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Debate against a planned economy

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Bogdan posted on Thu, Jun 30 2011 7:53 PM



So I'm having a debate with one of my friends vis-a-vis the subject of a planned economy. He asserts a centrally-planned economy, such as a communist/socialist one is superior to a "evil, depraved free-market system." I naturally disagree and we have been arguing this for some time now.

As both of us were just adventuring on our first steps in the world of economics, the debate has taken some significant time to develop. Nonetheless I believe I struck the first real blow when I brought up the economic calculation problem (after I read about it on Wikipedia). In response my friend explained to me that a planned economy is very viable and works very well...he pointed out that the Soviet Union was a great economic power and that furthermore empires such as Egypt functioned on a planned economy...this latest without money.

I am in short wondering, how I can respond to these claims in a credible logical and intelligent manner.

Thanks ahead of time,

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Top 50 Contributor
2,417 Posts
Points 41,720

Calculation and Socialism (by Joseph Salerno)


You can find many more resources (and a solid basic explanation of capitalism) here:

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Top 10 Contributor
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Points 118,135

Definitely check out the lecture and link in the post above...but I would ask your friend the obvious question...if the USSR, Egypt, East Germany, and all these other places were so great, why did they fail so miserably?  Why were there literally millions starving to death in the Soviet Union while grain rotted in the fields?  He might have to give a definition for what he considers "great economic power".

There was an entire Mises Summit on Marx and Marxism.  Mises wrote a whole book on the calculation problem: Economic Calculation In The Socialist Commonwealth (audio reading here and here.)  Salerno wrote a postscript to that book...titled "Why a Socialist Economy is 'Impossible'".

And for some really hard-hitting ethos, just do a youtube search for "soviet union starvation".


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Top 50 Contributor
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If this person honestly believes that the Soviet Union was a "Economic" power then there is little point entering the debate.  From the beginning the whole Soviet State was based upon lies and violence.  Lenin, Stalin, Mao and their ilk were so terrible that only Hitler himself compares and most people have no reference point even to discuss the misery. 

Face it, You are not going to change this persons mind and when you bring up the hammer of the argument "The Calculation Problem" because there no argument that a centrally planned system can overcome the problem.  No society has ever resolved the Calculation Problem other than to change their institutions to operate more like actors in a free market.  And when doing this the society eventually ends in allowing all individuals freedom.

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