Born in Austria, in 1934 he sensed trouble ahead, especially for Austrian Jews such as himself, and moved to Switzerland, going on to the United States in 1940. In Socialism (1922) he persuaded many young intellectuals of the impracticability of abolishing money and markets—as Marx and his Soviet followers intended—though others unfortunately took much longer to understand and needed overwhelming empirical evidence. His other major books included The Theory of Money and Credit (1912), Omnipotent Government (1944), Bureaucracy (1944), and Theory and History (1957). His greatest work was Human Action (1949), usually described as an economics treatise but in fact a wide-ranging examination of society, cooperation, spontaneous order, and the market process. In this excerpt from a 1961 essay in the magazine Modern Age, he distinguishes between equal rights and the alluring but fanciful notion of equal abilities and equal outcomes.

            THE DOCTRINE OF natural law that inspired the eighteenth century declarations of the rights of man did not imply the obviously fallacious proposition that all men are biologically equal. It proclaimed that all men are born equal in rights and that this equality cannot be abrogated by any man-made law, that it is inalienable or, more precisely, imprescriptible. Only the deadly foes of individual liberty and self-determination, the champions of totalitarianism, interpreted the principle of equality before the law as derived from an alleged psychical and physiological equality of all men. The French declaration of the rights of the man and the citizen of November 3, 1789, had pronounced that all men are born and remain equal in rights. But, on the eve of the inauguration of the regime of terror, the new declaration that preceded the Constitution of June 24, 1793, proclaimed that all men are equal “par la nature.” From then on this thesis, although manifestly contradicting biological experience, remained one of the dogmas of “leftism.” Thus we read in the Encyclopaedia of the Social Sciences that “at birth human infants, regardless of their heredity, are as equal as Fords.”

            However, the fact that men are born unequal in regard to physical and mental capacities cannot be argued away. Some surpass their fellow men in health and vigor, in brain and aptitudes, in energy and resolution and are therefore better fitted for the pursuit of earthly affairs than the rest of mankind—a fact that has also been admitted by Marx. He spoke of “the inequality of individual endowment and therefore productive capacity (Leistungsfähigkeit)” as “natural privileges” and of “the unequal individuals (and they would not be different individuals if they were not unequal).” In terms of popular psychological teaching we can say that some have the ability to adjust themselves better than others to the conditions of the struggle for survival. We may therefore—without indulging in any judgment of value—distinguish from this point of view between superior men and inferior men.

            History shows that from time immemorial superior men took advantage of their superiority by seizing power and subjugating the masses of inferior men. In the status society there is a hierarchy of castes. On the one hand are the lords who have appropriated to themselves all the land and on the other hand their servants, the liegemen, serfs, and slaves, landless and penniless underlings. The inferiors’ duty is to drudge for their masters. The institutions of the society aim at the sole benefit of the ruling minority, the princes, and their retinue, the aristocrats.

            Such was by and large the state of affairs in all parts of the world before, as both Marxians and conservatives tell us, “the acquisitiveness of the bourgeoisie,” in a process that went on for centuries and is still going on in many parts of the world, undermined the political, social, and economic system of the “good old days.” The market economy—capitalism—radically transformed the economic and political organization of mankind.

            Permit me to recapitulate some well-known facts. While under precapitalistic conditions superior men were the masters on whom the masses of the inferior had to attend, under capitalism the more gifted and more able have no means to profit from their superiority other than to serve to the best of their abilities the wishes of the majority of the less gifted. In the market economic power is vested in the consumers. They ultimately determine, by their buying or abstention from buying, what should be produced, by whom and how, of what quality and in what quantity. The entrepreneurs, capitalists, and landowners who fail to satisfy in the best possible and cheapest way the most urgent of the not yet satisfied wishes of the consumers are forced to go out of business and forfeit their preferred position. In business offices and in laboratories the keenest minds are busy fructifying the most complex achievements of scientific research for the production of ever better implements and gadgets for people who have no inkling of the theories that make the fabrication of such things possible. The bigger an enterprise is, the more is it forced to adjust its production to the changing whims and fancies of the masses, its masters. The fundamental principle of capitalism is mass production to supply the masses. It is the patronage of the masses that make enterprises grow big. The common man is supreme in the market economy. He is the customer who “is always right.”

            In the political sphere, representative government is the corollary of the supremacy of the consumers in the market. Office-holders depend on the voters as entrepreneurs and investors depend on the consumers. The same historical process that substituted the capitalistic mode of production for precapitalistic methods substituted popular government—democracy—for royal absolutism and other forms of government by the few. And wherever the market economy is superseded by socialism, autocracy makes a comeback. It does not matter whether the socialist or communist despotism is camouflaged by the use of aliases like “dictatorship of the proletariat” or “people’s democracy” or “Führer principle.” It always amounts to a subjection of the many to the few.

            It is hardly possible to misconstrue more thoroughly the state of affairs prevailing in capitalistic society than by calling the capitalists and entrepreneurs a “ruling” class intent upon “exploiting” the masses of decent men. We will not raise the question of how the men who under capitalism are in business would have tried to take advantage of their superior talents in any other thinkable organization of production. Under capitalism they are vying with one another in serving the masses of less gifted men. All their thoughts aim at perfecting the methods of supplying the consumers. Every year, every month, every week something unheard of before appears on the market and is soon made accessible to the many.

            What has multiplied the “productivity of labor” is not some degree of effort on the part of manual workers, but the accumulation of capital by the savers and its reasonable employment by the entrepreneurs. Technological inventions would have remained useless trivia if the capital required for their utilization had not been previously accumulated by thrift. Man could not survive as a human being without manual labor. However, what elevates him above the beasts is not manual labor and the performance of routine jobs, but speculation, foresight that provides for the needs of the—always uncertain—future. The characteristic mark of production is that it is behavior directed by the mind. This fact cannot be conjured away by a semantics for which the word “labor” signifies only manual labor.

Source: The Libertarian Reader, David Boaz