Sunday, November 08, 2009

Socialism cannot calculate

Above is a photo of the Boeing 777 I flew to Dubai in on Saturday. Look at the tremendous number of operations going on. There is luggage being loaded, food being loaded, (most importantly) drinks being loaded, and passengers about to be loaded. That's not to mention the 600 channels of entertainment, including the latest Harry Potter film, and quite a good romp called 'The Ugly Truth'.

The flight crew are preparing their route and doing their pre-flight checks. The cabin crew are with us in the lounge getting us ready for the journey, and the plane itself is the direct descendant of the Wright brothers plane, made out of string and balsa wood, which hopped about on a Carolinas beach a mere 100 years ago.

(To put that into context, think about Roman imperial society in 100 AD, and then Roman imperial society in 200 AD. Any differences coming to mind? No? Thought not. This is because the socialism of the late Roman empire crushed all innovation and created a stagnant society ready for brutal crushing in the metal-crusher of history - but I digress.)

All of the progress in the photograph above is down to capitalism, particularly that of capitalist America before the two-headed monster of the Republican-Democrat government machine succeeded in destroying it and allowing China to take up the mantle.

Socialism cannot even calculate how many tons of coal to mine in any given year, in a coal-bearing area, to feed a single iron foundry.

This is the genius of Ludwig von Mises. Of his many astounding accomplishments, perhaps his greatest was the epiphany that socialism cannot calculate.


Without a free market there is no way of knowing what is the best use of scarce resources.

As an experiment for yourself to check this, play any 'Tycoon' computer game in 'Sandbox' mode (i.e. communist mode) and see how boring it gets, and how quickly it gets boring, and then take a look at the convoluted and stupid worlds you build when there is no competition forcing your hand to be efficient and productive, even when you have unlimited cash to build said resources, without any need to generate any kind of investment return.

This is why socialism appeals to people with the sandbox mentality of young children. Because it fails to take into account any kind of reality, in which real resources are scarce, and in which 'perfectionism' cannot be achieved in anything like a realistic time frame.

Mises realised all of this before computer games.

Mises truly was one of the greatest men of all time. Personally, I think the only man who came anywhere close, previous to this great Austrian, was Thomas Aquinas. Before that, probably Aristotle. Before that, perhaps the un-named Prometheus figure who invented fire-making, and before that, perhaps a close relative of the Bonobo chimpanzees who was the first brave 'man' to decide to come down from the trees and out from the forest.

We really are not worthy.

Just a random thought.


Unknown said...

I will let Maestro Lew ask the obvious corollary:

Anyway, you're back in Dubai again? Your plane seat had hardly grown cold! I've got another 2 weeks here, but the weather is gorgeous isn't it? Must try a dip in the sea this weekend, right after a session at Ski Dubai ;-)

Jack Maturin said...

Gekko, email me at and we must meet up. I'm at the Hilton Jumeirah, on Beach Road. I shall be in the sea at 4pm, when the sun has dropped enough for my pink Celtic skin.

As the Australians say, "I'll buy you a bleedin' beer".

Paul said...

Good point about computer games. Another experience I have where games confirm free market theories is with Civilization (III). As soon as trading of technologies come available I started doing it and making sure that I made most money on it (buying from chinese and reselling to americans). As a result, technologically the world develops at a rapid pace and you would have jets in 18th century. Free trade rules! :-)