From his new home in New York, in 1944, having fled his old home in Austria, via Geneva, Ludwig von Mises published a remarkable book entitled Omnipotent Government. Reading this book today provides a rare window into Mises’s world at the time he wrote it, as well as into the significant historical trends that characterize the roughly two centuries that led up to that time, the cataclysm of two world wars, a worldwide economic depression, Nazism, the holocaust, and the rise to prominence of the Soviet Union.
This book remains a source of information, amazement and satisfaction for those interested in the history, politics, economics and sociology of the times. I, and my generation, grew up in the shadow of World War II. Recent generations, will not feel the significance of those turbulent times as keenly - and less so as time goes by. It will become an esoteric experience for those who read books like this.
Bear in mind that the book was published in 1944, before the conclusion of World War II in 1945, and much of it was written in the few years before that, while the war was raging. The full extent of the destruction and brutality was not yet widely known (it is not clear from the book whether Mises knew, for example, of the magnitude of the holocaust – the death camps and extermination of around ten million people, including six million Jews, one third of the population of world Jewry). So, having fled the Nazis himself, leaving behind a lifetime of work and accomplishment, for a strange new world, writing in a foreign language, he passionately records his understanding of the deep forces at work that explain the descent into barbarism of European civilization. Without taking note of Mises’s perspective at the time, one does not appreciate the full power of the book.
To be sure, Mises is difficult to read for some. His style is assertive and dogmatic, and impersonal. One frequently encounters phrases like “There can be no doubt that … ” and rarely any humility. He confidently discerns the cultural tectonics underlying historical developments. He presumes to know the mindsets of millions of individuals over vast swaths of time. But, that being said, the reader need not hazard a judgement on these assertions to appreciate the quality of the intellect at work, and the earnest attempt to come to grips with the horrors that have personally affected him and his entire generation. He shines a bright light to illuminate the complex and mysterious. Having read this book one cannot but come away much less perplexed by all that happened, and much better equipped for further investigation.
At one level, Mises’s story is a simple one. The decline of European civilization to the abysmal depths of Nazism was the result of the eclipse of Liberalism (classical liberalism, the kind that Adam Smith believed in). Ideas matter, big time. The rise of the total state and total war (the subtitle of the book) was the result of the steady abandonment of a general commitment to the Liberal principles of individual rights and free markets. Liberalism arose, first in England and the British Isles, and then in western and central Europe and America, in the middle of the 18th century and lasted roughly a century, before being pushed out as the dominant worldview. It was the spark that ignited the Great Enrichment. And in this book we find perhaps Mises’s best statement of its content and significance, and one of the best statements on Liberalism to be found anywhere. Mises provides an account of what Liberalism is, and is not, and why it is so important in the grand scheme of things.
Two broad alternatives to Liberalism as the dominant view emerged toward the end of the 19th century, namely, Socialism and Interventionism, in different places, notably, in England and the newly emerged German nation state. Mises explains how both, in different ways, lead to catastrophe, the omnipotence of the state. Both are variations of the phenomenon of statism (or etatism, as Mises calls it). There is a direct line from Prussia’s Bismarck to Germany’s Hitler, from the decline of the European dynastic family principalities (the ancien regime) to the rise of all-encompassing nation states, with Liberalism in between as an unwitting conduit.
In earlier work, Mises had explained in great detail the contradictions involved in Socialism as a system for achieving sublime human equality. Socialism is doomed to collapse into economic ruin and brutality. The central planning required by Socialism implies the abandonment of private property and market processes that are necessary to coordinate economic activity. Without them people starve, become desperate and barbaric. This is explained again in 1944 before the full extent of Soviet failure had emerged, not to mention the numerous other failures of socialist experiments that followed.
Interventionism is commonly presented as a compromise between Capitalism and Socialism, but Mises disputes its sustainability and argues that, if not reversed, it leads ultimately to state domination of production no different in kind from Socialism. Nazism is Socialism in this sense, an extreme form of Interventionism that dominates all aspects of economic life (as he documents) and life in general. In the case of Germany, 1871 – 1944, it is the result of a push toward state-imposed autarky (discrimination against all foreign production) and the implied need for Lebensraum to feed the privileged German nation.
Mises is clear and adamant about the necessity to resist Nazism in the strongest possible terms and scathing in his condemnation of the western democracies in their failure to prepare for an effective opposition to Nazism (and Fascism in Italy and Spain). He attributes this lack of will to the abandonment of Liberalism, to a loss of understanding of its significance, and to the rise of Socialism in the world and in Britain in particular (Fabianism).
His final chapters on the future of Europe and the world are necessarily uninformed by later developments, notably the formation of the United Nations, and the closing of the iron curtain, but can be read nevertheless as remarkably prescient.
I studied history as an undergraduate, as a joint major with economics. I have retained an abiding interest in it, including in European history. I remember studying the history of the unification of Germany and remembered enough of it to relate to Mises’s account in a way that deepened my rather superficial understanding. Most English speaking readers are much more familiar with the history of Britain and America than of Germany, France and other European countries. But, in order to understand, the modern era in which we live, it is necessary to understand it all. One could do no better than to begin with this book.
