Critics of the free market often claim that capitalism is a system of ruthless struggle for survival. They say it is a system of dog-eat-dog competition. In fact, as the great Ludwig von Mises argued in an unanswerable way, the free market replaces the struggle for survival found in the animal world with social cooperation in which everybody benefits. Capitalism is a system of peace, not war.
The key point that Mises makes is that human beings benefit from the division of labor and the division of labor means peaceful exchange, not war. As he says in Human Action, “The theory of evolution as expounded by Darwin, says a school of social Darwinism, has clearly demonstrated that in nature there are no such things as peace and respect for the lives and welfare of others. In nature there is always struggle and merciless annihilation of the weak who do not succeed in defending themselves. Liberalism’s plans for eternal peace—both in domestic and in foreign relations—are the outcome of an illusory rationalism contrary to the natural order. However, the notion of the struggle for existence as Darwin borrowed it from Malthus and applied it in his theory, is to be understood in a metaphorical sense. Its meaning is that a living being actively resists the forces detrimental to its own life. This resistance, if it is to succeed, must be appropriate to the environmental conditions in which the being concerned has to hold its own. It need not always be a war of extermination such as in the relations between men and morbific microbes. Reason has demonstrated that, for man, the most adequate means of improving his condition is social cooperation and division of labor. They are man’s foremost tool in his struggle for survival. But they can work only where there is peace. Wars, civil wars, and revolutions are detrimental to man’s success in the struggle for existence because they disintegrate the apparatus of social cooperation.”
According to Mises, there is a harmony of interest among people. People are unequal—that is a clear fact that the incessant propaganda of socialists and “anti-racists” cannot gainsay. But even the “inferiors” benefit from peaceful exchange. As Mises says in Theory and History: “Yet man’s almost universal acknowledgment of the principle of social cooperation did not result in agreement regarding all interhuman relations. While almost all men agree in looking upon social cooperation as the foremost means for realizing all human ends, whatever they may be, they disagree as to the extent to which peaceful social cooperation is a suitable means for attaining their ends and how far it should be resorted to. Those whom we may call the harmonists base their argument on Ricardo’s law of association and on Malthus’ principle of population. They do not, as some of their critics believe, assume that all men are biologically equal. They take fully into account the fact that there are innate biological differences among various groups of men as well as among individuals belonging to the same group. Ricardo’s law has shown that cooperation under the principle of the division of labor is favorable to all participants. It is an advantage for every man to cooperate with other men, even if these others are in every respect—mental and bodily capacities and skills, diligence and moral worth—inferior.”
When Mises mentions “Ricardo’s law,” he has in mind the economist David Ricardo’s law of comparative cost. Mises brilliantly extended Ricardo’s law into a general Law of Association. As he explains in Human Action: “It is advantageous for the better endowed area to concentrate its efforts upon the production of those commodities for which its superiority is greater, and to leave to the less endowed area the production of other goods in which its own superiority is less. The paradox that it is more advantageous to leave more favorable domestic conditions of production unused and to procure the commodities they could produce from areas in which conditions for their production are less favorable, is the outcome of the immobility of labor and capital, to which the more favorable places of production are inaccessible. Ricardo was fully aware of the fact that his law of comparative cost, which he expounded mainly in order to deal with a special problem of international trade, is a particular instance of the more universal law of association.”
The benefits of social cooperation extend internationally. We benefit from free trade with other nations. But in order to have free trade, we need peace. As Mises says, “There are high-minded men who detest war because it brings death and suffering. However much one may admire their humanitarianism, their argument against war, in being based on philanthropic grounds, seems to lose much or all of its force when we consider the statements of the supporters and proponents of war. The latter by no means deny that war brings with it pain and sorrow. Nevertheless, they believe it is through war and war alone that mankind is able to make progress. War is the father of all things, said a Greek philosopher, and thousands have repeated it after him. Man degenerates in time of peace. Only war awakens in him slumbering talents and powers and imbues him with sublime ideals. If war were to be abolished, mankind would decay into indolence and stagnation. It is difficult or even impossible to refute this line of reasoning on the part of the advocates of war if the only objection to war that one can think of is that it demands sacrifices. For the proponents of war are of the opinion that these sacrifices are not made in vain and that they are well worth making. If it were really true that war is the father of all things, then the human sacrifices it requires would be necessary to further the general welfare and the progress of humanity. One might lament the sacrifices, one might even strive to reduce their number, but one would not be warranted in wanting to abolish war and to bring about eternal peace. The liberal critique of the argument in favor of war is fundamentally different from that of the humanitarians. It starts from the premise that not war, but peace, is the father of all things. What alone enables mankind to advance and distinguishes man from the animals is social cooperation. It is labor alone that is productive: it creates wealth and therewith lays the outward foundations for the inward flowering of man. War only destroys; it cannot create. War, carnage, destruction, and devastation we have in common with the predatory beasts of the jungle; constructive labor is our distinctively human characteristic. The liberal abhors war, not, like the humanitarian, in spite of the fact that it has beneficial consequences, but because it has only harmful ones.”
Let’s do everything we can to promote social cooperation and peace through the free market!
