Our Interests and Their Interests

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from Rothbard’s 1978 preface to Ludwig von Mises’s The
Clash of Group Interests and Other Essays

In the 20th
century, the advocates of free-market economics almost invariably
pin the blame for government intervention solely on erroneous
ideas – that is, on incorrect ideas about which policies
will advance the public weal. To most of these writers, any such
concept as "ruling class" sounds impossibly Marxist.
In short, what they are really saying is that there are no irreconcilable
conflicts of class or group interest in human history, that everyone’s
interests are always compatible, and that therefore any political
clashes can only stem from misapprehensions of this common interest.

In "The
Clash of Group Interests," Ludwig von Mises, the outstanding
champion of the free market in this century, avoids the naïve
trap embraced by so many of his colleagues. Instead, Mises sets
forth a highly sophisticated and libertarian theory of classes
and of class conflict by distinguishing sharply between the free
market and government intervention.

It is true
that on the free market there are no clashes of class or
group interest; all participants benefit from the market and therefore
all their interests are in harmony.

But the matter
changes drastically, Mises points out, when we move to the intervention
of government. For that very intervention necessarily creates
conflict between those classes of people who are benefited or
privileged by the State and those who are burdened by it. These
conflicting classes created by State intervention Mises calls
castes. As Mises states,

there prevails a solidarity of interests among all caste members
and a conflict of interests among the various castes. Each privileged
caste aims at the attainment of new privileges and at the preservation
of old ones. Each underprivileged caste aims at the abolition
of its disqualifications. Within a caste society there is an irreconcilable
antagonism between the interests of the various castes.

In this profound
analysis Mises harkens back to the original libertarian theory
of class analysis, originated by Charles
and Charles
, leaders of French laissez-faire liberalism in the
early 19th century.

But Mises
has a grave problem; as a utilitarian, indeed as someone who equates
utilitarianism with economics and with the free market, he has
to be able to convince everyone, even those whom he concedes are
the ruling castes, that they would be better off in a free market
and a free society, and that they too should agitate for this
end. He attempts to do this by setting up a dichotomy between
"short-run" and "long-run" interests, the
latter being termed "the rightly understood" interests.
Even the short-run beneficiaries of statism, Mises asserts, will
lose in the long run. As Mises puts it,

the short run an individual or a group may profit from violating
the interests of other groups or individuals. But in the long
run, in indulging in such actions, they damage their own selfish
interests no less than those of the people they have injured.
The sacrifice that a man or a group makes in renouncing some short-run
gains, lest they endanger the peaceful operation of the apparatus
of social cooperation, is merely temporary. It amounts to an abandonment
of a small immediate profit for the sake of incomparably greater
advantages in the long run.

The great
problem here is: why should people always consult their
long-run, as contrasted to their short-run, interests? Why is
the long run the "right understanding"? Ludwig von Mises,
more than any economist of his day, has brought to the discipline
the realization of the great and abiding importance of time
preference in human action: the preference of achieving a
given satisfaction now rather than later. In short, everyone prefers
the shorter to the longer run, some to different degrees than

How can Mises,
as a utilitarian, say that a lower time preference for the present
is "better" than a higher? In brief, some moral doctrine
beyond utilitarianism is necessary to assert that people should
consult their long-run over their short-run interests. This consideration
becomes even more important when we consider those cases where
government intervention confers great, not "small,"
gains on the privileged, and where retribution does not arrive
for a very long time, so that the "temporary" in the
above quote is a long time indeed.

Mises, in
"The Clash of Group Interests," tries to dismiss war
between nations and nationalisms as senseless, at least in the
long run. But he does not come to grips with the problem of national
boundaries; since the essence of the nation-State is that it has
a monopoly of force over a given territorial area, there is ineluctably
a conflict of interest between States and their rulers over the
size of their territories, the size of the areas over which their
dominion is exercised.

While in
the free market, each man’s gain is another man’s gain, one State’s
gain in territory is necessarily another State’s loss, and so
the conflicts of interest over boundaries are irreconcilable –
even though they are less important the fewer the government interventions
in society.

notable theory of classes has been curiously neglected by most
of his followers. By bringing it back into prominence, we have
to abandon the cozy view that all of us, we and our privileged
rulers alike, are in a continuing harmony of interest. By amending
Mises’s theory to account for time preference and other problems
in his "rightly understood" analysis, we conclude with
the still less cozy view that the interests of the State-privileged
and of the rest of society are at loggerheads – and further,
that only moral principles beyond utilitarianism can ultimately
settle the dispute between them.

from Mises.org.

N. Rothbard
(1926–1995) was dean of the Austrian
School, founder of modern libertarianism, and chief academic
officer of the Mises Institute.
He was also editor — with Lew Rockwell — of The
Rothbard-Rockwell Report
, and appointed Lew as his
literary executor. See
his books.

Best of Murray Rothbard

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