Heroic Elites in a Mass Democracy

Yet by the mid-1950s, capitalism and classical liberalism were everywhere on the retreat. How was it possible that the great majority of westerners had forgotten, or failed to appreciate, the most spectacular event of modern history? In Theory and History, Mises outlined his account of the rise and fall of classical liberalism. In the center of his reflection was the relationship between elites and masses, a relationship that he analyzed within the framework of his epistemological reflections.

In other writings he had already stressed the fundamental historical fact that social progress, in particular the rise of capitalism, had resulted from the efforts of a small group of individuals:

The most amazing thing concerning the unprecedented change in earthly conditions brought about by capitalism is the fact that it was accomplished by a small number of authors and a hardly greater number of statesmen who had assimilated their teachings. Not only the sluggish masses but also most of the businessmen who, by their trading, made the laissez-faire principles effective failed to comprehend the essential features of their operation. Even in the heyday of liberalism only a few people had a full grasp of the functioning of the market economy. Western civilization adopted capitalism upon recommendation on the part of a small élite.²⁴

How was this possible? Because ultimately society is ruled by ideas. Small groups who spread their ideas can therefore have, in due time, a disproportionate impact on social organization.

A rather superficial and shallow view of the problems of government saw the distinction between freedom and despotism in an outward feature of the system of rule and administration, viz., in the number of people exercising direct control of the social apparatus of coercion and compulsion.... The way toward a realistic distinction between freedom and bondage was opened, two hundred years ago, by David Hume's immortal essay, On the First Principles of Government. Government, taught Hume, is always government of the many by the few. Power is therefore always ultimately on the side of the governed, and the governors have nothing to support them but opinion.²⁵

Now Mises combined this insight with his epistemology of the social sciences. If Hume was right that ideas rule society and if it was true that no scientific account could be given of how new ideas emerge in general, then it follows that new ideas were the true driving force in human history:

History is the record of human action. Human action is the conscious effort of man to substitute more satisfactory conditions for less satisfactory ones. Ideas determine what are to be considered more and less satisfactory conditions and what means are to be resorted to alter them. Thus ideas are the main theme of the study of history.... The genesis of every new idea is an innovation; it adds something new and unheard of before to the course of world affairs. The reason history does not repeat itself is that every historical state is the consummation of the operation of ideas different from those that operated in other historical states.²⁶

It follows that intellectual elites were the true elites in comparison to which the mighty and powerful of any age are just the executors of ideas developed in previous ages. The creative genius was the hero, the true driving force of history:

Every man, whether great or small, lives and acts within the frame of his age's historical circumstances. These circumstances are determined by all the ideas and events of the preceding ages as well as by those of his own age. The Titan may outweigh each of his contemporaries; he is no match for the united forces of the dwarfs. A statesman can succeed only insofar as his plans are adjusted to the climate of opinion of his time, that is to the ideas that have got hold of his fellows’ minds. He can become a leader only if he is prepared to guide people along the paths they want to walk and toward the goal they want to attain. A statesman who antagonizes public opinion is doomed to failure. No matter whether he is an autocrat or an officer of a democracy, the politician must give the people what they wish to get, very much as a businessman must supply the customers with the things they wish to acquire.

It is different with the pioneers of new ways of thinking and new modes of art and literature. The path-breaker who disdains the applause he may get from the crowd of his contemporaries does not depend on his own age's ideas.... The genius’ work too is embedded in the sequence of historical events, is conditioned by the achievements of preceding generations, and is merely a chapter in the evolution of ideas. But it adds something new and unheard of to the treasure of thoughts and may in this sense be called creative. The genuine history of mankind is the history of ideas.... And in searching for their origin we inevitably come to a point at which all that can be asserted is that a man had an idea. Whether the name of this man is known or not is of secondary importance.²⁷

In Mises's worldview, in which all things and all thoughts are the necessary consequence of antecedent causes, ideas were the one dynamic element of social evolution. The discoverers and promoters of new ideas—the creative geniuses—were the social vanguard, the elite that led humanity onto new paths, both good and bad.²⁸ But in order to play this role, they had to be aware of their responsibility.

Now, the problem was that the majority of the rationalist philosophers who pioneered the capitalist revolution of the eighteenth and nineteenth centuries were not sufficiently self-aware. They did not perceive themselves as a small elite, and did not see social progress as necessarily driven by small elites. Rather they indulged in egalitarian fantasies about society.

[They] assumed that all men are endowed with the same power of reasoning. They ignored the difference between clever people and dullards, even that between the pioneering genius and the vast crowds of simple routinists who at best can espouse the doctrines developed by the great thinkers but more often are incapable of comprehending them. As the rationalists saw it, every sane adult was intelligent enough to grasp the meaning of the most complicated theory. If he failed to achieve it, the fault lay not in his intellect but in his education. Once all people have enjoyed a perfect education, all will be as wise and judicious as the most eminent sage.²⁹,³⁰

Mises held that as a consequence of this error of the eighteenth-century rationalists (and perpetuated by the nineteenth-century socialists) the dull masses were increasingly reluctant to accept intellectual leadership from anyone but those who flattered them. They were imbued with the mystical notion that the mass of the people can never be wrong—that society could do without the guidance of intellectuals.

Faced with this situation, the classical liberals still endorsed democracy, and so did Mises. It was true that mass democracy had led straight to “the ‘dictatorship of the proletariat’ and the autocracy of Hitler, Mussolini, Peron, and other modern successors of the Greek tyrants.”³¹ But the crucial question was whether any alternative political system could have prevented these excesses. Despite the political and humanitarian catastrophes of the twentieth century, Mises did not abandon the case for democracy. Rather he appealed to the elites to accept their responsibilities by engaging in public debate and enlightening their fellow citizens about the right course of action:

If the small minority of enlightened citizens who are able to conceive sound principles of political management do not succeed in winning the support of their fellow citizens and converting them to the endorsement of policies that bring and preserve prosperity, the cause of mankind and civilization is hopeless. There is no other means to safeguard a propitious development of human affairs than to make the masses of inferior people adopt the ideas of the elite. This has to be achieved by convincing them. It cannot be accomplished by a despotic regime that instead of enlightening the masses beats them into submission. In the long run the ideas of the majority, however detrimental they may be, will carry on. The future of mankind depends on the ability of the elite to influence public opinion in the right direction.³²

What does this imply more specifically for libertarian intellectuals who wish to steer social evolution toward greater freedom? Do they have to make the case for a particular form of government or for a particular design of constitutions? Mises would have none of this. The form of government was a completely secondary problem because tyranny could exist under any of the possible systems. He argued that the primary challenge for libertarian intellectuals was to preserve a climate of opinion that tolerated dissent. Hume's insight, that governors have nothing to support them but opinion,

logically followed to its conclusion, completely changed the discussion concerning liberty. The mechanical and arithmetical point of view was abandoned. If public opinion is ultimately responsible for the structure of government, it is also the agency that determines whether there is freedom or bondage. There is virtually only one factor that has the power to make people unfree—tyrannical public opinion. The struggle for freedom is ultimately not resistance to autocrats or oligarchs but resistance to the despotism of public opinion. It is not the struggle of the many against the few but of minorities—sometimes of a minority of but one man—against the majority. The worst and most dangerous form of absolutist rule is that of an intolerant majority. Such is the conclusion arrived at by Tocqueville and John Stuart Mill.³³

Without an elite defending tolerance, there could be no culture of dissent, no competition and progress in the economic sphere. Mises was not being naïve in ascribing this responsibility to intellectuals. They were the heroes of the drama of human history, yes, but they also had to be truly heroic in their attitude toward life. He knew from bitter personal experience that a procapitalist intellectual could not expect lavish material rewards. A case in point was the commercial book market. A true pioneer could not expect a high income on a free market:

Reverence to the great authors and artists has always been limited to small groups.... The book market is flooded by a downpour of trivial fiction for the semibarbarians. But this does not prevent great authors from creating imperishable works.³⁴

The decisive consideration was, again, that no alternative social system held better promise:

It is, of course, true that in the market economy not those fare best who, from the point of view of an enlightened judgment, ought to be considered as the most eminent individuals of the human species. The uncouth hordes of common men are not fit to recognize duly the merits of those who eclipse their own wretchedness. They judge everybody from the point of view of the satisfaction of their desires. Thus, boxing champions and authors of detective stories enjoy a higher prestige and earn more money than philosophers and poets. Those who bemoan this fact are certainly right. But no social system could be devised that would fairly reward the contributions of the innovator whose genius leads mankind to ideas unknown before and therefore first rejected by all those who lack the same inspiration.³⁵

The only consolation for great but unsuccessful intellectuals was that the pioneers in business did not fare any better:

The much defamed acquisitiveness of promoters and speculators succeeds daily in providing the masses with commodities and services unknown before. A horn of plenty is poured upon people for whom the methods by means of which all these marvelous gadgets are produced are incomprehensible. These dull beneficiaries of the capitalistic system indulge in the delusion that it is their own performance of routine jobs that creates all these marvels. They cast their votes for rulers who are committed to a policy of sabotage and destruction. They look upon “big business,” necessarily committed to catering to mass consumption, as upon the foremost public enemy and approve of every measure that, as they think, improves their own conditions by “punishing” those whom they envy.³⁶