Welcome Austrian reader!
In today’s post we’ll be introducing Socialism.
One of the main Intellectual Errors.
Hope you enjoy it!
"Socialism is the expression of the principle of violence crying from the workers' soul, just as Imperialism is the principle of violence speaking from the soul of the official and the soldier."
― Ludwig Von Mises
Introduction
Our definition of socialism is based or founded on the concept of entrepreneurship. We will define socialism as any institutional restriction or aggression against the free exercise of human action or business function.
The institutional restriction or aggression has its origin in a deliberate desire to improve the process of social coordination and achieve certain ends or objectives. That is, in some cases, the institutional aggression against human action that socialism implies may have an origin based on tradition or history, as happens in certain pre-capitalist societies anchored, for example, in the caste system; however, socialism as a modern phenomenon, regardless of its specific class or type, arises as a deliberate attempt to "improve" society, make its development and functioning more effective, and achieve certain ends that are considered "fair," all through institutional coercion.
Therefore, we can complete the definition of socialism we have just proposed in the following way: socialism would be any system of institutional restriction or aggression against the free exercise of human action or business function, which is usually justified at a popular, political, and scientific level as a system capable of improving the functioning of society and achieving certain ends and objectives that are considered good.
And, finally, it would be necessary to undertake an analysis in the field of social ethics theory, with the aim of determining whether, from an ethical perspective, it is acceptable to attack the most intimate essence of the human being: their ability to act creatively.
Business Function and Concept of Socialism
We will begin this chapter by explaining in detail what socialism consists of and how it makes the emergence of the coordinating tendencies necessary for life in society impossible.
Specifically, we will study the effects of socialism on incentives and information generation, as well as the perverse diversion in the exercise of the business function that it motivates. We will also explain in what sense socialism is an intellectual error, and how its essential nature is unique, regardless of the fact that it has historically manifested in different types or classes.
Finally, we will conclude this chapter with a critical analysis of the alternative concepts of socialism that have traditionally been used.
Definition of Socialism
We will define socialism as any system of institutional aggression against the free exercise of the business function. By aggression or coercion, we must understand any physical violence or threat of physical violence that is initiated and exercised on the actor by another human being or group of human beings. As a consequence of this coercion, the person, who would have otherwise freely exercised their business function, is forced to act in a manner different from how they would have acted under other circumstances, modifying, therefore, their behavior and adapting it to the ends of those who coerce them.
Aggression is, therefore, an evil because it prevents the human being from developing the activity that is most proper to them and that by essence and in the most intimate way belongs to them. Aggression can be of two types: systematic or institutional, and unsystematic or non-institutional.
For the coordinated exercise of human interaction, is the institutional or systematic aggression that, as we have seen, constitutes the essential core of the definition of socialism that we have given. Indeed, institutional coercion is characterized by being highly predictable, repetitive, methodical, and organized. This systematic aggression against entrepreneurship has as its main consequence the considerable prevention and perverse diversion of the exercise of entrepreneurship in all those areas of society in which the aforementioned aggression effectively operates.
Socialism as an Intellectual Mistake
We saw how social life was possible because individuals, spontaneously and unconsciously, learned to modify their behavior by adapting it to the needs of others. This unconscious learning process was the natural result of the exercise of the entrepreneurial function by the human being. In such a way that when each person interacts with their fellow beings, they spontaneously initiate a process of adjustment or coordination in which new information—tacit, practical, and dispersed—is continuously created, discovered, and transmitted from one mind to another.
The problem that socialism presents is whether, by essentially consisting of institutional aggression against the free exercise of human action or the entrepreneurial function, it is possible for the coordination and adjustment process of the behaviors of different human beings, one in function of the other, to be verified through the coercive mechanism, which is essential for the functioning of life in society; and all of this in a framework of constant discovery and new creation of practical information that makes the advancement and development of civilization possible.
The ideal that socialism poses is, highly daring and ambitious, as it implies believing not only that the mechanism of creativity, social coordination, and adjustment can be carried out by the governing body that institutionally exercises coercion in the area or social plot in question but also that this adjustment can even be improved through such a coercive procedure.
Well, socialism is an intellectual error because it is not theoretically possible for the body responsible for exercising institutional aggression to have enough information to give coordinating content to its mandates. This simple argument, which we will delve into in some detail, can be developed from two different but complementary points of view: first, from the point of view of the set of human beings who constitute society and who are coerced; second, from the perspective of the coercive organization that systematically exercises aggression.
The Impossibility of Socialism from the Perspective of Society
The “Static” Argument
From the point of view of the human beings who interact with each other, constituting society, it is necessary to remember that each of them possesses, with a private character, practical and dispersed information that is mostly tacit in nature and therefore not articulable. This makes it logically impossible to conceive of its possible transmission to the governing body.
Indeed, it is not only that the aggregated volume of practical information felt and managed in a dispersed manner by all human beings at the individual level is of such magnitude that it is inconceivable to consciously acquire it by the governing body, but above all, this volume is dispersed in the minds of all men in the form of tacit, non-articulable knowledge, which cannot be formally expressed or explicitly transmitted to any governing center.
The “Dynamic” Argument
Socialism is impossible not only because the information possessed by the actors is inherently non-transmissible but also because, from a dynamic point of view, human beings, by exercising the entrepreneurial function, that is, by acting, constantly create and discover new information. And it is hardly possible to transmit to the governing body the information or knowledge that has not yet been created but is emerging as a result of the social process itself and to the extent that this is not attacked.
The Impossibility of Socialism from the Perspective of the Governing Body
From the point of view of that person or group of people, more or less organized, who systematically and institutionally exercise aggression against the free exercise of entrepreneurial function, a series of considerations can be made to confirm the conclusion that socialism is merely an intellectual error.
We will begin by admitting, for dialectical purposes and following Mises that:
“Even if the governing body (whether it be a dictator or leader, an elite, a group of scientists or intellectuals, a ministerial department, a group of democratically elected representatives by the "people," or any combination, more or less complex, of all or some of these elements) is equipped with the maximum technical and intellectual capacity, experience, and wisdom, as well as the best intentions humanly conceivable, it still cannot be admitted that the governing body is endowed with superhuman abilities, nor, specifically, that it possesses the gift of omniscience. That it is capable of simultaneously assimilating, knowing, and interpreting all the disseminated and private information that is scattered in the minds of all the human beings acting in society and that is continuously being generated and created by them.”
On the other hand, the coercive body must necessarily be composed of human beings with all their virtues and flaws, who, like any other actors, will have their own personal goals that will act as incentives leading them to discover the information relevant to their particular interests.
Therefore, it is most likely that the men who make up the governing body, if they exercise their entrepreneurial intuition well and from the perspective of their own goals or interests, will generate the necessary information and experience to, for example, remain indefinitely in power, justify and rationalize their actions to themselves and to others, exercise coercion in increasingly sophisticated and effective ways, present their aggression to citizens as something inevitable and attractive, etc.; Contrary to the "well-intentioned" hypothesis set at the beginning, these will usually be the most common incentives and will prevail over others, especially over the interest in discovering the concrete and relevant practical information that exists at any given moment, dispersed throughout society, and necessary to make coordinated functioning via mandates possible.
This peculiar motivation will also mean that the governing body will not even realize, the degree of irremediable ignorance in which it finds itself, sinking ever deeper into a process of progressive alienation from the social realities it precisely intends to control.
On the other hand, the governing body will be unable to perform the necessary economic calculation in the sense that, regardless of its goals (and we can once again assume that they are the most "humane" and "morally elevated" goals), it will not be able to know if the costs it incurs in pursuing these goals, have a value greater than the value it subjectively attributes to the goals pursued.
Definition of Cost
Cost is nothing but the subjective value that the actor attributes to what they forgo when acting in pursuit of a particular goal. It is evident that the governing body cannot acquire the knowledge or information necessary to realize the true cost it incurs according to its own value scales, as the information about the specific circumstances of time and place necessary to estimate the costs is dispersed in the minds of all the human beings or actors that constitute the social process and who are coerced by the governing body (democratically elected or not) in charge of systematically exercising aggression over the social body.
Extra: Why the Development of Computers Further Impedes Socialism
The argument is often heard, from various people who do not fully understand the peculiar nature of knowledge relevant for social purposes, that the extraordinary advances in the fields of computing, communications, and computers could theoretically and practically make the functioning of the socialist system possible. However, a simple theoretical argument will demonstrate that it will never be possible for the development of computer systems and computing capacity to solve the problem of irremediable ignorance that essentially affects socialism. The argument is based on the assumption that the fruits of all technological development in the field of computing will be available to both the governing body and the various human actors involved in the social process. If this is so, the capacity to create and discover new information—practical, dispersed, and tacit—will be enormously enhanced as a result of the new computing tools available to actors in all contexts where they exercise their entrepreneurial function. The vast new quantity and quality of information generated entrepreneurially with the help of new technologies will progressively reach a depth and level of detail that will become inconceivable from the standpoint of our current knowledge.
And, logically, it will still be impossible for the governing body to acquire this dispersed information, even if it has at its disposal the most modern, capable, and revolutionary computers of each era. Here is an example:
“Relying on computers as an instrument to make socialism possible is just as absurd as thinking that in a much less advanced society, the invention of the printing press would make it possible to have the practical and subjective knowledge relevant at the social level. The result of the discovery of books and the printing press was exactly the opposite: to make society even richer and harder to control.”
In other words, the knowledge generated in the social process, relevant for entrepreneurial purposes, will always remain tacit and dispersed knowledge, and therefore not transferable to any central governing body, and the future development of computer systems and computers will further increase the complexity of the problem for the governing body, as the practical knowledge generated with the help of such systems will become progressively more complex, voluminous, and rich.
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