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43 3rd St., Brooklyn 3, N. Y.
identify interventionism and socialism.
There are many supporters of interventionism who consider it the most appropriate method of realizing—step by
step—full socialism. But there are also
many interventionists who are not oul-
right Socialists; they aim at the establishment of the mixed economy as a
permanent system of economic management. They endeavor to restrain, to regulate and to '"improve" capitalism by
government interference with business
and by labor unionism.
However, all lhe methods of interventionism are doomed to failure. This
means: the interventionist measures
must needs result in conditions which
from the point of view of their own
advocates are more unsatisfactory than
the previous state of affairs they were
designed to alter. These policies are
therefore contrary to purpose.
Minimum wage rates, whether enforced by government decree or by
labor union pressure and compulsion,
are useless if they fix wage rates at the
market level. But if they try to raise
wage rates above the level which the nn
hampered labor market would have
determined, they result in permanent
unemployment of a great part of the
potential labor force.
Government spending cannot create
additional jobs. If the government provides the funds required by taxing the
citizens or by borrowing from the pub
lie, it abolishes on the one hand as many-
jobs as it creates on the other. II gov
ernment spending is financed by borrowing from the commercial bank-, il
means credit expansion and inflation.
If in the course of such an inflation the
rise in commodity prices exceeds the
rise in nominal wage rates, unemployment will drop. But what makes unemployment shrink is precisely lhe facl
that real wage rates are falling.
The inherent tendency of capitalisl
evolution is to raise real wage rales
steadily. This is the effect of the progressive accumulation of capital by
means of which technological methods
of production are improved. Their i-
no means by which the height of wage
rates can be raised for all those eager
to earn wages other than through tin-
increase of the per capita quota of
capital invested. Whenever the accumulation of additional capital stops,
the tendency towards a further increase
in real wage rates comes to a standstill.
If capital consumption is substituted
for an increase in capita] available, real
wage rates must drop temporarily until
the checks on a further increase in caf
ital are removed. Government measurf-
which retard capital accumulation •
lead to capital consumption—such J
confiscatory taxation—are therefore $
rimental to the vital interests of '
Credit expansion can bring aboul
temporary boom. But such a fictitioj
prosperity must end in a general clef1
sion of trade, a slump.
Il can hardly be asserted lhat "
economic history of the last decael
run counter to the pessimistic p"1'
tions of the economists. Our age jf
to face great economic trouble:
this is not a crisis of capitalism. I'.1
the crisis of interventionism, of polio'1
designed lo improve capitalism and'
substitute a better system for it.
No economist ever dared lo as**
that interventionism could result in <*
thing else than in disaster and ch<J
The advocates of interventionism—'A
most among them the Prussian >|
toiieal School and lhe American I"-
tutionalists—were not economists. '
tin- contrary. In order in promote I
plans, they flatly denied that thej
any such thing as economic law. In "f
opinion governments are free lo aclu'
all ihey aim at without being restrai'l
by an inexorable regularity in tbfl
quence of economic phenomena. I
the German Socialist Ferdinand "
salle, they maintain that the stale- is I
The interventionists do not appri
the study of economic matters I
scientific disinterestedness. Most of
arc driven by an envious reserrfi
againsl those whose incomes are
than their own. This bias makes i*|
possible for them to sec things
National Socialist Adolf Hitler
FACTS FORUM NEWS, February,i