Every once in a while, Mises is accused of having been a fascist by slanderers who are either ignorant or acting in bad faith—or even both. The petty argument these detractors bring forth is a quotation taken—out of context—from Mises’s 1927 book Liberalism:
It cannot be denied that Fascism and similar movements aiming at the establishment of dictatorships are full of the best intentions and that their intervention has, for the moment, saved European civilization. The merit that Fascism has thereby won for itself will live on eternally in history. But though its policy has brought salvation for the moment, it is not of the kind which could promise continued success. Fascism was an emergency makeshift. To view it as something more would be a fatal error. (Liberalism,  1945, p. 51, underlining added)
The sentences I underlined are sometimes expunged, probably in order to distort Mises’s thoughts about fascism even more. In fact, reading the whole section which the quotation is taken from (“The Argument of Fascism,” pp. 47–51), one gets the real picture of Mises’s negative opinion about fascism. Moreover, Mises also proffers arguments against fascism in Human Action. Lastly, Mises was in favor of international cooperation and division of labor, free trade, free migration, and antiracism—whereas fascism promoted autarky and racism.
Mises on Fascism: What Did He Really Write?
At the very beginning of the section in question (“The Argument of Fascism”), Mises labels fascists “the non-Communist enemies of liberalism” (p. 47), maintaining that fascists—just like Third International’s communists—considered “any crime, any lie, and any calumny permissible” (p. 48) when it came to carrying out their revolutionary struggles and the extermination of their opponents.
Moreover, a few lines later, Mises explains that he considers the hegemony conquered in Europe by fascists in the political struggle against Bolsheviks and communists an example of classical liberalism’s failure. In fact, he writes that
one must not fail to recognize that the conversion of the Rightist parties to the tactics of Fascism shows that the battle against liberalism has resulted in successes that, only a short time ago, would have been considered completely unthinkable. (Liberalism,  1945, p. 49, bold added)
Furthermore, Mises explicitly points out that, insofar as fascists resort to violence where ideas and dialectical confrontations could be employed, their ideology is incompatible with classical liberalism. As a matter of fact, he maintains that
What distinguishes liberal from Fascist political tactics is…a difference in the fundamental estimation of the role of violence in a struggle for power. The great danger threatening domestic policy from the side of Fascism lies in its complete faith in the decisive power of violence….If it [i.e., fascism] wanted really to combat socialism, it would have to oppose it with ideas. There is, however, only one idea that can be effectively opposed to socialism, viz., that of liberalism. (Liberalism,  1945, p. 50, bold added)
Lastly, Mises argues that fascism, resorting to violence and aggressiveness even in international relations, can’t help but “give rise to an endless series of wars that must destroy all of modern civilization” (p. 51), thus disrupting the international cooperation necessary to preserve free trade and the international division of labor—which are essential for economic development. Besides that, Mises was fully aware that fascist economic policies were entirely incompatible with the free market due to their “altogether antiliberal” and “completely interventionist” program (p. 49).
Mises: Fascism as an Anticommunist Bulwark
But then why does Mises seem to think of fascism slightly more highly than he did of communism?
First, Mises was probably influenced by some among the Italian classical liberal economists of the time (Einaudi, De Viti de Marco, Giretti, Pareto), who were convinced—mistakenly—that fascism could be helpful in amending Italian crony capitalism. In fact, Mussolini’s ambiguity during the first part of his dictatorship was helpful in deceiving many Italian classical liberals (cf. Ralph Raico 1996). Considering that Mussolini was appointed Italy’s prime minister at the end of 1922—with the support of many Italian classical liberals—and that Mises’s essay Liberalism came out in 1927, it’s not surprising that Mises was partially deceived himself.
Second, Mises himself believed—in hindsight mistakenly—that fascism had at least a slight chance of being less illiberal than communism was. As a matter of fact, he thought that fascism—which, due to historical contingencies, was a western European phenomenon—had sort of a contingent cultural advantage against communism: namely, that of inheriting “some thousands of years of civilization” which could not “be destroyed at one blow” (p. 48). This alleged cultural inheritance is what made Mises believe—in hindsight mistakenly—that fascism would have never succeeded “as completely as Russian Bolshevism in freeing itself from the power of liberal ideas,” and that fascist policies would have taken a “more moderate course” after the initial anticommunist and violent phase (p. 49).
That said, Mises’s farsightedness led him also to write that fascism’s violent repressions against dissenters had to “ultimately cause its downfall” (p. 51), because he believed that “in a battle between force and an idea, the latter always prevails” (p. 50). At the end of the day, history proved fascism, nazism, and communism equally catastrophic collectivistic ideologies, which wreaked upon citizens only wars, slavery, misery, and violence.
Further Antifascist Considerations of Mises
But Mises’s incompatibility with fascism can be easily inferred simply by understanding his views on economic and social phenomena.
First, he was in favor of international cooperation, free trade, and free migration. For instance, he considered migration barriers as a detrimental tool available to labor union members in order restrict the supply of domestic labor, thus paralyzing “the tendency toward an equalization of wage rates which prevails under free mobility of labor from country to country” and preserving “their comparatively high wage rates” (Human Action,  1998, p. 374).
Second, he maintained that “like the mystical sense of communion, racial hatred is not a natural phenomenon innate in man,” being instead “the product of ideologies.” On the same page he writes that mixed-ethnicity people “are living counterevidence to the assertion that there exists a natural repulsion between the various races” (Human Action,  1998, p. 168).
Third, Mises explicitly explained that fascism (which he called by its Italian name, i.e., “stato corporativo”) is nothing but an outgrowth of socialism—i.e., guild socialism—and is manifestly incompatible with capitalism and the free market. In fact, Mises pointed out that under guild socialism “the monopolistic guild does not need to fear competition,” because it would enjoy “the inalienable right of exclusively covering its field of production,” thus being “free to give the interests of its members precedence over the interests of consumers” (Human Action,  1998, p. 815). In other words, guild socialism would extinguish consumers’ sovereignty over production—that is, the essence of a free market economy.
Mises’s views on social, economic, political, moral, and institutional matters are irreconcilable with the fascist ideology—as one can infer by reading his most famous books and essays. Hence, even though one can dispute whether Mises’s historical and political analysis of fascism was right, wrong, or halfway through, labeling him “fascist” denotes either bad faith or ignorance—or a combination of both.