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The Failure of Socialist Economics
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16612 |
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Section : |
SPECIAL SECTION
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| Issue
Date : |
11 / 1989 |
7,599 Words |
| Author
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Jan S. Prybyla
Jan S. Prybyla is a professor of economics at Pennsylvania
State University. His latest book, Market and Plan Under
Socialism: The Bird in the Cage is published by the Hoover
Institution Press. He is the author of Issues in Socialist
Economic Modernization and two books on the Chinese economy. |
The history of economic ideas reveals that economic systems--orderly patterns of resource allocation--can achieve a wide variety of purposes. For example, the mercantile system that preceded capitalism in Western Europe was designed primarily to enhance the power of the emerging nation states, by way of the treasury, through regulating foreign trade and domestic production. Economic systems have also been constructed in the past (and, indeed, today in parts of the Muslim world) to promote religious ideas such as personal salvation and the glory of the Creator. Other systems have been built specifically for military purposes: The national socialist (Nazi) system, for example, sacrificed personal material welfare for military conquest and the pursuit of racial purity. The Maoist subsystem of socialism in China aimed at egalitarian distribution and class purity.
A modern economic system, however, exists in order to provide people with rising quantities and qualities of final goods they want at prices they are willing and able to pay, and to do this efficiently, that is, with the least possible waste of resources at a point in time and over time. Efficiency over time means that growth in the production of desired goods is achieved through improvement in the productivity of labor, capital, and land. This, in turn, is a function of technological and social innovation. A modern economic system is inventive, and its inventiveness is used to improve people's living standards. That's what it's all about, and that's what people everywhere seem to want. We are talking here about individual, real-life persons, not "people" as a collective abstraction.
The fact that a modern economic system is concerned first and foremost with improving the personal material conditions of people's lives does not mean that other concerns need be or should be excluded. On the contrary, questions of equity in the distribution of wealth and income, equal opportunity, environmental protection, prevention of fraud, supply of public goods, and other social, cultural, and moral imperatives enter the agenda of the modern economic system--but they are not the system's primary concern. They are necessary supplements to the system's main function, which is to produce and distribute goods efficiently so as to raise people's material welfare. At the level of ideas, an economic system must have a positive "scientific" theory that explains how the institutions of the system work (and, when the system breaks down, how they can be fixed) as well as a normative theory that deals with the system's ethics--what is, and what should be. The modern economic system is not all brains and no heart. It merely uses its brains to produce goods so that the
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