All Commentary
Saturday, August 1, 1964

A National Policy for Peace

The philosophy of protectionism is a philosophy of war.

This is an excerpt from Human Action (Yale University Press, 1949).

What is needed to make peace durable is change in ideologies.

The conflict between the have-nots and the haves is a real con­flict. But it is present only in a world in which any sovereign gov­ernment is free to hurt the inter­est of all peoples—its own in­cluded—by depriving the con­sumers of the advantages a better exploitation of this country’s re­sources would give them. It is not sovereignty as such that makes for war, but sovereignty of gov­ernments not entirely committed to the principles of the market economy. 

Economic nationalism is incompatible with durable peace. 

Liberalism did not and does not build its hopes upon abolition of the sovereignty of the various national governments, a venture which would result in endless wars. It aims at a general rec­ognition of the idea of economic freedom. If all people become liberal and conceive that economic freedom best serves their own in­terests, national sovereignty will no longer engender conflict and war. What is needed to make peace durable is neither interna­tional treaties and covenants nor international tribunals and organ­izations like the defunct League of Nations or its successor, the United Nations. If the principle of the market economy is univers­ally accepted, such makeshifts are unnecessary; if it is not accepted, they are futile. Durable peace can only be the outgrowth of a change in ideologies. As long as the peo­ples cling to the Montaigne dogma and think that they cannot pros­per economically except at the ex­pense of other nations, peace will never be anything other than a period of preparation for the next war.

Protectionism Leads to Strife

Economic nationalism is incom­patible with durable peace. Yet economic nationalism is unavoid­able where there is government interference with business. Pro­tectionism is indispensable where there is no domestic free trade. Where there is government inter­ference with business, free trade even in the short run would frus­trate the aims sought by the vari­ous interventionist measures.

It is an illusion to believe that a nation would lastingly tolerate other nations’ policies which harm the vital interest of its own citi­zens. Let us assume that the United Nations had been estab­lished in the year 1600 and that the Indian tribes of North America had been admitted as members of this organization. Then the sovereignty of these In­dians would have been recognized as inviolable. They would have been given the right to exclude all aliens from entering their terri­tory and from exploiting its rich natural resources which they themselves did not know how to utilize. Does anybody really be­lieve that any international cove­nant or charter could have pre­vented the Europeans from invad­ing these countries?

Many of the richest deposits of various mineral substances are located in areas whose inhabitants are too ignorant, too inert, or too dull to take advantage of the riches nature has bestowed upon them. If the governments of these countries prevent aliens from ex­ploiting these deposits, or if their conduct of public affairs is so arbi­trary that no foreign investments are safe, serious harm is inflicted upon all those foreign peoples whose material well-being could be improved by a more adequate utilization of the deposits con­cerned. It does not matter whether the policies of these governments are the outcome of a general cul­tural backwardness or of the adoption of the now fashionable ideas of interventionism and eco­nomic nationalism. The result is the same in both cases.

Change in Ideologies

There is no use in conjuring away these conflicts by wishful thinking. What is needed to make peace durable is a change in ideol­ogies.

What is needed to make peace durable is a change in ideologies.

What generates war is the economic philosophy almost uni­versally espoused today by governments and political parties. As this philosophy sees it, there pre­vail within the unhampered mar­ket economy irreconcilable con­flicts between the interests of various nations. Free trade harms a nation; it brings about impov­erishment. It is the duty of gov­ernment to prevent the evils of free trade by trade barriers.

We may, for the sake of argument, disregard the fact that protec­tionism also hurts the interests of the nations which resort to it. But there can be no doubt that pro­tectionism aims at damaging the interests of foreign peoples and really does damage them. It is an illusion to assume that those in­jured will tolerate other nations’ protectionism if they believe that they are strong enough to brush it away by the use of arms.

The philosophy of protectionism is a philosophy of war. The wars of our age are not at variance with popular economic doctrines; they are, on the contrary, the inescap­able result of a consistent applica­tion of these doctrines.

Why League of Nations Failed

The League of Nations did not fail because its organization was deficient. It failed because it lacked the spirit of genuine liber­alism. It was a convention of gov­ernments imbued with the spirit of economic nationalism and en­tirely committed to the principles of economic warfare. While the delegates indulged in mere aca­demic talk about good will among the nations, the governments whom they represented inflicted a good deal of evil upon all other nations.

The two decades of the League’s functioning were marked by each nation’s adamant economic war­fare against all other nations. The tariff protectionism of the years before 1914 was mild indeed when compared with what developed in the ‘twenties and ‘thirties—viz., embargoes, quantitative trade con­trol, foreign exchange control, monetary devaluation, and so on.

The prospects for the United Nations are not better, but rather worse. Every nation looks upon imports, especially upon imports of manufactured goods, as upon a disaster. It is the avowed goal of almost all countries to bar foreign manufactures as much as pos­sible from access to their domestic markets. Almost all nations are fighting against the specter of an unfavorable balance of trade. They do not want to cooperate; they want to protect themselves against the alleged dangers of co­operation.

  • Ludwig von Mises (1881-1973) taught in Vienna and New York and served as a close adviser to the Foundation for Economic Education. He is considered the leading theorist of the Austrian School of the 20th century.