Why Socialism Doesn't Work...It Can't!!

Great explanation below. From: http://australianopinion.com/index.php?topic=1820.0

"One thing everyone - including all socialists - can agree on, is that of all the attempts to introduce socialism in the twentieth century: - Russia, China, Kampuchea, Cuba, Ethiopia, Iraq, Tanzania, you name it - none of them resulted in the achievement of true socialism.

Many people believe that ‘socialism is good in theory’, and the reason it didn’t work is because in practice, in every case, a person or persons of bad character miscarried the original good intentions of the socialist project: Stalin here, Pol Pot there, and so on. In theory it could work, it’s just that circumstances didn’t work out right.

But in fact, socialism is impossible in theory, and therefore can never be achieved in practice, for one simple reason, which all the socialists overlooked, at the cost of over one hundred million lives.

Why? Not hard to relate.

Capitalism means the private ownership of the means of production, and socialism means the public ownership of the means of production.

In a market economy, the capitalist buys stuff earlier on to produce something to sell later on. If the price ends up being more than the cost of all the stuff he had to buy to produce the product, then he makes a profit. If the price he gets ends up being less than the cost of all the stuff – the factors of production – then he makes a loss. If he keeps on making losses, he goes out of business.

The capitalist tries to predict whether the price that society puts on the end product is going to be greater than the price society puts on the factors of production. How he figures it out is by comparing the costs. So for example, a farmer adds up the costs of land, seed, fertilizer, tractor, diesel and so on, and compares it with what he thinks he can get for the food he produces.

Okay, now suppose that true socialism is achieved: public ownership of the means of production. So now all the farms, factories, offices, machine tools, tractors, bakers’ ovens – all factors of production whatever – are publicly owned. There is now no market for the factors of production, because the whole purpose of socialism is to get rid of the market for the means of production. There is no longer private ownership of the means of production because the socialists are going to replace it with a better, fairer system.

Okay. So how is anyone going to know the economical way to produce something? How are you going to know whether, in producing a crop of grain, you are using up more resources than you are producing? In a capitalist system, you would know it by the system of profit and loss. You would compare the prices of the inputs with the prices of the outputs.

But under socialism, you can’t compare prices because there aren’t any, because you abolished the institution that produces them: the market in capital goods.

The central planners can plan all they want, but they will be flying blind. In a simple subsistence economy you might be able to compare costs and benefits by comparing physical quantities of fish with apples. But in a modern society, supporting tens of millions of people, with very complex myriad production processes, how are you going to figure out whether it’s more economical to make a house out of timber or steel, or to use gyprock or weatherboard? How are you going to figure out how to make an electric kettle, and with what? How are you going to avoid wasting more than you’re producing? You can't know whether you are or aren't.

That’s why in the Soviet Union, they took stuff out of the earth, added labour, skill, time, organization and money, and ended up with stuff that was worth less than the original raw materials! That's why it was cheaper to fly from Moscow to Minsk to buy a toilet seat than it was to stay in Moscow and buy a toilet seat.

Even if you decided to go back to a barter economy, it would still require the deaths of all the millions of people whose lives have only been made possible by the higher productivity of life under a system of production that uses economic calculation based on money. And of course, that’s exactly what happened in both Russia and China: literally tens of millions of people starved to death while crops rotted in the fields.

So in other words, the reason true socialism was never achieved, was not because Stalin etc. hijacked what was otherwise a noble and good idea. Contrary to socialist wishful thinking, socialism is not an alternative form of economy, let alone the path to a fairer society, it is the abolition of rational economy. It is impossible both in theory and practice, and necessarily leads to political dictatorship and economic chaos – planned chaos.

Only private ownership of the means of production holds out the possibility of handling all the millions of different possibilities by enabling the calculation in one common denominator: money, thus enabling myriad different methods of production to be directly compared. Thus economic calculation is not a category of human action in general, it is a category of market action.

All this was shown by the great Austrian theorist Ludwig von Mises – before the great socialist disasters of the twentieth century: the massive famines, the deaths of millions, the labour camps, the poverty, misery and destruction. No-one ever refuted him. Please try if you like.

But the idea dies hard that public ownership of the means of production will make for a better, fairer society. Many people today, filled with the best intentions, continue to urge government to take actions that, if carried out, will be the deaths of hundreds of millions of people. The latest example is the environmental movement and its equally misguided and conceited opposition to the energy supply supporting the lives of literally billions of human beings. It is ironical that the most anti-social and violent belief system in the history of the world continues to sell itself to its well-intentioned adherents as a philosophy of caring and sharing."