Dear Reader,
What if Karl Marx triumphed over Adam Smith?
That is: What if socialism “worked” — where capitalism failed?
Should the United States take up collectivism on pragmatic grounds of efficiency?
Or should it refuse the transaction on abstract grounds of principle? Should it stick to its Jefferson?
The United States erected itself — after all — upon the hard granite of freedom and liberty.
Would today’s crop of Americans dynamite the bedrock for a mess of porridge and a chicken in each pot… if collectivist economics better delivered them?
I do not know the answer.
Capitalism Works
Read any “free market” economic literature you please.
In each of it you will discover thundering defenses of free market capitalism. What unites them all?
The answer is efficiency. It is capitalism’s superior capacity to produce goods and heave up wealth.
Free market capitalism simply “delivers the goods.” Collectivist economic systems do not.
Thus efficiency is capitalism’s Gibraltar, its Matterhorn.
Socialism Doesn’t Work
The capitalist argues that Marxism’s “from each according to his ability, to each according to his needs” is economic moonshine.
It does not function in practice, he says. And he is correct.
A man will sweat and toil fantastically to better his lot. He will not — however — sweat and toil fantastically to improve his neighbor’s lot.
The collectivist may label this man “selfish.” The collectivist may decry his “greed” that neglects the greater good.
Yet you must take this man as you find him, says the Adam Smith disciple, says the economic realist… not as you would have him.
Only when he is allowed his unobstructed pursuit of self-interest will he produce.
And when he produces, he enriches society.
Stifle his material ambitions and you stifle his productive energies. Society is impoverished.
Price Controls
Meantime, the free marketeer will argue that government-imposed price controls are economically lethal.
That is because they overturn capitalism’s beautiful incentive structure. Thus they result in goods shortages — and higher prices for the same goods.
Imagine a socialist government wishes to reduce widget costs for its poor beset population.
This government is kind. This government cares. And so it decrees that private enterprise sells its widgets at a price-controlled $1 each.
Yet private enterprise may only take a profit — perhaps even a bare profit — by hawking widgets for $2 each.
Why would private enterprise produce widgets at a loss? The question is of course the answer. It would not.
What must we conclude?
That under price control, consumers must go heavily without widgets. They must suffer lacks.
All because government acted to reduce the cost of widgets. That is, because because government meant well.
Apply this one example of government intervention across all industries. The identical result obtains.
A Recipe for Unemployment
Relatedly, minimum wage requirements work at self-destructive purposes.
They reduce employment because they compel employers to mete out wages that exceed an employee’s value.
Why would a McDonald’s pay an employee $15 the hour… when his workplace contributions justify only $7 the hour?
In the absence of minimum wage legislation, McDonald’s may take this fellow on. In the presence of minimum wage legislation, it will not.
And so this poor, unskilled fellow must throw himself upon public relief. Or he may resort to unlawful activities to scratch by.
And so he further burdens the community through his crimes.
All the while he is denied the virtues and dignities of work — virtues and dignities that will carry him through life.
Thus the free marketeer takes his pragmatic stance for capitalism.
Yet is he truly for free market economics?
“You’re All a Bunch of Socialists!”
The great “Austrian” economist — Ludwig von Mises — once stormed from a meeting of free market economists.
At this gathering they were debating tax policy. They pondered how government could collar the highest tax revenue without injuring the free market.
At that point Mises lit out for the exit. He raged, “You’re all a bunch of socialists!”
A bunch of socialists?
How a bunch of free market economists be socialists?
After all: They were against price controls, minimum wage laws and the rest.
They knew their Adam Smith. They knew their Freddy Hayek.
And capitalism’s invisible hand? It was visible to them.
They observed it in confounding — yet brilliant — practice. They understood.
Capitalism Shouldn’t Empower Government
As Mises scholar Lewellyn Rockwell explains:
- To Mises, this discussion presumed several wrongheaded notions. First, that the government is entitled to collect as much revenue as it can get away with collecting… that economists should be in the business of giving advice with an eye to what is best for the state… that economists should try to design measures of government interference to achieve optimal results.
- To Mises, economists had a role in the political life of the nation. But it was not in making life easier for the state and the political class. It was not in becoming specialists in providing rationales for the expansion of state power…
In conclusion:
- Mises thought that economists who attempted to make this possible… were acting very much like the socialists of old. It was the socialists, after all… who first conceived of economics as a science in service to the state.
I Am Unapologetically With the Free Marketeers
Put it into the record: I am with the free marketeers.
I am heart and soul for free market capitalism, and declare openly for it.
I am convinced beyond all convincing that free market capitalism infinitely outdoes the collectivist system.
Yet again I ask:
What if these collectivist economic doctrines “worked”?
What if the sun rose tomorrow in the west, what if gravity reverses, what if politicians stops lying…
And what if collectivism outproduced capitalism?
Again I ask: Should we take up collectivism on the practical grounds of greater efficiency… or should we refuse it on the abstractions of freedom and liberty?
The Economic System of Liberty
I am not for free market capitalism merely because it enriches me.
I am certainly not for free market capitalism because it enriches the state.
I am for free market capitalism for one central and simple reason:
Economic liberty is brother to political liberty.
The free market system is the economic system of a free and independent people — an authentically free and independent people.
It is the economic system of liberty.
I offer no higher defense.
Regards,
Brian Maher
for Freedom Financial News
