Why socialism is impossible?

[ProudCapitalist]

Any individual is only capable of considering a HANDFULL of alternatives at a time, right?

So it would need a huge amount of individuals in order to consider all the millions of alterantives necessary to, for example, produce a pencil.

If each of these individuals are free to choose, they will generate prices. So instead of having to consider all millions of factors which produced the pencil, the consumer only needs to consider one single factor, namely the price of the pencil! That makes it so much easier to choose between buying only one pencil and a chewing gum, or rather two of the same, doesn’t it? Prices enable decision making.

Prices stems from, and have their value in, human beings having a limited scope of attention. To price something is like passing the ball from one player in the team to another one who is more likely to score (and getting credit for it in return).

Communism is the idea that the Leader can span millions of decisions simultaneously. It is the religion of the almighty God who magically will make everything good by force of his super humanity, which in lack of real results often is manifested in huge statues…

Social democracy is the idea of everybody simply sitting down and talking about everything. Equally. Todays issue is pencil-making. Does any of you millions gathered here today know about the location of any suitable graphite mines? … And meeting suspended. Tomorrows meeting will go more deeply into the issue of graphite mining in Tasmania and the question whether women should be forced to work those (potential) mines, as well as the raised issue of 7 weeks hollidays for those who will work those same (potential) mines, except for workers of age less than 27 years (as defined by the age of the date of August 16th) who should only have 6 weeks vacation, and locals who should have 8 weeks vacation and so on and so on and so on and so on and so on and so on and so on and so on and so on and so on and so on when EVERYONE must have their say about EVERYTHING.

And then there are billions of other objects other then pencils to have endless democratic meetings with everyone about, aren’t there???

But how could democracy fail when EVERYONE comes together at the same time? Because ALL knowledge resides among everyone, that, I think, even Mises agrees upon. But even gathering ALL KNOWLEDGE on the same spot at the same time and “talking it all through” democratically, doesn’t work. Only capitalism works…

[ladyattis]

I want to expand on Stranger’s points (because I think he didn’t go far enough, but still…). Basically, what happens when you politicize the marketplace you introduce mechanisms that do not inherently aide in the valuation of resources and end-products in that marketplace. Rather, these extra mechanisms only aide in the misallocation of resources based on politicking whether or not they should be used, by whom they should be used, and for what. Instead of simply allowing those that own the resources to dicker the price amongst each other, to where the total average of the price reaches just less than perfect price for the given resource per its given volume in the marketplace, the socialist model alters the means by which one can even valuate a given resource or end-product, either in undervaluing it or overvaluing it. Either way, the socialist/socialized model of price valuation is many orders more inaccurate than emergent market mechanisms for price valuation.

We see this currently with the ethanol craze here in the United States, in which subsidies have inflated the value of corn beyond what the normal market could ever bear, which has even produced a number of food riots outside of the United States. So, really, political integration into the marketplace is a bad idea all around. Not only from the view of resource mismanagement, but also price overvaluation which can cause artificial scarcity of what would be otherwise a plentiful resource/product/service. Thus, it makes little sense to implement socialized anything with regard to the marketplace.

[Byzantine]

Also in social democracy, a government-regulated business becomes staffed and operated according to government dictates, not consumer preferences. Basically, they’re run to please regulators, not customers. Airlines and banks are good examples of this.

[Justin_D]

These countries begin to become stagnant in innovation and change. A reason most of these countries survive the way they do, is because of a capitalist (or near to) continuously improves its goods and services.. Health care being an example, Nearly every medical innovation, invention, technique has come from the United States private industries. With those continuous improvements, the socialized nations health care improvements would become sideways or less than.(among other problems of just living with state health care) They can exists but not with out the improvements from abroad.

[duffmann808]

@Glitch

Ive read mises thesis and he basically states that socialism is impossible due to it not having a method of economic caluclation, now i am not a proponent of socialism but i beleive in its possibility. Hypothetically wouldn’t one just be able have each of the “division managers” to produce reports on the status of the quanity they are producing and if they are low on resources,and couldnt prices or distribution ratios be dependent on these reports?

David Ramsay Steele wrote an excellent book on this topic called From Marx to Mises, that explains step by step where both men went wrong. Economic calculation basically goes as far as saying that not being able to correctly price input goods nullifies any ability to properly price output goods in the long run. Marx even wanted to get rid of currency and any method of exchange, and just allow people to give and take as they saw fit. I reccommend reading the book, because it explains very well why socialism does not work, and gives a complete overview of the subject from nearly every person who has written professionally on it. I think it has too great of a scope to be covered here.

[nirgrahamUK]

what did mises get wrong?

[Glitch]

Could you please define the word “non-economy” How is it possible for a country not have a economy, a economy is simplely the “system of production and distribution and consumption” Which socialism does… Just because they dont do it as well as capitalism dosent mean they dont have a economy, althought i may be misintrepreting you.

[hayekianxyz]

From here:

Economics is a science of the means men must select if they are to attain their humanly attainable ends which they have chosen in accordance with their value judgments.

As such an economy is the means by which men attain their “humanly attainble ends”, this is impossible without the price system.

[hayekianxyz]

Or in the words of Mises himself:

@Ludwig von Mises

Without economic calculation there can be no economy. Hence in a socialist state wherein the pursuit of economic calculation is impossible, there can be–in our sense of the term–no economy whatsoever … Socialism is the abolition of rational economy

What’s not to get?

[Stranger]

@Glitch

Could you please define the word “non-economy” How is it possible for a country not have a economy, a economy is simplely the “system of production and distribution and consumption” Which socialism does… Just because they dont do it as well as capitalism dosent mean they dont have a economy, althought i may be misintrepreting you.

Capitalism is only a system of production, not a system of redistribution and consumption. (It’s doubtful that the latter are systems at all.)

An economy is a process by which resources are allocated to their most beneficial use. So if we consider my household economy, I decide whether or not to use my table as a kitchen table or in my home office based on what will be most useful, and in doing so I am economizing.

A free market economy is not really an economy in the singular, but as many economies as there are people and organizations. All these economies adapt and adjust to each other through prices and the process of economic calculation. That is not possible in socialism where one single organization allocates all resources. If it also allocated resources in such a way that it loses potential beneficial uses, (those that it could obtain by exchanging with other individuals and organizations) then it is doing the opposite of economizing.