The pioneers of totalitarianism, Lenin and Hitler, both denounced the capitalism system as rotten. But Lenin was the first to recognize, with the advent of his New Economic Policy, that totalitarianism can wear a capitalist face. Lenin called his version of capitalism “state capitalism,” while Hitler proposed a “social market economy.” In both instances, the central principle was state power over private power. This formula seems to be emerging today in the United States, without the appearance of an overt socialist revolution. In America, socialist totalitarian principles advance by gradualism. Capitalism is overtaken bit by bit, so that most observers do not realize how far things have moved down “the road to serfdom.” Whether it is health care or banking, the automobile industry, fishing or timber – the state successfully interjects itself, asserting ultimate control. The reason is always given that the state can solve problems that the market cannot solve.
In 1944 Yale University press published a book titled Omnipotent Government, by Ludwig von Mises. In this book, Mises explained, “The economist does not substitute his own judgment about the desirability of ultimate ends sought by nations…. He merely asks whether the ends sought by nations … can indeed be attained by the methods actually chosen….” In terms of the state versus the market, which renders the life of the common man more pleasant? Should we look to state intervention to save us from poverty, or should we look to the market? For Ludwig von Mises, the answer was perfectly obvious. The preservation of the market economy based on private ownership of the means of production, grants free competition and consumer sovereignty. State interference with the market restricts productivity, hampers the accumulation of wealth, “and makes people poorer,” wrote Mises, who pleaded with his generation: “do not abolish or cripple the capitalist system which, in spite of all obstacles put in its way by governments and politicians, has raised the standard of living of the masses in an unprecedented way.”
Someone who is young and knows very little may occupy Wall Street and call for the abolition of capitalism, yet this same young person has enjoyed a high standard of living because of capitalism. Whether he knows it or not, the protestor who calls for the abolition of the market economy is siding with a totalitarian principle. He is siding with the followers of Lenin and Hitler. Those who decry “economic inequality” may not realize that equality is a totalitarian objective, while economic inequality is the condition which continually raises the level of civilization and the general standard of living. Where poverty is universal, everyone is equal. Less understood is how the dictator secures his power by reducing the most distinguished citizens to a common level. For in political matters, the wealthy have traditionally checked tyranny. This fact was freely acknowledged by ancient historians and philosophers. The aspiring tyrant instigates class warfare, pressing down on the prosperous. He uses numbers to hold sway, achieving dominance over all.
The Greek historian Herodotus tells of the advice given by Thrasyboulos the tyrant to Periandros the Corinthian. Rather than explaining the method of tyrannical government, Thrasyboulos demonstrated by leading Periandros’ messenger into a field planted with grain as he cut down the finest and tallest stalks. According to Herodotus, “Periandros understood the meaning of what Thrasyboulos had done and perceived that he was advising him to murder the prominent men of the city.” This indeed became Periandros’ method of governing – as it secured total power for himself.
An even more subtle method was practiced by Hitler, and by latter-day Chinese and Russian governments. One does not have to physically eliminate prominent people in order to secure control. It is possible to use intimidation. One may threaten to send prominent businessmen to prison on false charges; confiscate their wealth or their businesses. In many instances, a leveling effect can be produced without wholesale slaughter. The power of the state to threaten private persons is ever present whenever the state becomes tyrannical. Today’s Wall Street protestors blame private businesses for capturing the state, and using it as an instrument of private enterprise. With this argument, business is described as a threat to all. The businessman is blamed for seeking profit and wealth, and converting this wealth into political influence. The supposed solution is to “control” the businessman by using the power of the state. Few stop and think what this entails. Already, in the United States today, businesses are held hostage by environmentalists, animal rights activists, minority advocates, economic egalitarians and feminists. There are so many regulations and laws, through which a businessman might be fined or jailed, that our system is already prepped for a transition to totalitarianism.
Whatever the problems of the present economy, and whoever is to blame, the elimination of capitalism or the advance of fascist constraints will not improve the situation. As Mises explained more than 60 years ago, “The weakling, lacking the strength to get on with life and reality, indulges in reveries on dictatorship and on the power to subdue everyone else. The land of his dreams is the land in which his will alone decides; it is the realm in which he alone gives orders and all others obey.” This may be a solution to the neurotic’s maladjustment, but in this formula a nation finds no real solution to its economic problems.