Happy holidays everyone! And what better way to open the “commercialization” of the season than by talking about “The Founder” and how the McDonald’s corporation became the global presence it is today.
Robert and I go solo on this one and get fairly deep into the concepts of persistence, specialization and the division of labor.
This was a perfect meatball of a movie for us and we hope you enjoy it.
My 5 year old is smart. As her dad of course I say she’s smart. But, she is. She can visualize a lego toy in her head based on the picture and follow the directions perfectly. She’s has the ability to see completed that which is apart. That’s smart. Or something.
This same child does not have a sense of fluid dynamics or inertia. When she pushes the milk glass with the force at the top, it spills. I point out that she should push from the base and I am rejoined with a stern “I know!”
She has a cute habit of mispronouncing multi-syllable words. Interesting becomes in-stres-ting. It’s very cute and all too soon it will go away. She corrects us when, on the rare occasion we wish to remove these cute bits, that she knows she is right, that this word or that is pronounced as she has demonstrated.
She knows. For her it is true.
True. The hunter’s arrow flew true to the heart of the elk. The scorpion was true to its nature and stung the hiker. Her true love surprised her with a marriage proposal. We say these things are true and think little more about the word. What of true things which cannot be observed? Metaphysicians wrestle with big ideas and truth is a big idea. In Natural History of Intellect, Emerson writes that a student “must find what truth is.”
And how is this going to be enforced without government? IP requires a government to enforce it. Enforcement prevents someone not a party to the arrangement of the patent from using their own materials or ideas.
This is roughly equivalent to theft.
[IP is more precisely a form of negative servitude, not theft. It restricts people from doing certain things with their property. There’s nothing wrong with voluntary negative servitudes, such as restrictive covenant agreements. The problem with IP is that it attempts to create rights that are good against the world and at odds with pre-existing property rights in physical things.] – Freedom Juice
This article was originally published in The Review of Austrian Economics in 1991, during the collapse of the Soviet Union.
At the root of the dazzling revolutionary implosion and collapse of socialism and central planning in the “socialist bloc” is what everyone concedes to be a disastrous economic failure. The peoples and the intellectuals of Eastern Europe and the Soviet Union are crying out not only for free speech, democratic assembly, and glasnost, but also for private property and free markets. And yet, if I may be pardoned a moment of nostalgia, four-and-a-half-decades ago, when I entered graduate school, the economics Establishment of that era was closing the book on what had been for two decades the famed “socialist calculation debate.” And they had all decided, left, right, and center, that there was not a thing economically wrong with socialism: that socialism’s only problems, such as they might be, were political. Economically, socialism could work just as well as capitalism.
Mises and the Challenge of Calculation
Before Ludwig von Mises raised the calculation problem in his celebrated article in 1920, everyone, socialists and non-socialists alike, had long realized that socialism suffered from an incentive problem. If, for example, everyone under socialism were to receive an equal income, or, in another variant, everyone was supposed to produce “according to his ability” but receive “according to his needs,” then, to sum it up in the famous question: Who, under socialism, will take out the garbage? That is, what will be the incentive to do the grubby jobs, and, furthermore, to do them well? Or, to put it another way, what would be the incentive to work hard and be productive at any job?
The traditional socialist answer held that the socialist society would transform human nature, would purge it of selfishness, and remold it to create a New Socialist Man. That new man would be devoid of any selfish, or indeed any self-determined, goals; his only wish would be to work as hard and as eagerly as possible to achieve the goals and obey the orders of the socialist State. Throughout the history of socialism, socialist ultras, such as the early Lenin and Bukharin under “War Communism,” and later Mao Tse-tung and Che Guevara, have sought to replace material by so-called “moral” incentives. This notion was properly and wittily ridiculed by Alexander Gray as “the idea that the world may find its driving force in a Birthday Honours List (giving to the King, if necessary, 165 birthdays a year).” At any rate, the socialists soon found that voluntary methods could hardly yield them the New Socialist Man. But even the most determined and bloodthirsty methods could not avail to create this robotic New Socialist Man. And it is a testament to the spirit of freedom that cannot be extinguished in the human breast that the socialists continued to fail dismally, despite decades of systemic terror.
But the uniqueness and the crucial importance of Mises’s challenge to socialism is that it was totally unrelated to the well-known incentive problem. Mises in effect said: All right, suppose that the socialists have been able to create a mighty army of citizens all eager to do the bidding of their masters, the socialist planners. What exactly would those planners tell this army to do? How would they know what products to order their eager slaves to produce, at what stage of production, how much of the product at each stage, what techniques or raw materials to use in that production and how much of each, and where specifically to locate all this production? How would they know their costs, or what process of production is or is not efficient?
Mises demonstrated that, in any economy more complex than the Crusoe or primitive family level, the socialist planning board would simply not know what to do, or how to answer any of these vital questions. Developing the momentous concept of calculation, Mises pointed out that the planning board could not answer these questions because socialism would lack the indispensable tool that private entrepreneurs use to appraise and calculate: the existence of a market in the means of production, a market that brings about money prices based on genuine profit-seeking exchanges by private owners of these means of production. Since the very essence of socialism is collective ownership of the means of production, the planning board would not be able to plan, or to make any sort of rational economic decisions. Its decisions would necessarily be completely arbitrary and chaotic, and therefore the existence of a socialist planned economy is literally “impossible” (to use a term long ridiculed by Mises’s critics). Continue reading “The End of Socialism and the Calculation Debate Revisited”
Seeing as how we posted a biography of F. A. Hayek; it’s only fitting that we also post one for Ludwig von Mises. One of the most brilliant men of the 20th century.
His expertise ranged from money and its origins, business cycle theory that predicted the Great Depression, a devastating critique of socialism and how it is impossible, to his master work “Human Action” that is THE treatise in the study of economics.
Mises led an extraordinary life, most of it scorned by his peers and academia (a black mark they will never live down).
The man fled an advancing Nazi army!
Enjoy this one (I only wish something similar were done for Murray Rothbard as well, but at least he is prominent in this tribute to Mises).
The Ludwig von Mises Story
What kind of man was Ludwig von Mises? As this unique film shows, Mises (1881-1973) was a man who never stopped fighting for freedom: not when the Nazis burned his books, not when the Left blackballed him at universities, not when it seemed as if statism had won. With courage and genius, he fought big government until the day he died … in 25 books, hundreds of articles, and more than 60 years of teaching.
Mises’s battles against Communists, Nazis, and other socialists, are featured in this film, as are his ideas of Liberty. There is also the old Vienna he loved, the Bolshevik prime minister he dissuaded from Communism, and a cast of villains from Lenin to Hitler, as well as such supporters and students as Murray Rothbard, Ron Paul, Bettina Greaves, M. Stanton Evans, Mary Peterson, Joseph Sobran, and Yuri Maltsev.
Among his many accomplishments, Mises showed that socialism had to fail, that central banking causes recessions and depressions, that the gold standard is honest money, and that only laissez-faire capitalism is fully compatible with Western civilization.
Mises was the twentieth century’s foremost economist, and one of its most important champions of Liberty. Here is a film that does justice to this extraordinary man, and to his equally extraordinary ideas.