1. Skip to navigation
  2. Skip to content
  3. Skip to sidebar

The Ludwig von Mises Institute

Advancing Austrian Economics, Liberty, and Peace

Advancing the scholarship of liberty in the tradition of the Austrian School

Search Mises.org
Economic Freedom and Interventionism
Ludwig von Mises

Reprinted from the New York World Telegram & Sun, October 5, 1959.

27
The Soviet System's Economic Failure

It seems that in the heated polemics of the cold war people have lost sight of the issue in dispute between socialism and capitalism. The objective of socialism and communism is neither to "bury" us, nor to occupy the whole of the city of Berlin, nor the conquest of any of the remaining free countries.

Socialism, as all its harbingers announced in the past and as its professorial, journalistic, and political advocates repeat again and again in their books, speeches, and platforms, aims at a spectacular improvement in the average man's standard of living.

The Marxians and all other friends of socialism declare that capitalism inevitably results in progressing impoverishment of the masses. While the rich are getting richer, they say, the poor are getting poorer. This is especially true of "mature" capitalism, the present-day American system of what they call "imperialistic monopoly and finance capitalism." They claim that all schemes, such as labor unionism or social security designed to ward off or to assuage the sinister effects of the free enterprise system, are in vain.

There is only one way, they say, open to prevent the eclipse of civilization. That is to substitute socialism for capitalism. Socialism will pour a horn of plenty on the masses whom the capitalistic "exploiters" have reduced to utmost penury.

This is what the socialist message promised the world and what the U.S.S.R., the Union of Soviet Socialist Republics, was resolved to achieve. "Have a little patience and wait until our Five-Year Plan takes effect; then you will see what socialism can do. Don't trust the theorists who claim that they have demonstrated the inferiority and absurdity of the socialist methods. We will show you what miracles government all-round planning can accomplish. Do not cry over spilt milk. One cannot make an omelet without breaking eggs. But our omelet will be a marvel."

Now, where are these much-glorified blessings of the socialist methods of production? We have today, 42 years after the "ten days that shook the world" and after a succession of half a dozen five- and seven-year plans and bloody purges, the opportunity to compare the operation of the two systems, capitalism and socialism. Nobody would have the courage to deny that the average man's standard of living is incomparably higher in capitalistic Western Europe?not to speak of the United States, the paragon of capitalism?than it is in communist Russia. Leaving aside everything else that may be said about the dictatorship of the proletariat, there is need to emphasize that socialism failed lamentably in the very point that, according to its own doctrine, is the only one that counts.

The Communists try to divert attention from this essential fact by a barrage of doctored statistics and by telling us that at some later date?in 1965, 1984, or 2050?Russia's production will equal or even outstrip present-day American production. Up to now all such predictions have been disproved by reality. Experience has belied all this empty boasting. And whenever another free country has been incorporated into the socialist orbit, its industrial and agricultural output has immediately declined.

The socialists have entirely misrepresented the working of the market economy, the system popularly called capitalism. Capitalism is essentially mass production for the satisfaction of the needs of the masses. While the processing industries in the pre-capitalistic ages catered almost exclusively to the wants of a minority of well-to-do, modern business serves the much talked about common man.

All that big business turns out serves, directly or indirectly, but inevitably, the average citizen. There is no other means for business to prosper and to grow into bigness than to render its products and services accessible to the many.

The shops that produce luxury goods for the few remain small or at least medium sized. Thus capitalism resulted in an unprecedented improvement of the masses' standard of living and in a no less unprecedented increase in population figures. Capitalism deproletarianizes the proletarians and raises them to the "bourgeois" level. The average American wage-earner enjoys amenities of which the richest princes and lords of the pre-capitalistic ages did not even dream.

The rulers of Russia know very well why they prevent their people, by means of a rigid system of censorship, from learning about true conditions in the capitalistic West. The communist power is based upon keeping the masses behind the Iron Curtain in crass ignorance. The Soviet system would collapse if its victims were to get reliable information about the normal life of the common man in Western Europe and in this country.

Previous Page * Next Page

Table of Contents