Faces of socialism

In his book, Socialism, Ludwig von Mises, in a chapter describing different forms of socialism, wrote in the early 20th century about the Planned Economy:

In the last few years, a new word has been found for that which was covered by the expression "planned economy": State Capitalism, and no doubt in the future many more proposals for the salvaging of Socialism will be brough forward. We shall learn many new names for the same old thing. But the thing, not its names, is what matters, and all schemes of this sort will not alter the nature of Socialism.

Most current, modern liberal, political commentators will ridicule anyone who mentions Socialism in relation to our current system of State economic management. The President and members of congress will quickly defend free enterprise as an American value which has enabled our incredible economic progress. It's true that the mixed economy has done much better than the old Socialism proper in which nationalization of enterprise was believed to be necessary to accomplish socialist ends -- however, after a little over seventy years of our "mixed economy", we're witnessing the failures of this form of Socialism. I'm not using Socialism as a pejorative term to smear the modern liberal or progressive, but rather as a real form of Socialism in its broder meaning as established by Mises. It appears that the original impulse toward State Capitalism of which Mises wrote, is still operational with China's "capitalist" success as a new justification. China strictly manages its economy, and many on the Left are impressed with this State/Enterprise partnership. There's really nothing new in the current push for State Capitalism, and Mises overestimated the State's creative ability to come up with new names. State Capitalism as the Left proposes it is just a shifting of the mixed economy toward "smarter" technocratic planning.

Recently, President Obama has called on industry to think more about the general welfare, and the administration's relationships with GE and Goldman Sachs are signs of strengthening partnerships, as was the recent get together of Obama and the High Priests of Technology. GM is partly owned by the State, and Fannie and Freddie are still government controlled. The very fact of the special relationship between government and the Fed tells us what we need to know about the extent of "State Capitalism" -- this relationship becomes more questionable and troublesome as times goes by.

It will be helpful to read Mises book mentioned above, as it contains a comprehensive critique of Socialism that I cannot go into here at much depth. The problem we face now as a result of Socialist measures undertaken for decades is the misdirection of capital and the battle between the Left's concern for gross product and the expansion of labor, and the need for market players to obey supply and demand as it relates to net product and the ability to obey signals that suggest other needs aren't being met if gross product is no longer profitable. Plus, the push by the State to "invest" in healthcare, education, infrastructure and green energy is not economically sound, and the misdirected capital will necessarily destroy the other part of the mixture, a supposedly free market. What government officials and Leftist intellectuals mean by "free market" is simply that part of the economy which is mostly left to supply and demand and the speculative judgement of capitalists. This part of the mixture becomes weaker and weaker, especially as government/corporate/union enmeshment increases. The Big Businesses now creating partnerships with the State are little more than parts of the State and have little to do with free enterprise -- the partnerships are blocking out competition from small and medium size businesses who don't have the lobbying power to gain State favor and protection.

As unions, and the Left in general, hold on to past gains and disregard changes in the market, we're setting ourselves up for a new Big Battle between Socialism and Capitalism, not "State Capitalism", but the non-socialistic Capitalism necessary for a truly free market. The market is naturally dynamic, and we have to have flexibility to adjust when signals are present, especially in a global economy. No matter how smart the handful of Technocrats are in Washington DC, they can't read the signals -- they can only try to work in a static, planned system, which is impossible. The Left is shooting itself in the foot -- if people on the Left are truly concerned about the welfare of average workers, this is a self-defeating way to work for them. Also, it's not only about economic reality -- it's about liberty and equal opportunity, the possbility for someone to work from the bottom up to build the life many have dreamed of and accomplished in America -- it's about individuals choosing freely, competing and cooperating with others who freely choose. It's the opposite of collective "security" under the "smart" management of technocratic Rulers.