David R. Henderson  

Ludwig von Mises on Entrepreneurs Under Socialism

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A popular slogan affirms that if we think less bureaucratically and more commercially in communal enterprises, they will work just as well as private enterprises. The leading positions must be occupied by merchants, and then income will grow apace. Unfortunately "commercial-mindedness" is not something external, which can be arbitrarily transferred. A merchant's qualities are not the property of a person depending on inborn aptitude, nor are they acquired by studies in a commercial school or by working in a commercial house, or even by having been a business man oneself for some period of time. The entrepreneur's commercial attitude and activity arises from his position in the economic process and is lost with its disappearance. When a successful business man is appointed the manager of a public enterprise, he may still bring with him certain experiences from his previous occupation, and be able to turn them to good account in a routine fashion for some time. Still, with his entry into communal activity he ceases to be a merchant and becomes as much a bureaucrat as any other placeman in the public employ. It is not a knowledge of bookkeeping, of business organization, or of the style of commercial correspondence, or even a dispensation from a commercial high school, which makes the merchant, but his characteristic position in the production process, which allows of the identification of the firm's and his own interests.
This is from Ludwig von Mises, Economic Calculation in the Socialist Commonwealth. It was one of our readings at the earlier mentioned Liberty Fund conference I attended this last weekend. The whole reading can be found here.

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COMMENTS (7 to date)
PrometheeFeu writes:

I always find it fascinating that so many people ignore the basic insight that incentives and systems are more determinative of behavior than personal qualities. When I talk to friends and family about politics, they are quick to blame the corrupt politicians, they might even fire a couple shots at the role of lobbyists and money in politics. (listen to this interview of Jack Abramoff by Lawrence Lessig on the way lobbyists influence the political process for special interest groups http://www.youtube.com/watch?v=pkvIS5pZ0eI) When comes the time to talk about solution electing somebody who is better seems to be the preferred solution. We've been trying that for 300 years. Maybe there is a reason it hasn't worked yet... No?

Greg Jaxon writes:

This is so apropos the electioneering calls for putting people with business-sense into public office. In the kerfuffle over Romney's private equity activities, the same myth was once more trotted out in his defense: what the country needs is a CEO to lead us!

We just need a Mussolini to make the trains run on time. Spare us!

Dushan29 writes:

Are entrepreneurs to be treated as royalty? Seems to me that the Republican mantra is just that..business people are royalty and they know better than anyone else. but, in reality, they are actually the entrepreneurial class

For me, I can't but help believe that America is going back in time to the age of kings and queens,which accords entrepreneurs god-like status.

Bush had an MBA, and he neglected America by engaging in his infamous war of choice. Not much of anything was accomplished other than to run up the national debt. He left America in a worse economic shape than when he started.

I don't subscribe to the belief that business people know how to run a government better than anyone else. I don't like the idea that business people can run the government with the end goal as a profit measured in dollars.

I think that the entrepreneurial class in America will, eventually, set themselves up for a period of time not unlike what happened to King Louis XVI of France. They will have earned their downfall from their pedestal.

Creating a large underclass in America is not without a major risk. Americans are not the type of people who will lay down their arms in the face of an enemy, even from within. I don't like the idea of America becoming a Fascist state.

Klawnet writes:

Dushan:"Creating a large underclass in America is not without a major risk. Americans are not the type of people who will lay down their arms in the face of an enemy, even from within. I don't like the idea of America becoming a Fascist state."

You ignore the fact that it's already been done. You may think you are Harry Reid's equal, but Harry does not agree.

Lokki writes:

Why does every Progressive go back to blame Bush? The war in Iraq did several things , all later destroyed by his political opponents short-sightedness.
1. It based an army next door to our real enemy in the area, Iran.
2.It gave us a basepoint to replace Saudi Arabia, which was moving American troops out.
3. It gave us access to a huge supply of oil and removed Chinese access to that oil.
4. It acted as 'flypaper' for Islamic fighters and had them attacking our trained army rather than Americans at home.
5. It removed a nusiance in the form of Saddam Hussein and served notice that tugging the American whiskers wasn't a wise game. (Note Libya's abandonment of WMD).


Yes, all this later vell apart but not because of external forces but internal Democratic Party aspirations which placed political power above national power.

Now as to bureaucrats devolving from former businessmen - this.
I don 't know how to fight our current trends towards nationalizing businesses through creeping regulation except by shrinking government. Unfortunately it's going to be painful. However our choices are to choose short term intensre pain or chronic pain

Dushan29 writes:

I distinctly recall Bush administration stating his "coalition of the bribed" would be beneficiaries of Iraq's oil. Those who didn't join would get nothing.

Now, I don't recall any Chinese soldiers involved in Bush's Iraqi war with troops on the ground. But please note:

http://www.rfi.fr/actuen/articles/114/article_4145.asp

"The Iraqi oil ministry announced Tuesday that BP and CNPC International successfully bid for the Rumaila oil field in the south of the country, which has reserves of some 17.7 billion barrels of oil."

CNPC is a Chinese company. Not only are they getting oil from Iraq, but they are getting the first contracts for oil in Afghanistan.

Afghanistan, China sign first oil contract

http://news.yahoo.com/afghanistan-china-sign-first-oil-contract-073748776.html

Bush's war was paid for by getting the Chinese to buy US Treasuries. Bush's budget for his Iraqi war was "off the official budget." So was his Medicare Drug program, totally unpaid for by selling more US Treasuries to China and other nations. Untold trillions of dollars because we're not just talking about the war costs per se, but afterwards, and all the health care costs for thousands of veterans which stretches out to many years.

So, our troops fought for oil in both Iraq, and we're still in Afghanistan, and the Chinese partake of oil in both countries.

No military commander has stated that the US won the war in Iraq to this date, although you'll hear many right wingers proclaiming that he did. Ultimately, we don't know what will happen in Iraq. Whether or not they want a democracy is up to them.

As for most of the Mid-East nations, including, Libya, Syria, and the Arab Spring, the story continues to unfold. Certainly, these people need to become modernized and to join the the world's nations in peace and tranquility and more open societies. It will remain a tall order to complete.

Corporations are not people, and when they work in concert with Republican's right wing ideology, it's a form of Fascism. They want to dictate what is good and not good for America. Corporations do not have hearts nor souls, and their main goal is the bottom line. They would sooner keep you a slave as long as they can get away with it. The proof is outsourcing jobs overseas to low wage nations, but we see those workers in China now fighting back against corporate greed. They are fighting for higher wages and more benefits. It reminds me of the early days in America when unions were formed to fight for fair wages and benefits. Corporations have very little altruistic natures, and getting them to be more compassionate means fighting them.

chipotle writes:

Lokki:

1. It based an army next door to our real enemy in the area, Iran.

Iraq and Iran were enemies. Their mutual antagonism--which had led to a long and destructive war--kept them in check. Meanwhile, Bush's military adventure replace a "service" that we were getting for free with a venture that cost thousands of American lives in both deaths and life-long injuries while tearing apart American families, draining the American workforce, and abolishing domestic and foreign trust in the American government. And, oh yeah, there is also the little matter of 100,000+ extra dead Iraqis and what had been a marginally functional society being razed to the ground. Added bonus: the creation of Al-Qaida in Iraq. Added, added bonus: the introduction of brutal sectarian violence with ethnic cleansing between Sunni and Shia .

Total (eventual) cost to the U.S. taxpayer: Over $3 trillion. (Source: Nobel Laureate Joseph Stiglitz and Harvard budget expert Linda Bilmes.)

2.It gave us a basepoint to replace Saudi Arabia, which was moving American troops out.

Because "replacing" the government of large, Muslim countries is an easy, cheap thing that we understand well how to do?

[Hint: Look at our "success" in Iraq.]

3. It gave us access to a huge supply of oil and removed Chinese access to that oil.

This is easily confirmed by the fact that there are very few petrol-powered automobiles in China.

4. It acted as 'flypaper' for Islamic fighters and had them attacking our trained army rather than Americans at home.

Do you know what also worked? This amazing tiger-repellant spray that I bought on the internet. Seriously, not one tiger has attacked me since I got it!

5. It removed a nusiance in the form of Saddam Hussein and served notice that tugging the American whiskers wasn't a wise game. (Note Libya's abandonment of WMD).

And how did Libya's decision to abandon its nuclear program work out for them? Oh, that's right. It ended with Colonel Qadaffi being s*d*mized with a knife. Lesson learned: always get nukes, never cooperate with USA. Got it. Good to know.

Seriously, I think you are one of 13 remaining Bush supporters in the United States. Congratulations, you are now a member of an aggrieved minority.


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