reprint fr. the Sep. 4,1944 routher Cal. Peace and 'Socialists of the Chair Here is something for Americans to remember when the peace is written and the United States embarks upon a post- fort from America's Alexander Hamilton. After offering war foreign policy: evidence, von Mises coins his own word from this form of government, calling it etatism (from the French) rather A nation's policy forms an integral whole. Foreign policy and domestic policy are closely linked together; they are than statism, because the latter word might give rise to the but one system; they condition each other. Economic nation- thought that the system is of Anglo-Saxon origin. alism is the corollary of the present-day domestic policies of government interference with business and of national Omnipotent Government is a notable book for many rea- planning, as free trade was the complement of domestic eco- sons. It gives the host-powerful arguments for economic nomic freedom liberty as opposed to state domination that have been ad- There can be protectionism in a country with domestic vanced in this country for a long time. It portrays the his- free trade, but where there is no domestic free trade, pro- torical background of the rise of fascism with a clarity never tectionism is indispensable. A national government's might before pictured to Americans. It debunks a whole host of is limited to the territory subject to its sovereignty. It does popular fallacies. And it reveals some explanations of not have the power to interfere directly with conditions Europe's terror that every American should know. abroad. Where there is free trade, foreign competition would even in the short run frustrate the aims sought by the various Von Mises rejects the thesis that the world's troubles measures of government intervention with domestic busi- ness today are a result of a "revolt of the masses." He readily shows that economic and social chaos has been caused by The further a nation goes on the road toward public regu- what European economists scornfully call "socialists of the lation and regimentation, the more it is pushed toward eco- nomic isolation. International division of labor becomes sus- chair". scheming intellectuals of European universities, pect because it hinders the full use of national sovereignty. whose theories and services have always been allied with The trend toward autarky is essentially a trend of domestic tyrannies in the war against economic democracy. economic policies; it is the outcome of the endeavor to make the state paramount in economic matters The author warns that the assumption of the masses that Within a world of free trade and democracy there are no a certain government is inherently liberal is false. He writes: incentives for war and conquest. In such a world it is of no Governments are never liberal from inclination. It is in concern whether a nation's soverignty stretches over a larger the nature of the men handling the apparatus of compulsion or a smaller territory. Its citizens cannot derive any advan- and coercion to overrate its power to work, and to strive tage from the annexation of a province. at subduing all spheres of human life to its immediate inyu- This warning is important to the American people now, ence. Etatism is the occupational disease of rulers, warriors and civil servants. and will be more SO as the war draws nearer to an end, for everywhere the air is vibrant with grandiose planning for Von Mises then depicts European trends, which, under government interference in domestic economic affairs, for the guidance mberal governments, brought the horror controls and restrictions on world-wide economic inter- of fascism to the world : course, all in the name of peace and democracy. European governments and parliaments have been eager The clear-cut picture of the road to autarky-a mere for more than sixty years to hamper the operation of the market, to interfere with business, and to cripple capitalism. euphemism for the uglier word fascism-is presented in They have blithely ignored the warnings of economists. They Omnipotent Government*, a timely study made by Ludwig have erected trade barriers, they have fostered credit expan- von Mises under grants from the National Bureau of Eco- sion and an easy-money policy, they ,have taken recourse to nomic Research and the Rockefeller Foundation, and pub- price control, to minimum wage rates, and to subsidies. They have transformed taxation into confiscation and expropria- lished by the Yale University Press. The author is an tion; they have proclaimed heedless spending as the-best internationally-known economist. For more than 20 years method to increase wealth and welfare. he was professor of economics at the University of Vienna, But when the inevitable consequences of such policies, and between 1934 and 1940 taught at the Graduate Institute long before predicted by the economists, became more and of International Studies at Geneva. As a visiting professor, more obvious, public opinion did not place the blame on he has lectured at British, French, Dutch, Italian, American these cherished policies; it indicted capitalism. In the eyes of and Mexican universities. the public, not anti-capitalistic policies but capitalism is the root cause of economic depression, of unemployment, of in- Von Mises is not the first economist to draw attention to flation and rising prices, of monopoly and of waste, of social unrest and war. the paradox of politicians clamoring for "equal access to raw materials," for "international friendship, cooperation The fateful error that frustrated all the endeavors to and trade," and at the same time instituting domestic poli- safeguard peace was precisely that people did not grasp the fact that only within a world of pure, perfect and unham- cies that ultimately force unequal access to materials, inter- pered capitalism are there no incentives for aggression and national enmities, trade wars and military conflict. But von conquest. Mises has said it more powerfully than any other authority Rich in the economics of free enterprise and "etatism," of recent times, and he has supported his statement with a the book is even richer in historical lore SO necessary to an wealth of historical data in a deep and disturbing study of understanding of the tragedy of Europe. Perhaps the most the rise of fascism in Europe. significant reaction to the revelation of the background of Understandably, von Mises dips his pen in bitterness as fascism is the feeling that no American should form any he writes of Europe betrayed to fascism. His feeling is SO ideas on peace treaties or punishments until he has the facts strong he advances arguments to prove that the idea of the that von Mises can give him. Until those facts are in hand, totalitarian state is not one which originated in Central and dealt with, the hope for world peace and economic Europe, but one that was imported from the west-particu- democracy will be chimerical. larly from French socialist philosophers, with aid and com- "Omnipotent Government," by Ludwig von Mises; $3.75, Yale University Press, New Haven, Conn. Reprinted from the September 4, 1944, issue of SOUTHERN CALIFORNIA BUSINESS, published by the Los Angeles Chamber of Commerce.