The Theoretical Problems of Socialism

The Theoretical Problems of Socialism - market via the...

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John Hawkins Policy Ideas in the History of Economic Thought Mario Rizzo November 20, 2010 Peter Boettke: The Theoretical Problems of Socialism In The Theoretical Problems of Socialism , Boettke tries to answer the question of why the economic system of socialism didn’t deliver what it promised – a more rational and moral society – and instead lead to some of the greatest acts of mass oppression and economic deprivation in human history. First, he defines socialism in a strange way, negatively, as being, “what capitalism is not.” Where capitalism emphasized the exchange of goods, socialism would emphasize its use; where the former was chaotic, the other would be rational, etc… Most importantly, the socialist project of rationalization is what makes it incompatible with the anarchic workings of the market and free exchange. This makes the problem of using the diffuse knowledge in society, knowledge that expresses itself and is discovered in the free
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Unformatted text preview: market via the price system, to organize the economy one of the main problems of the sot system, along with problems of political organization and political self-interest. The economic problem of knowledge is that without a market, and without a price system, one could never know if resources were being put into enterprises in a profitable way. Economic calculation would become impossible without information as to what resources were in relative scarcity and surplus, and this information changes daily, with only a few members of society being aware of it. Resources of all types are bound to be used inefficiently, and not substituted for others when a price system would call for it. For this reason, political incentives are what structure the economy rather than economic incentives. Therefore, totalitarianism is the logical conclusion of som....
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This document was uploaded on 10/27/2011 for the course MAP CA102 at NYU.

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The Theoretical Problems of Socialism - market via the...

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