# Small business in a Marxist economy **URL:** \ **Category:** Great Debates\ **Created:** [March 15, 2014, 1:29am UTC](https://boards.straightdope.com/t/small-business-in-a-marxist-economy/683737 "2014-03-15T01:29:49Z")\ **Posts on this page:** 20\ **Page:** 4
**Author:** ![Steely\_Dan\_Fan](https://avatars.discourse-cdn.com/v4/letter/s/9de053/32.png) [@Steely\_Dan\_Fan](https://boards.straightdope.com/u/Steely_Dan_Fan)\ **Post date:** [March 17, 2014, 5:51am UTC](https://boards.straightdope.com/t/small-business-in-a-marxist-economy/683737/61 "2014-03-17T05:51:02Z")
> [@Bryan\_Ekers](#): > > Heck, the reality is the horrors of his ideas put into practice. > > Afterthought: sorry, his ideas instantly abandoned and corrupted the moment anyone _tried_ to put them into practice. First, the fact that all history is so contingent upon its specific context makes it almost impossible to draw conclusions about what would happen in the general case, from a smattering of cases of what happened in very specific cases. Further adding to the ridiculousness of your claim is the fact that _none_ of those attempts actually took place in the sort of environment that Marx himself held to be a necessary precondition. ---
**Author:** ![Frank\_Merton](https://avatars.discourse-cdn.com/v4/letter/f/b9e5f3/32.png) [@Frank\_Merton](https://boards.straightdope.com/u/Frank_Merton)\ **Post date:** [March 17, 2014, 6:02am UTC](https://boards.straightdope.com/t/small-business-in-a-marxist-economy/683737/62 "2014-03-17T06:02:52Z")
> [@Bryan\_Ekers](#): > > Heck, the reality is the horrors of his ideas put into practice. > > Afterthought: sorry, his ideas instantly abandoned and corrupted the moment anyone _tried_ to put them into practice. I live in a Communist country and it isn’t at all like your propaganda would have it. When I read posts like yours I just wince at how wrong it is. ---
**Author:** ![Bryan\_Ekers](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/bryan_ekers/32/183_2.png) [@Bryan\_Ekers](https://boards.straightdope.com/u/Bryan_Ekers)\ **Post date:** [March 17, 2014, 6:41am UTC](https://boards.straightdope.com/t/small-business-in-a-marxist-economy/683737/63 "2014-03-17T06:41:40Z")
> [@Steely\_Dan\_Fan](#): > > First, the fact that all history is so contingent upon its specific context makes it almost impossible to draw conclusions about what would happen in the general case, from a smattering of cases of what happened in very specific cases. Okay, name the most successful specific case you know of where Marxist ideas were implemented for a population bigger than, say… 500,000? i.e. good-sized city or the state of Wyoming. > [@](#): > > Further adding to the ridiculousness of your claim is the fact that _none_ of those attempts actually took place in the sort of environment that Marx himself held to be a necessary precondition. So, there has never _been_ a success story? I’m not going to fault Marx for saying “such-and-such industrial conditions are necessary” while not having any idea of how much more advanced those conditions would get (he’s not Jules Verne, after all), but he was describing an economic system that was not especially friendly to innovative individuals, which I guess is easy to do if you look at the current state of technology and assume its permanence. ---
**Author:** ![Bryan\_Ekers](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/bryan_ekers/32/183_2.png) [@Bryan\_Ekers](https://boards.straightdope.com/u/Bryan_Ekers)\ **Post date:** [March 17, 2014, 6:44am UTC](https://boards.straightdope.com/t/small-business-in-a-marxist-economy/683737/64 "2014-03-17T06:44:08Z")
> [@Frank\_Merton](#): > > I live in a Communist country and it isn’t at all like your propaganda would have it. When I read posts like yours I just wince at how wrong it is. You do? Which one? Is there a net immigration or net emigration (or barriers to either)? ---
**Author:** ![Frank\_Merton](https://avatars.discourse-cdn.com/v4/letter/f/b9e5f3/32.png) [@Frank\_Merton](https://boards.straightdope.com/u/Frank_Merton)\ **Post date:** [March 17, 2014, 6:55am UTC](https://boards.straightdope.com/t/small-business-in-a-marxist-economy/683737/65 "2014-03-17T06:55:23Z")
I live in Vietnam. One can immigrate here only by marrying a Vietnamese, or by having a job the Vietnamese think no local can do. It is easy enough to make a living here teaching English, but not much of a living; better to come independently wealthy (which is not that much given that costs here are very low). If one does not immigrate one must go to a travel agent once every three months and extend one’s visa. Costs about a hundred bucks. ---
**Author:** ![Bryan\_Ekers](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/bryan_ekers/32/183_2.png) [@Bryan\_Ekers](https://boards.straightdope.com/u/Bryan_Ekers)\ **Post date:** [March 17, 2014, 6:59am UTC](https://boards.straightdope.com/t/small-business-in-a-marxist-economy/683737/66 "2014-03-17T06:59:19Z")
Okay, I’ll cheerfully admit knowing very little about current conditions in Vietnam. How easy is it to _leave_ Vietnam, should a citizen choose to do so? ---
**Author:** ![Frank\_Merton](https://avatars.discourse-cdn.com/v4/letter/f/b9e5f3/32.png) [@Frank\_Merton](https://boards.straightdope.com/u/Frank_Merton)\ **Post date:** [March 17, 2014, 7:12am UTC](https://boards.straightdope.com/t/small-business-in-a-marxist-economy/683737/67 "2014-03-17T07:12:48Z")
It is easy to get a passport if you don’t have a criminal record. Then you can go anywhere you want that will give you an entry visa. The US is tough on this and wants to see some wealth before it will let Vietnamese in. The ASEAN countries (Vietnam, Laos, Cambodia, Thailand, Burma, Malaysia, Indonesia, Philippines, Singapore, Brunei and little East Timor) all have no-visa requirement so Vietnamese go to these countries all the time. It is also easy for Vietnamese to get into most of Asia but Europe is like the States and only wants rich tourists. A valid US passport gets you a thirty day visa here; to stay longer you go to a local travel agent and get it extended (the fee they charge is worth it as otherwise you wait in line a day or so). ---
**Author:** ![Bryan\_Ekers](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/bryan_ekers/32/183_2.png) [@Bryan\_Ekers](https://boards.straightdope.com/u/Bryan_Ekers)\ **Post date:** [March 17, 2014, 7:17am UTC](https://boards.straightdope.com/t/small-business-in-a-marxist-economy/683737/68 "2014-03-17T07:17:52Z")
Cool. I’ll have a few follow-up questions about various basic freedoms like expression, the press, religion and the vote by and by. Also, I guess, how “Marxist” Vietnam really is, and if this proved to be a help or hindrance to its postwar recovery and development. ---
**Author:** ![Frank\_Merton](https://avatars.discourse-cdn.com/v4/letter/f/b9e5f3/32.png) [@Frank\_Merton](https://boards.straightdope.com/u/Frank_Merton)\ **Post date:** [March 17, 2014, 7:48am UTC](https://boards.straightdope.com/t/small-business-in-a-marxist-economy/683737/69 "2014-03-17T07:48:14Z")
The press is state-owned except a few magazines, and reflects the government’s view of things. Stories are generally straight with little propaganda in them; they just de-emphasize violence and things of a prurient nature. There is no effort to censor the internet as far as I can tell as they do in China. (There were a couple of people detained for awhile for making corruption accusations on blogs. I would guess someone got a little too close to the truth but in fact there is less corruption here than in most Asian countries). It is possible to buy pretty much any international magazine or newspaper if you read English (about eighty percent of those under thirty). TV is satellite cable in both English and Vietnamese and as far as I can tell is uncensored except for standard Communist prudishness. People are pretty happy with the government because there has been a very noticeable improvement in living standards over the last twenty years. This can in part be attributed to state investment (highways, schools, ports, bridges, etc.) and in part to a loose small-business low-tax environment. There is only one legal party and no effort to my knowledge to change that. Nowadays party membership is generally offered college grads and those who finish a military enlistment successfully. This is something like the rule by an elite that Lenin envisioned although there is little in the way of ideological purity demanded. How the party organizes itself is opaque to me – it has the appearance of government by consensus – which of course one doubts. They do have a clear fear of “personality cults” so terms of office are five years and then comfortable retirement. ---
**Author:** ![Bryan\_Ekers](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/bryan_ekers/32/183_2.png) [@Bryan\_Ekers](https://boards.straightdope.com/u/Bryan_Ekers)\ **Post date:** [March 17, 2014, 8:01am UTC](https://boards.straightdope.com/t/small-business-in-a-marxist-economy/683737/70 "2014-03-17T08:01:42Z")
> [@Frank\_Merton](#): > > People are pretty happy with the government because there has been a very noticeable improvement in living standards over the last twenty years. This can in part be attributed to state investment (highways, schools, ports, bridges, etc.) and in part to a loose small-business low-tax environment. Well, this seems pretty on-point to the thread’s original question - how (and how well, I guess) do these small businesses operate in what you call a communist economy and I guess might be accepted by the OP as a Marxist one, though one can never tell how these hairs will end up split. Perhaps you’ve already addressed the OP’s question in which case, never mind. ---
**Author:** ![Frank\_Merton](https://avatars.discourse-cdn.com/v4/letter/f/b9e5f3/32.png) [@Frank\_Merton](https://boards.straightdope.com/u/Frank_Merton)\ **Post date:** [March 17, 2014, 8:51am UTC](https://boards.straightdope.com/t/small-business-in-a-marxist-economy/683737/71 "2014-03-17T08:51:44Z")
If you want to start a small business, you go to the equivalent of city hall and fill out some forms and in a day or so it gets approved, provided it meets several tests (pretty routine like a unique name, a neighborhood where that sort of business is allowed (for example brick manufacturers must be well outside the city because of air quality rules). The local constable is generally consulted (they have a police system that includes a local guy you go to for everything not seriously criminal) but I think this is just so he knows what is going on. I’m sure there are more rules I don’t know about. Vietnam is largely a country of thousands of small family businesses, although with the underemployment it is attracting some industries looking for cheap labor. The government doesn’t like that and tends to want a different sort of foreign investment. ---
**Author:** ![Human\_Action](https://avatars.discourse-cdn.com/v4/letter/h/ac91a4/32.png) [@Human\_Action](https://boards.straightdope.com/u/Human_Action)\ **Post date:** [March 17, 2014, 1:45pm UTC](https://boards.straightdope.com/t/small-business-in-a-marxist-economy/683737/72 "2014-03-17T13:45:22Z")
> [@Steely\_Dan\_Fan](#): > > Neither was Marx. So you say. [QUOTE=Steely Dan Fan] Marx didn’t omit it, he just offered an explanation for that phenomenon other than the romanticized and reality-free one you’re putting forth. [/quote] That they were seeking the improvement of their material circumstances isn’t romanticized. I’ve no idea what you’re talking about. [QUOTE=Steely Dan Fan] If you actually bothered to know what you’re talking about, you’d find that in most of his major works, Marx isn’t actually interested in normative statements. “Bad” is a meaningless concept in this context, because he was interested in explaining, not making value judgments. [/quote] _The work I was quoting_ contains many, many value judgments. Why would you think I was referring to things I didn’t reference? Also, you need a new gimmick. [QUOTE=Steely Dan Fan] Then you’re part of the school that willfully and eagerly alternates between not knowing what they’re talking about and distorting evidence beyond all sanity… …because the passage you quote is from a work written in an entirely different genre, with an entirely different style, and for an entirely different purpose, from the academic work that makes up the overwhelming bulk of his written output and upon which an intellectually honest assessment of his economic and sociological thinking must be based. [/QUOTE] Meh. I was asked about Marx’s criticism of capitalism, I used one of his works to pull quotes from. I’m not writing a doctoral thesis here, I was answering the question of whether his criticisms were valid (and the answer is yes, some of them are). Marx was part of the Counter-Enlightment, which was romantic. Steven Pinker explains it better than I can: > [@](#): > > A child of the counter-Enlightenment, then, does not pursue a goal because it is objectively true or virtuous, but because it is a unique product of one’s creativity. The wellspring of creativity may be in one’s own true self, as the Romantic painters and writers insisted, or it may be in some kind of transcendent entity: a cosmic spirit, a divine flame. Berlin elaborates: > > “Others again identified the creative self with a super-personal “organism” of which they saw themselves as elements or members - nation, or church, or culture, or class, or history itself, a mighty force of which they conceived their earthly selves as emanations. Aggressive nationalism, self-identification with the interests of the class, the culture or the race, or the forces of progress - with the wave of the future-directed dynamism of history, something that at once explains and justifies acts which might be abhorred or despised if committed from calculation of selfish advantage or some other mundane motive - this family of political and moral conceptions is so many expressions of a doctrine of self-realization based on defiant rejection of the central thesis of the Enlightenment, according to which what is true, or right, or good, or beautiful, can be shown to be valid for all men by the correct application of objective methods of discovery and interpretation, open to anyone to use and verify.” > > The counter-Enlightenment also rejected the assumption that violence was a problem to be solved. Struggle and bloodshed are inherent in the natural order, and cannot be eliminated without draining life of its vitality and subverting the destiny of mankind. As Herder put it, “Men desire harmony, but nature knows better what is good for the species: it desires strife.” The glorification of the struggle in “nature red in tooth and claw” (as Tennyson had put it) was a pervasive theme in 19th-century art and writing. Later it would be retrofitted with a scientific patina in the form of “social Darwinism,” though the connection to Darwin is anachronistic and unjust: The Origin of Species was published in 1859, long after romantic struggleism had become a popular philosophy, and Darwin himself was a thoroughgoing liberal humanist. > > The counter-Enlightenment was the wellspring of a familiy of romantic movements that gained strength during the 19th century. Some of them influenced the arts and gave us sublime music and poetry. Others became political ideologies and led to horrendous reversals in the trend of declining violence. One of these ideologies was a form of militant nationalism that came to be known as “blood and soil” - the notion that an ethnic group and the land from which it originated form an organic whole with unique moral qualities, and its grandeur and glory are more precious than the lives and happiness of its individual members. Another was romantic militarism, the idea that (as Mueller has summarized it) “war is noble, uplifting, virtuous, glorious, heroic, exciting, beautiful, holy, thrilling.” A third was Marxist socialism, in which history is a glorious struggle between classes, culminating in the subjugation of the bourgeoisie and the supremacy of the proletariat. And a fourth was National Socialism, in which history is a glorious struggle between races, culminating in the subjugation of inferior races and the supremacy of the Aryans. ---
**Author:** ![Steely\_Dan\_Fan](https://avatars.discourse-cdn.com/v4/letter/s/9de053/32.png) [@Steely\_Dan\_Fan](https://boards.straightdope.com/u/Steely_Dan_Fan)\ **Post date:** [March 17, 2014, 1:53pm UTC](https://boards.straightdope.com/t/small-business-in-a-marxist-economy/683737/73 "2014-03-17T13:53:03Z")
> [@Bryan\_Ekers](#): > > he was describing an economic system that was not especially friendly to innovative individuals Communism is the opposite of that, actually. Communism is the form of society that frees each individual from the need to subordinate himself to another, leaving him free to pursue whatever peaceful ends or goals he desires. ---
**Author:** ![Really\_Not\_All\_That\_Bright](https://avatars.discourse-cdn.com/v4/letter/r/e8c25b/32.png) [@Really\_Not\_All\_That\_Bright](https://boards.straightdope.com/u/Really_Not_All_That_Bright)\ **Post date:** [March 17, 2014, 2:05pm UTC](https://boards.straightdope.com/t/small-business-in-a-marxist-economy/683737/74 "2014-03-17T14:05:39Z")
Once the apparatus of the state withers away, sure. But since the apparatus of the state has yet to wither in any state (despite numerous opportunities) I think we can safely assume it’s never going to. ---
**Author:** ![Horatio\_Hellpop](https://avatars.discourse-cdn.com/v4/letter/h/e5b9ba/32.png) [@Horatio\_Hellpop](https://boards.straightdope.com/u/Horatio_Hellpop)\ **Post date:** [March 17, 2014, 2:15pm UTC](https://boards.straightdope.com/t/small-business-in-a-marxist-economy/683737/75 "2014-03-17T14:15:14Z")
I live in the People’s Republic of China and see plenty of privately owned businesses (including my employer, an English school; it’s a booming industry here). I live in a city with a large and growing middle class. While nominally a Communist country, citizens are tentatively being encouraged to pursue money-making enterprises. And while I occasionally see some old guy in a Mao jacket and cap, most younger folks favor Wranglers and UniQlo. Most Chinese go about their business, save their money and mind their own affairs. Outside of Tibetans, Uighurs and Falun Gong types, most Chinese don’t feel any more oppressed than you or I unless they feel compelled to make religious or political rants, and that’s not a lot of people I encounter. (By comparison, most South Koreans really wish the American soldiers they quarter would fucking leave already.) ---
**Author:** ![Really\_Not\_All\_That\_Bright](https://avatars.discourse-cdn.com/v4/letter/r/e8c25b/32.png) [@Really\_Not\_All\_That\_Bright](https://boards.straightdope.com/u/Really_Not_All_That_Bright)\ **Post date:** [March 17, 2014, 2:18pm UTC](https://boards.straightdope.com/t/small-business-in-a-marxist-economy/683737/76 "2014-03-17T14:18:41Z")
It’s possible that the Chinese you know don’t complain about being unable to go on religious or political rants because they’re… unable to go on religious or political rants. Just a thought. ---
**Author:** ![Bryan\_Ekers](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/bryan_ekers/32/183_2.png) [@Bryan\_Ekers](https://boards.straightdope.com/u/Bryan_Ekers)\ **Post date:** [March 17, 2014, 3:15pm UTC](https://boards.straightdope.com/t/small-business-in-a-marxist-economy/683737/77 "2014-03-17T15:15:05Z")
> [@Steely\_Dan\_Fan](#): > > Communism is the opposite of that, actually. > > Communism is the form of society that frees each individual from the need to subordinate himself to another, leaving him free to pursue whatever peaceful ends or goals he desires. So can the individual profit from his or her innovation? Hold a patent, get royalties or some kind of personal gain? ---
**Author:** ![Bryan\_Ekers](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/bryan_ekers/32/183_2.png) [@Bryan\_Ekers](https://boards.straightdope.com/u/Bryan_Ekers)\ **Post date:** [March 17, 2014, 3:29pm UTC](https://boards.straightdope.com/t/small-business-in-a-marxist-economy/683737/78 "2014-03-17T15:29:33Z")
As an afterthought, I don’t see how anyone can seriously claim this: > [@Steely\_Dan\_Fan](#): > > Communism is the opposite of that, actually. > > Communism is the form of society that frees each individual from the need to subordinate himself to another, leaving him free to pursue whatever peaceful ends or goals he desires. …while contending that _I’m_ the one divorcing myself from reality. You may as well be quoting bible passages at me in support of your religion. ---
**Author:** ![Lumpy](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/lumpy/32/446_2.png) [@Lumpy](https://boards.straightdope.com/u/Lumpy)\ **Post date:** [March 17, 2014, 3:36pm UTC](https://boards.straightdope.com/t/small-business-in-a-marxist-economy/683737/79 "2014-03-17T15:36:50Z")
> [@Steely\_Dan\_Fan](#): > > Communism is the opposite of that, actually. > > Communism is the form of society that frees each individual from the need to subordinate himself to another, leaving him free to pursue whatever peaceful ends or goals he desires. I thought that was Anarcho-Capitalism. 😛 Anyway, my 2¢ on a few things: First, that quote from Marx- > [@](#): > > The bourgeoisie, wherever it has got the upper hand, has put an end to all feudal, patriarchal, idyllic relations. It has pitilessly torn asunder the motley feudal ties that bound man to his “natural superiors”, and has left remaining no other nexus between man and man than naked self-interest, than callous “cash payment”. It has drowned the most heavenly ecstasies of religious fervour, of chivalrous enthusiasm, of philistine sentimentalism, in the icy water of egotistical calculation. It has resolved personal worth into exchange value, and in place of the numberless indefeasible chartered freedoms, has set up that single, unconscionable freedom — Free Trade. In one word, for exploitation, veiled by religious and political illusions, it has substituted naked, shameless, direct, brutal exploitation. -sure contains a lot of pejoratives for someone who supposedly wasn’t making any value judgments. And it plays up something that I’ve seen over and over again in discussions on capitalism and communism; namely, the intellectual disdain and scorn for the sheer _ **vulgarity** _ of capitalism. Think of how many people regard McDonald’s or Walmart, those icons of successful capitalism. Second, where Marx seems to be comparing capitalism to feudalism most unfavorably is the degree of social atomization. Feudal peasants might have been exploited but at least they were in _collectives:_ of villagers working together, of church and congregation, of lord and subjects. Whereas capitalism both fosters and makes possible a degree of isolation that would have been unthinkable in past ages for anyone but a hermit monk, one where outside your immediate circle of family and friends you can live with no other social interaction but your work and your purchases. I don’t know if Marx ever addressed the subject but I suspect he would have had little love for the American idea of the rugged frontier individualist. The Communist ideal of collectivism seems to in one sense be a yearning to create an industrial version of the peasant society, with factories replacing villages as the basic unit of society. Lastly, Marx and his contemporaries apparently believed that the “free market” was doomed in an industrial age because expanding monopolies and the subordination of law and government to the industrialists’ interests would eventually destroy the civil society that originally made capitalism possible. When laborers worked for script redeemable only at the company store, ate in the company cafeteria, sent their children to the company school, and slept in company houses in a company town, you ironically would have a situation identical to communism in all but who ran it; in which event the owner class would become completely superfluous and abolished when the workers took control. Marxism failed as a predictive theory of history because capitalism did NOT destroy civil society in this manner. ---
**Author:** ![Sam\_Stone](https://avatars.discourse-cdn.com/v4/letter/s/ecccb3/32.png) [@Sam\_Stone](https://boards.straightdope.com/u/Sam_Stone)\ **Post date:** [March 17, 2014, 4:20pm UTC](https://boards.straightdope.com/t/small-business-in-a-marxist-economy/683737/80 "2014-03-17T16:20:45Z")
The reason you’ve never seen a ‘pure’ communist state is because communism doesn’t work. As soon as you try to implement it, you run into a number of problems that must be solved - usually at the point of a gun. Communism doesn’t work because power and knowledge are very poorly aligned. It is impossible for a central authority to efficiently allocate the resources of the nation, because it doesn’t have the information required to know where the resources should go - nor can it attain the information, because it is locked up in the heads of the population and simply not available. For example, let’s say you control the production of hammers. How are you going to distribute them? Just announce that the state is providing hammers, and let people come get them? In that case, everyone will want a hammer. I mean, hey free hammer, right? So somehow you need some authority to decide who gets a hammer and who doesn’t. But that decision requires knowing who really needs one and who doesn’t, and that knowledge isn’t available to him either. Even if every citizen is being a good little Marxist and only asks for a hammer if he thinks he really needs one, you still can’t allocate them efficiently because the citizens have no way of knowing if their need is greater than their neighbor’s need. Then there’s the problem of maintaining supply chains. If you dictate that hammer production must be increased, suddenly there’s a steel shortage, because you didn’t also allocate more steel production. Or maybe you were smart and did that too. But now the steel foundries are short of the goods they need to make the steel. So you order more of those goods, but the factories that make those are now short of the the things they need… And so it goes. The Soviet Union had a planning division called “Gosplan”, which employed thousands of actuaries to try and manage the nation’s resources. They really, really tried. The end result was chronic gluts and shortages. Standing in lines was a way of life. That’s just one reason why communism fails. Every time. To the extent that ‘communist’ countries survive, they do so by tolerating large black markets that re-distribute the goods that were poorly allocated in the first place, or they allow a certain amount of capitalism to co-exist, as China does. Another reason communism fails is because of human nature. When you concentrate power in the hands of the state, you get corruption. Now the hammers don’t go to those most in need - they go to those who come from the right areas, who say the right things, who grease the right palms, etc. And along the way, you discover that without some kind of incentive people just won’t work hard. Without reward they won’t take necessary risks. Stalin ‘solved’ this by hauling slackers off to the Gulag - fear is a pretty good motivator for a while, but it just teaches people to keep their heads down, and innovation stops. The only other alternative was to pretend that everyone is equal, but to figure out ways to allow some to become rich if they worked harder or smarter. So the factory ‘owner’ might make the same ‘income’ you do, but he gets exclusive use of the state-owned limousine provided for the factory, and he is rewarded with ‘bonuses’ that include vacations to the black sea in the villa provided for use of the factory owner. Or, everyone might earn the same money, but there’s nothing to spend it on in the common markets available to everyone. But if you’re a good little communist with the right connections, you get access to special department stores that actually have goods to sell. To the extent that the Soviet Union worked, it worked because it went around the communist ideal and inserted enough of the features of the market to allow some semblance of reasonable allocation of resources and to provide some incentives for people to actually do anything. Capitalism solves the problem of distribution by allowing people to negotiate with each other. A capitalist economy can be thought of as a massively-parallel supercomputer, with the price system acting as an information bus and an incentive mechanism. If the demand for hammers goes up, the price goes up. That forces everyone to re-adjust their own cost-benefit equations. People with marginal needs for hammers stop buying them. That allows the resource to be more efficiently allocated. Not just that, but as the demand for intermediate hammer products (wood for handles, steel for the head, the parts that make up the machines in a hammer factory), those prices then rise, which stimulates production of more of them. But that then drives up the prices of other products that use those raw materials, which adjusts the demand for those as well. Very soon, the system finds a new equilibrium and everyone in the chain of supply and demand is forced to re-calculate their needs in accordance to the new prices. If you could see a real-time animation of a free economy’s capital flows, and you could change the color of the flow as the prices rise and fall, then with every change to the real-world supply or demand of products you would see the colors ripple and pulsate all through the economy as it recalculates and absorbs the new reality. In the meantime, another aspect of capitalism that makes it succeed is the nature of innovation within it - millions of people incentivized to constantly seek improvements in processes, discover new resources, etc. At a macro level it looks like an efficient stochastic search algorithm. And when new things are tried, if they succeed capital flows to them, everything re-adjusts, and the new information is absorbed into the system. Things get more efficient. If new innovations fail, they fade back into the stochastic noise, and new things are tried. The ability to profit from your own innovation provides the incentive, and allows for the accumulation of capital which then allows for private investment in other innovations. There is no way for any central authority to manage this feat, no matter how large or how smart it is, because it does not have the tools and never can. In practice there are many other reasons communism fails, but those are the big ones. [Previous page](https://boards.straightdope.com/t/small-business-in-a-marxist-economy/683737.md?page=3) [Next page](https://boards.straightdope.com/t/small-business-in-a-marxist-economy/683737.md?page=5)