Too Good to be True

I recommend reading this post at Carpe Diem blog on Why socialism always fails.

This is particularly well-said:

The strength of capitalism can be attributed to an incentive structure based upon the three Ps: (1) prices determined by market forces, (2) a profit-and-loss system of accounting and (3) private property rights. The failure of socialism can be traced to its neglect of these three incentive-enhancing components.

And this:

The main difference between capitalism and socialism is this: Capitalism works.


4 thoughts on “Too Good to be True

  1. re: private property rights
    does my neighbor own the minerals beneath ‘their’ land? or the airspace above it?
    can my neighbor transmit electromagnetic radiation through my land, or frack into my underground natural gas formations?
    why do we consider ‘natural’ resources to be private property as long as theyre properly marked with national/state/local boundaries? – who owns lake michigan and should nestle corporation be allowed to pump and bottle millions of gallons of water a day from it just because they bought a chunk of land big enough to put a pump on?

    in a small tribe of people with a territory they provide a common defense for, who owns the migratory birds they rely on for survival? when one hunter brings in a whale after many days spent alone at sea – risking life and limb against the elements and other larger, fiercer predators – who gets to eat it? whose whale is it?

    • Great questions.

      As with most things human, private property rights evolve through a trial-and-error process.

      On Wikipedia, articles with a lot of views tend to be more accurate than articles with fewer views. Similarly, property rights on stuff that have a lot of trial-and-error behind it have been ferreted out pretty well. In areas that don’t have the trial-and-error base load — either because they are fringe and meaningless or because that situation is just now beginning to be experienced with more frequency — the rights may not have been ferreted out as well.

  2. also, how can a society build a bridge over a river without some kind of tax/bond levy to build and operate it? if we had only ‘private’ toll roads and bridges, wouldnt that be worse than a ‘collective’ bridge? wouldnt there be several bridges, all vying for the bottom? the price floor? and wouldnt that bridge be pretty much by definition the least safe bridge to actually cross?

    it seems we have to have _some_ amount of socialism. esp. for engineering projects beyond the scope of an individual or even a large ‘private’ organization. i have taken note that spacex is doing remarkably well. does that point to a ‘failure’ of socialism? or an extension/enhancement of it? would spacex be possible without government (taxpayer) funded aerospace research?

    • Who knows. Perhaps. I can’t imagine how all things would evolve if things were different. But, radio wave spectrum is similar to roads, yet government doesn’t own all radio stations. It just grants licenses for radio stations to transmit at certain frequencies.

      For me, government vs. private isn’t all much of a concern. The degree to which something is bottom-up v. top-down is. I wrote about that here:

      Roads are still very much bottom-up because so many entities manage them, so users still have a degree of power of exit and there’s a lot of experimentation that goes on, which helps improve the chances that new and better things road-wise will evolve from those experiments.

      In the sense that roads are still bottom-up, I’d say the ‘road system’ is a lot closer to having the features of capitalism than socialism and that’s one of the reasons folks like you can cite them as being pretty good.


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