Jessica Whyte Calculation and Conflict

Jessica Whyte

Calculation and Conict

In July 1919, the Austrian philosopher and economist Otto Neurath was convicted of high trea - son for his role as head of the Central Economic Administration of the short-lived Munich Soviet Republic (Cartwright et al. 2008: 55)—the “most pronouncedly revolutionary episode of the Ger- man revolution of some endurance” (Uebel 2006: 81n87). The path that led to Neurath being sen- tenced to eighteen months imprisoned in a fortress began in January that year, when he presented a paper on the prospects for a socialized economy to the Bavarian Workers’ and Soldiers’ Council in Munich.1 There, Neurath invoked the impact of the Great War on the German economy: “Just as the economy had been made to serve the needs of war with the Hindenburg programme,” he wrote, “one should be able to make it serve people’s happiness” (quoted in Cartwright et al. 2008: 55). Neurath had argued for a planned economy that would place “the satisfaction of basic needs” (housing, nutrition, and clothing for all) above the desire for protability (44). This program had animated his brief stint as a revolutionary economic administrator. While the Munich Soviet Republic gave Neurath an opportunity to put his ideas into action, this opportunity was short-lived.

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On May 2, 1919, the right-wing Freikorps militias conquered Munich and bru- tally suppressed this experiment, killing six hundred people in the process (Balakrishnan 2000: 19). The painter Paul Klee, who had joined a committee of revolutionary artists the previous month, described the destruction of the Munich Soviet Republic as a “tragedy”—“the collapse of a fundamentally ethical movement” (quoted in Uebel 2006: 40). The following year, Klee painted his Angelus Novus, which the German Jewish philosopher Walter Benjamin later hung above his desk. Klee’s portrait of a stunned angel with its outspread wings played a starring role in Benjamin’s nal text, “On the Concept of History” (Benjamin [1942] 2006). In a poetic and excoriating critique of the progres- sivism that had animated the German Social Democrats who had ordered the suppression of the Munich Soviet Republic, Benjamin depicted progress as a storm that propels the “angel of history” toward the future while, in the past, “the pile of wreckage goes skyward” (392). Neurath’s attempt to construct a socialized economy dedicated to human happiness was buried amid that wreckage. So too, his insistence that utopias were not “accounts of impossible happenings” but simply “orders of life which exist only in thought and image but not in reality” (Neurath 1973f: 150–51) was buried beneath the weight of the neoliberal insistence that there is no alternative to the capitalist market. Almost seventy years later, in 1986, the Marxist theorist Ernest Man- del (1986: 9) complained of what he called a new “cult of the market” on the left, and indicted what he described as “an unbridled rehabilitation of the market and of commodity production as civilizational values in themselves.” More than thirty years after that, environmental devastation, rising economic inequality, a new generation of authoritarian leaders, and ongoing wars have taken the sheen o¥ the neoliberal market utopia. The rise of what one commentator has referred to as “Pro-Christendom, Pro-European and Pro-Western” “civilisationist” parties (Pipes 2018) has shattered the assump- tion that the victory of liberal market capitalism would lead to universal tolerance and perpetual peace. In this context, this article returns to a key moment in the construction of the idea that there is no alternative to market capitalism: the socialist calculation debate of the 1920s and 1930s. In returning to the arguments between defenders of economic planning, including Neurath, and liberal advocates of the competitive market, I aim to uncover possibilities for economic life that were buried under the weight of liberal triumphalism after the fall of the Berlin Wall. The socialist calculation debate was critical to the development and intellectual clarication of those strands of classical liberalism that would

ultimately metamorphose into neoliberalism (Kirzner 1988). The arguments in favor of the market made by the Austrian economists Ludwig von Mises and Friedrich Hayek profoundly shaped neoliberal thinking in the subsequent decades. Today, the debate is best remembered for Mises’s argument that rational economic calculation is impossible in the absence of private ownership of capital goods and a system of market prices, and for Hayek’s defense of the superiority of the market in enabling individuals to draw on dispersed tacit knowledge. Yet there is a striking contemporaneity to the arguments of their socialist adversaries, who criticized the systematic perversion of the relation between market demand and social needs that ensured that “while some are starving others are allowed to indulge in lux- ury” (Lange 1937: 124; Dickinson 1939: 5). Market capitalism, the socialists argued, led to extensive “social waste”—in the form of ecological damage, contamination of waterways, ill health, and work injuries—as the “life, security and health of the workers are sacriced without being accounted for as a cost of production” (Lange 1937: 125). Today it is often forgotten that the socialist calculation debate was not simply a technical argument about the eªciency of market calculation. Rather, as I aim to show, it was also a con«ict about political order, economic history, and the possibility of perpetual peace. “Civil war is raging in Ger- many,” Neurath wrote in mid-1919. “Famine, disease and murder are at work, the Horsemen of the Apocalypse” (Neurath [1920/21] 2006e: 345). After asking how these could be resisted, he responded: “Only by our will and our knowledge” (345). At stake in the calculation debate was the question of whether human beings must submit to the impersonal results of the market process, or could subject their collective lives to their knowledge and their will. The central neoliberal victory in that debate was not so much their “proof” that economic calculation required a system of market prices. Rather, it was their insistence on the impossibility of what Peter Hallward (2009: 17) calls “a deliberate, emancipatory and inclusive process of collective self-determination.” A central legacy of the calculation debate was the resignication of conscious deliberation and self-determination (Neurath’s knowledge and will) as a totalitarian impingement on individual freedom and a recipe for permanent war. In recovering the political arguments at stake in the calculation debate, I aim to show that early neoliberalism was not a narrowly economistic doc- trine. For Mises and his fellow liberals, the rise of economic planning was not merely a threat to rational economics; it was a threat to the individualistic political order and the peaceful coexistence of “Western civilization.” Only

market relations, they argued, would allow diverse individuals to cooperate peacefully without needing to agree on ultimate ends, and thus ward o¥ violent struggles. For Mises, the turn toward economic planning was a historical regression to a more “primitive” and war-mongering age. 2 In what fol- lows, I suggest that the characterization of the calculation debate as a narrow, technical argument has obscured the vision of civilizational development that underpinned the arguments of the calculation debate’s liberal protagonists. It has rarely been noted that their arguments against planning were thoroughly racialized. Russians “yearned for a dictator,” Mises argued, which was why socialism had taken root there.3 Socialism threatened the cooperative system built up in Europe over thousands of years, he warned; if its intellectual dominance was not broken, “nomad tribes from the Eastern steppes would again raid and pillage Europe, sweeping across it with swift cavalry” (Mises [1922] 1962: 511). In returning to Neurath’s early contribution, I seek to illuminate the competing visions of historical development and peace that were at stake in the calculation debate. Like Benjamin’s angel of history, Neurath sought to “awaken the dead, and make whole what has been smashed” by the march of economic progress (Benjamin [1942] 2006: 392). His account of economic planning was underpinned by a challenge to a conception of history that relegated nonmarket forms of life to superseded historical stages, thereby licensing colonization, expropriation, and trade wars. In Neurath’s argument for the coexistence of multiple historical “stages” and forms of life, we see the outlines of profound challenge to the violence that sustains global capitalism. Turning the tables on liberal defenders of the market, he argued that market capitalism is fundamentally intolerant, as the imperative to prot necessitates the forceful imposition of market relations across the globe. In contrast to what I show was Mises’s contention that the benets of the division of labor justied the forcible imposition of market relations, I argue that Neurath’s position opened up the possibility of a coexistence of historical “stages” and diverse forms of life and challenged the belief that there is no alternative to market capitalism.

A Rational Economy Today, if Neurath’s contribution to the calculation debate is remembered at all, it is often depicted as a confused opening salvo that was soon tran- scended as the debate became more economically sophisticated. Scholars sympathetic to the liberal position have depicted Neurath’s arguments for

dispensing with money and the market altogether in a fully administered economy and for calculation in kind [Naturalrechnung] as evidence of his ignorance of economic theory.4 The Austrian School economist Israel Kirzner (1988: 5) argued in 1988 that, in the early stages of the debate, Mises had to contend with “proponents of socialism who seem not at all to have understood the social problems raised by the phenomenon of scarcity, at the most fundamental level.” According to Hayek’s biographer Bruce Caldwell, it is therefore “not surprising that, in the debate with Neurath, Mises very quickly won the day” (Caldwell 2004: 117). In his book-length study of the calculation debate, Don Lavoie devotes only a single footnote to Neurath, whose advocacy of calculation in kind, Lavoie notes, was soon abandoned by subsequent socialists (Lavoie 1985: 6n7). Socialists also contributed to burying Neurath’s contribution. The Pol- ish socialist economist Oskar Lange, who played a central role in both the calculation debate and its subsequent transmission, went so far as to propose that a statue of Mises should “occupy an honourable place” in the Central Planning Board of the socialist state, to recognize his great contribution to making socialists aware of the “importance of an adequate system of economic accounting to guide the allocation of resources in a socialist economy” (Lange 1936: 53). By reframing the debate as a technical one articulated in the language of neoclassical economics, Lange and subsequent socialist economists sought to distinguish themselves from what they implicitly accepted was Neurath’s ignorance of the importance of economic accounting. Whatever the value of their contributions, in this technical framing, as John O’Neill notes, “the immediate intellectual context of Mises’ argument is lost” (O’Neill 1996: 432). That context was one of revolutionary experi- mentation (the Munich Soviet and Klee’s revolutionary artists’ committee, for instance) and it was profoundly shaped by the experience of the Great War. It was Neurath’s own response to this climate, his 1919 essay “Through War Economy to Economy in Kind” (as Hayek recalled), that prompted Mises to initiate the debate (Caldwell 2004: 116). Neurath’s defense of a moneyless economy was also disparaged by many of his contemporaries. Max Weber testied on Neurath’s behalf at his treason trial in the wake of the suppression of the Munich Soviet Republic, but nonetheless described his economic schemes as “amateurish, absolutely irresponsible foolishness that could discredit ‘socialism,’ indeed for a hundred years, tearing everything that could be created now into the abyss of a stupid reaction” (quoted in Uebel 2006: 24). Neurath was also criticized on the left; the Marxist theoretician Karl Kautsky argued that the “barbarous monotony”

of the prison or the barracks lurked behind his plans (quoted in Uebel 2006: 56). Mises ([1922] 1962: 121n1) was not alone in charging that “Neurath did not recognise the insurmountable diªculties economic calculation would encounter in the socialist community.” Hayek (1935: 30–31), whose 1935 edited collection of “Critical Studies on the Possibilities of Socialism” shaped subsequent understandings of the calculation debate, described Neurath as the “most interesting” of its socialist protagonists, yet declared him “quite oblivi- ous of the insuperable diªculties which the absence of value calculations would put in the way of any rational economic use of the resources.” Such calculations were only possible in a market society, Mises ([1920] 2012: 10) had argued, as only market exchange makes it possible to refer values back to a single unit—what Mises called “the objective exchange value of commodities.” Mises’s account of market calculation rested on the contention of the founder of the Austrian School, Carl Menger, that individual values are subjective and cannot be directly compared. In the absence of agree- ment on values, Mises argued, exchange value emerges from the interplay of the subjective value judgments of all market participants. Market prices therefore enable consumers to directly compare alternative goods and courses of action and give entrepreneurs a means to compare their own productivity with that of others; if they are unable to produce goods at the market price, they have a yardstick that tells them their methods are less eªcient than those of other producers. Mises’s intervention challenged two distinct positions: he contested the belief that money prices could be replaced by alternative units of value, whether the labor units proposed by German and Austrian Social Demo- crats such as Karl Kautsky, Otto Leichter, and Otto and Helene Bauer, or the energy units proposed in the earlier economic plans of Popper-Lynkeus and Ballod-Atlanticus (on the former, see Chaloupek 2007; on the latter, see Neurath 1973c). But he also took aim at Neurath’s defense of calculation in kind. Neurath readily conceded that, in advocating a planned economy oriented to human happiness, he was not proposing a new unit of commensu- rability. Unlike those socialists and anarchists whom Karl Marx (2005: 122) criticized for believing that “tricks of circulation” could resolve the antago- nisms inherent in capitalist social relations, Neurath proposed abandoning generalized exchange (and thus production for the market, and money) as the regulating principle of economic life. Neurath argued that economic planning would utilize technical statistics on the availability and use of resources and detailed investigations of living standards to assess di¥erent courses of action using multiple criteria. In his 1919 address to the Munich

Workers’ and Soldiers’ Council, he pointed out that a decision to build either a hospital or a school does not begin with “units of teaching or sickness” but directly assesses the changes in living conditions that would «ow from either one (Neurath 1973b: 146). The implication of Neurath’s position was that even technical decisions were irreducibly political, and could not be resolved by a process of calculation, however precise (O’Neill 1996: 435). The dispute between Neurath and Mises was in large part a con«ict between two distinctive conceptions of rationality, which Max Weber ([1947] 1968: 185) termed “formal rationality” and “substantive rationality.” The sociologist described a formally rational system as one in which the provi- sion for needs is “expressed in numerical, calculable terms” (185). In his view, monetary calculation was formally the most rational means of economic action, as it enabled the comparison of di¥erent production processes that use di¥erent raw materials, and made it possible to identify which parts of an enterprise are operating ineªciently. Yet he contended that formal rationality tells us nothing about the substantive rationality of an economic system—that is, about the extent to which it actually provides for human needs. The “requirements of formal and substantive rationality are always in principle in con«ict,” he argued, as the formal rationality of money accounting has no implications for the “actual distribution of goods” (212). Weber argued that, unlike the relatively simple concept of formal rationality, substantive rationality was “full of diªculties,” because it required a consideration of “absolute values” and “ultimate ends” (185). Yet, even on his own terms, the technical rationality of monetary calculation was not so simple either; not only did money prices “result from systems of power relations” (211), but the “most various sorts of external and subjective barriers have existed to account for the fact that capital accounting has arisen as a basic form of economic calculation only in the Western world” (193). The technical rationality of monetary calculation was premised on legal and cultural conditions that Weber believed did not yet exist in much of the world. In referring to rational economy, Mises focused on the formal rationality of monetary calculation, which could not take account of values that “stand outside the domain of exchange transactions” (Mises [1920] 2012: 11). One who wished to calculate the protability of erecting a waterworks, he acknowledged, “would not be able to include in his calculation the beauty of the waterfall which the scheme might impair” (11), except if it resulted in a drop in monetary revenue from tourist traªc. While nothing would stop him from abandoning the waterworks because of its impact on the waterfall, such con- siderations are necessarily beyond the bounds of economic calculation.

Although here Mises appeared to make room for other noneconomic values, he stressed that it is on the basis of monetary calculations that decisions about production must be made. If we wish to choose whether to “utilize a water- course for the manufacture of electricity or the extension of a coal mine,” he wrote, in a newly topical example, we require the “more exact estimates” of economic calculation (9). Neurath, in stark contrast, argued that capitalism was substantively irrational in placing protability ahead of human happiness. He indicted its underutilization of resources—through dumping, the restriction of production, and underemployment of people who want to work—and its unjusti- able inequalities of income and wealth. Production oriented to protability cannot satisfy human needs, he argued, as only needs backed up by purchas- ing power in«uence supply. In a striking anticipation of more recent environmental arguments, Neurath argued, as early as 1919, that monetary calculation is inadequate for making decisions about the intergenerational ecological impact of the use of nonrenewable natural resources (Uebel 2005: 319; O’ Neill 2004). In a non-market economy, he argued, the central planning board would outline the impact of a new foundry or generating plant on the production of iron, electricity, food, and the environment. It would then be up to “the people’s representatives to decide whether they prefer one or the other shaping of living standards” (Neurath 1973b: 146). No unit of measurement could determine such a decision, he argued. “One must directly judge the desirability of the two possibilities” (146). Monetary calculation was no substitute for political and ethical judgment. Mises’s rejection of Neurath’s arguments were underpinned by a profound skepticism about such collective political decision-making. Mises depicted the bracketing of questions of substantive rationality as the necessary condition of social peace. Like Weber ([1947] 1968: 169), who wrote that every “rationally-oriented exchange is the resolution of a previous open or latent con«ict of interests by means of a compromise,” Mises portrayed the market in quasi-political terms as an avenue for mutually benecial, voluntary relations. From this perspective, while collectivism spells “war, intolerance, and persecution” (Mises [1957] 2007: 61), every exchange is a peace- treaty. In Socialism, first published in 1922, in response to Neurath’s arguments, Mises ([1922] 1962: 539) compared free trade to freedom of religion, arguing that “when people were committed to the idea that in the eld of religion only one plan must be adopted, bloody wars resulted.” Like reli- gious freedom, market freedom fosters peace, he argued, because it allows individuals to pursue their own plans. “If one master plan is to be substi- tuted for the plans of each citizen,” he wrote, “endless ghting must emerge”

(539). While Neurath portrayed planning as a process of democratic deliberation, for Mises, politics was necessarily a realm of violence, con«ict, and coercion. From his perspective, nothing provided better evidence of the bel- licosity of social planning than Neurath’s suggestion that the war economy showed that economic planning is possible.

From War Economy to Perpetual Peace: Neurath on Capitalism and Conict In his 1919 address to the Munich Workers’ and Soldiers’ Council, Neurath argued that the German war economy made clear monetary calculation could be replaced with calculation in kind. Was it “on the basis of some ‘war units’ that a general decided where he should direct his guns, supplies and soldiers?” he asked rhetorically (Neurath 1973b: 146). Neurath believed it was all too clear that war was fought with bullets and food, not with money. He also identied a number of advantages to a war economy: it did not restrict production in the interests of prot, he argued, and was less prone to crisis; it also stimulated innovation, prompting the revival of seemingly superseded industries (“beer breweries that are run out of the home,” for instance), and encouraged recycling and barter (Neurath quoted in Vossou- ghian 2007: 135). But his central wager was that, if it was possible to reorient the economy in wartime, it should not be necessary, in times of peace, to submit to “limitations on production, mass unemployment, [and] emigra- tion as some kind of fate or at least as something not due to the organisation of the market and credit” (Neurath [1916] 2006b: 304). Neurath’s critics saw his belief that the war economy contained the seeds of a future socialized economy as evidence of his authoritarianism. Weber ([1947] 1968: 209) argued it is dangerous to use the war economy to criticize the substantive rationality of other economic organizations, because, during war, the state uses powers unacceptable in peacetime “except in cases where the subjects are ‘slaves’ of an authoritarian state.” Hayek argued that the only alternative to a commercial society was a military one, which replaces individual liberty with the “security of the barracks” (Hayek [1944] 2007: 150). Mises ([1919] 2006) depicted the German war economy, with its extensive state control, as the model for all socialism. These characteriza- tions of economic planning as a despotic assault on individual freedom played as signicant a role as Mises’s strictly economic arguments in dis- crediting alternatives to the competitive market economy. Neurath ([1928] 1973c: 264–5) directly rejected the imputation that his administrative economy amounted to “the so-called ‘barracks-socialism’ which is hardly entertained by any serious socialist thinker.” There are nonetheless

aspects of his earlier advocacy of total socialization that at rst appear to support this charge. In a lecture delivered in May 1918, at a time when he was directing the German Museum of War Economy, he noted that “in today’s war economy . . . gures of authority play a larger role than before the war” and “in place of the will of the individual, the will of states or associations often emerge [sic]” (quoted in Vossoughian 2007: 137). In his 1919 address to the Munich Workers’ Council, he suggested that, while socialization may “bring with it a far-reaching democratization of rms,” it was also possible that, within individual workplaces, there “may reign a kind of absolutism” similar to that which exists between a private and a commander in a socialist militia (Neurath 1973b: 139). Neurath suggested that the role of workers’ councils in an individual enterprise should be limited to controlling “working conditions” (139–40). In common with the mainstream of German Social Democracy, he worried that more powerful sections of the working class could blackmail those who worked in less vital sectors of the economy, and he argued that, in a socialist economy, strikes would be a “form of civil war” (139). As he advocated his plans for social engineering, Neurath at times depicted independent workers’ organizations as spanners thrown in the well-oiled cogs of the machine. Nonetheless, there is signicant evidence from his works of the same period that challenges the view that his plans entailed the transformation of society into a single barracks ruled with military severity. In the summary of his Munich address that he wrote while imprisoned in the fortress, he argued that while he did not believe the “political council system” was technically appropriate, “the adherents to socialism might of course strive for a specic type of state for reasons of power, even though this type embodies social-tech- nological disadvantages” (quoted in Cartwright et al. 2008: 44). What Thomas E. Uebel (2006: 7) has referred to as the “lacuna of the political” in Neurath’s thought is perhaps better understood as his belief that scientists could not pre- scribe answers to political questions. Whereas the neoliberals insisted that there was a necessary relation between the market economy and political freedom, Neurath argued that economic planning could potentially be combined with diverse political forms. “From the point of view of social engineering,” he wrote, “the socialisation could be carried out by a despotic ruler just as well as by a republic of councils” (Neurath [1920/21] 2006e: 364). The suitability of these various forms remained a political question shaped by historical circumstances. In his own circumstances, he made clear that workers were demand- ing a republic of councils in which “bureaucracy is replaced at every point by representative institutions” (Neurath [1919] 1973b: 137).

Neurath ([1920/21] 2006e: 349) argued that a key question to be asked of any plan for socialization is “how will it change the control over economic life.” This control “is not just demanded for the sake of a new distribution and use of resources by the people,” he stressed, “but also in its own right” (349). While his interest in scientic management seems at rst to recall the use of Taylorism and piecework in the Soviet Union, Neurath ([1917] 1973d: 130–32) explicitly rejected “the generalized mechanization of living” that treated individual workers as appendages to machines. Instead, he proposed a “converse Taylor system” that would mold professions to suit di¥erent people (not vice versa) and enable workers “to achieve full humanity” (130–32). He also envisioned that the “working people [would] decide for themselves whether they want to lay the bricks according to outdated rules or following scientic principles that take into account output, health and well-being on equal terms” (Neurath [1920/21] 2006e: 360). Neurath was convinced that socialization would increase deliberation and collective freedom. It would, for instance, enable people to choose options that are precluded by competitive market pressures, such as prioritizing better working conditions or more leisure time over higher productivity and consumption. In revealing that the freedom of the liberal individual is tied to the perpetual drudgery of labor and indistinguishable from submission to impersonal market dynamics, Neurath revealed the weak point of the liberal account of freedom. Mises (1996: 590) argued that the benets of modern industrialism arose because the entrepreneur “did not bother about the feel- ings of his employees as workers” and focused on serving them as consumers. As consumers, these workers are sovereign. As sellers of labor power, however, they are subjected to price «uctuations, which “submit the individual to a harsh social pressure” (599). Mises’s consumer sovereignty was a capricious and arbitrary sovereignty, which did not provide reasons for throwing workers out of their jobs or bankrupting their rms. And the price for disobeying this sovereignty was ruin. Weber ([1947] 1968: 213) was more open than Mises on this point: the unequal distribution of capital goods in a market society meant that, despite entering into formally voluntary relations, those without property are “subjected to the authority” of wealthy householders or capital owners, he argued. Such subjection was not an aber- ration; in “a purely capitalist organization of production,” he acknowledged, “this is the fate of the entire working class” (213). For Mises, the only alternatives to the impersonal domination of the market were authoritarian statism or the violence of the state of nature. History is a struggle between “the peaceful principle, which advances the development of

trade, and the militarist-imperialist principle,” Mises ([1922] 1962: 301) wrote in 1922. The capitalist market with its extensive division of labor requires uninterrupted peace, he argued, and therefore provides an important barrier to con«ict. Socialism, on the contrary, represents a regression to a more “primitive” economic system for which violent acquisition rather than peaceful exchange was primary. While Mises drew his account of peaceful commerce from nineteenth-century Manchester School liberals, Neurath (2006g: 154) starkly inverted the Manchester liberalism contention that war was “nothing but a disturbance of commercial economy.”5 Wars continue under capitalism, Neurath argued, not due to the irrational persistence of a precapitalist martial spirit, but because the competitive dynamics of profit-making push nations and people into con«ict. As Neurath noted, the idea that war could only be bad for business was in sharp contrast to the dominant view in antiquity, when Greek and Roman authors had considered war a “gainful occupation,” or, as Aristotle put it, “a kind of hunt” (154).6 Neurath argued that such conquest could not be rele - gated to the past; among European nations too, war had been a “means to acquire colonies so as to exploit them to the exclusion of all competitors” (158).7 Neurath argued that the liberal argument that wars could not enrich a nation had arisen only once the “wars which had provided markets and produced resources in the rst place were forgotten” (158). Against the utopias of peaceful commerce, Neurath argued that trade wars were endemic to an economy in which the prot motive ruled. Not only did the irrational and unproductive use of resources during times of peace make it possible for states to profit from war, but he believed that the constant competitive dynamic of economic life pushed even peace-seeking societies into con«ict. A capitalist market economy, Neurath argued, would always be a war of all against all.

Economic Tolerance Neurath ([1920] 2006f: 397) argued that “intolerance of the market economy” makes market societies uniquely disposed to con«ict. A market society is compelled to impose a single form of life across the globe, he contended, and it was this “tendency to organize the economy in all civilizations after the same pattern which made the free market society so much hated” (402). In a 1919 essay, he contended that those who “work for the introduction of a new civilisation” are convinced that “the levelling power of the free market economy must be broken” (402).8 The famed tolerance of liberalism ended,

he pointed out, where economic life began. Liberal states had “destroyed everything that stood against ‘laissez faire’ and the wish of expansion for capitalist gain” (397). From such a perspective, market capitalism augured not peace but trade wars, colonization, and violent civilizing missions. Neur- ath (375) also pointed to the violent suppression of the Munich Soviet Repub- lic to bolster his case that the market order was violently intolerant: “All sorts of people spoke of peace and orderliness,” he wrote, “and yet did not shy from using violence to halt a movement that only needed proper avenues to lead to the land of the future” (375). Neurath ([1919] 2006g: 172) traced this intolerance to a conception of history that relegated nonmarket forms of existence to superseded stages of human development, and he rejected “the widely held prejudice that econ - omy in kind is fundamentally more primitive than a money economy.” Neur- ath’s thought was not entirely free of the historicism that pervaded the mainstream of social democracy. Like many Marxists of his time, he identied the rise of large cartels and organizations as a step toward a socialized economy. Yet he also insisted that communism did not mean the intensication of industrialization and the division of labor, with their “merely partial development of human potential” (Neurath [1920/21] 2006e: 355). Like Walter Benjamin, he bitterly criticized the Social Democrats whose commitment to historical necessity had “killed playful utopianism,” thereby “paralyzing the resolve to think up new forms” (345). Rather than treating peasant communes, craft guilds, and industrial organizations as discrete sequential stages, Neurath proposed that a socialized society would “conserve the already-existing non-capitalist structures” in order to “enhance the development of the whole human potentiality” (355). Pointing to the Communist Manifesto, he envisioned a society in which individuals could live in small settlements or cities and experience a combination of industrial and agricul- tural work (Neurath 2006f: 401). “Let one thing be clear from the start,” Neurath (1973b: 145) wrote, “within a socialized economy a far greater multi- plicity of ways of life can be made possible than in a free trade economy. A socialization that aims to last, he argues, must be one that “respects human beings in their variety and does not enforce new subjugation” (Neurath 2006f: 402). Against the myth of peaceful commerce, Neurath highlighted the violent imposition of capitalist market relations. After arguing that attempts to destroy the existing cultures of peasants and craftsman and impose industrialization would lead to new con«icts, he asked: “Do we really need an economic Thirty Years War to teach us tolerance?” (Neurath [1920/21] 2006e:

355). This conception of economic tolerance was also central to Neurath’s indictment of the violence that had produced the world market. Just as domestic capitalism relied on the violent expropriation of the peasantry and the enclosure of communal lands, he argued, the world market necessitated the forcible colonization and transformation of noncapitalist societies. Neur- ath depicted the Opium Wars of the mid-nineteenth century, in which the British and French used gunboats to force China to import opium, as the quintessential wars of a market order. Contesting sanitized associations of global trade with cultural exchange, he asked: Of what signicance is it that “a few European men of letters tell a small circle of educated people about Chinese philosophy,” when set against the fact that “the blessings of world traªc rst enabled the Chinese properly to get to know Europe as an international organisation for robbery”? (Neurath 1973c: 267). Just as Neurath believed that peasants, traders, and self-governing communes should be left to develop their own forms of life, he argued that “if one had left the Chinese alone they would hardly have disturbed world peace” (268). For Mises, in contrast, such a counterfactual was too horrifying to contemplate. His own account of liberal peace was tempered by his defense of the violent imposition of trade.

Mises on Market Calculation, Social Peace, and Economic History According to Mises ([1927] 2005: 78), it “was from the fact of the international division of labor that liberalism derives the decisive, irrefutable argument against war.” Yet despite his praise for the “douceur [sweetness] of commerce” (Hirschman [1977] 2013: 59), Mises was clear that the extension of the division of labor was enabled by gunboats and theft.9 His 1922 book, Socialism, contains a sweeping defense of the violence that produced the world market: “No one can regard what his neighbour does as a matter of mere indi¥erence,” Mises ([1922] 1962: 233) asserted, as everyone has an interest in the productivity enabled by an extended division of labor. Mises developed a just war argument for the violent imposition of a world market. Given the universal benets of an extended division of labor, he declared: “I too am injured if some people maintain a state of economic self-suªciency” (233).10 Mises argued it was in the interest of “the more advanced organism” to draw the “less advanced” into the sphere of its market relations, even in cases in which the latter present no military threat and occupy land unfavor- able to production (308). The wars waged by England to expand her empire were justied, he believed, because they laid the foundations for the modern

world economy. Too much emphasis had been placed on the fact that Britain and France had imposed opium on China, he argued; “the stake was the general freedom of trade” (234n1). 11 Had India and China not been forcefully opened to trade, he asserted, “not only each Chinese and each Hindu, but also each European and each American would be considerably worse o¥” (235). Mises grounded his argument that the extension of the division of labor was coextensive with the path from “savagery” or “barbarism” to “civilization” in the evolutionary social theory of the Scottish enlightenment. 12 For gures such as Adam Ferguson and Adam Smith, the history of civil society was one of slow and gradual progression, from the “rude and infant state” of unsettled tribes to the industry, arts, sciences, and class divisions of “polished” commercial nations (Ferguson [1767] 2001: 74). Smith ([1776] 1976: 40) long preceded Mises in arguing that the division of labor, and the greater opulence it brings about, is limited by the extent of the market, and that the most “civilized” states therefore have an impetus to draw the “barbarous and uncivilized” into market relations. Yet Mises’s work contained none of the ambivalence of his Scottish predecessors, who were far less sanguine about the political e¥ects of the division of labor. Ferguson ([1767] 2001: 207–8) was particularly worried that the division of labor would “break the bonds of society,” leaving its members with “no common a¥airs to transact, but those of trade.” For Mises, in contrast, the «ip side of the argument that the extension of the division of labor was the necessary path of civilization was the contention that the rise of collectivist economic planning was not only a barrier to rational economic calculation—it was a civilizational regression to barbarism, con«ict, and penury. In the wake of WWI, Mises ([1919] 2006: 169) evoked the “decline of ancient civilization” to warn that revolutionary syndicalism and “destruction- ism” were threatening the spirit of social cooperation that a market society required. Mises’s account of the fall of Rome was decidedly less nuanced than that of Neurath, for whom the decline of antiquity presented economic history with “a scene full of variety” (Neurath [1909] 2006a). Mises warned that if the market economy was abandoned, the depopulation of cities, the sinking of the landless into misery, the disruption of the monetary system, and the reversion to a barter economy would “bring stagnation, if not the decline of our whole economic civilization, and misery and need for all” (157–58). In his major work Human Action ([1949] 1996), Mises provided an explicitly racialized version of the claim that the most civilized peoples were those with the most developed division of labor. The “destiny of modern civilization as developed by the white peoples in the last two hundred

years is inseparably linked with the fate of economic science,” he wrote there (10). In terms that recalled Weber’s account of the cultural precondi- tions for economic rationality, he argued that the “East is foreign to the Western spirit that has created capitalism” (671). Mises asserted that the “peoples who have developed the system of the market economy and cling to it are in every respect superior to all other peoples” (672). None of the West’s achievements could have been accomplished except in a capitalist economy and none would survive unless the world market was preserved, he argued. He therefore made the market central to his own account of the civilizing mission, arguing that “if the Asiatics and Africans really enter into the orbit of Western civilization, they will have to adopt the market economy without reservation” (671). Adopting the market entailed a profound cultural and subjective transformation. And if that transformation was not voluntary, the need to preserve market civilization made it legiti- mate to impose it by force. While market peoples are peace-loving, Mises warned that they would ght to the death against anyone who interferes with the market, and “repel the barbarian invaders whatever their numbers may be” (671). The violence that created the conditions for capitalism was not a founding violence relegated to a distance past, as Mises sometimes implied. Rather, it reappeared whenever the market order was threatened. The state does not interfere in the market, Mises stated. “It employs its power to beat people into submission solely for the prevention of actions destructive to the preservation and the smooth operation of the market economy” (258). From such a perspective, the suppression of the Munich Soviet Republic and the forcible imposition of opium on China provided particularly stark examples of what was necessary to beat those who sought to enact alternatives to market capitalism into submission.

Neurath’s Warning In 1945, in the wake of another world war, Neurath wrote a short review of Hayek’s recently published anti-socialist tract, The Road to Serfdom. By then, in many of those countries that had emerged from the war victorious, earlier revolutionary aspirations had been replaced by enthusiasm for state planning. Expressing his support for Hayek’s aim to “show up concealed fascism,” Neurath (1973a: 546) acknowledged that there were some who sup- ported economic planning “as a new way of obtaining totalitarian leadership,” and others who “unwittingly support fascism by promoting certain princi-

ples of planning.” Yet he argued that Hayek had “exaggerated his case” by asserting that there was only one choice: free market competition or the sup- posed totalitarianism of economic planning. “He never thinks of planning as cooperative e¥ort based on compromise,” Neurath complained (546). Restating arguments that formed part of his case for socialization decades earlier, Neurath imagined a society in which a representative body distrib - uted raw materials and food based on the “orchestration of the various wishes of its workers” (546). Rather than requiring the imposition of a single way of life, he stressed that such a pluralist society would give small groups the right to their own settlements, periodicals, and forms of life and work. Majority decisions would be restricted to unavoidable matters, such as set- ting the width of railway gauges for a whole country. Neurath rejected Hayek’s “dogmatic” insistence that planning was “beyond human ability” and argued that the latter’s contention that eradicating poverty is impossible painted a “gloomy picture of the post-war situation” (547). Neurath ended his review with a warning: if people are convinced that the only alternative to the crises and unemployment of the competitive market is authoritarianism, they may well choose the latter, “with tears in their eyes” (548). He argued that those who endorsed planning for freedom would be best placed to challenge both the “painful market society of the past” and “dictatorial planning based on totalitarian fascism” (548). Today, Neurath’s warning seems eerily prescient. After decades of neoliberal austerity, during which people were told that the only alternative to the competitive market was the barracks security of authoritarian statism, signicant segments of the populations of India, Russia, Turkey, Brazil, the United States, and else- where appear to have responded to this forced choice by choosing the latter. One century after Klee painted the angel of history, the pile of wreckage at the angel’s feet has grown still higher. The Horsemen of the Apocalypse, which Neurath warned would only be defeated by human knowledge and will, still torment the world. Today, war, persecution, and environmental devastation have generated extraordinary levels of displacement (UNHCR 2018). In Europe and the United States, the rise of the far right has given a more explicitly racist and exclusionary sheen to older aªrmations of the superiority of “Western civilization.” In such a context, what is most valuable about Neurath’s rationalist utopianism is not the specic details of his plans but his insistence that humans have the capacity to bring about numerous di¥erent options for social and economic life—that is, that there are many alternatives. It was Mises who made clear what was necessary to foreclose such options, when he placed the future of “Western civilization” in the

hands of the arms dealers; “As long as there is a need for weapons,” he wrote in the wake of WWII, “the entrepreneurs of the market society will never stop producing more eªcient weapons and thus securing to their countrymen a superiority of equipment over the merely imitative noncapitalistic Orientals” (Mises [1949] 1996: 671).

Notes

1 Neurath did not serve his full sentence. After the intervention of Otto Bauer, then foreign secretary of Austria, he was deported to Austria (Cartwright et al. 2008: 55) 2 As Mises ([1944] 2008: 10) put it in a later essay: “War is a primitive human institu- tion,” which was only restrained by the recognition that peaceful cooperation through the division of labor brings more benets than “violent strife.” 3 On the Bolshevik-Menshevik split, Mises ([1922] 1962: 547) wrote: “Lenin, the Bol- shevist chief, knew his countrymen much better than his adversaries and their leader, Plekhanov, did. He did not, like Plekhanov, make the mistake of applying to Russians the standards of the Western nations.” 4 Neurath’s calculation in kind required the direct consideration and deliberation of qualitative options that could not be made commensurable. 5 For a more recent iteration of this argument, see McCa¥rey 2017. 6 Aristotle considered expertise in war to be a form of “acquisitive expertise,” one part of which is expertise in hunting. Neurath did not mention that Aristotle believed this expertise should be “used with a view both to beasts and to those human beings who are naturally suited to be ruled but unwilling” (Aristotle 2013: 14). 7 Neurath’s interest in war economics preceded the outbreak of the First World War. In 1912, he had received a stipend from the Carnegie Endowment for International Peace to study the economic impact of the Balkan war. He argued that Serbia’s suc- cess in the war was due, in part, to its preexisting in-kind economy and its “peasant democracy,” which had made it better equipped to cope with war than the industrial or semifeudal states (Neurath [1912] 2006d: 233). 8 “Total Socialisation” was written in 1919 but not published until the following year. 9 In previous work I argue that the neoliberals embraced the political argument for the pacifying virtues of capitalism that Hirschman believed has not withstood the Napo- leonic Wars and the industrial revolution. See Whyte 2019. 10 For a fuller account of Mises’s argument, see Whyte 2019. 11 In any case, Mises believed that “from the free trade point of view, “no barriers ought to be put in the way even of the trade in poisons,” it being up to each individual to restrain himself (Mises [1922] 1962: 234). 12 Much later, in 1962, Mises explicitly placed himself in a “long line of eminent authors, beginning with Adam Ferguson, [who] tried to grasp the characteristic fea- ture that distinguishes the modern capitalistic society, the market economy, from the older systems of the arrangement of social cooperation. They distinguished between warlike nations and commercial nations, between societies of a militant structure and those of individual freedom, between the society based on status and that based on contract” (Mises [1962] 1990: 20).

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