“Under socialism the situation [capital investment in foreign countries] would be different. It would be impossible for a socialist community to possess means of production lying outside its own borders. It could not invest capital abroad even if it would yielded a higher product there.”
Can someone explain to me why this is true? Before you start attacking me, I’m not socialist (or else I’d hardly be reading something like this, would I?) I’m just curious about Mises’ reasoning… he doesn’t seem to offer any.
Any insight from this community would be appreciated.
Your example is a capitalist country owning means of production in a socialist one, why would it be impossible for a socialist country to owns means of production in a capitalist country? Would the capitalists, for instance, forbade them from this practice? Or there something intrinsically contradictory about the situation that prevents it from occurring?
I was using Mises examplke of 2 socialist countries, but you are right, the same thing would apply to capitalist country owning in a socialist one.
I think you are also right that there is no reason a socialist country cant buy means of production in a capitalist one. The stock exchange doesn’t care who is putting up the money.
The capitalists could forbid it, of course. But then they would be deviating from the principles of capitalism, that anyone can buy and sell whatever they wish. Of course, this happens all the time. Look at Obama and the silly tarrif he put on imported steel. And all the literally thousands of interferences with capitalism that go on here every day.
But I dont think there is something inherently contrtadictory in a socialist country buying stocks in a capitalist one. Makes me wonder if Russia bought American stocks in the cold war. They probably did, why not?
Soviet Russia was built on western markets. They borrowed from western funds, hired western firms, licensed/appropriated western designs, imported western goods and exported to the west. But, I’ve never heard of them buying stocks.
So, does that mean that Mises was just making a statement that was downright not true? I don’t see why he would just randomly throw in that socialist countries can’t own means of production in another country… He must have reasoning, so if I could get answer that maybe sheds some insight into Mises’ thinking I’d be very appreciative.