In his second great book Socialism Ludwig von Mises explained why socialism is not an alternative to capitalism and, in fact, is not an alternative economic system at all. The elimination of private property by the socialist state makes economic calculation impossible; thusly, 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 private property rights is to be 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 by two fairly recent incidents. The first occurred 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 titled "Why Everything is Dirtier" about why laundry detergent no longer gets clothes "clean and bright". Yuri said something that I will never forget. He told 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 whole point of washing clothes. Similarly, this 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 have not succumbed to phosphate poisoning long ago was never explained. Mother nature was deemed to be 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 co-existing 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 consumer or the property rights of the producers; thusly, 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. True, the EPA does not own businesses that manufacture commercial laundry detergents, but in Human Action Mises also 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) business is still nominally owned by private individuals but the state makes all the important, and even some seemingly trivial but still important decisions – like what we can or cannot use to clean our dishes or clothes. Yuri’s mother understood that a small ‘first step’ of Socialism is taken. Mises explained that regardless of which socialist approach, Russian or German, the deleterious results were the same. Socialism expands, Freedom wanes; the State steps in and reduces our choices and, as a result, our quality of life is reduced – and life becomes more soiled.
Fighter Jets that Can't Fly
The second incident which reminded me of Mises' dictum that socialism fails due to the lack of economic calculation involves America's premier air superiority fighter--the F-22. The F-22 has been grounded since May due to a problem with the pilot's oxygen system. Just to let you know how serious this issue is, our government, in its vast wisdom, shut down the F-22 assembly line a couple years ago after producing only 167 aircraft. This is an astonishingly low production run, given the development cost, the success of the aircraft as the world's best fighter, and the fact that its replacement, the F-35, is many years away from deployment in any numbers. So right now America is without its most modern frontline air superiority fighter.
Sources from my old Air Force network claim that most modern military aircraft use a different oxygen system from the one I used many moons ago flying the F-111 and the one currently used on commercial aircraft. The new oxygen system is designed to operate in a chemical environment. Since outside ambient air may contain chemicals, the engineers did not provide the F-22 with access either to pressurized air in the cockpit or to outside ambient air should the system fail. Flight above 14,000 feet will cause rapid impairment of brain functions. Commercial airliners are pressurized, so our bodies believe that we are below 14,000 feet. But the F-22 pilot does not have access to a pressurized environment in the event of oxygen failure. Even if the pilot dove to below 14,000 feet, he would not be able to breathe outside ambient air--he cannot even jettison the canopy! So failure of the oxygen system on an F-22 means that the pilot either ejects or dies from hypoxia, lack of oxygen. Thus the “stand down”, the grounding of all F-22’s, was ordered until a solution is found.
Now, your local backyard mechanic probably could install a simple selector valve quickly and easily, giving the pilot access to ambient air in the case of oxygen failure. But the Air Force chose instead to form a committee to study the problem. Three months later the jets still are grounded and the pilots are losing proficiency since constant training/re-training is required. It isn't easy flying one of these machines! A professional musician once told me that he practiced his guitar every day, even after forty years of playing. He said, “If I miss one day, then I notice it. If I miss three days, then the audience notices it.” The term for losing flying proficiency is "getting behind the airplane". It is not just that the pilot loses a feel for the airplane as much as losing mental agility to anticipate what needs to be done next.
America Stumbles Down the Well-Worn Soviet Path to Military Failure
We should not be surprised that military hardware failures occur so frequently, for the military is the best example of a socialist institution in any society. Since economic calculation is difficult if not impossible for military hardware, there is no way to reasonably determine how to design hardware, what materials to use, and how many units to produce. The Air Force's F-22 debacle is distressingly reminiscent of Russia's military decline toward the end of the Soviet era. Despite pumping a huge proportion of its GDP into military hardware, the ravages of socialism meant that over-designed Russian military hardware could not be maintained. Tanks could not operate--most were not operational due to cannibalization of parts to keep a few going for appearance sake--and ships were abandoned in port, leaking radioactive waste into the water. Now the American Air Force has its limited F-22 fleet grounded and the highly trained pilots losing their edge daily.
The only "economic calculation" government understands is bigger budgets. More money is supposed to equal more of whatever is desired--national security, education, research discoveries, etc. But the opposite happens, due to the inherent socialist nature of government programs. The military does not generate revenue to offset its costs--as did the Revolutionary War era privateers!--so there really is no way to determine what to build, how to build it, and in what quantities...in other words, there is no room for economic calculation. Even though the U.S. spends half of the entire world's military budget--in other words, we spend as much on the military as all the other nations of the world combined!--we are less secure. The Air Force's inventory has never been older. Why it stopped production of the F-22 remains a mystery, but I suspect that Lockheed needed a big project in order to survive. So, it lobbied for a new fighter to replace the F-22, which was built by Boeing, and got it in the form of the F-35, recently dubbed the world's first "trillion dollar airplane". As consumers, the military always wants more and newer hardware, of course.
The F-35: Headed for Failure
The F-35 is supposed to perform many diverse missions--air superiority and ground attack for the Air Force and Navy, and close air support for the Marine Corps. Plus we expect to sell lots of units to our allies. But the Air Force does not expect to deploy the aircraft in numbers suitable for operational responsibilities until 2017 at the earliest, meaning that the British may complete construction on two new aircraft carriers designed specifically for the "jump jet" version of the F-35 before America can provide the aircraft. As an old F-111 crewmember, I am experiencing déjà vu. The F-111 was dubbed "McNamara's Folly", because it too was supposed to fill many diverse roles. But it proved to be too heavy to land on a Navy carrier and was not nimble enough as an air superiority fighter for the Air Force. The Air Force stopped using it as a dive bomber--the preferred method to deliver close air support to ground troops--after the wings fell off testing this maneuver. It finally found a niche in medium range interdiction missions. Likewise I predict that the F-35 will not be found suitable for all the roles promised by Lockheed. The main problem is the VTOL capability. VTOL is an acronym for "vertical take-off and landing". But VTOL capability subtracts from a fighter's range, maneuverability, and armament. The British Harrier is the only Western fighter ever built with VTOL capability. It was a favorite at air shows but could not stay in the sky with front line fighters of its day. There is no military justification for VTOL. No modern fighter will be based in primitive locations, due to the need for vast support infrastructure. The Navy's catapult system on its carriers is powerful enough to throw a jumbo jet into the air. VTOL is being driven by other considerations.
This fighter debacle illustrates several points about the difference between socialism and capitalism. Although the military may claim to be consumers, it is not purchasing its hardware with exchange generated by its own, previous production. It is in the same position as any welfare recipient. So the military and its suppliers lobby for more money with no real feedback other than success or failure in war. The United States has not won a war since World War Two. Korea was a stalemate; we lost Vietnam; we are still fighting in Afghanistan; Iraq is not pacified; and Libya is a mess.
So just as more welfare money has not reduced poverty, more money for the military has not made us more secure. Yet the poor and the military both demand and get more. This welfare/warfare socialism will bankrupt us just as Soviet communism bankrupted Russia. We are seeing the first signs of this decline in the grounding of our pathetically few and enormously expensive F-22's and the delays in production of the over-engineered F-35. Oh!...and detergent that doesn't clean!