Ludwig von Mises on Money and Inflation by Bettina Bien Greaves

Author:Bettina Bien Greaves [Bettina Bien Greaves]
Language: eng
Format: epub, pdf
ISBN: 978-1-93355-075-6
Publisher: Ludwig von Mises Institute
Published: 2007-11-06T16:00:00+00:00

CHAPTER

ELEVEN

Capitalism, the Rich and the Poor

It is a very popular assumption, criticized only very rarely by people, that the capitalistic system brings about satisfactory conditions for a minority of profiteers, while the masses become more and more impoverished. Of all the enormous problems connected with the monetary crisis, I want to deal with this problem especially because the most popular, or one of the most popular, ideas of Marxism is that the system of capitalism brings about the progressive impoverishment, the progressive deterioration of the economic state of affairs of the masses, for the benefit of a shrinking number of people who become richer and richer from year to year.

People believe that what is going on with these monetary problems today concern the well-to-do and that simple people are not so much interested. I want to show you how erroneous this idea is. It is thought that when the government inflates and as a result lowers the purchasing power of the monetary unit, this is of advantage to the masses, to the great majority of the people, and that only the rich are suffering. If you don’t want to use the term “suffer,” let us say have to pay higher prices for things. Now this idea, that the interested people are not the masses, not the majority of the people, but only the wealthy people and that it is only the wealthier and richer people that are concerned, is based on an ancient doctrine.

This doctrine was perfectly correct in the days of Solon (c. 638—559 BC) of Athens, or in the days of ancient Rome, of the Gracchi brothers (d. 121 and 133 BC), or in the Middle Ages. In the pre-capitalistic ages the rich people owned land and were, therefore, wealthy. They could save, increase their possessions by investing in real property, houses, businesses, landed property. Or they could increase their fortunes by dealing in a more conservative way with the forests which they owned. On the other hand there were people who were poor, very poor, people who had nothing, who might occasionally earn a small piece of money but who really had no opportunity to accumulate anything to improve their conditions. Under ancient conditions, the masses had no opportunity to save; the poor man had only the possibility of earning a few coins perhaps and of hiding these coins somewhere, perhaps in a dark corner of their premises, but this was all. He would always be under the temptation to spend them. Or he could lose them. Or somebody could steal them. The poor were not in a position to make their savings grow by lending them against interest. Even in England, the most advanced capitalistic country in the eighteenth century, it was not possible, for a poor man to save except by hoarding a few coins in an old stocking hidden somewhere in his house. Such savings bore no interest. Only the rich could invest money at interest, perhaps in mortgages, and so on.

At that time

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