Centrally Planned Economy Quotes

All utopias are dystopias. The term "dystopia" was coined by fools that believed a "utopia" can be functional.

Communism is what happens when Socialists realize that they want complete control over every aspect of human life.

The desire to engineer humanity is a sign of a mind warped by megalomania and lust for power.

Thomas More's Utopia was not a recommendation. It was a warning.

Some capitalism suffers from cronyism. All of socialism is perverted by the crony statism of the powerful few.

A "centrally planned economy" by definition discourages and despises participation by the masses. It's a bureaucratic oligarchy.

The central planners of Democratic Socialism tighten their noose when people resist their plans and assert their rights. All Socialism is intended to devolve into Communism, and as a result, Totalitarianism.

A totalitarian regime thus has one political party, one educational system, one artistic creed, one centrally planned economy, one unified media, and one moral code. In a totalitarian state there are no independent schools, no private businesses, no grassroots organizations, and no critical thought.

Centralization is an abomination! Decentralize everything! Leave nothing to the central planners.

The right to "liberty" and "pursuit" of happiness is incompatible with a government that makes choices for you.

the economy would tend not to the frictionless ideal, but to be made up of islands of central planning linked by bridges of price signals.

Centrally planned economies are upended by out of control population. Their escape valve is eugenics.

Everything within the state, nothing outside the state, nothing against the state.”3 Strictly defined, a totalitarian regime is one that bans all institutions apart from those it has officially approved. A totalitarian regime thus has one political party, one educational system, one artistic creed, one centrally planned economy, one unified media, and one moral code.

Economists who looked at the real consequences of a centrally planned economy came to a very different conclusion: that" there are too many economic relationships, and it is impossible to take them all into account and carefully coordinate them.

In this sense socialism means the abolition of private enterprise, of private ownership of the means of production, and the creation of a system of “planned economy” in which the entrepreneur working for profit is replaced by a central planning body.

By the beginning of the 1970s, the Soviet Union’s centrally planned economy was failing. It could not produce the goods that people wanted, and what it did produce was shoddy, except for specific sectors, mainly defense. The oil crisis of the 1970s came just in time.

Every totalitarian Communist considered themselves as a Socialist first and foremost.

Regulations in an "Idea Economy" are restraints on innovation.

When the individual people have the freedom to engage in permaculture activity, the effect is that ultimately the standards of living are improved for everyone, such that poverty is ultimately eradicated and even the people with the least among all still enjoy considerable wealth. When government or central planning agencies forcefully redistribute wealth, it has the ultimate effect of eradicating wealth such that eventually most people among all are poor; while even those people who have some temporary riches do not have real wealth

There is no more precious currency than the unfettered liberty to explore while engaged in an "Idea Economy". You cannot centrally plan the "Idea Economy" any more than you can plan fun or spontaneity. Regulations are restraints in an "Idea Economy". The entrepreneur is either free to experiment or not.

"This compound should be available from most good drugstores." I got increasingly annoyed with this phrase because in the world I lived in, even ordinary soap was available only intermittently............In an economy that operated by central planning, shortages of just about everything were commonplace." the author dexcribing life in Hungary in the 1950s under Communist Russian rule.

Or, to express it differently, planning and competition can be combined only by planning for competition but not by planning against competition. It is of the utmost importance to the argument of this book for the reader to keep in mind that the planning against which all our criticism is directed is solely the planning against competition — the planning which is to be substituted for competition. This is the more important, as we cannot, within the scope of this book, enter into a discussion of the very necessary planning which is required to make competition as effective and beneficial as possible. But as in current usage "planning" has become almost synonymous with the former kind of planning, it will sometimes be inevitable for the sake of brevity to refer to it simply as planning, even though this means leaving to our opponents a very good word meriting a better fate.

Central planning inevitably leads to economic chaos and failure. Friedrich Hayek called the delusion that a single person or a group of government planners could possibly possess the knowledge to plan an entire economy a “fatal conceit.” The overwhelming historical evidence is that the more freedom a nation has, the more economic opportunities will exist and the more dynamic that nation’s economy will be. Likewise, the more regulations, controls, taxes, governmentrun industries, protectionism, and other forms of interventionism that exists, the poorer the country will become.

In the event of total freedom, the desire to dominate rules just as tyrannically as it does with centrally-planned economies. Freedom gave us capitalism, which has come to mean bosses ordering workers about. Workers aren’t free; they are chained by their biological needs. Where is their freedom? Oh, the freedom of mobility? They can quit their jobs and work elsewhere? They can switch from one slave-owner to another? The capitalist vision ignores the capitalist reality, which is that bosses tells workers what to do under pain of death by starvation. Tell me that is freedom some more. Tell me another good one.

Even during its earlier good years, when observers spoke of the Ivory Coast's economic "miracle," it was not a completely free-market economy. Even then, its ventures into the kinds of state regulation engaged in more widely by other African nations had not had good results. For example, the availability of "soft" foreign aid loans for centralized government planning of rice production led the Ivory Coast into policies that produced a glut of heavily subsidized rice that taxed the storage capacity of the government, cost the national budget far more than originally planned, and led to consumer prices far above those at which rice was available on the world market.

In his 1966 book, Tragedy and Hope, Professor Carroll Quigley said: [T]he powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent private meetings and conferences.1 Their scheme is close to fulfillment unless public outrage stops them. They plan global control of money, credit and debt to be able to dominate economies, politics, commerce, and military adventures, so that these might be conducted in a way that benefits them advantageously. In fact, the power to create money can build or destroy nations. In private hands, it goes to the root of today’s problems.

Centralized planning also presupposes a universal moral agreement that never exists. People can agree on lesser items of importance, but we will never agree on the all-encompassing worldview that central planning needs if it is to reflect the actual will of the people. In fact, the idea of a universal morality is becoming less and less plausible in our increasingly diverse world. Centralized planners think the lack of universal moral agreement is a consequence of people’s ignorance and that they, the planners, know these absolutes. Their belief in such absolutes as centralized planning or social utility combined with the contention that a core group (centralized planning authority or the World Bank) knows these moral absolutes, allows extremist beliefs to be imposed on the people despite the consequences. These policies have proved to be death-dealing, as the recent histories of the Soviet Union, Tanzania, and Ethiopia indicate.

But capitalism has not stood still since Marx's day. Writing in the middle years of the nineteenth century, Marx could not be expected to grasp the full consequences of his insights into the centralization of capital and the development of technology. He could not be expected to foresee that capitalism would develop not only from mercantilism into the dominant industrial form of his day—from stateaided trading monopolies into highly competitive industrial units—but further, that with the centralization of capital, capitalism returns to its mercantilist origins on a higher level of development and reassumes the state-aided monopolistic form. The economy tends to merge with the state and capitalism begins to "plan" its development instead of leaving it exclusively to the interplay of competition and market forces. To be sure, the system does not abolish the traditional class struggle, but manages to contain it, using its immense technological resources to assimilate the most strategic sections of the working class.

Westerners, not just Lincoln Steffens. It took in the Central Intelligence Agency of the United States. It even took in the Soviet Union’s own leaders, such as Nikita Khrushchev, who famously boasted in a speech to Western diplomats in 1956 that “we will bury you [the West].” As late as 1977, a leading academic textbook by an English economist argued that Soviet-style economies were superior to capitalist ones in terms of economic growth, providing full employment and price stability and even in producing people with altruistic motivation. Poor old Western capitalism did better only at providing political freedom. Indeed, the most widely used university textbook in economics, written by Nobel Prize–winner Paul Samuelson, repeatedly predicted the coming economic dominance of the Soviet Union. In the 1961 edition, Samuelson predicted that Soviet national income would overtake that of the United States possibly by 1984, but probably by 1997. In the 1980 edition there was little change in the analysis, though the two dates were delayed to 2002 and 2012. Though the policies of Stalin and subsequent Soviet leaders could produce rapid economic growth, they could not do so in a sustained way. By the 1970s, economic growth had all but stopped. The most important lesson is that extractive institutions cannot generate sustained technological change for two reasons: the lack of economic incentives and resistance by the elites. In addition, once all the very inefficiently used resources had been reallocated to industry, there were few economic gains to be had by fiat. Then the Soviet system hit a roadblock, with lack of innovation and poor economic incentives preventing any further progress. The only area in which the Soviets did manage to sustain some innovation was through enormous efforts in military and aerospace technology. As a result they managed to put the first dog, Leika, and the first man, Yuri Gagarin, in space. They also left the world the AK-47 as one of their legacies. Gosplan was the supposedly all-powerful planning agency in charge of the central planning of the Soviet economy. One of the benefits of the sequence of five-year plans written and administered by Gosplan was supposed to have been the long time horizon necessary for rational investment and innovation. In reality, what got implemented in Soviet industry had little to do with the five-year plans, which were frequently revised and rewritten or simply ignored. The development of industry took place on the basis of commands by Stalin and the Politburo, who changed their minds frequently and often completely revised their previous decisions. All plans were labeled “draft” or “preliminary.” Only one copy of a plan labeled “final”—that for light industry in 1939—has ever come to light. Stalin himself said in 1937 that “only bureaucrats can think that planning work ends with the creation of the plan. The creation of the plan is just the beginning. The real direction of the plan develops only after the putting together of the plan.” Stalin wanted to maximize his discretion to reward people or groups who were politically loyal, and punish those who were not. As for Gosplan, its main role was to provide Stalin with information so he could better monitor his friends and enemies. It actually tried to avoid making decisions. If you made a decision that turned

A confidential report delivered in June 1965 by Abel Aganbegyan, director of the Novobirsk Institute of Economics, highlighted the difficulties. Aganbegyan noted that the growth rate of the Soviet economy was beginning to decline, just as the rival US economy seemed particularly buoyant; at the same time, some sectors of the Soviet economy - housing, agriculture, services, retail trade - remained very backward, and were failing to develop at an adequate rate. The root causes of this poor performance he saw in the enormous commitment of resources to defense (in human terms, 30-40 million people out of a working population of 100 million, he reckoned), and the 'extreme centralism and lack of democracy in economic matters' which had survived from the past. In a complex modern society, he argued, not everything could be planned, since it was impossible to foresee all possible contingencies and their potential effects. So the plan amounted to central command, and even that could not be properly implemented for lack of information and of modern data-processing equipment. 'The Central Statistical Administration ... does not have a single computer, and is not planning to acquire any,' he commented acidly. Economic administration was also impeded by excessive secrecy: 'We obtain many figures... from American journals sooner than they are released by the Central Statistical Administration.' Hence the economy suffered from inbuilt distortions: the hoarding of goods and labour to provide for unforeseen contingencies, the production of shoddy goods to fulfill planning targets expressed in crude quantitative terms, the accumulation of unused money by a public reluctant to buy substandard products, with resultant inflation and a flourishing black market.

We usually think of empires as violent undertakings. As Frantz Fanon observed in the 1960s, the process of conquering and governing a colony is, by definition, violent. But in the context of global capitalism, empire has a more expansive meaning. Capitalist empires are not simply the states capable of winning the most wars; they are the command centers of the capitalist world system. Their corporations are the largest and most powerful multinationals, extracting profits from all corners of the globe and sucking them back to the imperial core. Their financial institutions are some of the most important nodes in the networks of global finance. The priorities of their governments are forcefully communicated to -and sometimes enforced upon- less powerful states. In fact, at the global level it is much easier to see the equivalence between economic and political power than it is domestically. The power of US businesses abroad is maintained through an international order that prioritizes the interests of US capital, promulgated by the US government and its allies. The power of US finance rests on the central role played by the dollar as the global reserve currency, which is it self a function of American military, political, and economic might. American military power, meanwhile, stems from and helps to reinforce the power of a web of military contractors, weapons manufacturers, and research hubs that provide the expertise and equipment needed to maintain its supremacy. In certain parts of the world, as in Iraq after its invasion, the US government has rules through private corporations like Halliburton. Empire is, then, about more than formal colonization -it refers to all the processes through which the world's most powerful capitalist institutions plan who gets what at the level of the world economy. Throughout history, this imperial power has often been exercised through horrendous acts of violence that have warped the development of entire societies for decades. But today, it is often exerted in far more covert ways, such as through the secretive system of international courts or international financial institutions imposing rigid conditions on countries trying to access emergency lending.

We have continued to frame our politics in such a self-defeating terms simply because these are the only ones that make sense to us. Capitalism, according to common understanding, means free markets, and socialism means state central planning. If you want more socialism, you have to add more state, and if you want more capitalism, you need to extend markets. Yet the defining feature of capitalism is not the presence or absence of 'free markets', any more than the defining feature of socialism is the centralized planning of the economy. Markets existed long before the emergence of capitalism, and state planning existed long before the emergence of socialism. Aside from the fact that it's wrong and it doesn't work, there's an even more fundamental reason to avoid pitching leftist politics as one of the state versus market: it's disempowering. There is a big difference between approaching people with an offer of protection and approaching them with an offer of empowerment. The former encourages people to alienate their sense of political agency to a group of unaccountable representatives and bureaucrats who, at best, pay attention to their needs only once every four years. When these electoral promises are broken, people fall into despair and disillusionment, often giving up on politics altogether because 'politicians are all the same.' But when we frame our political project in terms of collective empowerment, we show that politics can't be reduced to elections -it's something we all do every day. Organizing with your colleagues to demand higher wages is politics, protesting climate breakdown in politics, even fighting alongside your neighbors to keep your local library open is politics. Socialism should not be based on asking people to trust politicians -it should be based on asking people to trust each other. The significance of the Lucas Plan is that it showed in very concrete terms exactly how people could work together to build a better world. People do not need to surrender their power to state institutions that can control and protect them. Nor do they need to surrender control to a market that is dominated by the powerful. Instead, we can work together to create the kind of world we want to live in. In place of domination, we can build society based on cocreation. In this chapter, we'll look at then real-world examples of attempts to do just this. Such a perspective might sound naive to those who are convinced that humans are naturally competitive beasts who need to be tamed by authoritarian social institutions. Liberal philosophy stretching all the way back to Hobbes has been grounded on the premise that without an all-powerful sovereign to control their competitive instincts, people would tear each other apart. There's just one problem with this argument: it's demonstrably untrue.

gave up on the idea of creating “socialist men and women” who would work without monetary incentives. In a famous speech he criticized “equality mongering,” and thereafter not only did different jobs get paid different wages but also a bonus system was introduced. It is instructive to understand how this worked. Typically a firm under central planning had to meet an output target set under the plan, though such plans were often renegotiated and changed. From the 1930s, workers were paid bonuses if the output levels were attained. These could be quite high—for instance, as much as 37 percent of the wage for management or senior engineers. But paying such bonuses created all sorts of disincentives to technological change. For one thing, innovation, which took resources away from current production, risked the output targets not being met and the bonuses not being paid. For another, output targets were usually based on previous production levels. This created a huge incentive never to expand output, since this only meant having to produce more in the future, since future targets would be “ratcheted up.” Underachievement was always the best way to meet targets and get the bonus. The fact that bonuses were paid monthly also kept everyone focused on the present, while innovation is about making sacrifices today in order to have more tomorrow. Even when bonuses and incentives were effective in changing behavior, they often created other problems. Central planning was just not good at replacing what the great eighteenth-century economist Adam Smith called the “invisible hand” of the market. When the plan was formulated in tons of steel sheet, the sheet was made too heavy. When it was formulated in terms of area of steel sheet, the sheet was made too thin. When the plan for chandeliers was made in tons, they were so heavy, they could hardly hang from ceilings. By the 1940s, the leaders of the Soviet Union, even if not their admirers in the West, were well aware of these perverse incentives. The Soviet leaders acted as if they were due to technical problems, which could be fixed. For example, they moved away from paying bonuses based on output targets to allowing firms to set aside portions of profits to pay bonuses. But a “profit motive” was no more encouraging to innovation than one based on output targets. The system of prices used to calculate profits was almost completely unconnected to the value of new innovations or technology. Unlike in a market economy, prices in the Soviet Union were set by the government, and thus bore little relation to value. To more specifically create incentives for innovation, the Soviet Union introduced explicit innovation bonuses in 1946. As early as 1918, the principle had been recognized that an innovator should receive monetary rewards for his innovation, but the rewards set were small and unrelated to the value of the new technology. This changed only in 1956, when it was stipulated that the bonus should be proportional to the productivity of the innovation. However, since productivity was calculated in terms of economic benefits measured using the existing system of prices, this was again not much of an incentive to innovate. One could fill many pages with examples of the perverse incentives these schemes generated. For example, because the size of the innovation bonus fund was limited by the wage bill of a firm, this immediately reduced the incentive to produce or adopt any innovation that might have economized on labor.

Growth was so rapid that it took in generations of Westerners, not just Lincoln Steffens. It took in the Central Intelligence Agency of the United States. It even took in the Soviet Union’s own leaders, such as Nikita Khrushchev, who famously boasted in a speech to Western diplomats in 1956 that “we will bury you [the West].” As late as 1977, a leading academic textbook by an English economist argued that Soviet-style economies were superior to capitalist ones in terms of economic growth, providing full employment and price stability and even in producing people with altruistic motivation. Poor old Western capitalism did better only at providing political freedom. Indeed, the most widely used university textbook in economics, written by Nobel Prize–winner Paul Samuelson, repeatedly predicted the coming economic dominance of the Soviet Union. In the 1961 edition, Samuelson predicted that Soviet national income would overtake that of the United States possibly by 1984, but probably by 1997. In the 1980 edition there was little change in the analysis, though the two dates were delayed to 2002 and 2012. Though the policies of Stalin and subsequent Soviet leaders could produce rapid economic growth, they could not do so in a sustained way. By the 1970s, economic growth had all but stopped. The most important lesson is that extractive institutions cannot generate sustained technological change for two reasons: the lack of economic incentives and resistance by the elites. In addition, once all the very inefficiently used resources had been reallocated to industry, there were few economic gains to be had by fiat. Then the Soviet system hit a roadblock, with lack of innovation and poor economic incentives preventing any further progress. The only area in which the Soviets did manage to sustain some innovation was through enormous efforts in military and aerospace technology. As a result they managed to put the first dog, Leika, and the first man, Yuri Gagarin, in space. They also left the world the AK-47 as one of their legacies. Gosplan was the supposedly all-powerful planning agency in charge of the central planning of the Soviet economy. One of the benefits of the sequence of five-year plans written and administered by Gosplan was supposed to have been the long time horizon necessary for rational investment and innovation. In reality, what got implemented in Soviet industry had little to do with the five-year plans, which were frequently revised and rewritten or simply ignored. The development of industry took place on the basis of commands by Stalin and the Politburo, who changed their minds frequently and often completely revised their previous decisions. All plans were labeled “draft” or “preliminary.” Only one copy of a plan labeled “final”—that for light industry in 1939—has ever come to light. Stalin himself said in 1937 that “only bureaucrats can think that planning work ends with the creation of the plan. The creation of the plan is just the beginning. The real direction of the plan develops only after the putting together of the plan.” Stalin wanted to maximize his discretion to reward people or groups who were politically loyal, and punish those who were not. As for Gosplan, its main role was to provide Stalin with information so he could better monitor his friends and enemies. It actually tried to avoid making decisions. If you made a decision that turned out badly, you might get shot. Better to avoid all responsibility. An example of what could happen

Speech to the German Folk January 30, 1944 Without January 30, 1933, and without the National Socialist revolution, without the tremendous domestic cleansing and construction efforts, there would be no factor today that could oppose the Bolshevik colossus. After all, Germany was itself so ill at the time, so weakened by the spreading Jewish infection, that it could hardly think of overcoming the Bolshevik danger at home, not to mention abroad. The economic ruin brought about by the Jews as in other countries, the unemployment of millions of Germans, the destruction of peasantry, trade, and industry only prepared the way for the planned internal collapse. This was furthered by support for the continued existence of a senseless state of classes, which could only serve to transform the reason of the masses into hatred in order to make them the willing instrument of the Bolshevik revolution. By mobilizing the proletarian slaves, the Jews hoped that, following the destruction of the national intelligentsia, they could all the more reduce them for good to coolies. But even if this process of the Bolshevik revolt in the interior of Germany had not led to complete success, the state with its democratic Weimar constitution would have been reduced to something ridiculously helpless in view of the great tasks of current world politics. In order to be armed for this confrontation, not only the problems of political power but also the social and economic problems had to be resolved. When National Socialism undertook the realization of its program eleven years ago, it managed just in time to build up a state that did not only have the strength at home but also the power abroad to fulfill the same European mission which first Greece fulfilled in antiquity by opposing the Persians, then Rome [by opposing] the Carthaginians, and the Occident in later centuries by opposing the invasions from the east. Therefore, in the year 1933, we set ourselves four great tasks among many others. On their resolution depended not only the future of the Reich but also the rescue of Europe, perhaps even of the entire human civilization: 1. The Reich had to regain the internal social peace that it had lost by resolving the social questions. That meant that the elements of a division into classes bourgeoisie and proletariat-had to be eliminated in their various manifestations and be replaced by a Volksgemeinschaft. The appeal to reason had to be supplemented by the merciless eradication of the base elements of resistance in all camps. 2. The social and political unification of the nation had to be supplemented by a national, political one. This meant that the body of the Reich, which was not only politically, but also governmentally divided, had to be replaced by a unified National Socialist state, the construction and leadership of which were suited to oppose and withstand even the heaviest attacks and severest tests of the future. 3. The nationally and politically coherent centralized state had the mission of immediately creating a Wehrmacht, whose ideology, moral attitude, numerical strength, and material equipment could serve as an instrument of self-assertion. After the outside world had rejected all German offers for a limitation of armament, the Reich had to fashion its own armament accordingly. 4. In order to secure its continued existence in Europe with the prospect of actual success, it was necessary to integrate all those countries which were inhabited by Germans, or were areas which had belonged to the German Reich for over a thousand years and which, in terms of their national substance and economy, were indispensable to the preservation of the Reich, that is, for its political and military defense. Only the resolution of all these tasks could result in the creation of that state which was capable, at home and abroad, of waging the fight for its defense and for the preservation of the European family of nations.

The Federal Reserve System had been established to prevent what actually happened. It was set up to avoid a situation in which you would have to close down banks, in which you would have a banking crisis. And yet, under the Federal Reserve system, you had the worst banking crisis in the history of the United States

Conventional economics is the dominant intellectual rationalization of today’s world order. As we’ve overextended the growth phase of our global adaptive cycle, this rationalization has become relentlessly more complex and rigid and progressively less tenable. Breakdown will, all at once, discredit this rationalization and create intellectual space for new ideas to flourish. But this space will be brutally competitive. We can boost the chances that humane alternatives will thrive by working them out in detail and disseminating them as widely as possible beforehand.89 Advance planning means we need to develop a wide range of scenarios and experiment with technologies, organizations, and ideas. We’ll do better at these tasks, and we’ll also do better in the confusing aftermath of breakdown, if we use a decentralized approach to solving our problems, because traditional centralized and top-down approaches aren’t nimble enough, and they stifle creativity. Scientists have found that complex systems that are highly adaptive—like markets and even the immune system of mammals—tend to share certain characteristics. First of all, the individual elements that make up the systems—such as companies in a market economy or T-cells and macrophages in an immune system—are extraordinarily diverse. Second, the power to make decisions and solve problems isn’t centralized in one place or thing; instead, it’s distributed across the system’s elements. The elements are then linked in a loose network that allows them to exchange information about what works and what doesn’t. Often in a market economy, for example, several companies will be working at the same time to solve different parts of a shared problem, and important information about solutions will flow between them. Third and finally, highly adaptive systems are unstable enough to create unexpected innovations but orderly enough to learn from their failures and successes. Systems with these three characteristics stimulate constant experimentation, and they generate a variety of problem-solving strategies.90 We

The failure of companies in a free market, then, is not a defect of the system, or an unfortunate by-product of competition; rather, it is an indispensable aspect of any evolutionary process. According to one economist, 10 percent of American companies go bankrupt every year.4 The economist Joseph Schumpeter called this “creative destruction.” Now, compare this with centrally planned economies, where there are almost no failures at all. Companies are protected from failure by subsidy. The state is protected from failure by the printing press, which can inflate its way out of trouble. At first, this may look like an enlightened way to go about solving the problems of economic production, distribution, and exchange. Nothing ever fails and, by implication, everything looks successful. But this is precisely why planned economies didn’t work. They were manned by intelligent planners who decided how much grain to produce, how much iron to mine, and who used complicated calculations to determine the optimal solutions. But they faced the same problem as the Unilever mathematicians: their ideas, however enlightened, were not tested rapidly enough—and so had little opportunity to be reformed in the light of failure. Even if the planners were ten times smarter than the businessmen operating in a market economy, they would still fall way behind. Without the benefit of a valid test, the system is plagued by rigidity. In markets, on the other hand, it is the thousands of little failures that lubricate and, in a sense, guide the system. When companies go under, other entrepreneurs learn from these mistakes, the system creates new ideas, and consumers ultimately benefit.

Through the way it values - or does not - the finite resources of our planet, double entry [accounting] now has the potential to make or break life on the earth. We can continue to ignore the free gifts of nature in the accounts of our nations and corporations, and thereby continue to ruin the planet. Or we can begin to account for nature and make it thrive again. If numbers and money are the only language spoken in the global capitalist economy, then this is the language we must use. Accountants, remodelled as eco-accountants, can plan a central role in this conversation - and it is for this reason that Jonathan Watts wrote in 2010 that they may be the one last hope for life on earth. As he also pointed out, done badly, eco-accounting will mean the natural world is further 'commodified, priced, sliced and sold to the highest bidder'. But done well, it could reframe our values and transform the capitalist world in ways we are yet to imagine.

Modern capitalism seemed to favor giant entities, which could coordinate activities through standardized policies and central planning, achieve economies of scale, borrow more cheaply and access the large capital markets, and insulate themselves from the volatility of the business cycle. In spirit, free enterprise was akin to other democratic freedoms, but in practice over time, the function of the individual practitioner was often superseded and replaced by the large institution.

When Hoover was president, the concept of a “food dictatorship” was a contentious issue in the Midwest. The government was debating, and later passed, an unprecedented series of quotas and production guidelines to directly control the agricultural economy. The efforts were seen as a critical bailout to protect middle-class farmers who were still a considerable voting bloc in those days, and who relied on steady market prices to stay in business. The central planning of agriculture didn’t end for nearly sixty years, and the government was still spending billions a year to prop up farms when Tabor took his job at the Iowa attorney general’s office.

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Neither Fascist Italy nor Spain adopted eugenics as an ideology central to their form of government the way the National Socialist did. However, socialist and progressive nations such as Canada, Sweden, Denmark, Finland, and Norway did adopt and implement eugenics. This is because eugenics is the safety valve of a centrally planned economy. Central planners like John Maynard Keynes fear a population that is not as meticulously planned as the economy. They fear the unproductive sectors out-breeding the productive sectors of the population. This is also why Keynes was a lobbyist for the British eugenics movement both before and after The Holocaust.

You can get to oppression through regulation, especially in an "Idea Economy" which necessitates liberty of the mind to explore.

PROGRESSIVISM = EUGENICS: Centrally Planned economies tempt population control.

The fateful moment for the Chinese economy, crippled by central planning and collectivized production, was when Deng Xiaoping, China’s long-term leader after Mao’s death, announced that the country would pursue “Socialism with Chinese characteristics,” which is to say a market economy under an authoritarian technocracy. This was in 1977, as good a year as any for marking the birth of modern China. Deng and his associates undertook a job akin to that of a political bomb squad, laboriously dismantling most of the economic ideology installed by Mao without blowing up political continuity at the same time. That they succeeded is in many ways the single most important political fact of contemporary China.

Westerners, not just Lincoln Steffens. It took in the Central Intelligence Agency of the United States. It even took in the Soviet Union’s own leaders, such as Nikita Khrushchev, who famously boasted in a speech to Western diplomats in 1956 that “we will bury you [the West].” As late as 1977, a leading academic textbook by an English economist argued that Soviet-style economies were superior to capitalist ones in terms of economic growth, providing full employment and price stability and even in producing people with altruistic motivation. Poor old Western capitalism did better only at providing political freedom. Indeed, the most widely used university textbook in economics, written by Nobel Prize–winner Paul Samuelson, repeatedly predicted the coming economic dominance of the Soviet Union. In the 1961 edition, Samuelson predicted that Soviet national income would overtake that of the United States possibly by 1984, but probably by 1997. In the 1980 edition there was little change in the analysis, though the two dates were delayed to 2002 and 2012. Though the policies of Stalin and subsequent Soviet leaders could produce rapid economic growth, they could not do so in a sustained way. By the 1970s, economic growth had all but stopped. The most important lesson is that extractive institutions cannot generate sustained technological change for two reasons: the lack of economic incentives and resistance by the elites. In addition, once all the very inefficiently used resources had been reallocated to industry, there were few economic gains to be had by fiat. Then the Soviet system hit a roadblock, with lack of innovation and poor economic incentives preventing any further progress. The only area in which the Soviets did manage to sustain some innovation was through enormous efforts in military and aerospace technology. As a result they managed to put the first dog, Leika, and the first man, Yuri Gagarin, in space. They also left the world the AK-47 as one of their legacies. Gosplan was the supposedly all-powerful planning agency in charge of the central planning of the Soviet economy. One of the benefits of the sequence of five-year plans written and administered by Gosplan was supposed to have been the long time horizon necessary for rational investment and innovation. In reality, what got implemented in Soviet industry had little to do with the five-year plans, which were frequently revised and rewritten or simply ignored. The development of industry took place on the basis of commands by Stalin and the Politburo, who changed their minds frequently and often completely revised their previous decisions. All plans were labeled “draft” or “preliminary.” Only one copy of a plan labeled “final”—that for light industry in 1939—has ever come to light. Stalin himself said in 1937 that “only bureaucrats can think that planning work ends with the creation of the plan. The creation of the plan is just the beginning. The real direction of the plan develops only after the putting together of the plan.” Stalin wanted to maximize his discretion to reward people or groups who were politically loyal, and punish those who were not. As for Gosplan, its main role was to provide Stalin with information so he could better monitor his friends and enemies. It actually tried to avoid making decisions. If you made a decision that turned out badly, you might get shot. Better to avoid all responsibility. An example of what could happen

In a modern political, economic, and social context, socialism isn't voluntary like the Girl Scouts. Its central characteristic is the concentration of power to forcibly achieve one or more (or usually all) of these purposes: central planning of the economy, government ownership of property, and the redistribution of wealth.

The situation was similar in the Soviet Union, with industry playing the role of sugar in the Caribbean. Industrial growth in the Soviet Union was further facilitated because its technology was so backward relative to what was available in Europe and the United States, so large gains could be reaped by reallocating resources to the industrial sector, even if all this was done inefficiently and by force. Before 1928 most Russians lived in the countryside. The technology used by peasants was primitive, and there were few incentives to be productive. Indeed, the last vestiges of Russian feudalism were eradicated only shortly before the First World War. There was thus huge unrealized economic potential from reallocating this labor from agriculture to industry. Stalinist industrialization was one brutal way of unlocking this potential. By fiat, Stalin moved these very poorly used resources into industry, where they could be employed more productively, even if industry itself was very inefficiently organized relative to what could have been achieved. In fact, between 1928 and 1960 national income grew at 6 percent a year, probably the most rapid spurt of economic growth in history up until then. This quick economic growth was not created by technological change, but by reallocating labor and by capital accumulation through the creation of new tools and factories. Growth was so rapid that it took in generations of Westerners, not just Lincoln Steffens. It took in the Central Intelligence Agency of the United States. It even took in the Soviet Union’s own leaders, such as Nikita Khrushchev, who famously boasted in a speech to Western diplomats in 1956 that “we will bury you [the West].” As late as 1977, a leading academic textbook by an English economist argued that Soviet-style economies were superior to capitalist ones in terms of economic growth, providing full employment and price stability and even in producing people with altruistic motivation. Poor old Western capitalism did better only at providing political freedom. Indeed, the most widely used university textbook in economics, written by Nobel Prize–winner Paul Samuelson, repeatedly predicted the coming economic dominance of the Soviet Union. In the 1961 edition, Samuelson predicted that Soviet national income would overtake that of the United States possibly by 1984, but probably by 1997. In the 1980 edition there was little change in the analysis, though the two dates were delayed to 2002 and 2012. Though the policies of Stalin and subsequent Soviet leaders could produce rapid economic growth, they could not do so in a sustained way. By the 1970s, economic growth had all but stopped. The most important lesson is that extractive institutions cannot generate sustained technological change for two reasons: the lack of economic incentives and resistance by the elites. In addition, once all the very inefficiently used resources had been reallocated to industry, there were few economic gains to be had by fiat. Then the Soviet system hit a roadblock, with lack of innovation and poor economic incentives preventing any further progress. The only area in which the Soviets did manage to sustain some innovation was through enormous efforts in military and aerospace technology. As a result they managed to put the first dog, Leika, and the first man, Yuri Gagarin, in space. They also left the world the AK-47 as one of their legacies. Gosplan was the supposedly all-powerful planning agency in charge of the central planning of the Soviet economy.

The Fed is still on the same track.” Whatever you call it, the benign economic environment has supported a bull market since 2009, and though there were a few rocky days last week, the main market ingredients seemed to remain in place. For example, on Wednesday a government report on gross domestic product in the second quarter showed that the economy was growing smartly, even rapidly, at a 4 percent annualized rate; yet the Federal Reserve declared that inflation was low enough to allow the slowly moderating pace of its expansive monetary policy to remain on track. In a statement on Wednesday, the Federal Open Market Committee said the central bank would continue to ratchet down its bond purchases as planned, yet it also said its policies would “maintain downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative.” The Fed already holds more than $4 trillion in bonds, up from less than $1 billion when the financial crisis started, and it’s still buying more.

Well, it depends which planned economies you mean. There are lots of planned economies―the United States is a planned economy, for example. I mean, we talk about ourselves as a "free market," but that's baloney. The only parts of the U.S. economy that are internationally competitive are the planned parts, the state-subsidized parts―like capital-intensive agriculture (which has a state-guaranteed market as a cushion in case there are excesses); or high-technology industry (which is dependent on the Pentagon system); or pharmaceuticals (which is massively subsidized by publicly-funded research). Those are the parts of the U.S. economy that are functioning well. And if you go to the East Asian countries that are supposed to be the big economic successes―you know, what everybody talks about as a triumph of free-market democracy—they don't even have the most remote relation to free-market democracy: formally speaking they're fascist, they're state-organized economies run in cooperation with big conglomerates. That's precisely fascism, it's not the free market. Now, that kind of planned economy "works," in a way―it produces at least. Other kinds of command economies don't work, or work differently: for example, the Eastern European planned economies in the Soviet era were highly centralized, over-bureaucratized, and they worked very inefficiently, although they did provide a kind of minimal safety-net for people. But all of these systems have been very anti-democratic―like, in the Soviet Union, there were virtually no peasants or workers involved in any decision-making process.

stockpiling of goods, runs on banks, and widespread urban discontent. This put Zhao seriously on the political defensive and under attack from the conservative Old Guard. Over the summer of 1988 a comprehensive plan to control inflation and stabilize the overheated economy was worked out by senior leaders Yao Yilin and Li Peng, as well as State Council think tank economists—which was presented to the Third Plenum of the Thirteenth Central Committee in September. As a result, prices were frozen, foreign trade was recentralized, a very tight fiscal policy forced on state banks, investment controls were put in place, and capital construction halted. Zhao himself came in for six-and-a-half hours of harsh criticism and was forced to make a self-criticism. This was the all-important backdrop to the dramatic demonstrations of the spring of 1989 (which were triggered by economic discontent as much as by political demands). Among the many other economic reforms stimulated during Deng’s tenure, two others deserve brief mention. The first concerned changes in the ownership structure, and the second concerned efforts to establish a regulatory structure (as distinct from an administrative structure) for qualitative oversight of economic activity. With regard to the first, a key part of creating the hybrid state-collective-private economy that Deng and his colleagues envisioned necessitated the creation of truly private enterprises and private ownership.56 Citizens in both rural and urban areas were permitted to purchase long-term leaseholds on property (often their homes) and to pass it from generation to generation. Another example of

The winter started and it got extremely cold very quickly. There was very little to buy on the market or to eat at the Intourist hotel restaurant. When Luc was in town, we had a little bet going every day. Would we get chicken at lunch or at dinner, or both? Greasy Chicken Kiev. Fat would splatter onto your clothes when you stuck your fork into it. We couldn’t complain. We were negotiating a mobile license while the USSR was disintegrating and we saw the country, which had been an essential part of the centralized plan economy, falling apart quickly

We said at the beginning of this chapter that a key goal of any investment model is to find a way to get the business started and to cash flow breakeven with as little investment as possible, while including some cash cushion for iterating to Plan B. There are exceptions to this rule, such as where network effects are central to the strategy, as for Skype; where economies of scale make it necessary to “get big fast,” as we’ll see in the Amazon case in chapter 8; and where a competitive footrace must be won. In such cases, raising more capital may be in order. But generally, whether it’s your money or others’, leaner is usually better. So, since money doesn’t grow on trees, what are the lessons for building your investment model?

Virtually all of the scenario planning for pandemics employ technical assumptions and strategies familiar to anyone who has read the CIA’s notorious psychological warfare manuals for shattering indigenous societies, obliterating traditional economics and social bonds, for using imposed isolation and the demolition of traditional economies to crush resistance, to foster chaos, demoralization, dependence and fear, and for imposing centralized and autocratic governance.

The variables which were apt for management by central authorities were interest rates and taxation, which he proposed that governments should adjust in order to stimulate investment and to seek full employment. However, he said little of emergency public works, and nothing about fiscal methods of demand management. He did not recommend increasing the government’s current expenditure by running a budget deficit to meet a deficiency of demand. He gave no encouragement to profligate finance ministers. He urged that additional government expenditure should be on capital account and financed from a separate capital budget while so far as possible the regular budget should be kept in balance. He suggested that full employment might be maintained by redistribution of income. If wealth was more equitably dispersed in the population, effective demand would be stimulated and would thus help capital growth. As the scarcity of capital diminished, investors would be rewarded less. He never believed that state planning would eliminate economic instability. He saw national economies as inherently wobbling: they were susceptible to rational management, but with irrational elements.73

The sailors said to Gan Ying: ‘The ocean is huge. Those making the round trip can do it in three months if the winds are favourable. However, if you encounter winds that delay you, it can take two years.’ Gan Ying was also told that he would have to pay for large-scale provisions since ‘all the men who go by sea take stores for three years.’ When he heard this, Gan Ying abandoned his plans to reach Rome by sea and began the long journey back to the Chinese held Tarim protectorates. He did not realise that Parthia and Rome shared a common land border and the city of Characene was only forty days distant from the Roman frontier in Syria.

We have reached the point where even some of the central institutions have been forced to admit, however quietly, that this is indeed the case. In America, the Federal Reserve floated a plan for mass mortgage relief in the summer of 2012, only to discover the political class was simply unwilling to consider it. For a while, even the IMF, under Dominique Strauss-Kahn, began trying to reposition itself as the conscience of global capitalism, issuing warnings that if the economy continues on the present course, some kind of crash is inevitable, and the next time, no bailout is likely to be forthcoming: the public simply will not stand for it, and as a result, everything really will come apart. “IMF Warns Second Bailout Would ‘Threaten Democracy,’ ” reads one headline.16 (Of course by “democracy” they mean “capitalism.”) Surely it means something that even those who feel they are responsible for keeping the current global economic system running, who just a few years ago acted as if they could simply assume the current system would be around forever, are now seeing apocalypse everywhere.

What is the basic purpose of central banking? The intimate connection that exists between central banking, government expansion, and central planning offers a clue. Central banking is nothing but central planning applied to money and banking. It is no part of a genuine free-market economy.

remedy the “anarchy” of the market, the socialist planned economy is utterly irrational. Its irrationality is due to the elimination of the essential indices for determining rational production and distribution – namely, prices. Von Mises showed that prices represent the incredibly thick and vital data sets required for allocating productive resources for commodity production and calibrating these to demand. Socialism is irrational because by beginning without prices for the machinery of production, no rational criteria could ever emerge for allocating resources to specific production processes. And when unpriced consumer goods are added to the mix, the chaos multiplies – unless, that is, political force is applied, and it always is. Eliminating prices, the socialist economy cannot provide the feedback loops required for determining what to produce or how much of it to produce. Cancerous, over-sized productive capacities in one sector of the economy are paralleled by relatively anemic productive capacities in another, and so on. And resorting to the labor theory of value won’t fix the problem. The socially average amount of labor time required to produce a commodity, even if it determines a commodity’s value (a doubtful claim in any case), is by no means an adequate index for determining the amount of resources to devote to its production. This means that socialism fails not only at resource allocation but also at the economic representation of the people it claims to champion. Absent price mechanisms, economic “voters,” or consumers, have no way to voice their needs and wants. Production and distribution must be based on the non-democratic decision-making of centralized authorities. Those who really care about the working masses must reject socialism for its incapacity to establish economic democracy, its most fundamental reason for being.

Fascism is the system of government that cartelizes the private sector, centrally plans the economy to subsidize producers, exalts the police State as the source of order, denies fundamental rights and liberties to individuals, and makes the executive State the unlimited master of society.

Lerner similarly asserts that “Mises . . . assumes the pricing system transformed unaltered from a perfectly competitive economy” and contends that this “dogmatic” viewpoint considers “sacrilegious” any attempt to “improve on a ‘perfect’ price mechanism” (1934b, p.

The young, naïve socialists who dream of socialism “from below” are caught in a conundrum. Non-state socialist communes can only work (poorly) on a small scale in an otherwise capitalist world. To replace capitalism with this system necessitates centralizing power in order to plan the economy. That ultimately results in state ownership, control, and tyranny. Society-wide socialism “from below” that doesn’t entail state ownership is a contradiction in terms.

Is Willis Carrier an anomaly or not? The question has real political and social stakes, because the doxa of market capitalism as an unparalleled innovation engine has long leaned on stories like Willis Carrier’s miraculous cooling device as a cornerstone of its faith.6 In many respects, these beliefs made sense, because the implicit alternatives were the planned economies of socialism and communism. State-run economies were fundamentally hierarchies, not networks. They consolidated decision-making power in a top-down command system, which meant that new ideas had to be approved by the authorities before they could begin to spread through the society. Markets, by contrast, allowed good ideas to erupt anywhere in the system. In modern tech-speak, markets allowed innovation to flourish at the edges of the network. Planned economies were more like the old mainframe computer systems that predated the Internet, where every participant had to get authorization from a central machine to do new work. When Friedrich von Hayek launched his influential argument in the 1940s about the importance of price signals in market economies, he was observing a related phenomenon: the decentralized pricing mechanism of the marketplace allows an entrepreneur to gauge the relative value of his or her innovation. If you come up with an interesting new contraption, you don’t need to persuade a government commission of its value. You just need to get someone to buy it. Entire institutions and legal frameworks—not to mention a vast tower of conventional wisdom—have been built around the Carrier model of innovation. But what if he’s the exception and not the rule?

past year, reflecting not just the city’s strong economy but also the impossibility of building on its edges. The insistence on big minimum lot sizes in some American suburbs and rural areas has much the same effect. Cities that try to prevent growth through green belts often end up weakening themselves, as Seoul has done. A wiser policy would be to plan for huge expansion. Acquire strips of land for roads and railways, and chunks for parks, before the city sprawls into them. New York’s 19th-century governors decided where Central Park was going to go long before the city reached it. New York went on to develop in a way that they could not have imagined, but the park is still there. This is not the dirigisme of the new-town planner—that confident soul who believes he knows where people will want to live and work, and how they will get from one

Most important, though, was the way this string of bailouts fit the government pattern: prevent the economy from correcting itself. Once again, rather than let an inefficient allocation of resources shake itself out, politicians and central bankers decided that the right cure for a drinking binge was “the hair of the dog that bit you.” That is, when confronted with a crisis caused by government-created moral hazard, cheap money, and central planning, Washington responded with more moral hazard, even cheaper money, and heightened central planning.