What will kill an economy stone cold dead

Quite interesting discussion today on what’s wrong with socialism and why don’t we teach what’s wrong with socialism. The consensus at the end – which I might add I am not part of – was that we do teach what is wrong with socialism but not in the way that I think it should be taught. OK, maybe. But on this there was complete agreement – this was my last slide.

Each of these will kill an economy stone cold dead – from I, Mechanical Pencil:

  1. If economic decisions are made from the centre and not by entrepreneurs
  2. If finance and national savings are allocated by the government
  3. If prices are administered by the government
  4. If guiding an economy according to profitability is sharply restricted, if not actually eliminated
  5. If heavy-handed and inappropriate regulations are issued by governments
  6. If property rights are abolished or else strictly curtailed.

If there is consensus on this, then this should be taught to every student who goes through an economics course, and to everyone else as well.

Meanwhile the socialist trope travels farther and wider with not all that much getting in its way. Some recent examples.

There is a phenomenal amount of ignorance in what she says, but at the end, with her statement that it is the workers who create the wealth [to much applause] we are dealing with a quasi-Marxist conception if not actually full-on Marxist since the entrepreneur has no explicit function.

The problem in dealing with “socialism” is that it has a range of meanings, from a very light-on forms of the welfare state all the way to central planning and the complete nationalisation of the means of production. Whatever else it might mean, however, is that it is a desire to have something different from the present. Two items to help think about things. First this, which is from a comment from a post at Powerline.

And before I get to it, I will just note that he leaves out, and indeed seems not to know, anything about the Socialist Calculation Debate, which states categorically that an economy without a price mechanism determined within the market by entrepreneurs who respond to the world as they find it and prices as they are generated in the market, is doomed to fail. That of itself will ensure the economy cannot function.

Most commonly, “socialism” is being applied to a vision rather than an ideology or methodology, a vision where the great wealth created by an economy is distributed more widely so that the people with the least money get more benefit from the economy. In the wealthier countries of Europe and Asia, that vision is carried out with a welfare state and high level of command in an economy that is still based on private ownership and on free exchange. People in the UK or in Japan may still choose their occupations and their businesses are privately owned. There’s a large range of salaries among those who work for wages or salaries. Those who have somewhat larger incomes pay much higher taxes to subsidize welfare-state subsidies of those who make less money. You also have the panoply of labor laws that stifle economic development but do not kill it outright and you have a lot of petty laws, almost tyrannical laws, passed by the duly elected representatives of the very people who carp about high unemployment, high taxes, stagnant economic development, and the wickedness of the wealthy. But this system is not socialism as an economic system; it does less harm and it does it more slowly.

A near-command economy with the ownership and much of the profits of economic activity still in private hands is the fascist model. Since the owners connect closely with the political powers and since the owners still want profits, this brand of command economy will make efforts to keep up profits but those efforts will be misguided because command economies are inherently limited in their responsiveness. Beyond the inherent limits of attempting to run an economy by committee, every command economy has also wound up listening to the loudest and most influential voices but those voices rarely know or care about the broadest benefit for their societies….

Most of our soi-disant “socialists” are actually welfare-state nanny-bullies. Their policies and theories are not geared to collective ownership but to collective pillaging. In terms of discussion and dealing with the special brand of s-word that is socialism, it matters that that is not what is on the floor. We need to address the s-word of welfare-state nanny-bullyism because that is what is actually on the floor.

And then this: Young Americans are embracing socialism.

61% of Americans aged between 18 and 24 have a positive reaction to the word “socialism” — beating out “capitalism” at 58%. Overall, 39% of Americans are well-disposed toward socialism, but the gulf remains wide for men and those aged over 55.

It’s only a word. At the moment across the whole of society there are still 61% who react positively to the word “capitalism”. But that is if you are older and male.

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