ȇȅ Partʺ: Economicsforesight. If he does not do so then he suffers losses—losses that bring
it about that his disposition over the factors of production is transferred
to the hands of others who know better how to weigh the risks and the
prospects of business speculation.
Capitalists and speculators cannot be expected to act as mere agents
of the community, for
the function which capitalists and speculators perform under Capital-
ism, namely directing the use of capital goods into that direction in
which they best serve the demands of the consumer, is only performed
because they are under the incentive to preserve their property and to
make profits. (ȀȈȁȁ/ȀȈȇȀ, pp.Ȁȃǿ–ȀȃȀ)
Furthermore, there is no reason to think that the recklessness of some
socialist managers would compensate for the over-cautiousness of others.
Two wrongs don’t make a right.
Ț.As I have already implied, the schemes of price-theory socialists
have an extreme static bias. We may well join with Professors Hayek,
Mises, and Robbins in asking: What is to be the independent business
unit? Who is to be the manager? What resources are to be entrusted to
him? How is his success or failure to be tested? On what principle is
the control of productive facilities to be transferred from one manager
to another (HayekȀȈȃȇ, esp. pp.ȀȆȁ,ȀȈȅ–ȀȈȆ)? Ļe idea of instructing
the controllers of various industrial units to actas if they were capitalist
entrepreneurs ignores the fundamental problem of a dynamic economy,
the problem of deciding what resources should be risked in what ventures
under the control of what men. As Robbins says,
For competition to be free theentrepreneurmust be at liberty to withdraw
his capital altogether from one line of production, sell his plant and his
stocks and go into other lines. He must be at liberty to break up the
administrative unit. It is difficult to see how liberty of this sort, which
is necessary if the market is to be the register of the varying pulls of
all the changes in the data, is compatible with the requirements of a
society whoseraison d’etreis ownership and control at the centre. (ȀȈȂȃ,
pp.ȀȄȂ–ȀȄȃ)
Mises remarks that when socialist theorists assume stationary con-
ditions, the essential function of economic calculation hasby hypothesis
already been performed (ȀȈȃȈ, pp.ȀȂȆff.).
R.L. Hall worries about how anyone could tell whether a socialist
monopoly were as efficient as it might be. In Hall’s words,