Socialism: Illegitimate, Not Just Inefficient

In a recent essay on the sixteenth-century author, Etiene de la Boetie, Robert Klassen highlights several passages from Etiene’s book, The Politics of Servitude: The Discourse of Voluntary Servitude. Etiene believed that the State’s use of redistributed wealth was the basis of its authority. The masses have always loved tax-funded bread and circuses. They surrender their liberty for the promise of continuing bread and circuses.

There is a problem with this analysis: the State does not begin with bread and circuses. It begins with the promise of law and order. This, in turn, rests on a concept of justice. The State comes in the name of justice, but frequently ends in injustice. Why?

A successful critique of the messianic State must offer a rival view to the prevailing social order’s views of justice and injustice. Ultimately, the sense of injustice is the crucial factor in the removal of tyranny, rather than the mere substitution of a rival group of scoundrels. There must be a sense of the restoration of justice. Men may risk their lives for power, or for the hope to get in on the plunder, but this is no solution to the problem of tyranny. What we need are people who will risk everything for the establishment of justice.

This leads me to an important and divisive conceptual issue within the libertarian camp: the ethics of liberty vs. the theory of value-free economics.

Baldy Harper’s Question to Mises

There are at least three free market economists who used their initials, F. A. The most famous is Hayek. Lutz is less known. Harper is the least known within academic circles.

Floyd A. “Baldy” Harper was not bald. For two decades, 1950-70, he was one of the most important figures in the anarcho-capitalist wing of libertarianism. He was hired by Leonard Read to work at the Foundation for Economic Education. Read later severed his formal connection with Harper over the issue of anarchism. Harper then moved to the William Volker Fund for a few years, supervising the publication of the Volker Fund’s series in economics, which included Israel Kirzner’s Ph.D. dissertation, written under Mises, The Economic Point of View, the translation and publication of Frederic Bastiat’s essays, and a series of book-long collections of essays edited by Helmut Schoeck and James Wiggins. In 1962, he was fired by the head of the Volker Fund, Harold Luhnow. He then began the Institute for Humane Studies in Menlo Park, California.

Harper wrote two small books, Why Wages Rise and Liberty: A Path to Its Recovery. In the second book, he made one crucial observation: if you do not have the right to disown a piece of property, then you do not own it. That gem I think I first found in Rothbard’s Man, Economy, and State, which Harper also got into print through Volker funding. He later published the expurgated sections of the book as Power and Market (1970). Like Rothbard, he based his defense of the market on moral grounds: the natural right of everyone to property gained voluntarily and peacefully.

Harper was important as a facilitator of ideas. He recruited raw talent. I was one of his recruits in 1961. He sent free books to people. I received my copy of Man, Economy, and State in the fall of 1962. He organized conferences. He asked hard questions softly.

He told me that he had once asked Mises this question: “If socialism were more efficient than capitalism, would you still oppose it?” Mises answered: “But socialism is not more efficient than capitalism.” He said that he asked it again, and got the same reply. “I realized that Mises was not going to answer my question.”

A major difference between Mises and Rothbard, as well as Harper, is found here. Rothbard, although a defender of the methodology value-free economics, just as Mises was and most economists say they are, also presented the moral case against socialism and collectivism generally. He wrote The Ethics of Liberty. This was not a book that Mises would ever have written. I doubt that he would have endorsed it, at least not in his capacity as an economist.

Mises believed that the case against socialism was best made in terms of its economic irrationality, i.e., its inability to enable central planners to make rational economic calculations. Rothbard agreed with Mises’s technical critique, but he went further. He argued that the State is a moral monstrosity and a destroyer of liberty. If socialism were more efficient than capitalism, Rothbard would still have opposed it.

The war over socialism has always been a moral war first. It is not primarily a debate over comparative efficiency. In a pragmatic era, some people will be persuaded by arguments regarding efficiency, but socialists always came in the name of a moral vision. They early staked their claim — collectively, of course — to the high moral ground.

This is why, in his famous 1990 admission that “Mises was right” regarding Mises’ technical critique of socialism, Robert Heilbroner then moved on to the next stage of socialism: recommending environmentalism as a means of restoring the lost legitimacy of socialism. He was at long last persuaded that socialism is economically irrational. The complete failure of the Soviet Union’s economy had finally persuaded him of the logic of Mises’s 1920 essay. He immediately called for socialism’s establishment through controls over the economy in the name of environmentalism. This is how he concluded his New Yorker (Sept. 10) essay.

This Bread Is Mine

Robert Lefevre, a contemporary of and fellow anarchist with Harper, wrote a book, This Bread Is Mine. It was not a defense of capitalism’s lower cost of bread or the higher quality of its bread. It was a defense of his right to own the bread that he had produced.

It is here that the socialist begins the fight. He rejects the owner’s exclusive claim, meaning his right to exclude everyone else from this bread. Society has a moral claim on this bread, the socialist claims.

There is no doubt that this socialistic argument has appealed to the masses from time to time. This was Etiene’s observation. Men’s acceptance of this moral claim has been the basis of their willingness to submit voluntarily to the State.

Etiene fully understood that if all men refused to cooperate with the State’s agents except under threat of immediate violence, no civil ruler could enforce his claims beyond his immediate surroundings. But men do submit, and not just out of fear. They believe that the civil rulers possess the moral right to enforce certain laws. They believe, in our day, that “some of your bread is mine.”

There is a proper role for technical arguments. The fact is, socialism’s immorality has bad consequences. As surely as Ben Franklin’s Poor Richard was correct — “Honesty is the best policy” — so is capitalism more productive than socialism. There is moral cause and effect in social and economic affairs. This makes the case for liberty easier to make among the pragmatists of any era. The problem is, the most efficient defenders of the efficiency of the free market have generally been defenders of value-free economics. They have let their technical case against socialism stand alone. This lets the socialists off one of the two hooks, the hook that offers them their greatest propaganda advantage: the myth of their high moral ground.

We need defenders of the free market who understand both the inefficiency of collectivism and its immorality. It would be nice if they were effective coiners of aphorisms, the way that Bastiat was.

James Bovard

I cannot stand to read much of a James Bovard’s book at one sitting. His books enrage me too much. He catalogues horrors of interventionism. He monitors the enforcement of government regulations by real-world bureaucrats. He shows examples of the petty tyranny of the interventionist State. He provides story after story of lost freedom, stolen wealth, and heartless bureaucracy. Page after page, the cataloging goes on. The reader is expected finally to accept the grim truth: these are representative cases in a stream of petty tyranny that will not stop until the funding stops.

His case studies are not randomly accumulated; they are carefully selected to support a moral case against government intervention into the economy. The reader reads these horror stories, and asks himself, one by one, “Is that right?” Bovard’s silent response: “It’s not right, but it’s true.” Then he provides another case study.

Occasionally, he offers an aphorism. “Democracy is two wolves and a sheep voting on what to have for dinner.” That one is worthy of Bastiat.

Bovard’s books evoke moral outrage. This is why they are so important. Men are often willing to live with inefficiency. They are much less willing to live with injustice.


Every social order has all of these five aspects: legitimacy, authority, law, sanctions, and continuity. If it lacks any of these five features, it will disappear. It will be replaced by another. I have summarized these five factors with five questions.

Who’s in charge here, and why?To whom do I report?What are the rules?What do I get if I obey (disobey)?Does this outfit have a future?
Mises argued that socialists successfully persuaded people to accept their economic system on this basis: the unproven slogan that socialism is inevitable. Men’s resistance to socialist ideas was undermined, Mises said, once they accepted the doctrine that socialism is the wave of the future. (The most detailed study of this aspect of Marxism is F. N. Lee’s Communist Eschatology [1974].)

Mises had a good point, but I think he would have come closer to the truth by looking at the first issue: legitimacy. Socialists have always come in the name of higher morality, i.e., their moral right to rule on behalf of the downtrodden. Mises was uncomfortable with the moral argument against socialism. He was not prepared to take on the collectivists in public debate with respect to this issue. Rothbard was.

It is fine to argue that socialism is not the wave of the future. The collapse of the USSR is the supreme case in point. It is fine to argue that economic cause and effect under socialism is irrational, due to the absence of markets, especially capital markets. Mises made this the center piece of his technical critique of socialism. It is fine to argue that socialism rests on a system of law that is opposed to human nature, but most economists begin to get nervous when they hear “human nature” invoked, which is one reason why they resisted Mises’s doctrine of praxeology: the a priori science of human action.

As for the authority of socialism, this is based operationally on power. But this power always requires voluntary submission — Etiene’s point. Why do men submit? They accept the legitimacy of the prevailing authority.


R. J. Rushdoony, in his book, The Institutes of Biblical Law (1973), said that the god of a society is its source of law. There can be debates over law — its content, its effects, its procedures — but the debate over law is ultimately the debate over origins.

“Who is in charge here, and why?” This is the issue of legitimacy. The ideological battle over socialism begins here and must end here. This is why Heilbroner did not capitulate to the free market ideal, even though he finally recognized the truth of Mises’s arguments regarding point four: economic cause and effect. The debate over socialism vs. the free market is not about efficiency as such. It is about legitimacy and the social order that grows out of legitimacy.

The libertarian says, “This bread is mine.” The Christian says (or ought to say), “This bread is God’s, and He has delegated control over it, and responsibility for it, to me.” The other four issues are peripheral — not unimportant, but peripheral to the central issue.

May 15, 2001

Gary North [send him mail] is the author of an eleven-volume series, An Economic Commentary on the Bible. The latest volume is Cooperation and Dominion: An Economic Commentary on Romans. The series can be downloaded free of charge at