WND column

Who Killed Capitalism?

“For each separate calculation of the particular branches of one and the same enterprise depends exclusively on the fact that is precisely in market dealings that market prices to be taken as the bases of calculation are formed for all kinds of goods and labor employed. Where there is no free market, there is no pricing mechanism; without a pricing mechanism, there is no economic calculation.”,
– “Economic Calculation in the Socialist Commonwealth,” Ludwig von Mises, 1920

Ludwig von Mises conceptually destroyed socialism in his famous paper titled, “Economic Calculation in the Socialist Commonwealth.” He did so by pointing out the central importance of prices to economic activity, which, as Adam Smith famously demonstrated, were the means by which market supply intersected with market demand. Due to the way it eliminated the natural operations of supply and demand, socialism necessarily precluded the production of price information, and thereby rendered the economic calculations required to make decisions about how many goods to produce or what price they should be sold totally inoperable.