There's no third way?

Mises famously contended that there is no third way between socialism and laissez faire. This was an odd contention on his part, since we'd also have to say that according to him we've always been on a third way: pure socialism is not possible (I think Mises was right about this) and we have never had a pure market economy (also, I think, not possible).

Now, Mises was terribly wrong about some things, but he certainly wasn't stupid, so: how did he reconcile these two seemingly disparate ideas?

(I am thinking about this as I begin my research on distributism.)

8 comments:

  1. I'd guess he might say that what we presently 'enjoy' is a hampered market. That is, the choice is between market and socialism. We have a particular kind of the former the former: so, genus = market; differentia = hampered.

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  2. Perhaps this depends on what mises meant when he said "way". We can follow the deer paths of " natural" laissez faire capitalism, or the " rational " straight lines of socialism, but betwpieen them lis only a trackless waste defined only by the footpaths we make in traversing them.

    To say it again, "way" may refer to a delineated path, in english, as in "bridleway" or " public way". Perhaps mises expression in german has a similar meaning if carefully translated.

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  3. Politics can't be placed on a spectrum.

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  4. Perhaps the "way" is a direction rather than an end state?

    I could see it as a one-dimensional spectrum in which "capitalism" is very close to one end, "socialism" is some range on the other end, and the third way of "interventionism" is a vector pointing in the direction of socialism. You're either holding the line on capitalism or allowing a descent into socialism.

    I don't know if Mises had a specific idea of how pure a market economy must be to be considered "capitalism", or if he just meant reasonably free of intervention.

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    1. Well, he's totally wrong on that, then. One third way would be pure chaos.

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  5. Perhaps he mean that all economic systems can be classified as combinations of freedom and planning, with no other variables giving addition options.

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  6. I suspect Mises means that over a long enough time the economic system logically or praxeologically has to resolve itself into one form or another. From a theoretical perspective this might sound clear-cut and powerful, but from a practical perspective it turns out to be like talking about a perfect equilibrium. The logically unstable form -- a mixed economy -- is unstable based on economic principle, but exigencies keep "temporarily" keeping it around, like an external energy inputs screwing up what would otherwise be a nice, predictable path of entropy. As evidence that this is how Misesians see it, consider how the Soviet Union's foreign trade gets cited as the backdoor through which some price logic was reintroduced into the otherwise truly socialist system, thus keeping it going for decades.

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    1. Methinks the Misesians are spouting nonsense on that/

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