Ludwig von Mises tries in Human Action to reconcile two arguments about charity that pull in opposite directions. The first of these is that some people cannot survive without receiving help: unless they are guaranteed such help by law, they are dependent on charitable donations from the better-off.
Within the frame of capitalism the notion of poverty refers only to those people who are unable to take care of themselves. Even if we disregard the case of children, we must realize that there will always be such unemployables. Capitalism, in improving the masses’ standard of living, hygienic conditions, and methods of prophylactics and therapeutics, does not remove bodily incapacity. It is true that today many people who in the past would have been doomed to life-long disability are restored to full vigor. But on the other hand many whom innate defects, sickness, or accidents would have extinguished sooner in earlier days survive as permanently incapacitated people. Moreover, the prolongation of the average length of life tends toward an increase in the number of the aged who are no longer able to earn a living.
The problem of the incapacitated is a specific problem of human civilization and of society. Disabled animals must perish quickly. They either die of starvation or fall prey to the foes of their species. Savage man had no pity on those who were substandard. With regard to them many tribes practiced those barbaric methods of ruthless extirpation to which the Nazis resorted in our time. The very existence of a comparatively great number of invalids is, however paradoxical, a characteristic mark of civilization and material well-being.
Provision for those invalids who lack means of sustenance and are not taken care of by their next of kin has long been considered a work of charity. The funds needed have sometimes been provided by governments, more often by voluntary contributions. The Catholic orders and congregations and some Protestant institutions have accomplished marvels in collecting such contributions and in using them properly. Today there are also many nondenominational establishments vying with them in noble rivalry.
Should we abandon charity in favor of governmental provision to the unfortunates? This would be a mistake, Mises suggests:
The metaphysical arguments advanced in favor of such a right to sustenance are based on the doctrine of natural right. Before God of nature all men are equal and endowed with an inalienable right to live. However, the reference to inborn equality is certainly out of place in dealing with the effects of inborn inequality. It is a sad fact that physical disability prevents many people from playing an active role in social cooperation. It is the operation of the laws of nature that makes these people outcasts. They are stepchildren of God or nature. We may fully endorse the religious and ethical precepts that declare it to be man’s duty to assist his unlucky brethren whom nature has doomed. But the recognition of this duty does not answer the question concerning what methods should be resorted to for its performance. It does not enjoin the choice of methods which would endanger society and curtail the productivity of human effort. Neither the able-bodied nor the incapacitated would derive any benefit from a drop in the quantity of goods available.
Mises’s criticisms of the right to welfare are based on his own utilitarian approach to morality and differ from Murray Rothbard’s natural law theory, which also denies a right to welfare because such a “right” would aggress against the property rights of others. In practice, though, their recommendations are the same.
If we do not make support for the poor a right, this leads us to the second of the two arguments about charity that pull us in opposite directions. From the points of view of the donor and the recipient, charity is degrading:
The second defect charged to the charity system is that it is charity and compassion only. The indigent has no legal claim to the kindness shown to him. He depends on the mercy of benevolent people, on the feelings of tenderness which his distress arouses. What he receives is a voluntary gift for which he must be grateful. To be an almsman is shameful and humiliating. It is an unbearable condition for a self-respecting man.
These complaints are justified. Such shortcomings do indeed inhere in all kinds of charity. It is a system that corrupts both givers and receivers. It makes the former self-righteous and the latter submissive and cringing.
If we take account of the defects of charity, we can see the desirability of emphasizing the so-called impersonality of the free market. To the extent possible, those who receive aid should get it in the form of products and services that the donor finds useful.
The point that Mises makes here helps us to understand better a famous remark by Adam Smith in The Wealth of Nations:
In almost every other race of animals each individual, when it is grown up to maturity, is entirely independent, and in its natural state has occasion for the assistance of no other living creature. But man has almost constant occasion for the help of his brethren, and it is in vain for him to expect it from their benevolence only. He will be more likely to prevail if he can interest their self-love in his favour, and show them that it is for their own advantage to do for him what he requires of them. Whoever offers to another a bargain of any kind, proposes to do this. Give me that which I want, and you shall have this which you want, is the meaning of every such offer; and it is in this manner that we obtain from one another the far greater part of those good offices which we stand in need of. It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages.
Critics of the free market often cite this passage. Isn’t Adam Smith, the main theorist of capitalism, admitting that the market rests on greed? People in a capitalist system look at their fellow human beings in a narrowly selfish way.
If we rely on Mises’s insight about voluntary exchanges in which all parties expect to benefit, we can see that Smith is not criticizing the market but praising it. As the leftist philosopher Martha Nussbaum notes:
The famous passage . . . is usually read out of context. . . . He is not claiming that all human behavior is motivated by self-interest, something [The Theory of Moral Sentiments] spends seven hundred pages denying and something [The Wealth of Nations] has just denied. Smith is saying, instead, that there is something particularly dignified and human about these forms of exchange and deal-making, something that makes them expressive of our humanity. “Nobody but a beggar,” he continues, “chuses [sic] to depend upon the benevolence of his fellow-citizens.”
Only the free market enables us to escape the paradoxes of charity.
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