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Source link: http://archive.mises.org/17184/the-hate-litmus/

The Hate Litmus

June 2, 2011 by

The angrier-than-thou “moral scrupulosity” among some libertarians that Jeffrey Tucker talks about in his excellent recent post seems to be part of something a bit broader. As a commenter on Jonathan Catalan’s blog post seconding Jeffrey’s sentiments said, there can be a tendency for libertarians to be “willful grumps”.

Another case in point is when I once dared refer to our civilization as a capitalist civilization. When a commenter objected, I reminded him that, as Mises wrote, there are only two conceivable systems for the social division of labor: capitalism and socialism. And while socialism is conceivable, it is inherently impossible. Therefore, insofar as we have a social division of labor (and we’d most of us be dead if we did not) we still have a capitalist civilization.

“Socialism” with surrounding markets is not truly socialism. And severely hampered capitalism is still capitalism. Those aspects that hamper capitalism are not part of the system of the social division of labor. See this Mises Daily I wrote on the topic.

Insofar as there is any production coordination whatsoever in the economy, it is because of the capitalism that we still have. And the capitalism we still have is the only thing that merits being called a production “system”. Insofar as you are daily clothed and fed by a production process that rings the globe, stretches across years, and passes through the hands of millions of complete strangers, it is because of capitalism.

This was not enough for a second commenter who insisted that Americans live under socialism, nay, communism!

Implicit in that position is that communism was able to produce the iPad, Pixar movies, Amazon.com, and gamma knife surgery; and that communism maintains a hugely complex division of labor and capital structure that provides food, clothing, shelter, and innumerable comforts to millions of people on a daily basis.

This is the kind of conclusion you get when you let angry rhetoric determine your scientific distinctions.

Jeffrey insightfully wrote,

Murray Rothbard used the phrase “do you hate the state?” to ferret out real from mild libertarians. As a correlative question, we might ask “do you love commerce?” to ferret out real defenders of real markets as versus those who just enjoy standing in moral judgement over the whole world as it really exists.

But I actually think it would be better as a replacement question, rather than a correlative one.  I don’t think a movement driven by hate and all-around negativity will accomplish very much.  Far better is the approach exemplified by Jeffrey’s invigorating articles on the beauty and bounty of commerce.  Of course Jeffrey also writes eloquently about the inherent destructiveness of the state.  But it doesn’t prevent him for rejoicing over the (however hampered) extent to which capitalism still exists and still provides us with whatever degree of health, security, and comfort we each can enjoy.


Anonymous June 2, 2011 at 11:29 pm

I believe one must both “Hate the State” and ‘Love Commerce” to be a true libertarian. Those who do not “Hate the State” sell out. Those who do not “Love Commerce” spend their time denouncing businesses on the most absurd of grounds. As Rothbard wrote repeatedly, our movement faces dangers from both the opportunists (the Catoites who advocate “privatizing” social security and pretend that we are somehow “more free” today than anybody has ever been; that being said, I’m all for going along with the “Kochtopus” when they advocate anything that actually moves us in the right direction) and the sectarians (the condemn all business crowd, the “voting is unlibertarian” crowd, the “attack voluntary choices you don’t agree with while pretending to be libertarian” crowd). Both groups are equally bad and equally self-defeating. They need to be challenged, lest they lead libertarians away from the true path and down the wrong path.

Stephan Kinsella June 3, 2011 at 12:16 am

Agreed. Great post by Danny too.

DD5 June 3, 2011 at 12:38 am

Danny, the objection to “we are living in a capitalist society” is not so unwarranted. What does capitalism generally refer to in common speech? A free market society or just a market society? If it is the former, the objection is appropriate.

Of course you and I are perfectly aware that we are living in a interventionist capitalist society (Interventionism) or better; “a hampered market society”. Obviously such interventionism only makes sense in the context of a market society or capitalist society. However, the term in common speech is mostly used to refer to free markets and private enterprise, period! As if the government operates outside the system like some ghosts or something not interfering with market actors. It is therefore, not so incorrect to object to your statement, for we are obviously not living is such a capitalistic society.

nate-m June 3, 2011 at 12:58 am

I think that the article makes a lot of sense. I am certainly guilty of the saying stuff like that.

As is indicated capitalism thrives and works wonders for our society despite the interventionism. That despite the socialist tendencies and ‘corporatism’ we still have capitalism to thank for how well our society still is able to work. It is probably most accurate to say that we live in a capitalist society despite the best efforts of socialists. Atlas hasn’t shrugged yet.

This is a important distinction because if we go around declaring that we live in a socialist society and actually convince people of this then people will pause, look around, and say to themselves: “Hey, Socialism is working out pretty well so far! What exactly is the problem?”. The tendency after that will be to simply assume that examples you point out of the failure of state government is just normal human mistakes that can be corrected through the normal democratic process. They will assume that since this socialist society already has produced so much good in our lives, we have managed to progress so far already, and problems can be fixed there is no need for a harsh libertarian attitude against government..

J. Murray June 3, 2011 at 6:09 am

Capitalism is merely the method of reserving resources to improve future future productivity and engaging in division of labor. Capitalism and socialism aren’t two separate entities. One refers to business organization and the other refers to who, or what, owns those resources. Even the most die-hard Marxists embrace capitalism because without the accumulation of capital, nothing productive can be built. Capitalism was born the moment our early ancestors devoted time and energy to attach a sharpened rock to the end of a stick to hunt with and has been with us ever since. It just wasn’t given a name until a fellow in the 19th Century completely misunderstood how the world operates. We even went so far as to provide a name for Capitalism-Socialism by calling it Fascism without comprehending that there is still Capitalism under the utopian ideal for Communism.

Free Market – Capitalism where capital is owned by individuals.
Socialism – Capitalism where capital is owned by individuals in name only, but most gains are confiscated by the State, thus actual ownership rests with the State.
Fascism – Capitalism where capital is owned by individuals in name only, but most major decisions, and thus actual ownership, rests with the State.
Maoism/Lenninism/Stalinism – Capitalism where capital is outright owned by the State.
Communism – Capitalism where capital is owned by no one and everyone at the same time.

The real antithesis of Capitalism is basically being a scavenger-gatherer, eating only that which you find lying around on the ground naturally or what you can kill with your bare, weaponless, hands.

Danny Sanchez June 3, 2011 at 6:29 am

You know, Mises kind of put a lot of thought into this already, and his work is the touchstone of this site. Maybe we could just use his terminology, instead of every 5th poster inventing their own pet system.

DD5 June 3, 2011 at 8:46 am

According to Mises’ own thought then, it does not follow that we are living in a “capitalistic society”. This does not mean that we do not owe are standard of living to capitalism, for the capitalistic elements in our system are still the dominant ones.

Capitalism according to Mises is when the means of production are privately owned. This is obviously not the current situation. Many means indeed can be considered to be privately owned but many cannot. Among those that are privately owned, some are so regulated and taxed that it hardly can be said to be really privately owned in the economic sense of the term.

It’s all about definitions. Define Capitalism. If you want to invoke Mises’ use of the term, then the logic doesn’t follow to your conclusion. If you want to invoke some broad definition, as when there is still a market not hampered too severely, then I would agree with you.

Danny Sanchez June 3, 2011 at 9:33 am

the capitalistic elements in our system are still the dominant ones.

As I said in the OP, the capitalism we still have is the only thing that merits being called a production “system”. You are giving non-capitalist elements far too much credit by calling them a part of a production “system”.


“The market economy or capitalism, as it is usually called, and the socialist economy preclude one another. There is no mixture of the two systems possible or thinkable; there is no such thing as a mixed economy.(…) If within a society based on private ownership by the means of production some of these means are publicly owned and operated–that is, owned and operated by the government or one of its agencies–this does not make for a mixed system which would combine socialism and capitalism.(…) Nothing that is in any way connected with the operation of a market is in the praxeological or economic sense to be called socialism.”

Mises, Human Action

Again, again hampered capitalism…. ANY [adjective] capitalism is still capitalism.

fundamentalist June 3, 2011 at 10:40 am

Mises preferred to talk about intervention rather than socialism. But if we take Mises at his word, then no socialism exists, or has ever existed because it can’t.

Theoretically he is right. But where does that leave us in the debate with people who want socialism? They claim they don’t want Soviet style socialism, only state intervention in the economy to correct “market failures.”

But as Mises admitted, intervention leads inevitably to socialism, which is the goal of the interventionists.

It’s nice to make fine theoretical distinctions between capitalism, socialism and intervention. But the world is messy. No pure capitalist nation has ever existed and no pure socialist nation has ever existed because socialism is impossible.

All we have ever had and ever will have are differing degrees of state intervention. At what point does intervention morph into socialism? According to Mises it never can because socialism is impossible.

Should we call the USSR a communist nation? It survived longer than it should have because of the black market, relatively freer markets around it, and massive aid from the West.

However, the USSR intended to be a socialist state and did all that it could to implement one, even though it failed. At some point it seems that we ought to look at intentions.

DD5 June 3, 2011 at 11:33 am

As I said before. When capitalism basically refers to ‘market economy’ and that’s it, then I agree with you. However, this is not the common use of the term. It depends on the context of the debate to determine whether the objection to your claim was warranted or not. In the context where ‘Capitalism’ refers to private property, profits, no government oversight, etc…. then the objection is a valid one.

vcif June 4, 2011 at 10:38 am


I understand and agree with your (Mises’) point. However, in HA Mises makes the point that Socialism, by definition, is the control of ALL wages, prices, and interests rates. In fact, when he talks about Russia and Germany, he makes the qualified statement, “There are two patterns for the realization of Socialism”. I think the qualification, “realization of”, is quite telling. His Minarchist bent coincides with this. I understand the Paxeological necessity of defining “Socialism” as such, but it is an impossible standard. As if Socialism doesn’t exist unless the above mentioned definition isn’t met. This definition means that the assertions “there is no such thing as a mixed economy” and “ANY [adjective] capitalism is still capitalism” are tautologies-it is definitional.

If an economic system asymptotically approaches Socialism, as defined, yet has some market-related (but still highly government-manipulated) functions, then we still have a Hampered Capitalist Economy. I understand that you are not defending interventionism, but I wonder if this is actually the best way to look at it and if this has something to do with him being a Minarchist. Why not, Capitalism is the complete abscence of government coercion? We live in a Hampered Socialist Economy and ANY [adjective] socialism is still socialism?

PS I hate the state and love commerce.

J. Murray June 3, 2011 at 9:20 am

That’s an appeal to authority logical fallacy and assumes the definition created by Mises is correct. I admire the man, but I have no illusions that his work is 100% flawless and should be taken blindly because he said it. Everything needs to be questioned periodically to determine if it’s truly correct, or in scientific terminology, most correct. I happen to disagree with how he defines capitalism. Capitalism is simply the accumulation of capital. You can’t build a house without it since without capitalism, all you would do is immediately consume all the materials to build the house instead of saving it as a form of a reusable structure.

Brent June 3, 2011 at 1:18 am

I don’t see how you can truly love commerce if you don’t truly hate the state. Note that you don’t need to get all emotional and let your emotions control you… but the state is a cancer to our dear commerce.

Junk Science Skeptic June 3, 2011 at 1:30 am

One must realize that liberals have all but completely redefined the concept of “hate” to include anything less than the most zealous advocacy of the far left’s cause du jour.

Thus if you’re not somewhere to the left of Stalin regarding totalitarian statism, you hate government.

Pom-Pom June 5, 2011 at 8:59 pm


fundamentalist June 3, 2011 at 9:04 am

Any time your litmus test becomes hate you invite into your group people who live to hate. Hate is the only emotion some people can feel, and like crack they need a dose of it every day.

But why have a litmus test at all? Liberty is in such peril that we need all of the friends we can get! Why shoot those who don’t perfectly match the ideal?

Sometimes I think libertarians have a death wish.

As far as the definition of capitalism and socialism goes, most of history has seen a mixture of the two. Pure socialism as envisioned by Saint-Simon or Marx cannot and has never worked. Where tried it has caused tens of millions to starve to death. All socialist/communist countries have needed some capitalism in order to keep their people from starving to death. If nothing else capitalism sneaks in through the black market.

As Mises pointed out, German socialists figured that out before WWII and changed their definition of socialism to allow a tiny amount of capitalism. The result was the NAZI philosophy. Soviet and Chinese socialists were a bit thicker in the skull and had to suffer from mass starvation before they learned the lesson.

If you leave a tiny, tiny area for free markets as the Chinese have, does that make you a capitalist nation? After all, the Chinese miracle happened only because of extremely limited free markets, and China demonstrates the amazing power of even the tiniest of free markets.

Danny: “And while socialism is conceivable, it is inherently impossible. Therefore, insofar as we have a social division of labor (and we’d most of us be dead if we did not) we still have a capitalist civilization.”

The problem I see with this is it seems to say there is no socialism in the world. Every nation represents nothing more than shades of capitalism. And that fuels the cry from socialists that all of our problems come from residual capitalism still in the system that must be eradicated.

Seems to me that it’s better to call socialism what socialists today call it – a system in which the state controls as much of the economy as possible but leaves enough of a free market to keep us from starving to death. That is what Europeans and most socialists in the world mean. Very few socialists want Soviet style socialism today. They merely want the state to control as much as possible.

So should our argument be that we are a capitalist nation with socialism gumming up the works or that we are a socialist nation with a tiny bit of capitalism keeping us afloat? I think the latter is better for polemics and probably closer to the truth.

Wildberry June 3, 2011 at 10:11 am

@fundamentalist June 3, 2011 at 9:04 am

Danny: “And while socialism is conceivable, it is inherently impossible. Therefore, insofar as we have a social division of labor (and we’d most of us be dead if we did not) we still have a capitalist civilization.”
The problem I see with this is it seems to say there is no socialism in the world. Every nation represents nothing more than shades of capitalism. And that fuels the cry from socialists that all of our problems come from residual capitalism still in the system that must be eradicated.

Not at all. In my view it is not necessary to debate what is “closer to the truth”. If you subscribe to the Austrian Economic Theory, you know which direction the arrow must point. It is toward more capitalism, and away from more socialism. In my mind, it is a settled issue that socialism cannot produce what it promises, and in that sense it is “inherently impossible”.

The only issue is what the “ideal” state of freedom looks like. But it will be a very long time before we are in urgent need of resolving that debate. Some believe, as Mises did, that some level of governmental bureaucracy is advantages for certain functions, like police. Others hold an Ancap view of the ideal. If it weren’t for the “purity test” that Art references, there is no reason why those who hold different visions of the ultimate destination cannot be allies in the journey.

But in the meantime, we can mostly agree that we are intending to go in a certain direction, and there are many actions that can contribute to that overall effort. In an economic context, we understand the division of labor concept. That applies to the social and political systems as well. All require some degree of cooperation.

fundamentalist June 3, 2011 at 10:45 am

I agree, but it seems to me the issue is what to call the US. Is it a capitalist system or a socialist one? And that depends upon how you define capitalism and socialism.

I think calling the US a socialist system is closer to the truth and forces interventionists to consider that economic problems are the result of state interventions that inevitably lead to, and are intended to lead to socialism.

Pure socialism is impossible, just as pure capitalism is unlikely (due to human weakness) and historically rare. But how much state intervention can an economy endure before it no longer is capitalist? If you use Danny’s approach, you can never reach that point.

Wildberry June 3, 2011 at 12:36 pm

@fundamentalist June 3, 2011 at 10:45 am

I agree, but it seems to me the issue is what to call the US. Is it a capitalist system or a socialist one? And that depends upon how you define capitalism and socialism.

Why do you think it is important to reach a final conclusion either way? The fact is that socialism and capitalism co-exist. Each tries to grow and each encounters resistance from counter forces.

In general, it is not that socialism cannot possibly exist, it is that it cannot produce what it promises due to the inability to engage in economic calculation. Yet powerful social, political and business interests may pursue strategies that rely on socialist theories of organization. If you are an adherent of AET, you know that is the wrong approach for the reasons stated.

Yet in a completely capitalist system in every other respect, you could still theoretically have a government run police force, for example. Is it necessary in that case to say that the resulting society is either all capitalist or all socialist?

In any case, the definition of socialism discussed and used by Mises was centered on the means of production, not the provision of non-producing services, like armies, police, and courts. For those, he used the term “bureaucracies” to distinguish that while not producers in the economic sense, they are nonetheless divorced from pricing and profit mechanisms.

So in looking at a social/political/economic system like the provision of healthcare, for example, you can make the distinction you seek by looking at the means of production and the market mechanisms in question, and determine if they are based on a capitalist theory, or a socialist theory of central planning, public (government) control of pricing, supply, etc.

Again, if you adhere to AET, you want to purge the public/government interventions as much as possible. It is not necessary to determine at what point to you become a pure capitalist or socialist system.

Wildberry June 3, 2011 at 9:59 am

This series of articles from Jeff, Art, and Danny are perhaps some of the most significant expressions yet to appear here.

I applaud you all for bringing this to the surface. Based on the responses, it appears that even the most common practitioners of the “purity test” mentality recognize the truth of it.

Very well done.

DixieFlatline June 3, 2011 at 11:30 am

I agree with Daniel, slavery is just severely hampered capitalism, since there are only two options (capitalism and socialism) and one of them is impossible.

There is no reason to get angry about violence, theft or slavery. Libertarians should relax, pay taxes and indulge the inane rationales of sociopaths and idiots.

Also, I made a comment last night which has not appeared.

Inspector Ketchup June 3, 2011 at 1:00 pm

North Korea has a productive capacity and is producing a certain amount of wealth at least capable of feeding most of it’s population otherwise everybody there would be dead.

Are you suggesting that North Korea is a CAPITALIST country since it relies on division of labor and productivity ?

Inspector Ketchup June 3, 2011 at 1:01 pm

So, North Korea is a country with severely severely severely severely severely hampered “capitalism” ?

nate-m June 3, 2011 at 1:10 pm

The black market trade is the only reason a significant amount of the population has been able to avoid starving to death.


North Korean shoppers embraced those markets—as well as black markets that developed at the same time. Today, many North Koreans depend on the underground economy to buy not only basics like food but increasingly consumer electronics and even videos of South Korean soap operas. Despite efforts by the regime in 2006 to crack down on the black markets, they’ve continued to grow—and have become a emblem of failure for Kim Jong Il’s government.

Now the regime is fighting back. According to reports in South Korea’s media, North Korea on Nov. 30 redenominated its currency, issuing new notes that lop off two zeros from the nominal value of the North Korean won. In a move aimed directly at the underground economy, the government has also set a ceiling for the amount of old notes its citizens can exchange into new ones. Since so many people involved in the black market stash their money under their mattresses rather than in the government-run banks, that limit will suddenly wipe out the savings of millions of North Koreans.

fundamentalist June 3, 2011 at 1:17 pm

Good point, inspector! N Korea isn’t socialist, just a severely constrained capitalist nation!

Inspector Ketchup June 3, 2011 at 2:53 pm

Severely constrained is an understatement. So humans, by seeking self-interest and desire of accumulation of wealth are capitalist by design, by nature, by the force of things. Socialism is therefore nothing but a facade, a disguise to hide that fact which is motivating every humans.

DD5 June 3, 2011 at 1:46 pm

The straight answer is yes according to the socialism vs. capitalism dichotomy, which I am not denying. However, these are obviously places like N. Korea, that according to even Mises, have not adopted Capitalism. This is why I’m saying that this discussion ignores other meanings ascribed to the term and the different contexts in which they are used. Even by Mises.

Inspector Ketchup June 3, 2011 at 2:57 pm

By nature, civilization cannot survive without division of labor, private property rights and a free market price system.

Jim P. June 3, 2011 at 6:13 pm

At its most basic, capitalism is the natural state of humanity. So, yes. North Korea can be viewed as an intense struggle by the State against human nature.

Inspector Ketchup June 3, 2011 at 1:03 pm

I see many problems in seeing the devil everywhere and to be a willful grump but I am also very allergic to relativize everything and to represent everything in shades of gray with no truth and no false.

Jim P. June 3, 2011 at 6:14 pm

Is that realistic?

Inspector Ketchup June 3, 2011 at 9:20 pm

That’s just me, I have a counterproductive tendency to hash everything, every problems and every situations in two conflicting pro and con analysis and then I can’t make my mind between the two.

Vanmind June 6, 2011 at 1:57 pm

Ha. Sure thing, the Soviet Union was indeed a capitalist society.

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