Socialist Planning and War
Last week I wrote about Ludwig von Mises’s important letter to the New York Times in June 1942 about the Nazi economy. In the letter, Mises says that foreign trade poses a difficult problem for a socialist economy. Unlike the citizens of a country controlled by central planning, those in foreign countries don’t have to accept goods offered to them, and bureaucrats, who operate by fixed rules, cannot cope with this situation. Elsewhere in his work, Mises has much more to say about this topic, and in this week’s column, I will discuss some of his insights, stressing the connection between socialist planning and war.
One theme that again and again occurs in Mises’s work is that in a capitalist market with complete free trade, national boundaries do not matter. The buyers and sellers of goods will always buy in the cheapest market and sell in the dearest, regardless of the country in which the goods are located. He says in Socialism:
Under Capitalism, as Free Traders would have it, frontiers would be without significance. Trade would flow over them unhindered. They would prohibit neither the movement of the most suitable producers towards immobile means of production, nor the investment of mobile means of production in the most suitable places. Ownership of the means of production would be independent of citizenship. Foreign investment would be as easy as investment at home. (p. 235)
This isn’t the case in a socialist economy. The planners want to have everything under their control, and thus, to the greatest extent feasible, they want economic autarky, in which all production is internal rather than external. Mises points out in his 1942 letter that Stalinist Russia came much closer to this goal than Nazi Germany. Mises exp
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