The Secret of American Prosperity

This short 1955 review essay by Ludwig von Mises, reprinted from The Freeman, uses William E. Rappard’s book The Secret of American Prosperity as the occasion for a broader Cold War argument about capitalism, development, and anti-American ideology. Mises begins from an agreed fact and asks why it is so widely resented:

The United States is today the world's most prosperous nation. There is no need to dwell upon this fact. Nobody contests it.

The essay’s first movement links domestic redistributionism to foreign anti-Americanism. For Mises, the “progressive” suspicion of wealth inside America has an international analogue: poorer nations interpret American abundance as exploitation rather than achievement. Foreign aid cannot cure this resentment, because the underlying doctrine treats unequal prosperity itself as injustice.

This blend of anti-capitalistic and anti-American sentiments plays an ominous role in present-day world affairs.

Mises then turns to Rappard, praising his detachment and authority. Rappard identifies four causes of American prosperity: mass production, applied science, the passion for productivity, and competition. Mises accepts the framework but presses it toward his own central thesis: these factors do not mean that America has benefited at others’ expense. They describe internal institutions and habits that made productivity possible.

The political importance of Professor Rappard's conclusions is to be seen in the fact that they ascribe American prosperity fully to factors operating within the United States.

This is the essay’s core conceptual move: Mises redirects the question from distribution to production. American wealth is not a share seized from a fixed global stock; it is the outcome of institutions that protected saving, investment, enterprise, and competition. Hence the “secret” is not imperial extraction but capital accumulation under comparatively freer economic arrangements.

America is prosperous because its people wanted prosperity and resorted to policies fitted to the purpose.

In the second half, Mises sharpens Rappard’s explanation. Mass production and competition are capitalist forms, not uniquely American inventions; scientific knowledge is widely available; businessmen everywhere want better methods. What distinguishes America is the scale of capital goods available to labor.

America's industrial superiority is due to the circumstance that its plants, workshops, farms, and mines are equipped with better and more efficient tools and machines.

From this premise follows Mises’s development argument. Technical knowledge alone cannot transform poor economies if governments discourage saving, threaten property, or obstruct foreign investment. The decisive scarcity is capital, not intelligence, effort, or access to ideas.

Technological "know-how" and the "passion for productivity" are useless if the capital required for the acquisition of new equipment and the inauguration of new methods is lacking.

The essay concludes by opposing Marxian, Keynesian, and “New Economics” hostility to saving. Wealth, for Mises, is fundamentally a structure of capital goods produced by prior abstention and secure investment. The relevance of the essay lies in its compact fusion of Cold War polemic, development economics, and Austrian capital theory: prosperity depends on institutions that permit accumulation, while egalitarian confiscation undermines the very process it hopes to redistribute.

If one wants to improve economic conditions, to raise the productivity of labor, wage rates, and the people's standard of living, one must accumulate more capital goods in order to invest more and more.