I teach four years of literature courses for the high school program of the Ron Paul Curriculum.
I also teach six weeks of literature for the eighth grade. For these lessons, I analyze two novels: Edward Bellamy’s Looking Backward: 2000–1887 (1888) and Charles Sheldon’s In His Steps (1896). Bellamy’s book is occasionally assigned to college students in courses on the history of American literature. Sheldon’s book is still in print, but it is rarely mentioned.
Here is what few historians understand. Bellamy’s novel launched American socialism. Sheldon’s book launched the Social Gospel movement.
Prior to Looking Backward, American socialism was a tiny fringe movement of a handful of German immigrants. There was a tiny Marxist movement in the United States, but it was so far out on the fringes that no one knew about it. There had been a series of Utopian communities, some of which had common property. The Hutterites were examples. But unless they were based on communal religion, these experiments usually failed within a few years. They did not lead to full-scale movements calling for the nationalization of property by the U.S. government.
Then came Looking Backward. In the same year that Benjamin Harrison defeated Grover Cleveland, Americans had their first introduction to the idea of the national government taking ownership of the means of production.
The book was little more than a series of descriptions of how such an economy would unleash massive production, thereby eliminating all poverty. There would be entire armies of workers employed by the state. No man would work longer than age 45. Every man would begin work as a common laborer at age 21. Daily wages would be equal for all, although the bureaucracy could determine that highly skilled workers in high demand would work shorter daily hours.
Here is the plot. An upper-class resident of Boston in 1887 goes to sleep in a basement. Somehow, mesmerism puts him into a state of suspended animation. He wakes up in 2000. Boston is completely different. Everyone is rich. The state produces everything. All meals are held in luxurious common dining halls. There is free entertainment on the equivalent of a giant telecommunications system. Only the best kinds of music are available, free for all.
The visitor keeps asking questions about how everything works. The man who discovered his frozen body describes the wonderful results.
In what is almost incredible in retrospect, the revived visitor in the future asks a question that Ludwig von Mises asked in his 1920 essay, “Economic Calculation in the Socialist Commonwealth.” The question: “How can a socialist planning board set prices?”
“All that is conceded,” I said. “But, with all its defects, the plan of settling prices by the market rate was a practical plan; and I cannot conceive what satisfactory substitute you can have devised for it. The government being the only possible employer, there is of course no labor market or market rate. Wages of all sorts must be arbitrarily fixed by the government. I cannot imagine a more complex and delicate function than that must be, or one, however performed, more certain to breed universal dissatisfaction.”
Even more astounding, the answer is basically the one that Marxist economist Oskar Lange gave to Mises in 1936-37: bureaucratic guesswork.
“I beg your pardon,” replied Dr. Leete, “but I think you exaggerate the difficulty. Suppose a board of fairly sensible men were charged with settling the wages for all sorts of trades under a system which, like ours, guaranteed employment to all, while permitting the choice of avocations. Don’t you see that, however unsatisfactory the first adjustment might be, the mistakes would soon correct themselves? The favored trades would have too many volunteers, and those discriminated against would lack them till the errors were set right.
And then the ultimate parallel: Lange’s plan was never adopted by any socialist planning board in history. Dr. Leete says: “But this is aside from the purpose, for, though this plan would, I fancy, be practicable enough, it is no part of our system.” He never answers the question.
[Note: The year after Lange’s two articles attacking Mises were published, the University of Chicago hired him as a full professor. Think about this. The University of Chicago economics department was known as a free market department, but it rewarded a Marxist economist in the depths of the Great Depression with a full professorship for attacking Mises. The department refused to hire F. A. Hayek in 1950, five years after Lange renounced his citizenship and returned to Poland to advise the Communist government.]
(For the rest of my article, click the link.)