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Socialism Is Dead. Mises Was Right.

Written by Gary North on December 5, 2015

The twentieth century has witnessed the beginning,
development, and end of the most tragic experiment
in human history: socialism. The experiment resulted
in tremendous human losses, destruction of potentially
rich economies, and colossal ecological disasters. The
experiment has ended, but the devastation will affect the
lives and health of generations to come.

The real tragedy of this experiment is that Ludwig von
Mises and his followers — among the best economic minds
of this century — had exposed the truth about socialism in
1920, yet their warnings went unheeded. — Yuri Maltsev (1990).

Socialism is dead as an ideology and also as a political movement. It is an example of a god that failed.

Socialism is a very specific form of economic opinion. A socialist believes that the civil government should own the means of production. This is what socialism has always meant.

When Ludwig von Mises refuted socialism in 1920, he had in mind exactly this outlook regarding the economy. Here was his argument. If the government owns a nation’s capital, meaning the tools of production, the planners cannot establish the value of these tools. There is no free market for pricing these tools. Without free-market pricing, there is no way for any central planning agency to determine what the most desired consumer goods are in society. There has to be a free market in order to price consumer goods and capital goods. There is neither in a socialist economy. Therefore, said Mises, socialist economic planning is inherently irrational.

That argument was ignored by the vast majority of socialists, and it was never taken seriously by Keynesians. But then, when the Soviet Union’s economy collapsed in the late 1980’s, it became clear to at least Robert Heilbroner, a multimillionaire leftist economics professor, that Mises had been right. He said so in print in an article in The New Yorker: “After Communism.” (Sept. 10, 1990). He then called for the substitution of ecology for socialism. He said that socialism was simply a dead ideology.

Today, there are virtually no people outside of North Korea, Latin America, and Zimbabwe who straightforwardly argue in favor of socialism. North Korea and Cuba officially are Communist. They are poverty-stricken. They have no influence anywhere. Nobody is using them as a model. Zimbabwe is run by a tribal Marxist, and nobody is imitating it, either.

Theodore Dalrymple’s comments on African Marxism are to the point.

Although Marxists often claimed that the deficiencies of the Soviet Union had nothing to do with Marxism, the ignominious dissolution of a regime that had long claimed to be Marxist nevertheless dealt an all-but-fatal blow to the ideology.

I met a number of so-called Marxists in Northern Nigeria. They were young and confused, but they believed in a vaguely Marxist explanation or analysis of their discontents. They were not militant, except mentally. If there was a demonstration they might have joined it, but they would not have killed. They were content with mere words.

With the downfall of the Soviet Union there was an ideological vacuum for people seeking a total explanation of their discontents, people who–thanks to the spread of semi-education — were probably more numerous, and therefore more desperate, than ever. The only alternative on hand, and one with much deeper roots than Marxism, was fundamentalist Islam. Islam rushes in where Marxism can no longer tread.

There are of course advocates of the welfare state. There have always been advocates of the welfare state. These people believe in the private ownership of most capital. They believe in some market pricing. But they believe that government officials can intervene into the markets and redistribute wealth. They don’t care that this may reduce economic growth. They are, as Rothbard said in 1971, driven by envy. They are willing to see the economy produce less in order to satisfy their demand for something closer to economic equality.

Keynesianism is clearly not socialistic. Keynesianism is capitalistic, and it always has been. Keynes was a defender of capitalism. He believed that the state should intervene by either creating money out of nothing or by borrowing from capitalists. He wanted the state to buy goods and services in order to stimulate the economy. He wanted to see an expansion of capitalism, but he believed that deficit spending by the central government, and to a lesser extent monetary inflation by central banks, could achieve the goal of reestablishing the economic productivity of capitalism in the mid-1930’s.

Communism as a means of economic production did not survive the collapse of the Soviet Union in December 1991. That was the last gasp of socialism in Europe and Asia.

There are those in the West who do not understand or even recognize what happened to the Soviet Union in December 1991. They do not realize or recognize that this was the last gasp of socialism. They still want to fight the old fights. They want to invoke the old slogans. They want people to believe that the West remains in a war against socialism, whether domestic or international. This is no longer the case.

There are surely Communists who use the ideology of Marxian Communism to justify their retention of political power. This is true in Cuba, North Korea, Zimbabwe, and China. But Communism is an ideological defense of political power in China. It is not a defense of their reestablishment of state ownership of the means of production.

Any time you see a statement that international socialists are doing this or that, immediately discount it. Pay zero attention to it. International socialists are a figment of the imagination of domestic conservatives. They have not been around in a quarter of a century.

(For the rest of my article, click the link.)

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