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Why Obamanomics is destined to fail
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I meant to link to this article by Lew Rockwell a couple weeks ago when it was first published, but no time like the present to remind the masses why socialism cannot work.
The article is invaluable for the links alone contained within, but this snippet illustrates the talent Rockwell has for putting even complicated ideas into a format that anyone can understand.
Without market prices for capital goods, accounting is not possible. You don't know if you are making money or losing money, saving resources or wasting them, doing the right thing or not doing the right thing. Think of all the decisions that have to be made on the production end that require you to know whether you are wasting resources or not. With steel, do you make more buildings or trains? Or do you make cutlery or computers? Or cars or cables?
You can't just rely on assessing consumer demand. The demand for stuff is infinite. What matters are choices in light of foregone alternatives. These can't be discerned with polls or intuition. What matters here is the weighting of all alternative uses of resources. They can only be worked out in real time, in light of the choices of consumers and the profitable production decisions of producers.
None of this is possible if you don't have real market prices providing the real stuff that makes cost accounting possible. Collectivize property and you abolish the market for capital goods. No prices emerge. Every choice you make is arbitrary. There is no more rationality remaining. You just end up groping around in the dark.
