Planned Chaos by Ludwig von Mises

In his short book Planned Chaos, economist Ludwig von Mises discusses the defective economic and social consequences of establishing central planning governments including interventionism, socialism, communism, Fascism and Nazism (last four are essentially to be socialism according to Mises). He criticizes the attempt to build a state which controls everything and benefits all people will lead to dictatorship and the ruin of Western civilization.

In the first two chapters, Mises argues that the “failure of interventionism” is destined. He distinguishes interventionism from socialism, since interventionism is still a market economy. Interventionism, as defined by interventionists, is a social structure that has both advantages in socialism and capitalism. Mises criticizes that interventionism will fail because they build a system which is worse than the previous one they want to alter. The Great Depression in the 90s, as Mises argues, is not because of capitalism but interventionism. He argues that the anti-capitalism damages the operation of Western civilization. Furthermore, Mises argues that this kind of “midway between socialism and capitalism” (2) is not stable. The attempt to control even a part of a free economy will produce chaos. If the interventionism government does not realize their failure but add more regulations, the system will gradually turns into socialism. He also argues that political democracy can only work with a free economy. Men have to choose either socialism (planned economy) or capitalism (free economy). Mises emphasized that “there is no such thing as a scientific ought” (16). He claims that the conflicts of choosing socialism or capitalism come from the consideration of human welfare instead of the distribution of income. 

In chapter three Mises talked about the history of Socialism and Communism. As Mises writes in his book, Marx and Engels use the term “communism” and “socialism” in the same manner. According to Marx, socialism is inevitable to present and “emerge in the same time” (24) across the world. He argues that Lenin, as a dictator, hated the way that socialists gain power by parliamentary procedure. In Marx’s doctrine, the “transition” from capitalism and socialism should be accomplished by “revolution and civil war” (22). In order to explain the low living standard in Russia after the Communist Revolution, Stalin inserts Socialism as the phase before entering Communism. Stalin defined Russia as still in the “early phase” of communism, so it needs to use socialist methods to raise the living standard of Russia. In Mises opinion, the aggressiveness of Russia is different from the “Lebensraum doctrine” (33) of Nazis and Fascist. It is the dictators, Lenin and Stalin, who are aggressive in expanding the communism influence. Russia annexed several countries and built several puppet governments. Mises says that the “real crisis of Russian Marxism” (41) is that most of the advanced industrial countries didn’t embrace communism, which is a criticism to Marx’s prediction that communism will appear in the most advanced capitalist countries. Misses claimed that in order to solve this ideological crisis, Russia “must conquer the world” (41) and this leads to its aggressiveness.

Mises argues that Bolshevists, Fascists and Nazis all have the doctrine of dictatorship. Even as the opponent of Stalin, Trotsky is essentially a dictator the same as Stalin. Mises says that Trotsky advocated every policy made by Stalin and the only problem is that he himself is not the dictator. In Mises’s opinion, the story of Trotsky reveals that most of the socialist activists are fanatical and they never rationally consider the consequence of centrally planning an economic system. What they do is dreaming of a utopia society and advocating dictatorship.

In the middle chapters of the book, Mises put forward an important discussion of what distinguishes central planned government and democracy government. He argues that the restriction of government power is the distinction. By this he means it is a choice between law and human welfare. In order to maximize mass welfare, socialists do not want laws to restrain their power in building institutions. They become dictators. Mises argues that “state and government are the social apparatus of violent coercion and repression.”(50) Freedom and liberty will exist only with the appearance of “societal bonds”.

In chapter seven, Mises talks about the history of Fascism. Fascism is a separation of orthodox Marxian socialism, and borrows other socialism doctrines. Benito Mussolini was at first an orthodox Italian socialist and changes his path to stand with nationalist socialists. Fascist economy, Mises argues, is still interventionism at first but changes into “Nazi pattern of socialism” later (61). Then Mussolini adapted guild socialism and labeled it as corporativism. Mises claimed that the aggressiveness of Fascism is caused by “overpopulation” in Italy(63).

In chapter eight, Mises talks about the history of Nazism. He argues that Nazism is essentially a kind of socialism. Mises writes that “the philosophy of the Nazis…is the purest and most consistent manifestation of the anticapitalistic and socialistic spirit of our age” (65). In previous chapter Mises argues that the aggressiveness of Nazism comes from the idea of “Lebensraum” (33). They want to gain more economic resources and material by conquering other nations. Mises claimed that, as he has says about Stalin and Trotsky, Hitler is a “product” of Nazism instead of the “founder” (67). Mises also criticizes the eugenics idea of Nazis that there is no way to identify an inferior man according to laws or political ideologies. Men cannot be valued by “scientific” verification. The “scientific ought” (68) doctrine explains the cold-blood crimes committed by Nazis, Mises says.

Mises raises an objection to the claiming that the success of Soviet Union at that time is an experimental proof of the feasibility of socialism. He argues that there is no experiment of social science can be made and it is meaningless to discuss the significance of historic experience. He says that the only thing history shows us is necessity of private ownership. Mises’s fundamental objection to socialism is the “impossibility of economic calculation” (74). According to Mises, the lack of price system will lead to chaos in the operation economy. Mises’s second objection is the “less efficient mode of production” (76) of socialism. The low living standard in Russia is covered up by the state press.

In the final chapter Mises argues that believing socialism is inevitable actually pushes the public towards socialism. Not only socialist propaganda, but also intellectual leaders are fanatic to socialism. They appear in the public view much more often than entrepreneurs and technologists. Mises believes people should consider the consequence of choosing central planning economic system and prevent the destruction of freedom and wealth.