicit all along in the Germans’ philosophy. Economic catastrophe in Germany was an effect, the last link in a long chain of ideas and events—and a catalyst, which gave Hitler a real opportunity for the final cashing in. The catalyst worked because the nation was already ripe for Hitler’s kind of cashing in.

If a man long addicted to a toxic drug suffers sudden convulsions and then dies from them, one might validly say that the convulsions were the cause of the death, so long as one remembers the cause of the cause. The same is true of a country addicted to a toxic ideology.

* * *

For several years after the inflationary debacle, the Republic had seemed to return to normal, enjoying its so-called “period of prosperity.” It was a shaky, foredoomed prosperity built on credit and quicksands.

In essence, Germany’s recovery was the result of a massive inflow of foreign—primarily American—capital, in the form of huge loans along with large purchases of German securities. America was experiencing the artificial boom of the twenties, a pyramid of highly speculative investments and wild spending made possible by a variety of governmental actions—most notably, the action of the Federal Reserve Board in generating a cheap-money policy in the banks. The influx of this capital into Germany, which also lacked the free-market restraints on inordinate speculation and spending, helped to fuel a similar artificial boom.

In particular, the various levels of government in Germany, which had learned nothing and forgotten everything from the inflationary crisis, were once again pouring out money and piling up debts; they were endowing lavish public works, starting a program of unemployment benefits, enlarging the bureaucracy, raising its salaries, and the like. This time, however, the governments were not counting on the printing press to finance their activities, but on the Americans. “I must ask you always to remember,” said Gustav Stresemann to his countrymen, “that during the past years we have been living on borrowed money. If a crisis were to arise and the Americans were to call in their short-term loans we should be faced with bankruptcy.” He said it to deaf ears, in 1928.

When the New York stock-market crash signaled the collapse of the American boom, the collapse of Germany followed immediately, as a matter of course. For the second time in less than a decade a protracted agony struck the country, this time involving plummeting investments, the crash of famous financial houses, cascading bankruptcies, soaring unemployment, tobogganing farm prices, and widespread destitution.

The mania of the inflation years had been succeeded by a wave of giddy, unreal prosperity. Now the unreal stood revealed as unreal. Giddiness gave way to panic and to black despair.

The unphilosophical majority among men are the ones most helplessly dependent on their era’s dominant ideas. In times of crisis, these men need the guidance of some kind of theory; but, being unfamiliar with the field of ideas, they do not know that alternatives to the popular theories are possible. They know only what they have always been taught.

When Hans Fallada in his popular novel of the time asked Little Man, What Now? the little men in Germany (and the other kinds, too) knew the answer, which seemed to them self-evident. They turned to the group—to their economic class or trade association—as their only security; each group blamed the others for the crisis; each party demanded action, the kind of action it understood, government action, i.e., more controls.

Man is rotten, the omnipresent chorus of “Weimar culture” was crying, the individual is helpless, freedom has failed.

The Social Democrats, however, playing out to the end their founding contradiction, were unable to act. One union leader at a party convention indicated the reason eloquently. He asked whether the party at this juncture should strive to preserve the “capitalist” Weimar system, or to topple it. Should socialists stand “at the sick-bed of capitalism” as “the doctor who seeks to cure,” he wondered, or as “joyous heirs, who can hardly wait for the end and would even like to help it along with poison?” His answer was that the party is “condemned” to play both roles at once, which in fact is what it did, by switching back and forth at random between them.

In the early months of 1930, with the nation desperate for leadership, the party stumbled into its “proletarian” stance: it decided to bring down a coalition government headed by a Social Democratic Chancellor, Hermann Mueller, because of a proposed measure that might have had the effect of reducing unemployment benefits in the future. The Weimar politicians had long been engaged in Kühhandel, as the Germans called it, “cattletrading,” and had treated the country to a procession of musical-chair coalitions, sudden governmental collapses, and continual new elections. The spectacle had evoked widespread contempt for popular government even before the depression. After the Mueller cabinet fell on March 27, however—the “black day” of the Republic—no new coalition could be formed; the economic warfare among the parties was too virulent. The Germans’ contempt for the Reichstag became disgust. There was only one solution that seemed feasible.

On March 28, 1930, the Reichstag’s normal legislative prerogatives were suspended by President Hindenberg. A semi-dictatorial system of government, a system of rule by emergency executive decree, was established under Chancellor Heinrich Brüning, a conservative Centrist. Popular government was abandoned for the duration of the emergency. The dichotomy between political and economic freedom was breaking down by itself, without any help from the Nazis.

In regard to methods, the Brüning government was dictatorial. In regard to policies, however, it was democratic. The program Brüning (and his two short-lived, authoritarian successors in 1932) enacted was an exact reflection of the popular will. These men “did something,” in the German sense of the term.

The government issued a torrent of new decrees. It raised the tariffs, the taxes, the unemployment-insurance premiums; it expanded public works, imposed rigid restrictions on foreign exchange, and introduced a twenty-month “voluntary labor service” for young people; etc. Most important of all, the Reich in this period effectively erased the last significant remnants of private economic power, by turning the banks, the cartels, and the labor unions into mere administrative organs of the state. The Republic, writes Gustav Stolper (a member of the Reichstag at the time), “came close to being a thoroughly developed state socialism. . . . Government was omnipresent, and the individual had been used to turning to it in every need.”

The government’s policies did not work. Among other things, hyperprotectionism (in Germany and abroad) was strangling the country’s vital foreign trade; the cascade of sudden new taxes and emergency decrees was creating a climate of acute business uncertainty, which made impossible any significant recovery of German investment and production; the unions’ adamant opposition to further wage cuts was exacerbating the unemployment.

The Germans attempted to assess the situation and determine the cause of government’s failure. “At last,” writes Stolper,

it became common knowledge that all this state interference . . . was of no avail in the most disastrous economic crisis that had befallen Germany in the course of her history. Paradoxically, the system of state interference as such, being far too deeply rooted in the German political and economic tradition, was not blamed by the opposition. On the contrary, the general mood of the public backed the demands that this imperfect and incomplete system of state intervention be superseded by one more perfect and complete. This was the content of the so-called anti-capitalistic yearning which, according to a National Socialist slogan of the time, was said to pervade the German nation.

Naomi Wolf (not Klein) thought that fascism would creep into America from the right, and given Bush’s track record, few would deny the fear. But what must not be forgotten is this – it can just as easily come in from the left; the right does not hold a patent on fascism.