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State of Mankind

Chapter Nine(II): The Communist Economic Trap

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How the Specter of Communism Is Ruling Our World:

Chapter Nine: The Communist Economic Trap (Part II)



Table of Contents (continued)


4. Public Ownership and the Planned Economy: Systems of Slavery
a. Public Ownership: A Totalitarian Yoke
b. Economic Planning: Destined to Fail

5. Marx’s Theory of Exploitation: A Fallacious Inversion of Good and Evil

6. Hatred and Jealousy: The Origin of Absolute Egalitarianism
a The Promotion of Economic Equality: A Stepping Stone to Communism
b. Communism’s Use of Unions to Undermine Free Societies

7. Communist ‘Ideals’: Tempting Man Toward His Own Destruction

Conclusion: Prosperity and Peace Can Be Obtained Only Through Morality

References

* * *




4. Public Ownership and the Planned Economy: Systems of Slavery

Heaven created man, endowed him with wisdom and strength, and decreed that his life would be one in which he would reap reward for his labor—to be able to obtain enough to secure his life. As the Declaration of Independence says: “We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.” [1]

Naturally, these rights include the power to possess and allocate property and assets.

In contrast, Marx stated in The Communist Manifesto: “In this sense, the theory of the Communists may be summed up in the single sentence: Abolition of private property.” [2] This is a reference to public ownership—of which the planned economy is a mandatory aspect. The essence of this system violates Heaven’s principles, runs contrary to human nature, and is a form of slavery.

a. Public Ownership: A Totalitarian Yoke

The American anti-communist pioneer Fred Schwartz told the following joke in his book You Can Trust the Communists … to Be Communists about two interviews conducted by a visitor at a Soviet automobile plant first and next at an American plant: [3]

“Who owns this factory?”

“We do,” they replied.

“Who owns the land on which it is built?”

“We do.”

“Who owns the products of the factory when they are made?”

“We do.”

Outside in a corner of a large park were three battered jalopies. The visitor asked, “Who owns those cars out there?”

They replied, “We own them, but one of them is used by the factory manager, one is used by the political commissar, and the other is used by the secret police.”

The same investigator came to a factory in America, and said to the workers, “Who owns this factory?”

“Henry Ford,” they replied.

“Who owns the land on which it is built?”

“Henry Ford.”

“Who owns the products of the factory when they are made.”

“Henry Ford.”

Outside the factory was a vast park filled with every make and variety of modern American automobile. He said, “Who owns all those cars out there?”

They replied, “Oh, we do.”

This story vividly displays the consequences and differences between systems of private and public ownership. Under the system of public ownership, resources and the gains from labor are nationalized. Gone are the mechanisms that motivate individual enthusiasm, striving, and innovation, as with the sense of responsibility conveyed by personal property rights. In name, public ownership means that the wealth of a country is shared by all citizens, but in practice, it means that the privileged class monopolizes resources and looks after itself first.

The ultimate factor in economic growth is people. Public ownership chokes people’s vitality and motivation to be productive. It undermines morale, promotes inefficiency, and causes wastage. From Soviet collective farms to the people’s communes in China—including failed collectivization in Cambodia and North Korea—the system of public ownership brings starvation wherever it goes. Tens of millions of people in China died from a man-made famine.

Private ownership accords with the principle that man works for his bread. On the contrary, collective ownership violates this principle. Both evil and kindness exist in mankind. Private property allows man to develop his kind nature and encourages labor and thrift. Collective property, however, encourages the evil in human nature, promoting jealousy and sloth.

Friedrich Hayek writes that the growth of civilization relies on social traditions that put private property at the center. Such traditions spawned the modern capitalist system and its attendant economic growth. This is an organic, self-generating order that does not require a government for its action. Yet communist and socialist movements seek to exert control over this spontaneously arising order—what Hayek called their “fatal conceit.” [4]

If private ownership and freedom are inseparable, then the like applies to collective ownership, wed as it is to dictatorship and suppression. The system of collective ownership nationalizes resources, degrades economic productivity, and turns people into the country’s servants and slaves. All people must obey the commands of the central party, and any ideas and voices inconsistent with the regime can be shut down through economic punishments. People are then powerless against state intervention.

Thus, the elimination of private ownership and the establishment of collective ownership inevitably leads to totalitarian outcomes. Collectivism is a yoke affixed on the necks of man by a totalitarian state. Freedom is stolen—including the freedom to be kind—and everyone is forced to follow the moral commands of the communist regime.

Some people have said that power must not be privatized, and wealth must not be collectivized, or else disaster awaits mankind. That is indeed true.

b. Economic Planning: Destined to Fail

Under the planned economy, an entire society’s production, allocation of resources, and distribution of products are based on a plan established by the state. This is completely different from the organic planning of firms and individuals.

The planned economy has natural and obvious defects. Firstly, it requires the collection of huge data in order to make reasonable arrangements for production. For a country, especially a modern country with a large population, the amount of relevant information is unimaginably large. For instance, the former Soviet Union’s commodity pricing bureau had to set prices for 24 million different kinds of goods. [5] Such calculations are impossible.

The complexity and variability of society and people cannot be solved through a unified planned economy. [6] Even with the use of modern big data and artificial intelligence, human thoughts cannot possibly be inputted as variables, and so the system will always be incomplete.

Economist Ludwig von Mises discussed the relationship between socialism and the market in his article “Economic Calculation in the Socialist Commonwealth.” [7] He notes that without a real market, a socialist society won’t be able to make reasonable economic calculations. Thus, the distribution of resources cannot be rationalized, and the planned economy will fail.

Secondly, economic planning requires coercive state control of resources. This ultimately requires absolute power, quotas, and commands. Moreover, an economics of power is first of all beholden to politics, rather than to the needs of actual people. When the requirements of the real world fail to conform to state planning, then state power tramples on natural economic trends, thus causing mass misallocation of capital and all its attendant problems. The planned economy uses the limited power and wisdom of government to play God. This is doomed to failure.[Read more in PDF]

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