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Roderick Long has a pretty concise post up about ambiguity in the various definitions of “capitalism” and “socialism”. While B.K. Marcus didn’t directly mention that as a reason for his post of a relevant Mises quote, it seems to be good timing (perhaps in part because his name came up in the comments on Roderick’s post).

Marcus simply introduces the Mises quote as follows:

Ludwig von Mises on maintaining the word “capitalism”:

And then proceeds with the quote:

“It would be correct to describe this state of affairs in this way: Today many or some groups of business are no longer liberal; they do not advocate a pure market economy and free enterprise, but, on the contrary, are asking for various measures of government interference with business. But it is entirely misleading to say that the meaning of the concept of capitalism has changed and that “mature capitalism” — as the Americans call it — or “late capitalism” — as the Marxians call it — is characterized by restrictive policies to protect the vested interests of wage earners, farmers, shopkeepers, artisans, and sometimes also of capitalists and entrepreneurs. The concept of capitalism is as an economic concept immutable, if it means anything, it means market economy. One deprives oneself of the semantic tools to deal adequately with the problems of contemporary history and economic policies if one acquiesces in a different terminology. This faulty nomenclature becomes understandable only if we realize that the pseudo-economists and the politicians who apply it want to prevent people from knowing what the market economy really is. They want to make people believe that all the repulsive manifestations of restrictive government policies are produced by ‘capitalism.’” (Human Action, chapter 15)

My reading of the passage is that the golden axis upon which it all turns is the following sentence:

“This faulty nomenclature becomes understandable only if we realize that the pseudo-economists and the politicians who apply it want to prevent people from knowing what the market economy really is.”

That seems to be simply a verbose way of asserting, without substantiation, that — well, here…

Re-read the sentence and then note that we can simplify it (in a sort of pseudo-algebraic way) as follows:

X becomes understandable ONLY if we realize that Y want to prevent people from knowing Z.

Where:

• X = definitional deviationism about words like “capitalism” and “socialism”
• Y = proponents of X
• Z = “what the market economy really is”

Or:

• X = heterodoxy
• Y = proponents of X
• Z = truth

Simplifying even further:

X makes sense ONLY in the context of Y as obfuscators of Z.

There are problems with that statement. I would say that it seems to assume itself. Mises is simply assuming Z is equal to anti-X ( i.e. correct definitions, as Mises sees them, or “!X”). In other words, people who disagree with Mises definition of “capitalism” as “the market economy” are wrong BECAUSE they disagree with Mises definition of “capitalism” as “the market economy”.

Ultimately, Mises is asserting that only apologists for state power, or at the very least those with some sort of conceptual hostility toward the market, would disagree with him about certain definitions. That would seem to be easily disproved by noting the mere existence of people who disagree(d) with Mises preferred definitions but who are not apologists for state power, have no conceptual hostility toward the market and who are not politicians.*

Perhaps Mises attempted to back that assertion up somewhere — but it wasn’t done in the passage quoted. The closest we get is the following sentence which merely elaborates rather than substantiates. When we look rather closely at what he’s actually saying, though, the results are kind of embarassing for those of us who otherwise value Mises work.

“They want to make people believe that all the repulsive manifestations of restrictive government policies are produced by ‘capitalism.’”

Let’s apply our understanding of semantics to simplify.

THEY [Our old friends "Y" above (1. apologists for state power, 1a. or at least those with some conceptual hostility toward the market; also understood as 2. people who disagree with Mises about definitions)]…

…want to make people believe…

…that the detrimental effects of government policies (i.e. market intervention)…

…are produced by “capitalism”.

Here, Mises approaches incoherency.

Apologists for state power would have little interest in attributing the effects of market intervention by the government to “capitalism” defined as market intervention by the government.

Rather, apologists for statism would tend to falsely attribute the effects of market intervention by the government to the market itself. I would even venture to say they have been largely successful at that, unfortunately.

To summarize, if 1) “apologists for state power” are precisely coextant with 2) people who disagree with Mises about definitions, as Mises apparently asserted, then the quoted Mises sentence is nonsense.

Nonsense on stilts.

Nonsense on pogo-stilts.

* Note: Although Mises also mentions “pseudo-economists“, this would seem to be an example of what S.I. Hayakawa would dismiss as a “snarl word” (words with a built-in judgment). Mises is dismissing those who disagree with him about definitions as “pseudo-economists” precisely because they disagree with him about definitions.

This entry was posted on Sunday, June 29th, 2008 at 1:38 am and is filed under Politics. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.