Ludwig von Mises, the prominent economist of the so-called Austrian School of Economics, wrote Planned Chaos in 1947 for the Foundation for Economic Education. It was later added as an epilogue to a subsequent edition of his previously published book, Socialism. This essay serves as a strong critique of centralized planning, advocating instead for a market economy based on private property, the price system, the rule of law, and democracy; and Mises warns that socialism inevitably leads to the demise of democracy.
The first three chapters outline the theoretical principles of free-market capitalism, contrasting it with interventionism and socialism, complemented by some epistemological observations in the penultimate chapter. These concepts may not present anything new to those already familiar with them, especially readers of Mises' Human Action or even Henry Hazlitt's Economics in One Lesson. However, the subsequent historical chapters on the socialisms of Russia, Nazi Germany, and Italian fascism are particularly enlightening for those with very little knowledge of the characteristics of these systems and the history of that era. Mises lived through those years closely, residing in Austria until 1934, before moving to Switzerland, and later fleeing from the Nazis to the United States in 1940.
Thus, this short pamphlet and essay serves as both a history and economics lesson. Additionally, being concise and written with clarity, it makes an excellent gift for those interested in these topics but not yet deeply immersed in them.
Among the most interesting sections is the explanation of the semantics of "socialism" and "communism," which were synonymous in Marx and Engels' works but later became distinct concepts for some, creating confusion unless definitions are clarified upfront.
Mises also points out that, contrary to communist claims that Nazism and fascism represented the worst and most advanced stages of capitalism, both systems were, in fact, forms of socialism. Comparing the two models, Mises writes:
[62] The main difference was that the fascists were less efficient and even more corrupt than the Nazis.
Although fascism ostensibly adhered to guild socialism, rebranding it as corporatism, in practice there was no self-governance by the renamed chambers of commerce (corporations). Instead, socialist central planning prevailed. Regarding Nazism, Mises argues that its only originality lay in the pursuit of the "vital space" (Lebensraum). The Nazis merely copied Soviet methods of extermination, domination, and oppression while taking the abolition of laissez-faire further—not only abolishing it in economic production but also in human procreation, aiming to implement eugenics to create "perfect" humans.
The context in which Mises writes reflects a dominant public opinion that, as he puts it:
[p3] It is an almost undisputed dogma that capitalism is finished.
Mises disagrees, asserting that despite anti-capitalist obstacles imposed by governments, private enterprise continues to fulfill its social function of enhancing people's well-being by producing more, better, and cheaper economic goods. The prevailing intellectual environment he describes I find it akin to a worsened Hobbesian worldview:
[p4] The dogma that the state or government embodies everything good and beneficial, while individuals are wretched subordinates seeking only to harm others and in desperate need of a guardian, is almost undisputed. Questioning this even slightly is taboo.
However, Mises emphasizes that no historical inevitability or laws dictate the rise of socialism. Instead, successful socialist propaganda by bourgeois intellectuals gained traction in intellectual circles and spread to the masses. He writes:
[79-80] Socialist propaganda never faced decisive opposition. The devastating critique by economists exposing the futility and impossibility of socialist plans and doctrines never reached the opinion-makers. Universities were predominantly dominated by socialist and interventionist pedants, not only in continental Europe—where they were government-owned and operated—but even in Anglo-Saxon countries. Politicians and statesmen, eager to maintain popularity, were lukewarm in defending freedom. The policy of appeasement, so criticized when applied to Nazis and fascists, was universally practiced for decades regarding other types of socialism. This defeatism led new generations to believe that socialism's victory was inevitable.
Mises calls on intellectuals who value freedom and Western civilization to act against socialist intellectuals:
[p80] Only intellectuals are responsible for the mass killings characteristic of our century. Only they can reverse the trend and pave the way for a resurrection of freedom.
…
What is needed to stop the trend toward socialism and despotism is common sense and moral courage.
Mises himself never abandoned this moral courage. Despite fleeing Europe to escape the Nazis and finding little interest from American universities in his work—since mainstream economics was heading in a different direction—he continued to write. Even when he feared the battle was lost and that he would be merely a chronicler of Western civilization decline, he authored and published his magnum opus, Human Action. Together with his other works, it became a vital source of knowledge for future intellectuals fighting for freedom.
Translated from Spanish with chatGPT. Both English and Spanish online versions can be found for free in The Mises Institute
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