It’s often said that depressions are a failure of capitalism.  That when the market is left alone, greed and chaos drive it into ruin.  This is one of the greatest lies ever told.  Depressions aren’t born from freedom, but from obstruction.  The state injects its counterfeit signals into the market and distorts the structure of production.  When interest rates are forced down, entrepreneurs mistake the illusion of credit for genuine savings.  The boom begins—not from wealth—but from delusion.

Every boom fueled by easy money must collapse.  The resources invested under false pretenses can’t complete their course.  The bust isn’t the disease—it’s the cure.  It’s the recognition of error, the restoration of truth.  Painful, yes, but honest.  The longer the state props up the illusion, the greater the devastation that follows.  Yet the planners never learn.  They respond to each crisis with more of what caused it: debt, inflation, and decrees.

In the statist economy, the market never speaks freely.  Prices, interest, and profits are censored by policy.  The people’s values are hidden behind the mask of compulsion.  A command economy can’t have a “depression” because it has no expression of value.  The suffering is permanent, disguised by propaganda and ration cards.  The planners boast of “stability,” but it is the stability of the graveyard.

Depressions in a statist economy never end because the people aren’t allowed to act.  When freedom is forbidden, correction is impossible.  The system becomes a continuous stagnation, a long decay masked by reports and slogans.  The experts and false prophets chant that prosperity can be printed, that consumption is the source of wealth.  They lie.  Wealth isn’t printed—it’s produced.  Prosperity grows from saving, investment, and the honest coordination of human action.

The truth is simple: the free market corrects its errors, the planned economy conceals them.  One heals, the other rots.  The greater the control, the deeper the depression.  Only when individuals are free to act according to their own values can the cycle of delusion end and real recovery begin.

Reference

Ludwig von Mises; Human Action