Hayek on Socialism

but I don't interrupt at that point you say socialism is impossible in a technical sense now what exactly do you mean by that it proposes a solution which is not which key is not the solution you cannot when it takes a long time but my central problem socialism assumes that all the available knowledge can be used by a single central authority it overlooks that the modern society which I now prefer to call the extended urban which exceeds the perception of any individual mind is based on the utilization of widely dispersed knowledge and once you are aware that we can achieve that great utilization of available resources only because we utilize the knowledge of millions of men it becomes clear the assumption of socialism as a central sardine command all this launch is just not correct so what you are doing is you're turning on its head the common point one often hears from the left but because the problems of modern society are so difficult that they require planning you're saying because they're so complex they make plans impossible well I think the nicest form to put it is to say that socialism protesting against their production for profit not for use objects – what makes the extended society possible production for use is only possible in society where we knew all the facts but to achieve the situation where we all working for people whom we do not know when they are being supported by the work of people who do not know is made possible because we produce for profit profit is a signal which tells us but we must do in all the serve people whom we do not know yes now you and Ron Mises put forward his criticism in the 20s and what reaction did you get from the Socialists of the day what reply did they make to that fundamental we're unwilling to admit the fact for argument they prefer to the withdrawal on the tax this is a difference of values on which science cannot decide once you accept the socialist values that we must be guided by conception of just distribution all the factual arguments are your element well of course effect the arguments prove that the just distribution is impossible unless the distributor knows all the facts so my answer is if the fact the assumption of socialism we are correct that we involve duty to end with the just distribution but you've recognized you cannot do it in fact you can produce enough is to maintain the present population of the world only because of a spontaneous process or mechanism which enables you to make use of infinitely more informations in any central authority processes

  1. A society in which the systems of law and taxation empower elected representatives to direct financial resources to social welfare objectives will be effective IF the source of revenue comes from economic rents (i.e., the potential annual rental value of locations in cities and towns, of agricultural land, of natural resource laden land, and other natural assets with an inelastic supply). Economic rents are unearned by individuals and private entities; rents arise because of population growth, aggregate demand, and public investment in physical and societal infrastructure. At the same time, income earned producing goods and providing services, capital goods and commerce should not be burdened by taxation.

    Edward J. Dodson, M.L.A., Director

    School of Cooperative Individualism


  2. ECP argument is appealing for those who are unaware of LTV. There is a value system in a socialist planned economy, which boils down to socially necessary labor time. This data is used in the planning of production and distribution.

    1.) Planning
    Let us assume that central planners have planned that an X amount of steel of Q quality are to be produced in a T amount of time.
    According to gathered data from soviets, 1 unit of Q steel requires V amount of socially necessary labor time to produce. In other words: 1 unit of Q steel has the value of V.
    The amount of labor power (P) required to produce X amount of Q steel in T time is XV/T.

    2.) Production
    Central planners hand out new labor quotas for an amount of workers that total a social value of P. These workers are given an incentive to fulfill said quotas.
    Workers are expected to produce an X amount of Q steel in T time.

    3.) Distribution
    When the quotas have been fulfilled, each worker receives payment in accordance to the quantity and quality produced by the worker i.e. a worker receives in accordance how much value he contributed for the society.

  3. "Profit is a signal which tells us what we must do in order to serve people whom we do not know." Gold.

  4. This argument is silly. We don't need facts to know what people need. We know they need food. The only problem is that this need, due to modern society, is no longer satisfied by the individual himself. Due to the alienation which capitalism has brought to us, it is difficult to find out from a central point of view with alienation intact what is needed. You will not see Americans anytime in the future starving for lack of basic necessities. Why? Because we know what they need and they have a surplus of it. If Americans were to become malnourished this would instantly be communicated to the producers and the problem would be solved. This is why planning is essential to communism. So that people get what they need.

  5. This man completely lacks logic in his argument. If profits are the sign of what is needed then what is a falling profit? It is something that is still needed but is no longer acceptable under the capitalist system.

  6. Socialism, in my view, isn't even Utopian. It's entirely Dystopian. The very fact that a free market, the very seal of liberty, would not exist and that products are created out of necessity instead of demand is a terrifying sentiment. I don't quite understand people who say "Socialism is a good idea in theory." Do you think it's a good idea to work without reward? Do you think that the workers should own the means of production, even if they are unskilled to do the work of the management class? Do you think property right should be abolished? Do you want a top down society?

    Socialism is an evil.

  7. Сука типичный социальный дарвинист. Цель их ясна – уменьшить количество людей на планете. И закрепить за богатейшими капиталистами власть и доминирование на многие года. Не позволить другим социальным системам развиваться.

  8. There is communism and libertarian capitalism and in between is socialism where certain things are centrally planned such as laws and standards while other things are left up to the market. His terminology consequently seems dated.

  9. Two gaping holes in his argument: first, if we assume that we "should make use of the information available", then we should get rid of copyright and patents. According to his logic, a copyright or patent is a way to restrict the use of a piece of information to a "central authority" which this time is not a state, but a corporation. Second gaping hole: profit is the signal that you are doing something "good". Let's assume this is true. What it really means, though, is that NOT GOING BANKRUPT means you are doing something of value. The problem of socialism is that it subsidized nonviable businesses based on ideology, which is definitely not very efficient. But assume for a second that all that is required is that a company is financially viable (that is, that it sells at least enough to cover it's operating costs to produce the next batch of products), then its form is unrelated to Von Hayek's theory. You could thereby force all companies and businesses on earth to move to a worker cooperative model (where workers own their company in an equal share) instead of a shareholder ownership model and still be within the bounds of his theory (these companies would still be completely free and produce inside an open and free market, the only difference is their ownership and thereby the voting on how wealth and added value gets redistributed).

  10. Osker Lange answered Hayek nearly 80 years ago. Hayek should read it. Soviet Union was highly successful.

    Karl Marx also talked about this problem of disequilibrium ( under consumption theory which causes reserve army of unemployed) and his solution was through central planning of the economy; which was supported by Albert Einstein as well. There is a different stream of economics of Feldman-Mahalanobis-Leontiev-Sraffa-Pasinneti which the Anglo-Americans do not study at all.

  11. so when you see that meme about having the resources to feed everyone on the planet, the problem isn't scarcity, it is lack of planning. Greed is the only driving force which can create a natural network of distribution.

  12. It seems to me that  Hayek is defining Socialism actually with the definition of Communism.   This seems to be an error many people make, state control(dictator, oligarchy, etc) over a democratic consensus.  Gives a bad name to socialism in my opinion.

  13. When the workers control the means of production is profit still a factor? When a Nation controls the means of production is profit still a factor? How are surpluses and needs different from profit as an indicator of utility?

  14. Wow, Mises and Hayek would have never predicted that a global natural law resource based economy based on access abundance, automation, technical efficiency, calculation in kind, sustainability, relevant education, with all the resources including means of production held by all people of earth, in conjunction with open-source, collaborative design interface facilitated by a network of computers linked with industry and providing real-time information of input-output material balance and in line with the regenerative rate of forest consumption would be the most socially responsible method of operating society. 

    Profits to none, service to all.

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