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The Failure of Socialist Economics
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# : |
16612 |
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Section : |
SPECIAL SECTION
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| Issue
Date : |
11 / 1989 |
7,599 Words |
| Author
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Jan S. Prybyla
Jan S. Prybyla is a professor of economics at Pennsylvania
State University. His latest book, Market and Plan Under
Socialism: The Bird in the Cage is published by the Hoover
Institution Press. He is the author of Issues in Socialist
Economic Modernization and two books on the Chinese economy. |
The history of economic ideas reveals that economic systems--orderly patterns of resource allocation--can achieve a wide variety of purposes. For example, the mercantile system that preceded capitalism in Western Europe was designed primarily to enhance the power of the emerging nation states, by way of the treasury, through regulating foreign trade and domestic production. Economic systems have also been constructed in the past (and, indeed, today in parts of the Muslim world) to promote religious ideas such as personal salvation and the glory of the Creator. Other systems have been built specifically for military purposes: The national socialist (Nazi) system, for example, sacrificed personal material welfare for military conquest and the pursuit of racial purity. The Maoist subsystem of socialism in China aimed at egalitarian distribution and class purity.
A modern economic system, however, exists in order to provide people with rising quantities and qualities of final goods they want at prices they are willing and able to pay, and to do this efficiently, that is, with the least possible waste of resources at a point in time and over time. Efficiency over time means that growth in the production of desired goods is achieved through improvement in the productivity of labor, capital, and land. This, in turn, is a function of technological and social innovation. A modern economic system is inventive, and its inventiveness is used to improve people's living standards. That's what it's all about, and that's what people everywhere seem to want. We are talking here about individual, real-life persons, not "people" as a collective abstraction.
The fact that a modern economic system is concerned first and foremost with
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