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Epistemological Problems of Economics
Ludwig von Mises

The Psychological Basis of the Opposition to Economic Theory

3. The Role of Resentment

In his De officiis Cicero prescribed a code of social respectability and propriety that faithfully reflects the conceptions of gentility and merit that have prevailed in western civilization through the centuries. Cicero presented nothing new in this work, nor did he intend to. He availed himself of older, Greek standards. And the views that he expounded corresponded completely to those that had been generally accepted for centuries both in the Greek and Hellenistic world and in republican Rome. The Roman republic gave way to the empire; Rome's gods, to the Christian God. The Roman empire collapsed, and out of the storms created by the migration of entire populations a new Europe arose. Papacy and empire plunged from their heights, and other powers took their place. But the position of Cicero's standard of merit remained unshaken. Voltaire called the De officiis the most useful handbook of ethics,[10] and Frederick the Great considered it the best work in the field of moral philosophy that had ever been or ever would be written.[11]

Through all the changes in the prevailing system of social stratification, moral philosophers continued to hold fast to the fundamental idea of Cicero's doctrine that making money is degrading. It expressed the convictions of the great aristocratic landowners, princely courtiers, officers of the army, and government officials. It was also the view of the literati, whether they lived as paupers at the court of a great lord or were permitted to work in security as the beneficiaries of ecclesiastical prebends. The secularization of the universities and the transformation of the precarious posts of the court literati into publicly supported sinecures served only to aggravate the distrust that the intellectual who was paid a salary for his work as a teacher, scholar, or author felt toward the independent scholar, who had to support himself on the generally meager proceeds from his writings or by some other activity. Set apart by their position in the hierarchy of church, public office, and military service, they looked down with contempt upon the businessman, who serves Mammon. In this respect they took the view common to all who by virtue of an income derived from taxes are relieved of the necessity of earning a living on the market. This contempt turned to gnawing rancor when, with the spread of capitalism, entrepreneurs began to rise to great wealth and thus to high popular esteem. It would be a grievous error to assume that the hostility felt toward entrepreneurs and capitalists, toward wealth and quite especially toward newly acquired wealth, toward money-making and in particular toward business and speculation, which today dominates our entire public life, politics, and literature stems from the sentiments of the masses. It springs directly from the views held in the circles of the educated classes who were in public service and enjoyed a fixed salary and a politically recognized status. This resentment is, accordingly, all the stronger in a nation the more docilely it allows itself to be led by the authorities and their functionaries. It is stronger in Prussia and Austria than in England and France; it is less strong in the United States and weakest in the British dominions.

The very fact that many of these people in government service are related to businessmen by blood or marriage or are closely connected with them by school ties and social acquaintance exacerbates still further these sentiments of envy and rancor. The feeling that they are in many ways beneath the contemptible businessman brings about inferiority complexes that only intensify the resentment of those removed from the market. Standards of ethical merit are fashioned not by the active man of affairs, but by the writer who lives procul negotiis. A system of ethics whose authors are to be found in the circles of priests, bureaucrats, professors, and officers of the army expresses only disgust and contempt for entrepreneurs, capitalists, and speculators.

And now these educated classes, filled with envy and hatred, are presented with a theory that explains the phenomena of the market in a manner deliberately neutral with regard to all value judgments. Price rises, increases in the rate of interest, and wage reductions, which were formerly attributed to the greed and heartlessness of the rich, are now traced back by this theory to quite natural reactions of the market to changes in supply and demand. Moreover, it shows that the division of labor in the social order based on private property would be utterly impossible without these adjustments by the market. What was condemned as a moral injustice?indeed, as a punishable offense?is here looked upon as, so to speak, a natural occurrence. Capitalists, entrepreneurs, and speculators no longer appear as parasites and exploiters, but as members of the system of social organization whose function is absolutely indispensable. The application of pseudomoral standards to market phenomena loses every semblance of justification. The concepts of usury, profiteering, and exploitation are stripped of their ethical import and thus become absolutely meaningless. And, finally, the science of economics proves with cold, irrefutable Ionic that the ideals of those who condemn making a living on the market are quite vain, that the socialist organization of society is unrealizable, that the interventionist social order is nonsensical and contrary to the ends at which it aims, and that therefore the market economy is the only feasible system of social cooperation. It is not surprising that in the circles whose ethics culminate in the condemnation of all market activity these teachings encounter vehement opposition.

Economics refuted the belief that prosperity is to be expected from the abolition of private property and the market economy. It proved that the omnipotence of the authorities, from whom wonders had been hoped for, is a delusion and that the man who undertakes to organize social cooperation, the ****, as well as the homo faber, who directs organic and inorganic nature in the process of production, cannot go beyond certain limits. This too had to appear to the servitors of the apparatus of violence, both those in the imperium and those in the magisterium, as a lowering of their personal prestige. They considered themselves as demigods who make history, or at least as the assistants of these demigods. Now they were to be nothing but the executors of an unalterable necessity. Just as the deterministic theories, entirely apart from the condemnation they received from the ecclesiastical authorities on dogmatic grounds, encountered the inner opposition of those who believed themselves to be possessed of free will, so these theories too met with resistance on the part of rulers and their retinue, who felt free in the exercise of their political power.

No one can escape the influence of a prevailing ideology. Even the entrepreneurs and capitalists have fallen under the sway of ethical ideas that condemn their activities. It is with a bad conscience that they try to ward off the economic demands derived from the ethical principles of the public functionary. The suspicion with which they regard all theories that view the phenomena of the market without ethical judgment is no less than that felt by all other groups. The sense of inferiority that arouses their conscience to the feeling that their acts are immoral is all too often more than compensated by exaggerated forms of antichrematistic ethics. The interest that millionaires and the sons and daughters of millionaires have taken in the formation and leadership of socialist workers' parties is an obvious case in point. But even outside of the socialist parties we encounter the same phenomenon. In the last analysis is it not the result of the efforts and activities of two entrepreneurs, Ernst Abbe and Walter Rathenau, that the intellectual leaders of the German people condemn the social order based on private ownership of the means of production?


[10] Zielinski, Cicero im Wandel der Jahrhunderts (4th ed.; Leipzig, 1929), p. 246.

[11] Ibid., p. 248.

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