Von Mises, in his awe-inspiring work, Human Action, gives some advice concerning the proper role of government…
Government should NOT become entangled with organized religion. Von Mises contends that it is precisely when a government remains aloof from considerations of religious rituals and dogma that religions within the society can best co-exist. “By separating church and state,” writes von Mises, a society can give each religious faction “the opportunity to preach its gospel unmolested.” Von Mises takes a look around the globe and notes that “where the principle of church interference with secular issues is in force, the various churches, denominations, and sects are fighting one another.” Whereas, where there is a separation between church and state, peaceful co-existence usually reigns. And believe me, according to von Mises you don’t want involved in religious controversy– owing to the demonstrated fact that “metaphysical disputes are interminable.”
Government should NOT greatly interfere with the loan market. He explicitly says that government should not attempt to lower interest rates in an effort to expand available credit and pump-up the money supply. Implicitly, he seems to feel that government should also not pass a bunch of laws making it more difficult for lenders to recover their loaned-out monies. He doesn’t come right out and forbid this, but he seems to me to speak in a tone of disparagement when he talks of how government regulations of the loan market can cause the industry to become “conditioned by laws and institutions.” Such regulation might include laws concerning: repossession, collateral seizure, repossession, liens on wages, et cetera.
Government should NOT attempt to legislate morality. It should not concern itself with the motivations of individuals and their desired ends, but limit itself to the regulation or facilitation– where absolutely necessary– of the means which individuals desire to use in order to attain the ends which will satisfy them.
Von Mises contends that “it is futile to approach social facts with the attitude of a censor who approves or disapproves from the point of view of quite arbitrary standards and subjective judgments of value.”
It is not for a man’s government or his neighbors to decide what is good and bad for him. “Nobody,” states von Mises, “is in a position to decree what should make a fellow man happier.”
Values can change over time, remarks von Mises. For example, for hundreds of years, medieval societies thought it “unfair and unjust to outdo a competitor by producing better and cheaper goods,” and that it “iniquitous to deviate from the traditional methods of production.” There was also widespread belief that “machines are evil because they bring about unemployment.” Von Mises believes that the Industrial Revolution which began in Europe was started, not at the advent of machinery into the workplace, but when economic philosophers “exploded the old tenets” and began to sing the praises of innovation and competition.
“What is commonly called the Industrial Revolution was an offspring of the ideological revolution brought about by the doctrines of the economists,” writes von Mises.
How we value things varies from generation, and indeed, person to person. “Value is not intrinsic,” von Mises says. “It is within us.” In fact, the free market is BASED on the notion that different people have different valuation systems… “It is precisely the disparity in the value attached to the objects exchanged that results in their being exchanged.” […] “People buy and sell only because they appraise the things given up less than those received.” The attempt by economists to come up with numbers for “utility” (as when they attempt to compare “utils” of enjoyment value) is ludicrous. “There is no method available to construct a unit of value,” states von Mises. […] “The notion of the measurement of value is vain.”
Above all, von Mises is adamant that government or society should not condemn selfishness. “Action is necessarily always selfish,” he asserts, since, “what a man does is always aimed at an improvement of his own state of satisfaction.” As anyone who has read Ayn Rand knows, this is an idea which she took up and ran with.
Government should NOT attempt to redistribute wealth on moral grounds. For one reason, von Mises contends, it’s not like the wealthy are just sticking their money beneath the mattress. They are investing it.
Von Mises doesn’t do a great job explaining this, but I believe the reasoning would go like this… if the wealthy were just to sit on their wealth, they would risk losing a painful portion of it due to inflation or unforeseen events. For instance, the rich will want to diversify their holdings (put their money in different places) so that one unforeseen event (like their bed catching fire) doesn’t rob them of their total wealth.
The only way a rich man can keep his wealth is to return it to society in the form of investment. In this way, I believe von Mises is implying, he can receive interest or other investment returns on his money and thus offset the pernicious effects of inflation (historically, interest more-or-less keeps pace with inflation). And I would bet that inflation risk is probably all the greater in a world of fiat currencies. Von Mises, himself, states that, in the modern world, “there is no room left for wealth not dependent upon the market.”
WHAT THEN IS THE PROPER ROLE OF GOVERNMENT?
The proper role of government is that of maintaining “the monopoly of violent action” so that it can “hinder, by the application or threat of violent action, minority-factions from destroying the social order” (another notion shared with Rand]. Government is basically “the social apparatus of compulsion and coercion,” and it “must be prepared to crush the onslaughts of peace-breakers.”
In the view of von Mises, government will naturally be implementing the rule of the majority, since he believes that “in the long run, there is no such thing as an unpopular government.” Even if a minority-faction does manage to seize the reins of power, its rule cannot last– UNLESS, that is, they can sway others to adopt their worldview (thus no longer really being a minority), or if they can find some way to cause the majority to accept their political supremacy as legitimate.
And government should be democratic. This is another case where I’m reading between the lines, but von Mises does commend democracy for providing “a method for the peaceful adjustment of government to the will of the majority.” Von Mises believes that people are wrong to think of democracy as some sort of radical new world order instituted after revolution or civil war. Democracy, he writes, is “not a revolutionary institution. On the contrary, it is the very means of preventing revolutions and civil wars.”
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