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The Impossibility of Socialism

http://mises.org/econcalc.asp
Economic Calculation in the Socialist Commonwealth
by Ludwig von Mises (1920)
In this essay Mises criticizes socialism (in short socialism is impossible because it does not provide means for rational economic calculation and decision making). In doing so, he has to talk about what socialism says. He makes a good attempt to give a fair and reasonable interpretation. One of the things he says is socialism differentiates between consumption goods and the means of production. If a socialist citizen wishes to trade his allotment of beer for his friend's allotment of concert tickets, that's allowed. But there can be no trade of the means of production because they are communally owned.

That makes sense because otherwise the planners have to know everyone's tastes so they know who to give beer to and who to give concert tickets to. (Or they can try a rather implausible scheme such as making everythign free for the taking and asking people to only take modestly.)

There is a problem here: this distinction rests on a naive and false conception of the kinds of goods that exist. It assumes household cleaners are for consuming and hammers are for producing and every good is is one type or the other. This is false. Consider the Macbook. This is a consumer product which people use to play games, but it's also a means of production for programmers, video game artists, people who need a spreedsheet program to manage a warehouse or factory, architects, and sales people who need to create presentations.

Even household cleaners can be used in production (to make drugs, for example) and hammers can certainly be used for either hobby work or professional work. Jewelry can be melted into gold or silver which can be used in production. Factories can be remodeled into living spaces. There can be no distinction between consumer and productive goods.

This is not Mises' problem. It is socialism's problem. If socialism wishes the factors of production to be communally owned, but for consumption goods to be privately owned, then it's socialism's problem to (impossibly) draw a distinction between the two.

My conclusion is that socialists have a choice:

1) Socialism is impossible.

2) Socialism must intrude into its citizens' entire lives: everything is communally owned and its use determined by the planners.

3) Socialism must make arbitrary declarations about which goods are to be communally owned and which not. Doing that will cause economic harm by preventing goods from switching categories even when doing so is efficient.

Elliot Temple on January 12, 2011

Messages (15)

You've made a classic mistake in your understanding of the means of production (and distribution), and private and personal property.

Personal property are things like household goods, clothing, furniture, toothbrushes, etc. Things that a particular person makes use of (or might need use of) on a regular basis, and that someone else would be depriving them of if they were to use it. If we imagine that someone has a personal set of tools that they use for house work, or even for their productive occupation, these tools can be considered their personal property.

The term private property is specifically applied to the means of production and distribution. That is, land and capital. A farm, textile plant, a distribution warehouse, a grocery store—these are the kinds of property socialists are concerned with.

Furthermore, socialists do not necessarily aim for specifically *government* control of the means of production. Those following the Leninist tradition do, but only because they believe that centralized power is necessary to reorganize property relations and develop the infrastructural capacity for a society where every person can live without want of food, shelter, or freedom.

You can poke holes in that particular account and I'll probably agree with you.

What socialism specifically advocates for is *worker* control of the means of production. That is, the abolition of the relation of wage labour, where a capitalist lives off the profit created by the labour of others. Instead, the workers on that farm, in that textile plant, in that warehouse and that grocery store collectively, through democratic means, determine that enterprise's organization and operation.

With the elimination of the profit motive, that also means that enterprises won't be oriented towards the creation of endless surplus, but instead towards meeting the needs of society as a whole.

In summary and response to your trilemma:

1) Socialism is clearly possible, as it has been practiced in many places throughout history. I'll let you do your own reading on that.

2) Socialism is specifically oriented towards maximizing individual freedom. What it does not do is protect an individual's freedom to own the means of production and control their use—for a society to be free its people must not be bound in wage relations which rob them of the full value of their labour inputs.

3) Your third point is still couched in the belief that socialism is necessarily authoritarian, which is false. There are very clear (and very much not arbitrary) frameworks for what constitutes personal property. For what doesn't fit tidily into those frameworks, the distinction between kind of property is made by those people for whom that decision matters, because *socialism is necessarily predicated on democracy*, in every sphere of life.


Anonymous at 2:37 PM on November 20, 2019 | #14404 | reply | quote

> household goods, clothing, furniture, toothbrushes

Those can all be used in production.

> Furthermore, socialists do not necessarily aim for specifically *government* control of the means of production.

> *socialism is necessarily predicated on democracy*

By democracy do you mean democratic *government*? Or is there some other way to have workers vote to decide outcomes without government or any equivalent to government? You didn't explain.


Dagny at 5:09 PM on November 20, 2019 | #14429 | reply | quote

> Those can all be used in production.

I mean, conceivably? But they're not productive capital. They are not the means of production which socialists are concerned about. At most they're inputs.

>By democracy do you mean democratic *government*? Or is there some other way to have workers vote to decide outcomes without government or any equivalent to government? You didn't explain.

Democratic government, yes, but democracy in the workplace as well. One is not free when they spend most of their waking lives working for a capitalist who pockets the proceeds of their labour.

Though the term "government" is pretty broad, I should emphasize that the democratic institutions which socialists advocate for in the workplace do not necessarily have to have any ties to, say, local or regional authorities.

Think of it this way: just as we deposed the political tyrannies of feudal society and replaced them with more-or-less functional democracies, we so ought to replace the business tyrannies of capitalism with democratic associations of the workers who actually do production.

This should have the knock-on effect of improving political democracy, as well, since it would prevent the accumulation of wealth and political power which corrupts those systems.


Anonymous at 6:27 PM on November 20, 2019 | #14434 | reply | quote

> I mean, conceivably? But they're not productive capital. They are not the means of production which socialists are concerned about. At most they're inputs.

You don't have a way to delineate capital and consumption goods. Such delineation is unnecessary for capitalism but important to socialism.

> Democratic government

So how is that not government control of the means of production? Because some local organizations would have control over some local matters (what do they control? and what happens when they disagree with the central government), and those local organizations are different than a government in what ways?


Dagny at 6:37 PM on November 20, 2019 | #14437 | reply | quote

>You don't have a way to delineate capital and consumption goods.

I mean, capital does have a definition. If you own something, if you hire people to use it for you to produce things, and it aids in or is necessary for that production, then you are a capitalist and that thing is your capital. If you and a bunch of your fellows collectively own and manage a thing, and you all use it to produce thing and it aids or is necessary in that production, then that's your capital. Socialists argue that any of the first example ought to be the second. It's that simple.

I wrote a fairly thorough account of personal property. Anything that falls under that definition is definitely not capital.

>So how is that not government control of the means of production?

This is what I was getting at when I said that "government" is pretty broad. I suppose it would be more useful to explicate what is and is not a state, rather than a government.


Anonymous at 6:47 PM on November 20, 2019 | #14440 | reply | quote

> I suppose it would be more useful to explicate what is and is not a state, rather than a government.

Go ahead.


Dagny at 6:48 PM on November 20, 2019 | #14442 | reply | quote

I'm on my phone now so forgive me if I'm brief. A state is a political entity which claims certain kinds of exclusive legitimacy over a defined territory: political legitimacy, legitimate use of violence, regulation of economies and commerce, and ideological legitimacy (for example, in liberal democracies the state upholds individual property rights, and it's pretty much impossible for a non-corporate collective to own, say, a car). A state uses violence to maintain these exclusive legitimacies.


Anonymous at 6:49 AM on November 21, 2019 | #14474 | reply | quote

#14474 So has the stuff you're advocating been written down in a way that you endorse? Where do I read about the details of this system? Does it have a more specific name than "socialism"?


curi at 12:17 PM on November 21, 2019 | #14479 | reply | quote

I broadly endorse what I described. I had intended only to address the distinction between personal and private property, but I tried my best to address the other questions that came up.

Socialism, like democracy, is a term with a lot of different conceptions. It can broadly be understood as putting workers in control of the means of production and distribution, such that those means are directed towards the good of society at large rather than the profit of capitalists.

For a practical and philosophical overview of the particular brand of socialism I advocate, I recommend the writings of Murray Bookchin, available in a convenient digest format in The Murray Bookchin Reader, which you can find with a quick Google search.

To see Bookchin's ideas adapted into a specific political programme, I suggest Democratic Confederalism, a short pamphlet by Abdullah Ocalan.


Anonymous at 2:07 PM on November 21, 2019 | #14494 | reply | quote

#14494 Any comment on this article discussing Bookchin?

https://mises.org/library/anarchism-peter-kropotkin

Also Bookchin is quoted in another article:

https://mises.org/library/malthusian-trap

> Any attempt to solve the environmental crisis within a bourgeois framework must be dismissed as chimerical. Capitalism is inherently anti-ecological. Competition and accumulation constitute its very law of life, a law which Marx pungently summarised in the phrase, "production for the sake of production." Anything however hallowed or rare, "has its price" and is fair game for the marketplace. In a society of thus kind, nature is necessarily treated as a mere resource to be plundered and exploited. The destruction of the natural world, far from being the result of mere hubristic blunders, follows inexorably from the very logic of capitalist production.8

This excerpt sounds like Bookchin doesn't know or use rigorous economic arguments and is broadly unfamiliar with the capitalist economics literature. Is there material where Bookchin responds to capitalist economics arguments, e.g. from Mises, with substantive arguments which demonstrate his own understanding of economics concepts and explain which particular parts of Austrian economics Bookchin disagrees with, and why, while also saying which parts he accepts? If he has nothing like that, then I wouldn't see why anyone should accept his views over rigorous, logical economics arguments, so hopefully he does. But e.g. i searched the reader you suggested for the word "marginal" and it wasn't there, nor was "supply".


curi at 2:15 PM on November 21, 2019 | #14495 | reply | quote

Regarding the article on Kropotkin, it seems broadly factual. Of course, I don't agree with the claims the author makes w/r/t the economic impossibility of the abolition of private property etc.

I think you'll find that Bookchin's work is primarily in the realm of political theory and philosophy, and not in economics. You'll note that he defers to Marx's analysis of capital.

Marx, of course, dedicated his life to the analysis of capitalism and not to the development of a particular programme of socialist economics. If that's what you're interested in, I've been told Enrico Maletesta has a compelling account of anarchist economics, though I haven't read it myself. I would start with Part 1 Section III of Life and Ideas of Errico Maletesta.

It's important to note that Austrian economics and these socialist ideas I'm putting forward are incompatible, largely because of conflicting normative foundations. This is compounded by the fact that Austrian economics rests pretty much entirely on its normative foundations.

Lastly, I should note that your mises.org article on the Malthusian trap has an astounding number of false and unsupported assertions regarding the philosophical foundations of the environmental movement. I would go so far as to suggest the author is being intentionally uncharitable.


Anonymous at 5:13 PM on November 21, 2019 | #14505 | reply | quote

> It's important to note that Austrian economics and these socialist ideas I'm putting forward are incompatible, largely because of conflicting normative foundations. This is compounded by the fact that Austrian economics rests pretty much entirely on its normative foundations.

Is there any written criticism of Austrian economics which explains and argues this, which you'll share and endorse?

> Lastly, I should note that your mises.org article on the Malthusian trap has an astounding number of false and unsupported assertions regarding the philosophical foundations of the environmental movement. I would go so far as to suggest the author is being intentionally uncharitable.

You haven't made an argument. But IMO let's stick to econ.


curi at 5:16 PM on November 21, 2019 | #14506 | reply | quote

"Let's stick to economics," they say after jumping in at the end of a conversation about property relations and politics.

If you have any questions or arguments concerning my initial or followup posts, I'll be glad to answer them. I have no particular interest in engaging with Austrian economics.


Anonymous at 5:59 PM on November 21, 2019 | #14507 | reply | quote

> I have no particular interest in engaging with Austrian economics.

OK if you don't want to argue against my views, nor learn from me, bye I guess.


curi at 6:15 PM on November 21, 2019 | #14509 | reply | quote

The issues brought up in your original post, and the responses I made to it, were philosophical ones. If you want to present an economic argument for your position / against the socialist one, I might be able to address it, but you haven't.


Anonymous at 6:33 PM on November 21, 2019 | #14511 | reply | quote

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