# Are all economic ideologies aside from free-market/Randian theory obsolete? **URL:** \ **Category:** Great Debates\ **Created:** [April 24, 2013, 10:57pm UTC](https://boards.straightdope.com/t/are-all-economic-ideologies-aside-from-free-market-randian-theory-obsolete/656625 "2013-04-24T22:57:21Z")\ **Posts on this page:** 20\ **Page:** 3
**Author:** ![BrainGlutton](https://avatars.discourse-cdn.com/v4/letter/b/82dd89/32.png) [@BrainGlutton](https://boards.straightdope.com/u/BrainGlutton)\ **Post date:** [April 25, 2013, 8:02pm UTC](https://boards.straightdope.com/t/are-all-economic-ideologies-aside-from-free-market-randian-theory-obsolete/656625/41 "2013-04-25T20:02:43Z")
> [@bldysabba](#): > > For instance, I used to believe that monopolies are a case of market failure, and regulations are needed to prevent monopolies from abusing their power. I know a bit more economics now, and as long as monopolies can’t literally force people to buy their products at any price, abuse of monopoly power is exceedingly difficult to sustain due to even the possibility of competition. Now many, if not most governments, spend a lot of time, money and effort to purportedly prevent monopolies from abusing their power. Ironically, the one way companies can abuse their market power on a sustained basis is through government regulation providing entry barriers. So governments can and often do harm more than help on this issue(with most industries). There are many other similar things. Note also that some sectors are [natural monopolies.](http://en.wikipedia.org/wiki/Natural_monopoly) > [@](#): > > A monopoly describes a situation where all (or most) sales in a market are undertaken by a single firm. A **natural** monopoly by contrast is a condition on the cost-technology of an industry whereby it is most efficient (involving the lowest long-run average cost) for production to be concentrated in a single firm. In some cases, this gives the largest supplier in an industry, often the first supplier in a market, an overwhelming cost advantage over other actual and potential competitors. This tends to be the case in industries where capital costs predominate, creating economies of scale that are large in relation to the size of the market, and hence high barriers to entry; examples include public utilities such as water services and electricity.[1] ---
**Author:** ![Ograbme](https://avatars.discourse-cdn.com/v4/letter/o/c5a1d2/32.png) [@Ograbme](https://boards.straightdope.com/u/Ograbme)\ **Post date:** [April 25, 2013, 8:03pm UTC](https://boards.straightdope.com/t/are-all-economic-ideologies-aside-from-free-market-randian-theory-obsolete/656625/42 "2013-04-25T20:03:37Z")
You seem to be trying to paint market forces as some kind of democratic-like institution, but in many cases they’re flat-out plutocratic. ---
**Author:** ![deltasigma](https://avatars.discourse-cdn.com/v4/letter/d/e5b9ba/32.png) [@deltasigma](https://boards.straightdope.com/u/deltasigma)\ **Post date:** [April 25, 2013, 8:05pm UTC](https://boards.straightdope.com/t/are-all-economic-ideologies-aside-from-free-market-randian-theory-obsolete/656625/43 "2013-04-25T20:05:59Z")
> [@BrainGlutton](#): > > Note also that some sectors are [natural monopolies.](http://en.wikipedia.org/wiki/Natural_monopoly) The poster and I had that conversation back around post #28. Just an FYI post. 🙂 🙂 ---
**Author:** ![bldysabba](https://avatars.discourse-cdn.com/v4/letter/b/ecccb3/32.png) [@bldysabba](https://boards.straightdope.com/u/bldysabba)\ **Post date:** [April 25, 2013, 8:17pm UTC](https://boards.straightdope.com/t/are-all-economic-ideologies-aside-from-free-market-randian-theory-obsolete/656625/44 "2013-04-25T20:17:00Z")
> [@Shodan](#): > > I would disagree even with this. Markets can occur even when government does not provide law and order and courts, and even when government is actively working against the markets - witness the trade in illegal drugs in the US. Ye…es well, markets tend to form everywhere and for everything, but it’s hard to argue that markets without law and order would produce socially positive(forget optimal) results. > [@Voyager](#): > > Who thinks this is always the case? Not you, definitely, but IMO, it’s the unstated assumption behind many calls for greater regulation, which are fairly common, on this board and elsewhere. > [@Voyager](#): > > In the past 30 years there has been significant consolidation in electronics manufacturing. Back when I started major companies did everything in house, and smaller companies used CMs. Today almost no one does anything in house except perhaps final assembly. Yes, exactly! Electronic components have become a commodity produced by a few large firms, and this reduces the entry barriers for firms which use electronic components in their final products. Contract manufacturing is thus making it much easier for firms to innovate and break down monopoly power. > [@Der\_Trihs](#): > > On the contrary, without regulation any social system soon becomes very unfree. Without regulation, you’ll just end up with an utterly corrupt market; a sham controlled by people collaborating behind the scenes. They’ll indulge in price fixing, blacklisting, bribery, insider trading, etc; eliminating regulations just means that people will cheat and try to rig the market in their favor, not that they’ll all robotically act like ideologically perfect free marketeers who would never even _consider_ gaming the system. Your argument is very religious, ironically. No thing can exist without regulation. Let there be a regulator, who will thus exist 🙂 Not to say that it isn’t always true either. One example that I’ve seen argued quite well on these boards is SCUBA diving equipment. I’ve never seen a convincing response to that. Would you care to attempt one? ---
**Author:** ![The\_Hamster\_King](https://avatars.discourse-cdn.com/v4/letter/t/8edcca/32.png) [@The\_Hamster\_King](https://boards.straightdope.com/u/The_Hamster_King)\ **Post date:** [April 25, 2013, 8:24pm UTC](https://boards.straightdope.com/t/are-all-economic-ideologies-aside-from-free-market-randian-theory-obsolete/656625/45 "2013-04-25T20:24:32Z")
> [@puddleglum](#): > > So it is incoherent to say that the markets do not give us what we want, the market is by definition what we want. Complicated systems produce emergent high-level behaviors that cannot be directly correlated with low-level events within those systems. So large free markets will inevitably generate undesirable emergent effects that will not be immediately apparent to the people making decisions within that market. For example, when the automobile was introduced, almost nobody grasped the potential for wide-scale car ownership to turn large cities into smog-choked hellholes. Nobody “wanted” their city to be a smog-choked hellhole. That was an entirely undesirable side-effect of people pursuing what they did want: convenient personal transportation. So it would be ridiculous to claim that since people were free to choose whether or not to buy a car, the transformation of cities into smog-choked hellholes was an expression of what people wanted. The market is frequently an ass. ---
**Author:** ![Der\_Trihs](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/der_trihs/32/233_2.png) [@Der\_Trihs](https://boards.straightdope.com/u/Der_Trihs)\ **Post date:** [April 25, 2013, 8:29pm UTC](https://boards.straightdope.com/t/are-all-economic-ideologies-aside-from-free-market-randian-theory-obsolete/656625/46 "2013-04-25T20:29:03Z")
> [@bldysabba](#): > > Your argument is very religious, ironically. No thing can exist without regulation. Let there be a regulator, who will thus exist 🙂 It’s no more religious than saying you can’t have a well made building without skilled builders. Incompetents put up bad buildings, and an unregulated market will be a corrupt mess. > [@bldysabba](#): > > One example that I’ve seen argued quite well on these boards is SCUBA diving equipment. I’ve never seen a convincing response to that. Would you care to attempt one? I don’t understand the question (or know much about SCUBA equipment). ---
**Author:** ![OurLordPeace](https://avatars.discourse-cdn.com/v4/letter/o/e8c25b/32.png) [@OurLordPeace](https://boards.straightdope.com/u/OurLordPeace)\ **Post date:** [April 25, 2013, 8:30pm UTC](https://boards.straightdope.com/t/are-all-economic-ideologies-aside-from-free-market-randian-theory-obsolete/656625/47 "2013-04-25T20:30:37Z")
> [@donnie\_darko](#): > > I’ve noticed many of the big names in the “rational” community, such as Penn Jilette and Michael Shermer, are all about the free market and deregulation. > > In fact Shermer seems to equate socialists and other critics of capitalism to the economic equivalent of Flat Earthers and creationists. Do you think this is unfair and too harsh? > > Are there still rational reasons to oppose neoliberalism in the post Cold War era, or are modern socialists simply starry eyed progress-hating denialists who are irrationally biased by their dislike of consumerism? I haven’t read the whole thread, but no, on the contrary, those who espouse neoliberalism are either gaining something from it, or are delusional. Neoliberalism has failed for most people, just as Marxism-Leninism failed, and the challenge that now confronts us is to see if we can bring down the current system and replace it with something more positive. Some free-marketeers are honest people, who dislike neoliberalism for its severe market distortions. They readily point out that corporations gain their power by using the state. I respect this honesty, but they are still delusional, like the mirror image of Trotskyists. You know how Trotskyists claim that everything went wrong once Stalin took over, and they use terms like “degenerated workers’ state” and “deformed workers’ state” to refer to the Soviet Union and its neighbors, among other regimes? My question for them is why this shift is seemingly inevitable in the authoritarian, Leninist model they still defend. Well, my question for the capitalists, Randroids, and people who stole the word “libertarian” is why attempts to make markets more free always undergo the same kind of unfree, rent-seeking, authoritarian shift. They’re even more obsolete than the neoliberals, who at least can countenance reforms sometimes, and even face the music when things don’t go according to plan. There are indeed alternatives. I have mine, and I study and work with those who have others. About 12-15 years ago, this was a common conversation, and the issues have not gone away. A better world is possible, a better world is necessary, and a better world is on the march. ---
**Author:** ![bldysabba](https://avatars.discourse-cdn.com/v4/letter/b/ecccb3/32.png) [@bldysabba](https://boards.straightdope.com/u/bldysabba)\ **Post date:** [April 25, 2013, 8:40pm UTC](https://boards.straightdope.com/t/are-all-economic-ideologies-aside-from-free-market-randian-theory-obsolete/656625/48 "2013-04-25T20:40:35Z")
> [@Der\_Trihs](#): > > It’s no more religious than saying you can’t have a well made building without skilled builders. Incompetents put up bad buildings, and an unregulated market will be a corrupt mess. You said no social system can exist without regulation. Surely this includes the regulators? > [@](#): > > I don’t understand the question (or know much about SCUBA equipment). And, here’s an example of a market that exists without regulation (not saying that this is necessarily replicable, only that for your absolute statement to hold, you need to rebut this) - > [@Libertarian Mythology](https://boards.straightdope.com/t/libertarian-mythology/583327/176): > > I can give you yet another example: SCUBA gear. SCUBA is a dangerous activity. The government has virtually no oversight of the SCUBA industry, other than DOT certification for pressure vessels. The diving industry is heavily self-regulated, with organizations like NAUI and PADI maintaining strict requirements. Dive operators have their own certifying bodies and associations, and they keep their member operators in line because they recognize that a lapse in safety hurts everyone. The Diver’s Alert Network (DAN) acts as a statistics gathering service and information clearinghouse for safety concerns. > > You’d think that diving would be ripe for exploitation by greedy capitalists putting divers at risk by cutting corners - especially since a lot of it takes place in 3rd world countries and far away from any kind of government oversight. But it’s not the case. > > There have been movements by activists to have diving gear regulated by the FDA as medical devices. You can even see the rationale for it - unregulated dive operators can fill tanks of air, and you’re breathing the stuff. There are lots of ways for it to be contaminated. Why should an air tank in a hospital be regulated, but not a SCUBA tank? Dive regulators have oil in them that could be toxic, and this equipment is forcing gases into your lungs under pressure. > > In fact, SCUBA equipment is incredibly safe. Major failures of gear resulting in injury or death are almost unheard of, despite the equipment being used in harsh environments with little margin for error. > > The result of self-regulation means that the industry has undergone a tremendous amount of innovation. SCUBA gear is incredibly cheap for what it provides: You can buy an [entire package of equipment](http://www.scuba.com/shop/divesystems.asp) for under $700. Recreational divers are now breathing advanced Nitrox air mixtures, and using sophisticated dive computers. They’re doing it safely, in an unregulated market. > > How do you explain this, if markets aren’t capable of self-regulation? ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [April 25, 2013, 8:45pm UTC](https://boards.straightdope.com/t/are-all-economic-ideologies-aside-from-free-market-randian-theory-obsolete/656625/49 "2013-04-25T20:45:14Z")
> [@bldysabba](#): > > Not you, definitely, but IMO, it’s the unstated assumption behind many calls for greater regulation, which are fairly common, on this board and elsewhere. Not that I’ve seen. Most calls for greater regulation are in response to specific instances where companies caused problems. In many cases short term considerations will force companies to do things dangerous in the long term, which can only be cured by regulation. I’ve seen no one here who don’t think lobbyists exist. > [@](#): > > Yes, exactly! Electronic components have become a commodity produced by a few large firms, and this reduces the entry barriers for firms which use electronic components in their final products. Contract manufacturing is thus making it much easier for firms to innovate and break down monopoly power. I thought you were talking about manufacturers, not customers of manufacturers. Even there I don’t quite agree. 40 years ago any idiot could design and build a board by himself (I did one for my Bachelors Thesis.) When Sun Microsystems started they built their first systems themselves. Today with tiny surface mount devices you can’t go into your garage and build stuff yourself. Solectron and Celestica and the like will let you ramp more easily, but I don’t know if there are more low volume factories today than 20 years ago. So I’d say it was a wash. ---
**Author:** ![BrainGlutton](https://avatars.discourse-cdn.com/v4/letter/b/82dd89/32.png) [@BrainGlutton](https://boards.straightdope.com/u/BrainGlutton)\ **Post date:** [April 25, 2013, 8:45pm UTC](https://boards.straightdope.com/t/are-all-economic-ideologies-aside-from-free-market-randian-theory-obsolete/656625/50 "2013-04-25T20:45:55Z")
> [@Ograbme](#): > > You seem to be trying to paint market forces as some kind of democratic-like institution, but in many cases they’re flat-out plutocratic. Well, of course. “Plutocracy” means “power of wealth,” and where has wealth more power than in the marketplace? ---
**Author:** ![BrainGlutton](https://avatars.discourse-cdn.com/v4/letter/b/82dd89/32.png) [@BrainGlutton](https://boards.straightdope.com/u/BrainGlutton)\ **Post date:** [April 25, 2013, 8:49pm UTC](https://boards.straightdope.com/t/are-all-economic-ideologies-aside-from-free-market-randian-theory-obsolete/656625/51 "2013-04-25T20:49:41Z")
> [@donnie\_darko](#): > > **Are all economic ideologies aside from free-market/Randian theory obsolete?** BTW, there **is** no Randian theory of economics. [Anything in Objectivism that tends to support a free market](http://en.wikipedia.org/wiki/Objectivism_(Ayn_Rand)#Politics:_individual_rights_and_capitalism) is a matter of **ethics,** not economics. Ayn Rand fancied herself a philosopher, but never even pretended to be an economist. ---
**Author:** ![Der\_Trihs](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/der_trihs/32/233_2.png) [@Der\_Trihs](https://boards.straightdope.com/u/Der_Trihs)\ **Post date:** [April 25, 2013, 9:07pm UTC](https://boards.straightdope.com/t/are-all-economic-ideologies-aside-from-free-market-randian-theory-obsolete/656625/52 "2013-04-25T21:07:20Z")
> [@bldysabba](#): > > You said no social system can exist without regulation. No, I didn’t say that. I said that the system would be corrupt. > [@bldysabba](#): > > And, here’s an example of a market that exists without regulation (not saying that this is necessarily replicable, only that for your absolute statement to hold, you need to rebut this) - _\_ _\_ Assuming that’s true, that just makes it an aberration in the face of many thousands of counterexamples across thousands of years. ---
**Author:** ![foolsguinea](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/foolsguinea/32/14751_2.png) [@foolsguinea](https://boards.straightdope.com/u/foolsguinea)\ **Post date:** [April 25, 2013, 9:28pm UTC](https://boards.straightdope.com/t/are-all-economic-ideologies-aside-from-free-market-randian-theory-obsolete/656625/53 "2013-04-25T21:28:08Z")
> [@Little\_Nemo](#): > > A lot of people thought Marxism was a good idea too. Until somebody was dumb enough to actually try it. I think it’s insulting to Marxists to lump them in with those _laissez-faire_ Pollyannas. To the OP: There was a time when all theological beliefs other than Christianity were “obsolete”–if you were only listening to the Christian Church. It didn’t make Christianity true. ---
**Author:** ![BrainGlutton](https://avatars.discourse-cdn.com/v4/letter/b/82dd89/32.png) [@BrainGlutton](https://boards.straightdope.com/u/BrainGlutton)\ **Post date:** [April 25, 2013, 9:37pm UTC](https://boards.straightdope.com/t/are-all-economic-ideologies-aside-from-free-market-randian-theory-obsolete/656625/54 "2013-04-25T21:37:11Z")
> [@donnie\_darko](#): > > **Are all economic ideologies . . .** And, economics being a science of a kind (less of one than physics, more of one than astrology), “theories” would be a better term than “ideologies.” ---
**Author:** ![Der\_Trihs](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/der_trihs/32/233_2.png) [@Der\_Trihs](https://boards.straightdope.com/u/Der_Trihs)\ **Post date:** [April 25, 2013, 9:40pm UTC](https://boards.straightdope.com/t/are-all-economic-ideologies-aside-from-free-market-randian-theory-obsolete/656625/55 "2013-04-25T21:40:04Z")
> [@BrainGlutton](#): > > And, economics being a science of a kind (less of one than physics, more of one than astrology), “theories” would be a better term than “ideologies.” Except in this case it _is_ an ideology, or even a faith. Something they believe because they _want_ to believe, even in the face of the evidence. ---
**Author:** ![foolsguinea](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/foolsguinea/32/14751_2.png) [@foolsguinea](https://boards.straightdope.com/u/foolsguinea)\ **Post date:** [April 25, 2013, 9:40pm UTC](https://boards.straightdope.com/t/are-all-economic-ideologies-aside-from-free-market-randian-theory-obsolete/656625/56 "2013-04-25T21:40:25Z")
> [@Blaster\_Master](#): > > The counter-argument is that there are plenty of industries that self-regulate, and I think most or all industries ultimately can, but I think it’s flawed logic to assume it will always naturally arise within an industry, especially in particularly volatile ones. But I see that as more of an argument of potentially relaxing or removing regulations at some point when self-regulation is possible rather than just letting go. > > So, while I do favor free-market as much as possible, and I think it will be surprisingly resilient on it’s own, it does logically appear that some regulation makes sense. That said, I think any regulations should be minimal, carefully considered, and then reviewed regularly so they can be adjusted to make sure we’re meeting whatever goals we’re trying to achieve. And if we’ve met them, regulations should be turned down or removed, and if things mess up from that desired state, they should be reintroduced. > > But I think that’s where the biggest problem is, we have a tendency to WAY over-regulate, but the response to that isn’t just to naively remove all regulation. That kind of thinking got us unregulated derivatives. I think we need to understand that _under-regulation_ is a natural impulse for politicians and public servants as well. Don’t hand the country to martinets, but don’t be so easy-going that you let the really irresponsible and the sociopathic take over. ---
**Author:** ![The\_Hamster\_King](https://avatars.discourse-cdn.com/v4/letter/t/8edcca/32.png) [@The\_Hamster\_King](https://boards.straightdope.com/u/The_Hamster_King)\ **Post date:** [April 25, 2013, 10:03pm UTC](https://boards.straightdope.com/t/are-all-economic-ideologies-aside-from-free-market-randian-theory-obsolete/656625/57 "2013-04-25T22:03:00Z")
> [@foolsguinea](#): > > I think it’s insulting to Marxists to lump them in with those _laissez-faire_ Pollyannas. Exactly. Marxism _worked_. Not well, mind you, but well enough that very large countries were able to function with their economies organized along Marxist lines. Factories still made stuff, farmers still grew food, schools stayed open, borders were defended. There were huge inefficiencies, of course, and horrible brutality was common, but Marxism only looks like an abject failure when you compare it to the regulated market economies of the west. It was certainly a step up from the feudalism that it often replaced. I’ll start taking the free-market absolutists seriously when they can demonstrate a similar measure of real-world success. Communism defeated Hitler and put the first man in space. What achievements can libertarianism point to? Record-breaking dumpling production in Kowloon Walled City? ---
**Author:** ![BrainGlutton](https://avatars.discourse-cdn.com/v4/letter/b/82dd89/32.png) [@BrainGlutton](https://boards.straightdope.com/u/BrainGlutton)\ **Post date:** [April 25, 2013, 10:23pm UTC](https://boards.straightdope.com/t/are-all-economic-ideologies-aside-from-free-market-randian-theory-obsolete/656625/58 "2013-04-25T22:23:37Z")
> [@Der\_Trihs](#): > > Except in this case it _is_ an ideology, or even a faith. Something they believe because they _want_ to believe, even in the face of the evidence. I’m sure that is true of political Libertarians and Objectivists, but is it true of every economist of the Austrian or Chicago School? ---
**Author:** ![Der\_Trihs](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/der_trihs/32/233_2.png) [@Der\_Trihs](https://boards.straightdope.com/u/Der_Trihs)\ **Post date:** [April 25, 2013, 10:28pm UTC](https://boards.straightdope.com/t/are-all-economic-ideologies-aside-from-free-market-randian-theory-obsolete/656625/59 "2013-04-25T22:28:58Z")
> [@BrainGlutton](#): > > I’m sure that is true of political Libertarians and Objectivists, but is it true of every economist of the Austrian or Chicago School? No; I assume many are just corrupt. ---
**Author:** ![BrainGlutton](https://avatars.discourse-cdn.com/v4/letter/b/82dd89/32.png) [@BrainGlutton](https://boards.straightdope.com/u/BrainGlutton)\ **Post date:** [April 25, 2013, 10:40pm UTC](https://boards.straightdope.com/t/are-all-economic-ideologies-aside-from-free-market-randian-theory-obsolete/656625/60 "2013-04-25T22:40:32Z")
> [@The\_Hamster\_King](#): > > Exactly. Marxism _worked_. N.B.: Everything you’re saying is about Soviet Communism/Stalinism and systems modeled on it. Whether that system is “Marxism” or not is a debate for another thread, if Board interest would support it – probably not – but certainly much-debated among Marxists. > [@The\_Hamster\_King](#): > > Not well, mind you, but well enough that very large countries were able to function with their economies organized along Marxist lines. Factories still made stuff, farmers still grew food, schools stayed open, borders were defended. There were huge inefficiencies, of course, and horrible brutality was common, but Marxism only looks like an abject failure when you compare it to the regulated market economies of the west. It was certainly a step up from the feudalism that it often replaced. Quite true, except for certain startling instances where it was worse – the Holodomor, the Great Leap Forward, the Killing Fields – but, yes, on the whole a step up from feudalism. And, yes, so long as lunatics are not running it – sometimes, even when they are – even the Stalinist model of totalitarian socialism **does** work – for limited purposes, i.e., heavy capital formation. It’s what you do if you want to industrialize a country in a hurry. In 1924 Stalin took control of a country that always had been a backward, laughable peasant Ruritania, marginally industrialized by the onset of WWI and that little industry devastated by that war and the Russian Civil War, and – by methods which were bloody, brutal, repressive, wasteful, but **effective** – by 1939 had turned it into an industrial power capable of going head-to-head with Hitler’s Germany; and Germany had always been at the leading edge of the Industrial Revolution. **No way** could that have happened, if Russia had had a free-market system during that period. OTOH, central economic planning, lacking the constant corrective feedback of competitive market performance and consumer demand-pressure, is spectacularly inept at any kind of fine-tuning. Moreover, it does not encourage innovation very well. No state planner would ever have thought of something like the Sony Walkman, or the Pet Rock, or fabric softener. (Whether that is an argument for or against Stalinism is open to debate.) From [_Economics Explained,_](http://www.amazon.com/Economics-Explained-Everything-About-Economy/dp/0684846411/ref=pd_bbs_sr_1/102-0323301-0796122?ie=UTF8&s=books&qid=1182793941&sr=8-1) by Robert Heilbroner and Lester Thurow: > [@](#): > > The reason it [the Soviet system] did last [as long as it did] is that in the beginning the system very much resembled a military operation. After the Russian Revolution in 1917, Lenin confronted an almost totally disorganized society, and tried at first to build a “socialism” that was partly capitalist – private farming and private small enterprise – and partly socialist, in the form of state-owned banks and large centers of production. Russia staggered along under this mixed system for a few years, without either great success or great failure, but after Lenin’s death in 1924, Stalin took command and rapidly instituted the highly centralized system we have sketched in. > > Stalin’s methods were ferocious and bloody, but they were successful in bringing about an immense accumulation of wealth, much as did the ruthless ways of the ancient pharoahs of Egypt and emperors of Rome or China. The difference was that whereas the latter built palaces and cities, Stalin built factories, steel mills, hydroelectric plants, and railway systems – the ingredients of an industrial economy. The fact that Stalin’s Russia was strong enough to resist Hitler’s armies – and efficient enough, after its reconstruction following World War II, to impress the world with its industrial and military capabilities – shows that Soviet central planning was by no means a failure in its initial years. That is why “military socialism” may yet be a model for development efforts in the future. China is today a semi-military socialism which appears to be successfully negotiating the early stages of industrialization, much aided by a carefully supervised free market sector attached to the planned core. Hence the collapse of the Soviet system should not lead us to the snap judgment that centralized socialism is no longer on the agenda of the coming century. That is indeed likely to be the case with the North, but it is not a foregone conclusion in the troubled countries of the South. > > THE COLLAPSE > > But we are ahead of ourselves. After so successful a beginning, why did Soviet socialism finally break down? The answer is that it is a great deal easier to design and build the skeleton of a mighty economy than to run it. Building a steel plant requires good industrial draftsmanship, but running a steel plant requires good industrial management. Management, in turn, depends on the ability to adapt flows of production to ever-changing conditions – the unforeseen contingencies, mistakes, mismatches, shortages, and overruns that are inescapable in any complex undertaking. > > In a market system, these mistakes are repaired and remedied as soon as possible because they cost the factory or store money. Hence suppliers are told to hurry up, or to hold back on shipments, unprofitable items are canceled and profitable ones run overtime, the Yellow Pages are searched for last-minute necessities. None of this can happen in a society planned from top to bottom. When mistakes are made, they bring about a kind of gridlock in the flow of production, so that the pace of Soviet economic production was a never-ending sequence of feast or famine, too much or too little, with no way of remedying the errors other than recasting next year’s plan or seeking the semi-illegal channels of “tolkachi” – fixers. Korea’s another example, practically a controlled experiment: Two neighboring, culturally-identical peasant-countries industrializing at the same time, one Stalinist, the other not. I’ve read that up through the 1970s, the North Koreans were actually eating better than the South Koreans. But then NK’s economic growth hit a wall, and SK caught up and kept on going. [Previous page](https://boards.straightdope.com/t/are-all-economic-ideologies-aside-from-free-market-randian-theory-obsolete/656625.md?page=2) [Next page](https://boards.straightdope.com/t/are-all-economic-ideologies-aside-from-free-market-randian-theory-obsolete/656625.md?page=4)