The market doesn’t exist in statism. It’s nothing more than a pseudo-market. The statists will claim its better, they may use a different term. Whose point of view? It puts the leaders in a better position than they were before. The masses are worse off. They may talk about eliminating one thing or another. That is to be replaced by the overlord’s ideas. The market needs all pieces to operate. Eliminating one thing will destroy the market.
The entrepreneur is eliminated. He is guided by the consumers. Rather than the consumers issuing orders by their buying and abstention from buying, the overlord issues orders that the manager must follow. The overlords have a utopia in mind. It’s an unrestricted centralization of decision making. Rather than entrepreneurs satisfying the customers, or trying to, the overlords can only fail in this endeavor.
The economist can tell you before lives are ruined this will not work. The pseudo-economist will say it must be tried. The economist will point to historical example. According to R.J. Rummel, 200 million in the 20th century were wiped out by statism. The pseudo-economist will point out this time is different, they’ll control for A and B. When it doesn’t work, they will want to try again, but control for C and D this time. Lives are ruined with continual tests.
Profits don’t just tell what goods to produce. It tells where the capital is to be directed. The overlords can’t preserve part of the market if they eliminate profits. High profits are a signal to entrepreneurs to produce more of a certain good, or what industry to enter. If a certain company is earning “unconscionable profits,” that’s a signal to enter that field. Trying to artificially reduce prices to reduce those profits will create shortages.
The overlord puts a premium on political skill. The market puts a premium on who can satisfy the masses. Trying to create a market in statism is like trying to square a circle. It’s impossible. Production must be directed by profit seeking. Any attempt to eliminate one part of the market to “improve” it will lead to disaster. This is deifying the state. At best, it’s an absurd superstition and it must die hard.
Reference
Ludwig von Mises; Human Action
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