Socialism, efficiency and the One Big Cartel

In the production sphere, socialism is equivalent to One Big Cartel, compulsorily organized and controlled by the State. Those who advocate socialist “central planning” as the more ef­ficient method of production for consumer wants must answer the question: If this central planning is really more efficient, why has it not been established by profit-seeking individuals on the free market? The fact that One Big Cartel has never been formed voluntarily and that it needs the coercive might of the State to be formed demonstrates that it could not possibly be the most efficient method of satisfying consumer desires.

...says Rothbard in Man, Economy and State (chapter 10). The socialist will never attempt to answer the question raised by Rothbard, because he can't. Actually, socialists don't highlight their "efficiency" argument so much anymore. Now they say: "Well, socialism isn't really that efficient, but we will impose it anyway in the name of "justice", so that everyone can suffer equally under the inefficiency of socialism."

Weakness and strength of the State

The weakness of the State lies in the fact that it is but an aggregate of humans; its strength derives from the general ignorance of this truism.

... says here. This is something I should keep in mind more often. Sometimes I feel that it is a hopeless cause to fight the State. However, when I simply keep in mind that the State is just an aggregate of humans, and that the strength of the state lies in the the ignorance and submission of the general public, I regain my confidence and will to fight. The mission is clear: Educate the public. The goal: Free society.

Socialism, private cartels and economic calculation

The reason for the impossibility of calculation under socialism is that one agent owns or directs the use of all the resources in the economy. It should be clear that it does not make any difference whether that one agent is the State or one private individual or private cartel. Whichever oc­curs, there is no possibility of calculation anywhere in the pro­duction structure, since production processes would be only internal and without markets. There could be no calculation, and therefore complete economic irrationality and chaos would pre­vail, whether the single owner is the State or private persons.

... says Rothbard in Man, Economy and State (chapter 9). Also:

The difference between the State and the private case is that our economic law debars people from ever establishing such a system in a free-market society. Far lesser evils prevent entrepre­neurs from establishing even islands of incalculability, let alone infinitely compounding such errors by eliminating calculability altogether. But the State does not and cannot follow such guides of profit and loss; its officials are not held back by fear of losses from setting up all-embracing cartels for one or more vertically integrated products. The State is free to embark upon socialism without considering such matters. While there is therefore no possibility of a one-firm economy or even a one-firm vertically integrated product, there is much danger in an attempt at so­cialism by the State.

So what does this mean? It means that a private "monopoly" is unlikely to ever come into existence (without aid from the State), and even thought it would, it would quickly run into economic chaos because it does not have a market to make reference to when calculating the cost of its operation. However, a State "monopoly" can simply drain the economy for blood until it has to default on its debt and obligations - a process that could take decades and will kill all life in its reach in the process.

Full employment on the free market

The “full employment” provided by the free market is em­ployment to the extent that workers wish to be employed. If they refuse to be employed except at places, in occupations, or at wage rates they would like to receive, then they are likely to be choos­ing unemployment for substantial periods.

... says Rothbard in Man, Economy and State (chapter 9). This is often forgotten. People talk about "unemployment" of men who want to work but simply cannot find any work! Rothbard explains why these men are out of work. Either they demand too much pay, or the government has made it too expensive for anyone to hire them (e.g. because of extensive benefits and taxes that follow each employee).

Productivity of labor

That each man receives his marginal value product means that each man is paid what he is worth in producing for con­sumers. But this does not mean that increases in his worth over the years are necessarily caused by his own improvement. On the contrary, as we have seen, the rise is primarily due to the increas­ing abundance of capital goods provided by the capitalists.

...says Rothbard in Man, Economy and State (chapter 9). This is often forgotten. Why does a man, with no education and only minimal training, in general, earn a lot more in Europe than in Africa? Because in Europe, this man is given access to tools and equipment which the capitalist bought in order to improve the worth and value creation of his employee. Unions would do well to remember this. They tend to focus their efforts on consumption of existing capital, but forget that it is mainly increase in capital that really gives rise to an increase on the pay-check of the worker.

Technology or capital?

It is logically obvious that while cap­ital cannot engage in production beyond the limits of existing available knowledge, knowledge can and does exist without the capital necessary to put it to use. Technology and its improve­ment, therefore, play no direct role in the investment and pro­duction process; technology, while important, must always work through an investment of capital. As was stated above, even the most dramatic capital-saving invention, such as oil-drilling, can be put to use only by saving and investing capital.

...says Rothbard in Man, Economy and State (chapter 8). And what does this mean? It means that in order to take advantage of new or improved technology, you need capital. Therefore, it is not possible to say that someone became rich because he has the latest and greatest technology. The latest and greatest technology could not have been obtained (purchased or developed) without capital.