For the naive socialist there is quite enough in the world to make everybody happy and contented. The dearth of goods is only the result of a perverse social order which, on the one hand limits the extension of productive powers, and on the other, by unequal distribution, lets too much go to the rich and thus too little to the poor.1

It follows from the principles which the socialist community must necessarily observe in the distribution of consumption goods, that alterations of demand cannot be allowed free play. If economic calculation and therewith even an approximate ascertainment of the costs of production were possible, then within the limits of the total consumption-units assigned to him, each individual citizen could be allowed to demand what he liked, each would choose what was agreeable to him.

The capital goods employed in production are sooner or later used up. This is true, not only of those goods which constitute circulating capital, but also of those which constitute fixed capital. Those, too, sooner or later are consumed in production. In order that capital may be maintained in the same proportions, or that it may be increased, constant effort is necessary on the part of those who supervise production. Care must be taken that the capital goods used up in the process of production are replaced; and, beyond that, that new capital is created.

It should be already sufficiently clear from what has been said, that under Socialism, as under any other system, there could be no perfectly stationary state. Not only incessant changes in the natural conditions of production would make this impossible; quite apart from these, incessant dynamic forces would be at work, in changes in the size of the population, in the demand for commodities, and in the quantity of capital goods. One cannot conceive these factors eliminated from the economic system.

In any economic system which is in process of change all economic activity is based upon an uncertain future. It is therefore bound up with risk. It is essentially speculation.

One of the current fallacies of socialism is that joint stock companies are a preliminary stage of the socialist undertaking. The heads of joint stock companies — it is argued — are not owners of the means of production, and yet the undertakings flourish under their direction. If, in place of the shareholders, society should assume the function of ownership, things would not be altered. The directors would not work worse for society than they would for the shareholders.

The Socialist Community is a great authoritarian association in which orders are issued and obeyed. This is what is implied by the words ‘planned economy’ and the ‘abolition of the anarchy of production’. The inner structure of a socialist community is best understood if we compare it with the inner structure of an army. Many socialists indeed prefer to speak of the ‘army of labour’. As in an army, so under Socialism, everything depends on the orders of the supreme authority. Everyone has a place to which he is appointed. Everyone has to remain in his place until he is moved to another.

Socialist society is a society of officials. The way of living prevailing in it, and the mode of thinking of its members, are determined by this fact. People who are always expecting promotion, people who had always a ‘chief’ on whom they depend, people who, because they receive a fixed salary, never understand the connection between production and their own consumption — the last ten years has witnessed the rise of this type everywhere in Europe. It is in Germany, however, where it is especially at home. The whole psychology of our time derives from it.