Okay Drummnutt, you wanna learn something today?
February 02, 2009
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"A society that chooses between capitalism and socialism does not choose between two social systems; it chooses between social cooperation and the disintegration of society. Socialism: is not an alternative to capitalism; it is an alternative to any system under which men can live as human beings." - Ludwig Von Mises, Human Action
I propose a challenge to you Drummnutt. I don't particularly want to pick on you, but since you have been quite active lately I am guessing you have the time to do some research. It's also a good chance to educate my friends about economics and liberty, and how inseparable they are.
Drummnutt, I present you the Economic Calculation Problem of the Socialist Commonwealth. Written in 1920, Ludwig Von Mises' explosive essay shocked academic institutions around the globe, especially in America and Europe where Socialist educators had fortified their power.
"Before Ludwig von Mises raised the calculation problem in his cele-
brated article in 1920,'everyone, socialists and non-socialists alike, had
long realized that socialism suffered from an incentive problem. If, for
example, everyone under socialism were to receive an equal income, or,
in another variant, everyone was supposed to produce "according to his
ability" but receive "according to his needs," then, to sum it up in the
famous question: Who, under socialism, will take out the garbage? "
But this was different. Mises, the former Chief Economic Officer of the Austrian Government, felt certain that he had proven Socialism to be impossible. Since all transfers of goods in a Socialist society would be internal transfers, economic calculation becomes impossible, The Socialist economic planning board would have all the resources at its disposal and no idea how to allocate them.
The Calculation debates continued throughout the 1930s and 1940s. On one side was Mises, forced to flee Europe for criticizing the Nazi Socialist Party's economic policy (a policy that America's government has wholeheartedly embraced.) On the other side was the entire army of American Socialist educators, born and raised under the umbrella of collectivism and intellectual dishonesty.
There were quite a lot of theories thrown back and forth so I will just link to them, let you absorb them, and study their critiques:
Lange-Lerner-Taylor
"But now, happily, the day
has been saved for socialism, since Taylor-Lange-Lerner have shown
that, by jettisoning utopian ideas of a money-less or price-less social-
ism, or of pricing according to a labor theory of value, the socialist
Planning Board can solve these pesky equations simply by the good
old capitalist method of trial and error."
Joseph Schumpeter
Joseph Schumpeter and Frank H. Knight are interesting examples of
two eminent economists who were personally anti-socialist but were
seduced by their Walrasian devotion to general equilibrium and their
lack of a genuine capital theory into strongly endorsing the orthodox
view that there is no economic calculation problem under socialism. In
particular, in capital theory, both Schumpeter and Knight were disciples
of J. B. Clark, who denied any role at all for time in the process of
production. For Schumpeter, production takes no time because produc-
tion and consumption are somehow always "synchronized."
But here I'm going to do you a favor and link my favorite criticism of Mises. It's from a LIbertarian of all people:
Why I'm Not an Austrian Economist by Bryan Caplan
In Caplan's view, Mises merely proved that Socialism kinda sucks real bad, but it's not impossible!
So here's my challenge to you Drummnutt. Take the time to read everything I've laid out here. Study the Economic Calculation Problem and then present an argument using reason and analysis. Tell us and why a regulated, planned economy would work. Refute Mises, search for rebuttals of your position, and then refute those. Prove your points.
If you can do that, you will be more than just a pesky blogger. And by doing so, you will help us all learn something new whether our personal leanings are for Socialism, Capitalism, or some other economic ideal.
I have to be off to work now, so I may only have a chance to check in on you from time to time. Good luck!
David in Qatar
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