All Commentary
Tuesday, June 1, 1971

The Individual in Society

The words freedom and liberty signified for the most eminent representatives of mankind one of the most precious an d desirable goods. Today it is fashionable to sneer at them. They are, trumpets the modern sage, “slippery” no­tions and “bourgeois” prejudices.

Freedom and liberty are not to be found in nature. In nature there is no phenomenon to which these terms could be meaningfully applied. Whatever man does, he can never free himself from the restraints which nature imposes upon him. If he wants to succeed in acting, he must submit uncon­ditionally to the laws of nature.

Freedom and liberty always re­fer to interhuman relations. A man is free as far as he can live and get on without being at the mercy of arbitrary decisions on the part of other people. In the frame of society everybody de­pends upon his fellow citizens. Social man cannot become inde­pendent without forsaking all the advantages of social cooperation.

The fundamental social phe­nomenon is the division of labor and its counterpart — human co­operation.

Experience teaches man that co­operative action is more efficient and productive than isolated action of self-sufficient individuals. The natural conditions determining man’s life and effort are such that the division of labor increases output per unit of labor expended. These natural facts are: (1) the innate inequality of men with re­gard to their ability to perform various kinds of labor, and (2) the unequal distribution of the nature-given, nonhuman opportunities of production on the surface of the earth. One may as well consider these two facts as one and the same fact, namely, the manifold­ness of nature which makes the universe a complex of infinite varieties.

Innate Inequality

The division of labor is the out­come of man’s conscious reaction to the multiplicity of natural con­ditions. On the other hand, it is itself a factor bringing about dif­ferentiation. It assigns to the vari­ous geographic areas specific func­tions in the complex of the proc­esses of production. It makes some areas urban, others rural; it lo­cates the various branches of man­ufacturing, mining, and agricul­ture in different places. Still more important, however, is the fact that it intensifies the innate ine­quality of men. Exercise and practice of specific tasks adjust individuals better to the require­ments of their performance; men develop some of their inborn facul­ties and stunt the development of others. Vocational types emerge, people become specialists.

The division of labor splits the various processes of production into minute tasks, many of which can be performed by mechanical devices. It is this fact that made the use of machinery possible and brought about the amazing im­provements in technical methods of production. Mechanization is the fruit of the division of labor, its most beneficial achievement, not its motive and fountain spring. Power-driven specialized machin­ery could be employed only in a social environment under the di­vision of labor. Every step for­ward on the road toward the use of more specialized, more refined, and more productive machines re­quires a further specialization of tasks.

Within Society

Seen from the point of view of the individual, society is the great means for the attainment of all his ends. The preservation of so­ciety is an essential condition of any plans an individual may want to realize by any action whatever. Even the refractory delinquent who fails to adjust his conduct to the requirements of life within the societal system of cooperation does not want to miss any of the advantages derived from the di­vision of labor. He does not con­sciously aim at the destruction of society. He wants to lay his hands on a greater portion of the jointly produced wealth than the social order assigns to him. He would feel miserable if antisocial be­havior were to become universal and its inevitable outcome, the return to primitive indigence, resulted.

Liberty and freedom are the conditions of man within a con­tractual society. Social cooperation under a system of private owner­ship of the means of production means that within the range of the market the individual is not bound to obey and to serve an overlord. As far as he gives and serves other people, he does so of his own accord in order to be rewarded and served by the re­ceivers. He exchanges goods and services, he does not do compulsory labor and does not pay tribute. He is certainly not independent. He depends on the other members of society. But this dependence is mutual. The buyer depends on the seller and the seller on the buyer.


The main concern of many writ­ers of the nineteenth and twen­tieth centuries was to misrepre­sent and to distort this obvious state of affairs. The workers, they said, are at the mercy of their employers. Now, it is true that the employer has the right to fire the employee. But if he makes use of this right in order to indulge in his whims, he hurts his own interests. It is to his own disad­vantage if he discharges a better man in order to hire a less ef­ficient one. The market does not directly prevent anybody from ar­bitrarily inflicting harm on his fellow citizens; it only puts a penalty upon such conduct. The shopkeeper is free to be rude to his customers provided he is ready to bear the consequences. The consumers are free to boycott a purveyor provided they are ready to pay the costs. What impels every man to the utmost exertion in the service of his fellow men and curbs innate tendencies toward arbitrariness and malice is, in the market, not compulsion and co­ercion on the part of gendarmes, hangmen, and penal courts; it is self-interest. The member of a contractual society is free because he serves others only in serving himself. What restrains him is only the inevitable natural phe­nomenon of scarcity. For the rest he is free in the range of the market.

In the market economy the in­dividual is free to act within the orbit of private property and the market. His choices are final. For his fellow men his actions are data which they must take into account in their own acting. The coordina­tion of the autonomous actions of all individuals is accomplished by the operation of the market. So­ciety does not tell a man what to do and what not to do. There is no need to enforce cooperation by special orders or prohibitions. Non-cooperation penalizes itself. Adjustment to the requirements of society’s productive effort and the pursuit of the individual’s own concerns are not in conflict. Con­sequently no agency is required to settle such conflicts. The system can work and accomplish its tasks without the interference of an authority issuing special orders and prohibitions and punishing those who do not comply.

Compulsion and Coercion

Beyond the sphere of private property and the market lies the sphere of compulsion and coercion; here are the dams which organ­ized society has built for the pro­tection of private property and the market against violence, malice, and fraud. This is the realm of constraint as distinguished from the realm of freedom. Here are rules discriminating between what is legal and what is illegal, what is permitted and what is pro­hibited. And here is a grim ma­chine of arms, prisons, and gal­lows and the men operating it, ready to crush those who dare to disobey.

It is important to remember that government interference al­ways means either violent action or the threat of such action. Gov­ernment is in the last resort the employment of armed men, of policemen, gendarmes, soldiers, prison guards, and hangmen. The essential feature of government is the enforcement of its decrees by beating, killing, and imprisoning. Those who are asking for more government interference are ask­ing ultimately for more compul­sion and less freedom.

Liberty and freedom are terms employed for the description of the social conditions of the indi­vidual members of a market so­ciety in which the power of the indispensable hegemonic bond, the state, is curbed lest the operation of the market be endangered. In a totalitarian system there is noth­ing to which the attribute “free” could be attached but the unlim­ited arbitrariness of the dictator.

There would be no need to dwell upon this obvious fact if the champions of the abolition of lib­erty had not purposely brought about a semantic confusion. They realized that it was hopeless for them to fight openly and sincerely for restraint and servitude. The notions liberty and freedom had such prestige that no propaganda could shake their popularity. Since time immemorial in the realm of Western civilization liberty has been considered as the most precious good. What gave to the West its eminence was precisely its concern about liberty, a social ideal foreign to the oriental peoples. The social philosophy of the Occident is essentially a philoso­phy of freedom. The main content of the history of Europe and the communities founded by European emigrants and their descendants in other parts of the world was the struggle for liberty. “Rugged” individualism is the signature of our civilization. No open attack upon the freedom of the individual had any prospect of success.

New Definitions, Reversing the Meaning of Words

Thus the advocates of totalitari­anism chose other tactics. They reversed the meaning of words. They call true or genuine liberty the condition of the individuals under a system in which they have no right other than to obey orders. They call themselves true liberals because they strive after such a social order. They call de­mocracy the Russian methods of dictatorial government. They call the labor union methods of vio­lence and coercion “industrial de­mocracy.” They call freedom of the press a state of affairs in which only the government is free to publish books and newspapers. They define liberty as the oppor­tunity to do the “right” things, and, of course, they arrogate to themselves the determination of what is right and what is not. In their eyes government omnipo­tence means full liberty. To free the police power from all re­straints is the true meaning of their struggle for freedom.

The market economy, say these self-styled liberals, grants liberty only to a parasitic class of ex­ploiters, the bourgeoisie; that these scoundrels enjoy the free­dom to enslave the masses; that the wage earner is not free; that he must toil for the sole benefit of his masters, the employers; that the capitalists appropriate to them­selves what according to the in­alienable rights of man should belong to the worker; that under socialism the worker will enjoy freedom and human dignity be­cause he will no longer have to slave for a capitalist; that social­ism means the emancipation of the common man, means freedom for all; that it means, moreover, riches for all.

These doctrines have been able to triumph because they did not encounter effective rational criti­cism. It is useless to stand upon an alleged “natural” right of indi­viduals to own property if other people assert that the foremost “natural” right is that of income equality. Such disputes can never be settled. It is beside the point to criticize nonessential, attendant features of the socialist program. One does not refute socialism by attacking the socialists’ stand on religion, marriage, birth control, and art.

A New Subterfuge

In spite of these serious short­comings of the defenders of eco­nomic freedom it was impossible to fool all the people all the time about the essential features of socialism. The most fanatical plan­ners were forced to admit that their projects involve the abolition of many freedoms people enjoy under capitalism and “Pluto democracy.” Pressed hard, they re­sorted to a new subterfuge. The freedom to be abolished, they emphasize, is merely the spurious “economic” freedom of the capi­talists that harms the common man; that outside the “economic sphere” freedom will not only be fully preserved, but considerably expanded. “Planning for Freedom” has lately become the most popular slogan of the champions of totali­tarian government and the Russi­fication of all nations.

The fallacy of this argument stems from the spurious distinc­tion between two realms of human life and action, the “economic” sphere and the “noneconomic” sphere. Strictly speaking, people do not long for tangible goods as such, but for the services which these goods are fitted to render them. They want to attain the increment in well-being which these services are able to convey. It is a fact that people, in dealing on the market, are motivated not only by the desire to get food, shelter, and sexual enjoyment, but also by manifold “ideal” urges. Acting man is always concerned both with “material” and “ideal” things. He chooses between various alterna­tives, no matter whether they are to be classified as material or ideal. In the actual scales of value, ma­terial and ideal things are jum­bled together.

Preserving the Market

Freedom, as people enjoyed it in the democratic countries of Western civilization in the years of the old liberalism’s triumph, was not a product of constitutions, bills of rights, laws, and statutes. Those documents aimed only at safeguarding liberty and freedom, firmly established by the opera­tion of the market economy, against encroachments on the part of officeholders. No government and no civil law can guarantee and bring about freedom other­wise than by supporting and de­fending the fundamental institu­tions of the market economy. Government means always coer­cion and compulsion and is by necessity the opposite of liberty. Government is a guarantor of liberty and is compatible with liberty only if its range is adequately restricted to the preserva­tion of economic freedom. Where there is no market economy, the best intentioned provisions of con­stitutions and laws remain a dead letter.


The freedom of man under cap­italism is an effect of competition. The worker does not depend on the good graces of an employer. If his employer discharges him, he finds another employer. The consumer is not at the mercy of the shop­keeper. He is free to patronize another shop if he likes. Nobody must kiss other people’s hands or fear their disfavor. Interpersonal relations are businesslike. The ex­change of goods and services is mutual; it is not a favor to sell or to buy, it is a transaction dic­tated by selfishness on either side.

It is true that in his capacity as a producer every man depends either directly, as does the en­trepreneur, or indirectly, as does the hired worker, on the demands of the consumers. However, this dependence upon the supremacy of the consumers is not unlimited. If a man has a weighty reason for defying the sovereignty of the consumers, he can try it. There is in the range of the market a very substantial and effective right to resist oppression. Nobody is forced to go into the liquor in­dustry or into a gun factory if his conscience objects. He may have to pay a price for his conviction; there are in this world no ends the attainment of which is gratuitous. But it is left to a man’s own de­cision to choose between a ma­terial advantage and the call of what he believes to be his duty. In the market economy the individual alone is the supreme arbiter in matters of his satisfaction.

Consumers Choose

Capitalist society has no means of compelling a man to change his occupation or his place of work other than to reward those com­plying with the wants of the con­sumers by higher pay. It is pre­cisely this kind of pressure which many people consider as unbear­able and hope to see abolished under socialism. They are too dull to realize that the only alternative is to convey to the authorities full power to determine in what branch and at what place a man should work.

In his capacity as a consumer man is no less free. He alone de­cides what is more and what is less important for him. He chooses how to spend his money according to his own will.

The substitution of economic planning for the market economy removes all freedom and leaves to the individual merely the right to obey. The authority directing all economic matters controls all aspects of a man’s life and activi­ties. It is the only employer. All labor becomes compulsory labor because the employee must accept what the chief deigns to offer him. The economic tsar determines what and how much of each the consumer may consume. There is no sector of human life in which a decision is left to the individu­al’s value judgments. The author­ity assigns a definite task to him, trains him for this job, and em­ploys him at the place and in the manner it deems expedient.

As soon as the economic free­dom which the market economy grants to its members is removed, all political liberties and bills of rights become humbug. Habeas corpus and trial by jury are a sham if, under the pretext of economic expediency, the author­ity has full power to relegate every citizen it dislikes to the arctic or to a desert and to assign him “hard labor” for life. Freedom of the press is a mere blind if the authority controls all printing of­fices and paper plants. And so are all the other rights of men.

A man has freedom as far as he shapes his life according to his own plans. A man whose fate is determined by the plans of a su­perior authority, in which the exclusive power to plan is vested, is not free in the sense in which the term “free” was used and un­derstood by all people until the semantic revolution of our day brought about a confusion of tongues.

  • 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.