Change of plans. I had said I’d post two chapters each time, but since I’m writing so much on this, I think I’d better keep it to 1 chapter.

3 Individualism and Collectivism

What exactly is socialism? People often understand it to mean the ideals of social justice, greater equality, and security. But it also means the method by which most socialists hope to achieve this goal, and which many people believe is the only method by which they can be attained.  

Socialism means the abolition of private property and private ownership of the means of production, and the implementation of a planned economy in which the entrepreneur working for profit is replaced by a central planning body.  

Some people want the ends, but don’t care about the means.

Others see the means as just as important as the end.

Some want the ends, but refuse the means.

Socialism is a species of collectivism and everything that applies to collectivism, will also apply to socialism. Socialism is not only by far the most important species of collectivism or planning, but that it is socialism which has persuaded liberal-minded people to submit once more to that regimentation of economic life which they had overthrown because, in the words of Adam Smith, it puts governments in a position where “to support themselves they are obliged to be oppressive and tyrannical.”

A planned economy is necessary to realize any given distributive ideals, but its appeal lies largely in its vagueness. It is essential we should agree on its precise sense before we discuss its consequences.

“Planning” is popular because everyone desires that we should handle our problems rationally, using as much foresight as possible. No rational person is against “planning” in this sense. But this is not the sense that our “planners” mean. They want a central direction of all economic activity according to a single plan, laying down how resources of society should be consciously directed to serve particular ends in a definite way.

The question is whether the holder of coercive power (the government) should confine itself in general to creating conditions under which the knowledge and initiative of individuals are given the best chance so that they can plan successfully; or whether a rational utilization of our resources requires central direction of our activities according to some constructed blueprint.

It’s important not to confuse opposition to this sort of planning with a dogmatic laissez-faire attitude. The liberal argument is in favor of making the best possible use of the forces of competition as a means of coordinating human efforts.

Where effective competition can be created, it is a better way of guiding individual efforts than any other. It doesn’t deny, but even emphasizes that, in order for competition to benefit us, a carefully thought out legal framework is necessary, and our current system has its faults. It also recognizes that there are areas where it is impossible to make competition effective, and we must resort to other means to guide economic activity.  

Competition is superior because it is in most circumstances, not only the most efficient, but the only method by which our activities can be adjusted to each other without coercive or arbitrary intervention of authority. It dispenses with the need for control and gives the individuals a chance to decide whether the prospects of a particular occupation are sufficient to compensate for the disadvantages and risks connected.  

Restrictions can be placed on industry as long as they are placed equally.  

Competition requires functioning money, markets, and channels of information, some of which can’t be adequately provided by private enterprise. An appropriate legal system is necessary too- one that is designed to preserve competition and make it operate as beneficially as possible.