Socialism means collective or state ownership of the means of production, with central planning replacing private property and market prices. Variants of socialism range from hard Marxism-Leninism to softer democratic versions that still expand political control over capital allocation. The failures of socialism are rooted in several fallacies. The core fallacies of socialism are not moral failings of its advocates but systematic errors in how it treats knowledge, incentives, calculation, and human action. Without private ownership of the means of production, there are no genuine market prices for capital goods. Without those prices, planners cannot perform economic calculation by comparing the relative scarcity and value of alternative uses of resources. They can count physical units but cannot know whether a given project is wealth-creating or wealth-destroying. Soviet planners produced mountains of unusable goods, chronic shortages of consumer items, and waste on a scale no pri...
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