The Free Market 6, no. 2 (February 1988)
Compared with life in Western countries, where the socialist sector is sizable, life under total socialism is miserable.
The standard of living is so deplorable that, in 1961, the socialist East German government built a system of walls, barbed wire, electrified fences, minefields, automatic shooting devices, watchtowers, watchdogs, and watchmen, almost 900 miles long, to keep people from running away from socialism.
The empirical evidence shows that socialism is an obvious failure. And the cause of socialism’s failure is crystal clear: there is almost no private ownership of the means of production, and almost all factors of production are owned in common in precisely the same way that Americans own the Postal Service.
Why, then, do seemingly serious people still advocate socialism? And why are there still thousands of social scientists who want to put more and more factors of production under social instead of private control?
For one thing, of course, some socialists might simply be evil. They might have nothing against misery, especially if it is only misery for others, and they are in charge of administering it while living very well indeed.
But I am interested in those who advocate socialism because it is allegedly more “value-productive” than capitalism. They claim that the evidence showing otherwise, as in East Germany, is beside the point, or perhaps merely accidental.
But how can anyone deny that the East German or Russian experience is decisive evidence against socialism? How can people get away with promoting the absurd view that the evidence against socialism is merely fortuitous?
The answer lies in the respectable-sounding philosophy of empiricism. It is empiricism that shields socialism from refutation by its own failure, and gives socialism whatever credibility it still has.
That’s why the Misesian critique of socialism attacks both socialism and empiricism. It explains that there is a necessary connection between socialism and lower living standards; the Russian experience is no accident; and the empiricist’ attempt to make it appear an accident is founded on intellectual error.
Empiricism is based on two fundamental assumptions: first, one cannot know anything about reality with certainty, apriori; and, second, an experience can never prove definitively that a relationship between two or more events does or does not exist.
Using those two assumptions as the starting point, it is easy to dismiss empirical refutations of socialism.
The empiricist-socialist does not deny the facts. In fact, he will (reluctantly) admit that living standards are deplorable in Russia and Eastern Europe. But he claims that this experience does not constitute a case against socialism.
Instead, he says, the miserable conditions are a result of some neglected and uncontrolled circumstances that will be taken care of in the future, after which, everyone will see that socialism means higher living standards.
With empiricism, even the striking differences between East and West Germany can thus be explained away. The empiricist says, for example, that it’s because West Germany got Marshall Plan aid while East Germany had to pay reparations to the Soviet Union; or because East Germany encompassed Germany’s less developed, rural provinces; or that the mentality of serfdom wasn’t discarded in the East until much later; and so on.
Not even the most perfectly controlled experiment can change this predicament, because it is impossible to control every variable that may conceivably influence the variable we want to explain. We don’t even know all the variables making up the universe, which renders all questions permanently open to newly discovered experiences.
According to empiricism, there is no way that we can rule out any event as being a possible cause of something else. Even the most absurd things-provided they have taken place earlier in time-can be possible causes. Thus there is no end to the number of excuses.
The empiricist-socialist can dismiss any charge brought against socialism so long as it is based only on empirical evidence. He can claim that since we cannot know what the results of socialist policies will be in the future, we have to try them out and let experience speak for itself. And no matter how bad the results may be, the empiricist-socialist can always rescue himself by blaming some heretofore neglected, more or less plausible, variable. He makes a newly revised hypothesis, and it is supposed to be tested indefinitely.
The empiricist says that experience can tell him that a particular socialist policy scheme did not reach the goal of producing more wealth. But it can never tell him if a slightly different one will produce better results. Nor will experience tell him that it is impossible to improve the producion of goods and services, or raise living standards, through any socialist policy at all.
Now we see just how dogmatic the empiricist philosophy actually is. In spite of its alleged openness and its appeal to experience, empiricism is an intellectual tool that completely immunizes one from criticism and experience. It is the perfect intellectually dishonest means for shielding socialism from the glaring truth of its own failure.
Misesian economics shows that socialism fails because it violates the irrefutable laws of economics-among them the law of exchange, the law of diminishing marginal utility, the Ricardian law of association, the law of price controls, and the quantity theory of money-which can be deduced from the axiom of action by means of applied logic. And thus we can know-beforehand and absolutely-what the consequences of socialism will be wherever it is tried.
If we want to attack socialism, we must also attack the absurd intellectual error of empiricism. And if we want to defeat socialism, we must make a principled Misesian case based on the logic of human action and the irrefutable laws of economics.
