Why Socialism Always Ends Up Deadly

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At the heart of the deadly collapse of Venezuela lies what everyone recognizes to be a complete economic failure.

Venezuelans are smuggling in food and toilet paper across the borders because their dollar is inflating rapidly, they are battling stray dogs for food in the garbage, and the people are crying out for not only democratic assembly under their tyrannical dictator, but for free markets as well.

Unfortunately, this isn’t a novel sight, but something that is a sad and predictable outcome of socialism.

Everyone has always recognized the incentive problem with socialism; in that if everyone’s outcomes are predictably the same, then effort and productivity will wane because nobody has an incentive to work. However, this is often ignored.

The Soviets ignored this by going straight to detail. They said they were going to change the nature of man and create a new one, the New Soviet Man. This new man would have no problem sacrificing his body for others, and would not care about incentives but only the common good.

We all know how that worked out.

But even if that were possible, to completely change the nature of man, there is yet another fatal flaw in socialism; the economic calculation problem; If there is an army of workers that are completely loyal to this abstract ideal of the common good, who would tell them what to do and how would they figure it out?

In a complex economy larger than a family, it is impossible for one person to organize the events of production and consumption. And since socialism is the collective ownership of property, the planners would have no idea how to plan, or make any rational economic decision.

The beauty of capitalism is that the price system allows us to understand the supply and demand of every resource, including labor. This gives the ability for businesses to understand how valuable things are, how much to produce, how much to price, and how much we can consume.

If there is an abandonment of the pricing system, this all falls apart, which is what we are seeing in Venezuela. The planners blame their failures on capitalism, then take over more of the economy to plan, in which they ultimately fail because they do not have the ability to see how valuable a resource is worth.

This leads to massive shortages; first it was toilet paper, now it is food.

There has yet to be a competent answer by socialists on this issue other than a trial and error system, which would be ultimately deadly.