Mises’ Economics Reflecting on Today and Tomorrow

Lecture 1 Market Economic Performance

Some of the words used to describe things are very misleading. For example, modern industry and big business leaders are called “chocolate kings”, “spinning kings”, or “car kings”. The use of these words gives the impression that there is little difference between a modern industrial leader and a feudal king, duke, or ancient lord. But actually there is a huge difference. Because the chocolate king does not control at all, but rather serves.

He does not govern the conquered territory. Territory is independent of markets and customers. The chocolate king-the king of steel, the king of cars and the kings of other industries today-all depends on the industry he runs and on the customers he serves. This “king” must always be favored by his servant customers. If you can’t provide customers with better service than their competitors at a lower price, you quickly lose your “kingdom.” Two hundred years ago, by the time capitalism had not yet emerged, a person’s social status was determined from birth to death. The status inherited from ancestors did not change for a lifetime. Being a poor man was poor for a lifetime, and being rich—like a lord or a duke—was able to keep his status and the property associated with it for a lifetime.

As for the manufacturing industry, the primitive processing industry at the time was mostly for the rich. Since most people (more than 90% of Europe’s population) were farming, they had no opportunity to contact the urban processing industry. Such a tough regime of feudal society has persisted in Europe’s most developed regions for hundreds of years. However, as the agricultural population has expanded, the number of people working on the land has become excessive. The overpopulations without ancestral land or property had difficulty finding jobs and were unable to work in the processing industry. Because the city kings refused the influx of excess peasants.

The number of such “outcasters” continued to grow, and no one knew how to deal with it. They were literally “proletarians” and the government had no choice but to put them in a nursing home or a poor house. In parts of Europe, especially in the Netherlands and England, their numbers were so large that they became a major threat to the maintenance of the social system of the time around the eighteenth century.

When discussing developing countries such as India today, it must be remembered that England in the eighteenth century was even worse. At that time England’s population was six or seven million, of which more than one million, and perhaps more than two million, were poor outgrowers who could no longer be supported by previous social systems. What to do with these people was one of the greatest problems of England in the eighteenth century. Another major problem was the scarcity of raw materials. If the wood needed for industrial and home heating could no longer be harvested from the forest, the British had to take the question of what to do next. The situation was hopeless for the ruling class. The politicians did not know what to do, and the Gentiles, the rulers, had no idea how to improve the situation.

Section 1. Beginning of mass production

The sprouting of modern capitalism was born from such a social situation. People trying to form an organization to set up a small factory where things can be made have emerged among the outcasts and the poor. This was an innovation. These innovators did not make expensive goods only for the upper society, but made cheap goods that everyone needed. This was the origin of capitalism like today. That was the beginning of mass production, the fundamental principle of capitalist industry. The old processing industry, aimed at the wealthy of the city, existed almost exclusively for the needs of the upper class, while the new capitalist industry began to produce mass-purchasable goods. It was mass production to satisfy the needs of the masses.

  • Market Economy Outcomes
  • Start of mass production
  • Changes in the world due to capitalism
  • Improving living standards through trade
  • The need for the right economic policy

The sprouting of modern capitalism was born from such a social situation. People trying to form an organization to set up a small factory where things can be made have emerged among the outcasts and the poor. This was an innovation. These innovators did not make expensive goods only for the upper society, but made cheap goods that everyone needed.

This was the origin of capitalism like today. That was the beginning of mass production, the fundamental principle of capitalist industry. The old processing industry, aimed at the wealthy of the city, existed almost exclusively for the needs of the upper class, while the new capitalist industry began to produce mass-purchasable goods. It was mass production to satisfy the needs of the masses.

Section 2. Freedom of Competition

It is very wrong to think or assert that the producers and consumers of Big Business products are different people (4). In US department stores, we hear the slogan “Customers are always right (5)”, but these customers are the same as those who make products sold in department stores in factories. Some people think that the power of big business is huge. Big business depends entirely on the patronage of those who buy the product. Even the largest companies lose their power and influence when they lose their customers.


Fifty or sixty years ago, it was said in almost all capitalist countries that railway companies were too big and powerful and monopolized to compete so much. It was alleged that capitalism had reached its point of self-destruction by eliminating competition in the area of ​​transport. What was overlooked was that the railway had more power than any other means of transportation, so the railway’s power was greater. Of course, it’s ridiculous to compete with one of these giant railway companies by laying another railway parallel to the existing railway track. Old routes are enough to meet the needs at hand. However, other competitors soon appeared. Freedom of competition doesn’t mean that you can succeed if you just copy it as someone else did. Freedom of publication does not mean that you have the right to plagiarize others’ work in their entirety and intercept the success of the true author’s legitimate achievements. That means you have the right to write something different. In the case of railways, for example, freedom of competition means the freedom to challenge the railroad, drive into a competitively volatile position, or invent something.