In his second great book, Socialism, Ludwig von Mises explained why socialism is not an alternative to capitalism and is, in fact, not an alternative economic system at all.
The elimination of private property by the socialist state makes economic calculation impossible; thus, socialism in its pure form could not solve the ever-present problem of scarcity. The directors of a socialist state would not know what to produce, how to produce it, how much to produce, etc. Only free-market capitalism can solve these problems.
The main benefit of having private-property rights is being able to make entrepreneurial decisions. Those who make good decisions prosper and are granted control of more resources. The opposite happens with entrepreneurial failures. So capitalist economies grow from the accumulation of capital, and socialist economies consume capital until they collapse.
Laundry Detergents That Don’t Get Clothes Clean
I was reminded of this basic law of economic science a few months ago when my wife and I had dinner with Professor Yuri Maltsev at the home of Michael and Dawn McKay in Fairfield, Iowa. Needless to say, the evening was delightful. We all had just read Jeffrey Tucker’s Mises Daily article “Why Everything is Dirtier,” which is about why laundry detergent no longer gets clothes “clean and bright.”
Yuri said something that I will never forget. He informed us that when he told his mother, who suffered for most of her life living in Soviet Russia, about Jeffrey’s article, she replied, “Ah, the first sign of socialism — soap that does not clean.” What a marvelous insight! I subsequently reread Jeffrey’s article — which I highly recommend to you, dear reader.
Laundry detergents no longer contain trisodium phosphate, an agent that helps whisk the dirt away during the rinse cycle. That dinginess you see in your clothes is the dirt that was not removed. The lack of TSP also explains why your automatic dishwasher does not get your dishes spotless anymore.
The EPA banned the substance from commercially sold laundry products some time ago, although the consumer still can buy it in pure form and add it to his home laundry. A spokesman for the EPA explained that phosphates, a natural product, harmed the environment. Why we all did not succumb to phosphate poisoning long ago was never explained. Mother Nature had allegedly been harmed, so the substance was banned. Getting clothes clean was never a consideration.
(Twenty-five years ago, I consulted for the Citrus and Chemical Bank in Central Florida. The “Citrus” designation came from the local orange groves, and the “Chemical” designation came from the local open-face phosphate mines. I can tell you that both oranges and humans were coexisting very healthily along with the huge natural deposits of phosphate.)
In banning phosphates from commercial laundry detergents, the EPA did not consider the desires of the consumers or the property rights of the producers; thus, absent market forces and legal protections, there was no need for economic calculation. The EPA spokesman did not care how or whether the consumer’s clothes were laundered satisfactorily.
The EPA does not own the businesses that manufacture commercial laundry detergents; but in Human Action Mises explained the two forms of socialism — that of the Russian variety and that of the German variety. In the Russian variety (that of Soviet Communism), it is clear that the state owns the means of production. In the German variety (that of Nazi Germany) businesses are still nominally owned by private individuals, but the state makes all the important decisions — and even some seemingly trivial but still important ones, like what we can or cannot use to clean our dishes or clothes.
Yuri’s mother understood that a small “first step” of socialism has been taken. Mises explained that regardless of which socialist approach is pursued, Russian or German, the deleterious results were the same.
Socialism expands, freedom wanes; the state steps in and reduces our choices. As a result, our quality of life is reduced — and life becomes more soiled.
