What if a socialist government just controls the most basic parts of the economy like agriculture, mining, fishing, textiles, and construction. All the manpower and attention would be focused on just these industries and all other capital goods in other industires created by the previous capitalist economy will be liquidated and turned to foreign exchange. Let's say this socialist country is initially so productive in agriculture that the surrounding capitalist countries that have little land left for agriculture so they keep importing food from the socialist country. I would guess that socialism would work in this case in the sense that everybody would be able to eat and wear clothes and have houses to live in. And future investments would just come from accumulated foreign exchange. I mean sure people will still be impoverished in the sense that they have no liberties but because the state focuses in few industries, the state has enough information to plan the economy.
This is also analogous to an island wherein one person owns the island and the rest of the people living on the island. Let's say 99 people are owned as slaves. The slavemaster could keep the 99 people alive and contented through central planning.
So I'm thinking that socialism can possibly 'work' in satisfying people's basic needs. I'm asking about this because socialists accuse the free market of not providing people's basic needs while producing luxury goods for others. Could socialism possibly work in the sense of satisfying livestock as in the scenario above?
I'm sorry if this seems like an ignorant question. I haven't read Socialism by Ludwig von Mises.
To say that collectivised agriculture has had an unsucessful history is akin to saying that bullets have sometimes killed people, the Napoleonic Rothschild family was rich or that Asia is highly populated.
Why would a goverment with so much power restrain itself and not grab more industries?
hugolp:Why would a goverment with so much power restrain itself and not grab more industries?
The OP basically tries to overcome the hayekian knowledge problem using basic information about all/most humans. Its still inferior to market planning though...
Your system here is similar to Germany immediately after WW2 where the government under the auspices of the US and British created a brand of government that had government provided basic services in healthcare, education, banking, metals, autos, communications, etc. The German government removed the controls on other industries like furniture, high margin autos, clocks, beer, wine, chocolate, etc in protest of the occupation. What happened was that capital immediately left the government controlled areas for the more free areas. Keep in mind that at this time Germany had the most free economy of any country of any size and predictably experienced growth far in excess of the Socialists in France, Spain, UK, etc. This period of growth became known as the German Economic Miracle.
As time went on the government controlled areas of the economy began to run out of capital and continued to expand over the free areas of the economy. So the tax burdens over the free part of economy became too great and slowed the growth and really stopped the German economic miracle.
The lesson here is that any amount of socialism is doomed to drag the rest of the economy down with it. It is two towers of destruction as the government always grows and size and scope and the socialist portions of the economy always run out of capital and must therefore steal it from the private enterprise.
Kenneth:Could socialism possibly work in the sense of satisfying livestock as in the scenario above?
No. Your scenario is no different then the typical case of socialism except that you cannot really implement full blown socialism unless you isolate yourself from the rest of the capitalistic world. You still plan to conduct business with your capitalistic neighbors.
There are calculations problems which will become apparent as soon as the market is abolished. At first, the central planning board may be able to rely on the previous price structure of the previous capitalistic era, but as time goes on and conditions change, the system will disintegrate into total chaos.
The one other factor that may delay this process is the fact that you are to some degree, still subject to the laws of the market since you are conducting business with other capitalistic nations. So there are still price signals that come from abroad that guide you in some of your activities. It is also possible,although extremely inefficient, to resort to prices abroad in order to plan the domestic production.
Why will they run out capital? The intuitive assumption is that since they have the guns they can force the capital and the labour to stay in the country.
You're missing the point of the socialist calculation problem. No one is denying that the government can run an economy so simplified that barely any calculation can take place, but in doing so they're arbitrarily distributing resources and failing to rationally calculate in the first place.
...because capital is not infinite (or a homogeneous blob) and must be produced and allocated.
Freedom of markets is positively correlated with the degree of evolution in any society...
As far as I know, there’s only one way around the socialist calculation problem: Dunbar’s number.
Kenneth:What if a socialist government just controls the most basic parts of the economy like agriculture, mining, fishing, textiles, and construction.
Then everyone would starve to death and die. I read somewhere that even in the Soviet Union, farmers were allowed to sell a small portion of their crops, and that is where the vast majority of food in the USSR came from.
At most, I think only 5% of the adult population would need to stop cooperating to have real change.
"Most basic"? You have described the most important parts of an economy. These are all highly complex areas.
Kenneth:Let's say this socialist country is initially so productive in agriculture that the surrounding capitalist countries that have little land left for agriculture so they keep importing food from the socialist country.
Let's say pigs can fly. Why would this socialist country be so productive? It is, as you say, essentially a slave state. So where does all the productivity come from?
Kenneth:I would guess that socialism would work in this case in the sense that everybody would be able to eat and wear clothes and have houses to live in.
Your guess is wrong. Why would everybody have food, clothes and houses? Where would these things come from?
Kenneth:I mean sure people will still be impoverished in the sense that they have no liberties but because the state focuses in few industries, the state has enough information to plan the economy.
You're not serious, are you? Do I have a fish hook in my mouth? Am I being reeled in?
"The market is a process." - Ludwig von Mises, as related by Israel Kirzner. "Capital formation is a beautiful thing" - Chloe732.
Only if you're not familiar with the argument would that be true.
Jon Irenicus:Only if you're not familiar with the argument would that be true.
Please elaborate.
As far as I know almost every family on earth works pretty fine as a socialist entity. The same goes for every firm on earth. And why not? As long as a single guy can manage, personally, a number of people, the basic information than the price system gives can be taken though direct intercourse. So, yeah, I believe as long as the community is under 150, it can be rationally organized socialistically.
Merlin: As far as I know, there’s only one way around the socialist calculation problem: Dunbar’s number.
You are actually echoing what many socialist theorist wish to impose upon the world. Owen with his utopian towns, Fourier with his phalanxes, Mably with his bunker residences. It is a premise that is both unpractical and implicitly immoral.
'Men do not change, they unmask themselves' - Germaine de Stael