Money, Bank Credit, and Economic Cycles - The Ludwig von Mises ...

472 Money, Bank Credit, and Economic Cyclesnecessary to strictly regulate and control labor markets to“protect” workers from entrepreneurs and their capacity forexploitation, it has precisely been Marxist ideology. HenceMarxism has played a key and perhaps unintentional 75 role injustifying and fostering the rigidity of labor markets, andtherefore in making the readjustment processes whichinevitably follow any stage of bank credit expansion muchmore prolonged and painful. If labor markets were muchmore flexible (a situation which will only be politically possibleonce the general public realizes how damaging labor regulationis), the necessary readjustment processes which followcredit expansion would be much less lasting and painful.There is a third possible connection between the Austriantheory of economic cycles and Marxism: the absence of economiccrises in systems of “real socialism,” an absence manyauthors have highly praised in the past. Nevertheless there isno point in arguing that economic crises do not arise in systemsin which the means of production are never privatelyowned and all economic processes are “coordinated” fromabove through a coercive plan which public authorities deliberatelyimpose. We must remember that depression appears ina market economy precisely because credit expansion distortsthe productive structure, so that it no longer matches the oneconsumers would voluntarily maintain. Thus wherever consumerslack the freedom to choose and the productive structureis imposed on them from above, it is not that successivestages of boom and recession cannot occur, but rather, with alltheoretical justification we may consider that such economies arecontinually and permanently in a situation of crisis and recession.This is due to the fact that the productive structure is imposed75 In fact Marx himself considered the interventionist and syndicalistversions of socialism “utopian” and even stated that welfare and laborlegislation aimed at benefiting workers would invariably be ineffective.In this sense he fully accepted the classical school’s arguments againststate regulation of the market economy. Marx’s position on this issue inno way lessens the fact that Marxism, quite unintentionally, was themain ideological force behind the “reformist” movements that justifiedintervention in the labor market.