According to Ludwig von Mises, socialism was doomed to failure because the lack of private property, plus the absence of a profit and loss system, meant that accurate economic calculation would be impossible in those regimes. Instead of order, there would be chaos--something that was borne out time and again as we witnessed the poor performances of socialist economies.
The meltdown of liberty can be stopped. But it won’t be stopped until those who understand the problem speak out courageously against the clear and present danger, which is the state at war. It is a danger even if the state wins. As Mises says: "no citizen of a liberal and democratic nation profits from a victorious war."
It was the achievement of Ludwig von Mises to recreate in his time the radical program of early liberalism, i.e., the realizing of individual freedom, peace, and prosperity through limitations on state power, individual rights, and an economy based on private property. A state pursuing vengeance, he believed, threatens liberty itself.
In the natural sciences, a laboratory experiment can isolate various elements and their movements. There is no equivalent in the discipline of economics. The employment of econometrics and econometric model-building, therefore, is an attempt to fabricate a laboratory where controlled experiments can be conducted.
For those who have seen A Beautiful Mind, be assured that the strategizing--in which Russell Crowe instructs his friends that the only way to success is for them all to ignore the pretty girl and focus instead on her plainer friends--does not constitute a true Nash equilibrium. Even if all the boys would be better off if they all ignored the pretty blonde, there would still be an incentive for each one to deviate from the pact and approach her.
The free market is not a panacea. It does not eliminate old age, and it won't guarantee you a date for Saturday night. Private enterprise is fully capable of awful screw-ups. But both theory and practice indicate that its screw-ups are less pervasive and more easily corrected than those of government enterprises, including regulatory ones.
One major reason people are not loyal to the principle of the right to private property is that they have a misconception of its main function. Many think only the wealthy benefit from it. And even if they do not have anything against being rich, they do have something against unfair legal advantages for those who are.
Prior to the demise of Arthur Andersen, the "Big 5" firms seemed to have a "lock" on reputation. It is possible that these firms may have felt free to trade on their names in search of additional sources of revenue. If this is what happened, this was a big mistake. In a free market, nobody has a lock on anything.
By the 1890s, Rockefeller, Carnegie, Vanderbilt, Frick, Harriman, and many others amassed spectacular fortunes. To progressives and other redistributionists, their wealth, and the income inequality it implied, was unacceptable. An income tax, its advocates argued, was the fix.
Despite its great appeal because of its simplicity, the supply-demand graphic as employed by mainstream economics is a tool that is detached from the facts of reality. The real-world economy is far too complex to be faithfully rendered on simple graphs that take no account of uncertainty, entrepreneurial speculation, and the ceaseless change of the market economy.
