This is Ludwig von Mises in ‘Liberty and Its Antithesis’
In fact, the Welfare State is merely a method for transforming the market economy step by step into socialism. The original plan of socialist action, as developed by Karl Marx in 1848 in the Communist Manifesto, aimed at a gradual realization of socialism by a series of governmental measures. The ten most powerful of such measures were enumerated in the Manifesto. They are well known to everybody because they are the very measures that form the essence of the activities of the Welfare State, of Bismarck’s and the Kaiser Wilheim’s German Sozialpolitik as well as of the American New Deal and British Fabian Socialism. The Communist Manifesto calls the measures it suggests “economically insufficient and untenable,” but it stresses the fact that “in the course of the movement” they outstrip themselves, necessitate further inroads upon the old social order, and are unavoidable as a means of entirely revolutionizing the mode of production.”
Later, Marx adopted a different method for the policies of his party. He abandoned the tactics of a gradual approach to the total state of socialism and advocated instead a violent revolutionary overthrow of the “bourgeois” system that at one stroke should “liquidate” the “exploiters” and establish “the dictatorship of the proletariat.” This is what Lenin did in 1917 in Russia and this is what the Communist International plans to achieve everywhere. What separates the Communists from the advocates of the Welfare State is not the ultimate goal of their endeavors, but the methods by means of which they want to attain a goal that is common to both of them. The difference of opinions that divides them is the same as that which distinguished the Marx of 1848 from the Marx of 1867, the year of the first publication of the first volume of Das Kapital.
Mises is dead wrong about the welfare state.
1) Welfare States are not a method to transform a market economy to a socialistic one (which he implies that a socialistic economy is one without markets). This is not a goal for advocates of the Welfare State. They are currently one of the biggest market supporters, I am specifically talking about the Nordic countries. The Welfare States that are currently successful have strong property rights, enforce contracts, and low regulation on business. They accept the capitalistic mode of production, something that socialists reject. In fact, Welfare Statists take major criticism from Marxists and other socialists because they accept the capitalistic mode of production. So to equate socialists with Welfare Statists is a fallacy.
2) It is also a fallacy to call Bismarck a socialist. A quick google search on Bismarck demonstrates that he actually debated and was cautious about socialism. He even banned socialistic books and made it illegal for socialists to meet.
3) What separates communists and Welfare Statists IS the ultimate goal of their endeavors. Their goals are not the same at all. The biggest difference is that one supports a capitalistic mode of production and one supports a socialistic one. One wants to keep the market system in place while the other wants to revolutionize the mode of production.
In conclusion, I am by no means advocating the Welfare State. I just think that we should critique it fairly and not straw man it. And calling the Welfare State socialistic (in the Marxist sense) is a straw man.