Rule Five Why Socialism Fails Friday

Every time.  Every time socialism is tried, it fails.  You regularly here cries of “that wasn’t real socialism” or “we just need the right Top Men!” but that doesn’t change the fact that socialism fails every fucking time it’s tried.  And here’s why.  Excerpt:

The new “democratic socialists” want to make their followers believe that one could redistribute wealth and income and socialize a large part of the economy without harming production and productivity. They claim that a comprehensive control of the economy by the government would bring more justice and more prosperity. The democratic socialists want more planning and less market. Yet this postulate ignores that socialism does not fail by accident or circumstance. Socialism fails because it suffers from four fundamental design defects.

  • First, socialism eradicates private property and markets and thus eliminates rational calculation.
  • Second, socialism allows soft budgets, so there is no mechanism in place to discard inefficient production methods.
  • Third, abolishing private property and replacing it by the state distorts the incentives.
  • Four, the socialist system with its absence of private property and of free markets inhibits the economic coordination of the system of division of labor and capital.

The Importance of Market Prices

Socialism cannot bring prosperity because it destroys the market functions of private property. Under socialism, private ownership of the means of production no longer exists, and thus there are no market prices for capital goods available. Institutionally, socialism consists in abolishing the market economy and replacing it with a planned economy. By doing away with private property of the means of production, one wipes-out market information and valuation. Even if the socialist administration puts price tags on the consumer goods, and the people may own consumer goods, there is no economic orientation about the relative scarcity of capital goods.

I have one word for you:  Venezuela.

Some folks like to point out the various Scandanavian nations as evidence that the right Top Men can run a socialist nation and not crash into grinding poverty.  They don’t point out that:

  1. Personal taxes are generally sky-high, sometimes approaching 50% of income earned, while…
  2. Business taxes are generally on the low side, encouraging business growth and investment, because…
  3. Much of those state’s revenues come from extraction, mostly from North Sea oil and gas.

What works in Norway won’t work in the United States, in any case.  While there is an extraction boom in the U.S. right now, the fees and taxes from that won’t begin to cover our massive Imperial budget – and wouldn’t, even if that budget were trimmed to a more appropriate less batshit-insane level.

But in fact, we need look no further than the first bullet in the excerpt above for a reason to reject socialism.  Prosperous societies can only exist when private property rights are rigorously protected, and indeed, government really only has two legitimate reasons to exist:  To keep other people from hurting us or taking our stuff.

Socialist governments invariably do both of these things; they invariably hurt people and take their stuff.  And that’s why proponents of socialism need to be hounded to the ends of the earth.