Mises and Social Utilitarianism

Last updated: 2026-09-29

This article is part of the Basic Course on Libertarianism and the Austrian School of Economics -> Module 2: Libertarianism and its ethical foundations

Ludwig von Mises (1881-1973) develops this position primarily in Liberalism (1927) and Human Action (1949).

It is a justification of liberalism completely distinct from that of John Locke (1632-1704): it does not start from natural rights or natural law, but from a more modest question: which social regime best serves the ends that people actually pursue?

1. The Starting Point: Value-Freedom and Subjective Ends

Mises argues that science (economics, sociology) cannot prove whether an ultimate end is right or wrong. Value judgments are subjective: one may desire wealth, holiness, power, contemplation, or ascetic suffering, and reason cannot arbitrate between those ultimate ends. What reason can evaluate is the relationship between means and ends: whether a given policy achieves what it sets out to achieve.

This separates him from the natural law (iusnaturalist) tradition: for Mises, appealing to "natural rights" or an "objective moral order" introduces unprovable value judgments into science. His defenses of liberalism are, in their formulation, technical or instrumental, not metaphysical.

The reasoning consists of three steps:

Most of the ends that people pursue (eating, living longer, having shelter, raising children, even cultural or spiritual pursuits that require time and resources) require material goods and social peace.
The division of labor is vastly more productive than isolation (here Mises draws on Ricardo's law of association: even the most efficient producer gains by cooperating with a less efficient one).
Private ownership of the means of production is the institutional arrangement that enables this cooperation to extend and coordinate on a large scale, because it allows for economic calculation (market prices) and the allocation of resources to their most highly valued uses.

As a consequence, almost anyone who wants "more of whatever it is they want"—save for those pursuing purely ascetic or destructive ends—has reason to favor peaceful cooperation and private property.

Liberalism does not require agreement on ultimate ends; it only requires agreement that liberal means work best for almost all of them.

Mises emphasizes that this is what makes liberalism a doctrine of internal peace: if disagreements are over ends and cannot be resolved by scientific demonstration, the only method compatible with peaceful coexistence is exchange and voluntary cooperation, not imposition.

Why Liberalism is “Utilitarian”

Mises calls this approach utilitarianism, and the name can be misleading. In Liberalism (1927), the entire program is condensed into a single word: property, that is, private ownership of the means of production.

Liberty and peace are not independent ends tacked on alongside it; they are conditions for that property when cooperation extends across strangers.

The rationale is instrumental. Society is association for cooperative action.

Compared to isolated action, the division of labor is vastly more productive.

And the only system of cooperation under the division of labor that Mises considers viable on the scale of a civilization is private ownership of the means of production.

The argument rests on two pillars.

The first is economic calculation:

This is the most technical contribution and what gives "utilitarian" weight to the argument (Economic Calculation in the Socialist Commonwealth, 1920).

Without private ownership of the factors of production and without market prices formed in genuine exchanges, a planner cannot know whether a project squanders resources relative to the ends of consumers.

Socialism fails even if its intentions were entirely benevolent, because it cannot rationally coordinate means. It is, therefore, a critique situated strictly in the realm of means, not ends.

The second is comparative productivity:

Private property aligns the owner's interest with serving the demand of others, because revenue comes from selling to those who wish to buy.

Mises insists that property is not a privilege of the owner, but a social institution that operates for the benefit of those who do not own the means of production.

A worker in a private-capital economy has access to far more goods than a member of a community without accumulated capital.

The benchmark, then, is not an inalienable natural right.

It is conduciveness to social cooperation. In Theory and History and Human Action, he states it bluntly: that conduct is just which preserves cooperation; that conduct is unjust which destroys it.

Moral rules—do not kill, do not steal, keep contracts—are adopted because they make the division of labor possible, not because a legislator summed up pleasures.

An individual rarely deliberates this calculation every time they abide by a rule; social pressure and conscience operate immediately. But the mediate foundation of the norm, according to Mises, is that social utility.

Mises uses the term "utilitarianism," but with explicit reservations. The differences are fundamental:

	Bentham	Mises
Unit of analysis	Pleasure and pain as measurable magnitudes	Human action with ordinal, non-measurable preferences
Criterion	Maximizing total happiness (sum of utilities)	No summation or interpersonal comparison of utilities
Ends	Pleasure is the sole objective end	Ends are plural, subjective, and cannot be scientifically ranked
Who calculates	A legislator optimizing aggregate welfare	No one: institutions enable each person to pursue their own ends
Approach	Consequentialist calculation of acts or rules	Evaluation of institutional frameworks by their capacity to serve diverse ends

The key takeaway: Mises denies that utility is a cardinal magnitude that can be aggregated across individuals. Hence there is no "social hedonic calculus." Mises's "utilitarianism" is, rather, an institutional or rule-based utilitarianism of a qualitative kind: it evaluates social systems rather than individual acts, and does so from the perspective of "means for ends that people already hold," rather than imposing a single ultimate end.

He himself emphasizes that the word "utility" in his system does not imply hedonism or a welfare theory; it simply means that people act to attain what they prefer. And in Liberalism, he clarifies that liberal "utilitarianism" is social because it considers the utility of cooperation for all participants, not the maximization of a collective aggregate.

Characteristic Consequences

Rejection of paternalism: If ends are subjective, no central planner can know better than the individual what is best for them (except regarding means, and even there with strict limits).
Defense of tolerance and pacifism: War and conquest are costly compared to cooperation; in the industrial era, conquering territory is far less productive than free trade.
Instrumentalism regarding democracy: He values democracy as a mechanism of social peace (enabling changes of government without violence), not as an absolute value. This explains his ambivalence toward fascism in the 1920s, which is often criticized by his detractors.
Avowed anti-moralism: Mises insists that liberalism is not a "religion" or a moral code, but a social technique.

Who the Argument Binds

The scope of the argument is conditional: if you desire the fruits of social cooperation, these are the means. Whoever chooses autarky, radical asceticism, or the destruction of the division of labor falls outside the scope of the recommendation: their ends are not those that liberalism sets out to serve. Mises does not attempt to refute them through moral proof. He simply points out that they represent a tiny minority, that they cannot sustain a civilization, and that almost no one truly wants them once they realize the cost. In the preface to Liberalism, anti-liberal resentment is not viewed as a well-formed rival ultimate end, but as an error regarding means, frequently mixed with envy.

This marks the divide with the natural rights tradition. Locke and later Rothbard treat self-ownership and original appropriation as rights that hold even if the social outcome were worse.

Mises considers that approach unprovable, and in Human Action he explicitly separates utilitarian philosophy and classical economics from the doctrine of natural law.

For him, a political ethic that cannot demonstrate the suitability of means to the ends that people already seek is an ethic that fails to persuade anyone who does not share the axiom in advance.

The advantage he claims is practical: there is no need for agreement on the highest good (summum bonum) to agree that private property and the market are the institutional arrangement that best serves the disparate ends of all who wish to live by cooperation rather than plunder.

Main Critiques

Is it truly neutral regarding ends? Critics argue that claiming "almost everyone" wants the goods that capitalism produces is already a substantive value judgment. Furthermore, market cooperation privileges certain ends (those that can be purchased) and places little weight on others (justice, equality, community).
Interpersonal non-comparability of utility: If utilities cannot be compared, one cannot strictly claim that capitalism benefits "everyone"; at best, it enables each person to achieve more of what they want through their own means, but the distributive argument remains unresolved (Pareto efficiency and the compensation principle have their own well-known problems).
Confusion between factual judgments and value judgments: Philosophers (such as Hans Albert, or thinkers in the Kantian tradition) point out that Mises claims to make no value judgments while simultaneously recommending policies. Mises's defense is that the recommendation is conditional ("if you want X, then Y"), but his writings often sound categorical.
The empirical thesis is contingent: The claim that capitalism best serves almost all ends is an assertion about the world, not an a priori truth. Mises sometimes treats it as praxeologically certain, which is debatable. Critics (Keynes, welfare economics, and market socialists like Oskar Lange) reject the premise regarding economic calculation or the superiority of private property.
Mises vs. rights-based libertarians: Murray Rothbard, a student of Mises, argued that this foundation is insufficient: if liberalism depends on consequences, any instance where violating property appears "expedient" or beneficial would be justified. For that reason, Rothbard incorporated natural law (iusnaturalism). This reflects a classic tension within libertarianism: consequentialist foundations (Mises, Hayek in part, Friedman) vs. deontological foundations (Rothbard, Nozick).

Mises vs. Locke

A useful contrast: for Locke, property is justified by a prior right (self-ownership, labor, natural law). For Mises, property is justified because it works, and only for that reason. Both arrive at similar conclusions (private property, limited government) through opposite paths, which explains much of the internal debate within libertarianism over whether liberty is a right or a tool.

This article is part of the Basic Course on Libertarianism and the Austrian School of Economics -> Module 2: Libertarianism and its ethical foundations

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