Laws of Economics under Socialism

Abstract

This article argues that praxeology, as a general theoretical approach, can explain the emergence of the socialist doctrine. However, socialist laws of economics cannot be derived from praxeology. It is specifically shown that the immutability of market economic laws does not allow society to achieve a full-fledged communist reality. Using the Soviet Union as an example, this article demonstrates that the market economy cannot be eradicated, despite government efforts, but is omnipresent even if it is ostensibly outlawed. Also, this article demonstrates that Ludwig von Mises’s conclusion about the principal impossibility of economic calculation under socialism is fully applicable to the highest stage of communism, as theorized in Marxism. In relation to socialism in a broader sense, as the collectivization of the means of production grows, the magnitude of the impairment of economic calculation grows with it. Socialist thinkers failed to rebuff Mises’s reasoning because all their proposals violated the economic uncertainty principle: the exact price structures before the exchange are unknown and are in superposition.