David R. Henderson relays the following quotation from Alan Blinder’s book, Hard Heads, Soft Hearts:
The soft-hearted attitude holds that we ought to soften the blows for those who play the economic game and lose, or who cannot play it at all. That objective can be served by making the game less vigorous and risky–which is the rationale for Medicare, Social Security, and unemployment insurance. Or it can be done by making the victors share some of the spoils with the vanquished–via welfare benefits, public housing, Medicaid, and progressive taxation. Liberals generally favor such public generosity. But, of course, society as a whole has no Daddy Warbucks. If benefits are to be provided to the underdogs (or losers), the favorites (or winners) must foot the bill.
This perspective is at complete odds with the vision of the market economy put forth by Ludwig von Mises, particularly in his masterpiece Human Action. For Mises, the way to “win” in the market economy is simply to satisfy the desires of the consumers better than rival entrepreneurs. No one is “vanquished” at all, except in the sense that others may prove better at showering desirable products and services on humanity.
In the Misesian view, it is particularly nonsensical for Blinder to speak of the victor sharing “some of the spoils,” since the only way to “win” in the first place is to satisfy consumers. The progressive interventionist who wishes to seize some of the fortune of, say, Bill Gates in order to “do good” with it, completely overlooks just how much Bill Gates has improved the standard of living of billions of people in order to create his fortune in the first place.
Mises endorsed the doctrine of “the harmony of the ‘rightly understood’ interests,” in which society is not analogous to a zero-sum game with winners and losers. As Mises explains:
What makes friendly relations between human beings possible is the higher productivity of the division of labor. It removes the natural conflict of interests….Thanks to the higher productivity of labor performed under the division of tasks, the supply of goods multiplies. A preeminent common interest, the preservation and further intensification of social cooperation, becomes paramount and obliterates all essential collisions. Catallactic [economic] competition is substituted for biological competition. It makes for harmony of the interests of all members of society. The very condition from which the irreconcilable conflicts of biological competition arise–viz., the fact that all people by and large strive after the same things–is transformed into a factor making for harmony of interests. Because many people or even all people want bread, clothes, shoes, and cars, large-scale production of these goods becomes feasible and reduces the costs of production to such an cxtent that they are accessible at low prices. The fact that my fellow man wants to acquire shoes as I do, does not make it harder for me to get shoes, but easier. [Mises, Human Action, pp. 669-670]