State socialism has always aimed at a spectacular improvement in the average person’s standard of living. It is a noble intention which I share. The problem is that the methods chosen by state socialists to achieve their aim cannot succeed. And, tragically, in the course of trying, state socialists have all but destroyed the valuable mutualist traditions of the old, old Left such as co-operatives and friendly societies.
The enormous advantage of liberal economic policy – that is, Conservatism – is that it does increase prosperity for the great body of the public. In a market economy, investors and entrepreneurs can only enrich themselves by serving the public in large numbers. Unfortunately, capitalism requires patience and patience is in short supply in the midst of widespread suffering.
We do not have to wonder what would be the outcome of a serious attempt to implement state socialist economic ideas today. Venezuela’s current plight has been exaggerated by the low oil price but “Venezuelans have put up with shortages and long lines for years.”
A historical perspective provides the same answer. This 1959 essay, on “The Soviet System’s Economic Failure” could not be clearer:
There is only one way, [the Soviets] say, open to prevent the eclipse of civilization. That is to substitute socialism for capitalism. Socialism will pour a horn of plenty on the masses whom the capitalistic “exploiters” have reduced to utmost penury.
Now, where are these much-glorified blessings of the socialist methods of production? We have today, forty-two years after the “ten days that shook the world” and after a succession of half a dozen five- and seven-year plans and bloody purges, the opportunity to compare the operation of the two systems, capitalism and socialism. Nobody would have the courage to deny that the average man’s standard of living is incomparably higher in capitalistic Western Europe—not to speak of the United States, the paragon of capitalism—than it is in communist Russia. Leaving aside everything else that may be said about the dictatorship of the proletariat, there is need to emphasize that socialism failed lamentably in the very point that, according to its own doctrine, is the only one that counts.
The shops that produce luxury goods for the few remain small or at least [Mises surely meant “at most”] medium sized. Thus capitalism resulted in an unprecedented improvement of the masses’ standard of living and in a no less unprecedented increase in population figures. Capitalism deproletarianizes the proletarians and raises them to the “bourgeois” level. The average American wage-earner enjoys amenities of which the richest princes and lords of the precapitalistic ages did not even dream.
It is not surprising there is a lack of faith in free markets after so many years of third way interventionism. In particular, the market economy has been critically undermined by forty years of easy money. That has driven the boom-bust cycle and promoted the misery of unemployment. It has unjustly redistributed wealth and it has misdirected scarce resources. It is a subject I explored in my maiden speech and last year in the debate on money creation and society.
The evidence of history is that state socialism is a curse upon the public, not a blessing: we know that only a market economy delivers widespread prosperity. What is required of opinion formers with noble intentions today is not the propagation of attractive promises which must inevitably go unmet. It is to consider carefully the working of our socio-economic system in theory and practice and then to promote those policies which have a realistic prospect of serving the general interests of the public.
Those policies will be recognisably liberal, that is, Conservative.