Middle-​of-​the-​Road Policy Leads to Socialism

Originally delivered as a lecture in 1950, “Middle-​of-​the-​Road-​Policy Leads to Socialism” takes aim at the idea that government meddling in the market represents a compromise between the free market and socialist ideals of economic organization. The central disagreement between socialists and advocates of the free market, says Mises, is not over how economic goods should be distributed—how to split the pie—but about the institutional structure for making decisions about what should be produced and how—i.e., how the pie is to be baked. You could compromise about a question of distribution, but capitalism and socialism present mutually exclusive options for the mode of production. “Control is indivisible,” writes Mises. “Either the consumers’ demand as manifested on the market decides for what purposes and how the factors of production should be employed, or the government takes care of these matters.”

Mises examines how the piecemeal implementation of a de facto command economy plays out in theory, and how it had played out historically in Germany, Great Britain, and the United States between the first World War and the time of writing.

Although the mixed economy is inherently unstable, Mises says, it is not inevitable that the tension be resolved in the direction of socialism. He warns that by mistakenly buying into the idea that the collapse of capitalism and its replacement by socialism is inevitable, the supporters of the free market will limit themselves to merely slowing the advance of creeping authoritarianism and, therefore, be unable to turn the tide. A wholehearted commitment to free market liberalism is required for its successful defense.