Omnipotent Government by Ludwig von Mises

The New Mentality

The most important event in the history of the last hundred years is the displacement of liberalism by etatism.

Etatism appears in two forms: socialism and interven­tionism. Both have in common the goal of subordinating the individual unconditionally to the state, the social apparatus of compulsion and coercion.

Etatism too, like liberalism in earlier days, originated in Western Europe and only later came into Germany. It has been asserted that autochthonous German roots of etatism could be found in Fichte's socialist utopia and in the sociological teachings of Schelling and Hegel. However, the dissertations of these philosophers were so foreign to the problems and tasks of social and economic policies that they could not directly influence political matters. What use could practical politics derive from Hegel's assertion: "The state is the actuality of the ethical idea. It is ethical mind qua the sub­stantial will manifest and revealed to itself, knowing and thinking itself, accomplishing what it knows and in so far as it knows it." Or from his dictum: "The state is absolutely rational inasmuch as it is the actuality of the substantial will which it possesses in the par­ticular self‑consciousness once that consciousness has been raised to consciousness of its universality."[1]

Etatism assigns to the state the task of guiding the citizens and of holding them in tutelage. It aims at restricting the individual's freedom to act. It seeks to mold his destiny and to vest all initiative in the government alone. It came into Germany from the West.[2]Saint Simon, Owen, Fourier, Pecqueur, Sismondi, Auguste Comte laid its foundations. Lorenz von Stein was the first author to bring the Germans comprehensive information concerning these new doctrines. The appearance in 1842 of the first edition of his book, Socialism and Communism in Present‑Day France, was the most important event in pre‑Marxian German socialism. The elements of government interference with business, labor legislation, and trade-unionism[3]also reached Germany from the West. In America Frederick List became familiar with the protectionist theories of Alexander Hamilton.

Liberalism had taught the German intellectuals to absorb West­ern political ideas with reverential awe. Now, they thought, lib­eralism was already outstripped; government interference with business had replaced old-fashioned liberal orthodoxy and would inexorably result in socialism. He who did not want to appear back­ward had to become "social," i.e., either interventionist or socialist. New ideas succeed only after some lapse of time; years have to pass before they reach the broader strata of intellectuals. List's National System of Political Economy was published in 1841, a few months before Stein's book. In 1847 Marx and Engels produced the Com­munist Manifesto. In the middle 1860s the prestige of liberalism began to melt away. Very soon the economic, philosophical, his­torical, and juridical university lectures were representing liber­lism in caricature. The social scientists outdid each other in emotional criticism of British free trade and laissez faire; the phi­losophers disparaged the "stockjobber" ethics of utilitarianism, the superficiality of enlightenment, and the negativity of the notion of liberty; the lawyers demonstrated the paradox of democratic and parliamentary institutions; and the historians dealt with the moral and political decay of France and of Great Britain. On the other hand, the students were taught to admire the "social kingdom of the Hohenzollerns" from Frederick William I, the "noble socialist," to William I, the great Kaiser of social security and labor legislation. The Social Democrats despised Western "plutodemocracy" and "pseudo-liberty" and ridiculed the teachings of "bourgeois economics."

The boring pedantry of the professors and the boastful oratory of the Social Democrats failed to impress critical people. The élite were conquered for etatism by other men. From England pene­trated the ideas of Carlyle, Ruskin, and the Fabians, from France Solidarism. The churches of all creeds joined the choir. Novels and lays propagated the new doctrine of the state. Shaw and Wells, Spielhagen and Gerhart Hauptmann, and hosts of other writers, less gifted, contributed to the popularity of etatism.

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