CHAPTER VII THE IMPRACTICABILITY OF SOCIALISM
§ 1 the Fundamental Problems of a Socialist Economy Under Conditions of Change
A socialist economy faces serious problems. One main issue is the lack of economic calculation, which makes it hard to know the costs and results of economic activities. Without a clear way to measure value, it's difficult to make good decisions. Another problem is how to organize work so that individuals can act independently without risking failure like in gambling. While people have noticed these issues, solutions often focus too much on management instead of solving the deeper problems in socialist systems.
§ 2 Attempted Solutions
Many socialists struggle to understand the changing nature of industry because they stick to old ideas, especially the labor theory of value. They imagine their ideal socialist society as a place without change, not realizing that economic activity is always in motion. While they criticize capitalism for its changes and conflicts, they mistakenly think all change is bad and only a problem in capitalism. They believe that in their future society, everything will develop smoothly without friction.
Socialists often see entrepreneurs as people who simply take advantage of workers, treating them as outsiders to the production process. They think that by getting rid of these "parasites," a socialist society will succeed. However, this view ignores how important entrepreneurs are in both capitalism and socialism since their role in helping facilitate production will still be needed in any economic system.
The idea of speculation shows another misunderstanding among socialists. They often see speculation as something negative in capitalism, not recognizing that dealing with uncertainty is part of any economy. Many people believe current economic practices are permanent, failing to realize that change is the only constant.
Most people do not have a clear understanding of how economic systems work. They view socialism as a fix to issues without grasping its complexities. Only a few thinkers, like Saint Simon, understood that entrepreneurs are necessary in a socialist community, while others overlook this important fact. Lenin, for example, simplified the role of capitalists and managers to just basic tasks like bookkeeping, not realizing the broader challenges of economic management.
Some socialists believe that giving control to worker committees within companies would solve economic management issues, showing a misunderstanding of how different industries work together. Real economic problems often involve many industries and require strong central coordination to work properly.
The failures of state and municipal socialism show big gaps in understanding how to manage economies. Many think communal enterprises fail because they lack business-minded leaders. They believe that better training and education could fix these issues, thinking a business mentality can be learned like any skill. But being a successful entrepreneur requires more than just technical knowledge; it involves understanding market conditions and being able to innovate.
When experienced entrepreneurs were put in charge of public enterprises, they often did not perform better than other officials. Also, proposals to improve public enterprises by offering financial incentives, like sharing in profits, have not worked consistently. The real problem is that these managers are often not held responsible for losses because they don’t own the resources they manage.
In the end, the difficulties socialists face are not due to the moral failings of people but rather the complex challenges of economic systems, which require effective management and innovation, no matter the political system.
§ 3 Capitalism the Only Solution
Capitalism is described as the best way to organize an economy and solve the problems faced by socialism. To make a socialist system work better, it is important to create separate sections of industry, each managed by someone responsible for that specific area. This is necessary because having one authority control everything leads to ineffective management, as workers do not have clear roles or responsibilities.
Each section manager should be accountable for the results of their work, meaning they should earn profits from successful operations and also deal with losses. It is important for these managers to have the freedom to choose how they run their section, including what resources and workers to use. At the same time, the community must be able to demand products at fair prices and pay only what is necessary for labor.
In this system, society is divided into three groups: the main managers who supervise production, the section managers responsible for specific areas, and citizens who are not directly involved in management. Each section manager should be able to adjust to what the market needs by trading resources with other sections if necessary.
In the end, this system resembles capitalism, which allows for personal responsibility and accountability among individuals. Capitalism effectively fixes the problems of socialism and meets the economic needs of society.
§ 1 the Fundamental Problems of a Socialist Economy Under Conditions of Change
A socialist economy faces serious problems. One main issue is the lack of economic calculation, which makes it hard to know the costs and results of economic activities. Without a clear way to measure value, it's difficult to make good decisions. Another problem is how to organize work so that individuals can act independently without risking failure like in gambling. While people have noticed these issues, solutions often focus too much on management instead of solving the deeper problems in socialist systems.
§ 2 Attempted Solutions
Many socialists struggle to understand the changing nature of industry because they stick to old ideas, especially the labor theory of value. They imagine their ideal socialist society as a place without change, not realizing that economic activity is always in motion. While they criticize capitalism for its changes and conflicts, they mistakenly think all change is bad and only a problem in capitalism. They believe that in their future society, everything will develop smoothly without friction.
Socialists often see entrepreneurs as people who simply take advantage of workers, treating them as outsiders to the production process. They think that by getting rid of these "parasites," a socialist society will succeed. However, this view ignores how important entrepreneurs are in both capitalism and socialism since their role in helping facilitate production will still be needed in any economic system.
The idea of speculation shows another misunderstanding among socialists. They often see speculation as something negative in capitalism, not recognizing that dealing with uncertainty is part of any economy. Many people believe current economic practices are permanent, failing to realize that change is the only constant.
Most people do not have a clear understanding of how economic systems work. They view socialism as a fix to issues without grasping its complexities. Only a few thinkers, like Saint Simon, understood that entrepreneurs are necessary in a socialist community, while others overlook this important fact. Lenin, for example, simplified the role of capitalists and managers to just basic tasks like bookkeeping, not realizing the broader challenges of economic management.
Some socialists believe that giving control to worker committees within companies would solve economic management issues, showing a misunderstanding of how different industries work together. Real economic problems often involve many industries and require strong central coordination to work properly.
The failures of state and municipal socialism show big gaps in understanding how to manage economies. Many think communal enterprises fail because they lack business-minded leaders. They believe that better training and education could fix these issues, thinking a business mentality can be learned like any skill. But being a successful entrepreneur requires more than just technical knowledge; it involves understanding market conditions and being able to innovate.
When experienced entrepreneurs were put in charge of public enterprises, they often did not perform better than other officials. Also, proposals to improve public enterprises by offering financial incentives, like sharing in profits, have not worked consistently. The real problem is that these managers are often not held responsible for losses because they don’t own the resources they manage.
In the end, the difficulties socialists face are not due to the moral failings of people but rather the complex challenges of economic systems, which require effective management and innovation, no matter the political system.
§ 3 Capitalism the Only Solution
Capitalism is described as the best way to organize an economy and solve the problems faced by socialism. To make a socialist system work better, it is important to create separate sections of industry, each managed by someone responsible for that specific area. This is necessary because having one authority control everything leads to ineffective management, as workers do not have clear roles or responsibilities.
Each section manager should be accountable for the results of their work, meaning they should earn profits from successful operations and also deal with losses. It is important for these managers to have the freedom to choose how they run their section, including what resources and workers to use. At the same time, the community must be able to demand products at fair prices and pay only what is necessary for labor.
In this system, society is divided into three groups: the main managers who supervise production, the section managers responsible for specific areas, and citizens who are not directly involved in management. Each section manager should be able to adjust to what the market needs by trading resources with other sections if necessary.
In the end, this system resembles capitalism, which allows for personal responsibility and accountability among individuals. Capitalism effectively fixes the problems of socialism and meets the economic needs of society.