“Classical liberalism was victorious with economics and through it. No other economic ideology can be reconciled with the science of catallactics. During the 1820s and 1830s, an attempt was made in England to use economics for demonstrating that the capitalist order does not function satisfactorily, and that it is unjust. From this Karl Marx then created his “scientific” socialism. But even if these writers had succeeded in proving their case against capitalism, they would have had to prove further that another social order, like socialism, is better than capitalism. This they were not able to do; they could not even prove that a social order could actually be built on public property in the means of production. By merely rejecting and ostracizing any discussion of the problems of socialism as “utopian” they obviously did not solve anything.
Eighteenth century writers then discovered what had already been published by earlier writers on money and prices. They discovered the science of economics which replaced the collection of moral maxims, the manuals of police regulations, and the aphoristic remarks on their successes and failures. They learned that prices are not set arbitrarily, but are determined within narrow limits by the market situation, and that all practical problems can be accurately analyzed. They recognized that the laws of the market draw entrepreneurs and owners of the means of production into the service of consumers, and that their economic actions do not result from arbitrariness, but from the necessary adjustment to given conditions. These facts alone gave life to a science of economics and a system of catallactics. Where the earlier writers saw only arbitrariness and coincidence, the classical economists saw necessity and regularity. In fact, they substituted science and system for debates on police regulations.
The classical economists were not yet fully aware that the private property order alone offers the foundation for a society based on division of labor, and that the public property system is unworkable. Influenced by mercantilist thought, they contrasted productivity with profitability, which gave rise to the question of whether or not the socialist order is preferable to the capitalist order. But they clearly understood that, except for syndicalism which they did not see, the only alternatives are capitalism and socialism, and that “intervention” in the functioning of the private property order, which is so popular with both people and government, is unsuitable.
The tools of science do not enable us to sit in judgment of the “justice” of a social institution or order. Surely, we may decry this or that as “unjust” or “improper”; but if we cannot substitute anything better for what we condemn, it behooves us to save our words.
But all this does not concern us here. Only this matters for us: no one ever succeeded in demonstrating that, disregarding syndicalism, a third social order is conceivable and possible other than that based on private property in the means or production or that built on public property. The middle system of property that is hampered, guided, and regulated by government is in itself contradictory and illogical. Any attempt to introduce it in earnest must lead to a crisis from which either socialism or capitalism alone can emerge.
This is the irrefutable conclusion of economics. He who undertakes to recommend a third social order of regulated private property must flatly deny the possibility of scientific knowledge in the field of economics. The Historical School in Germany did just that, and the Institutionalists in the U.S. are doing it today. Economics is formally abolished, prohibited, and replaced by state and police science, which registers what government has decreed, and recommends what still is to be decreed. They fully realize that they are harking back to mercantilism, even to the canon doctrine of just price, and are discarding all the work of economics.” - Ludwig von Mises, ‘A Critique of Interventionism’ (1929) [p. 36 - 38]
