Dancing on the Grave of the Keynesian System

by Gary North, Tea Party Economist
LewRockwell.com

The collapse of the Soviet Union in December of 1991 was the best news of my lifetime. The monster died. It was not just that the USSR went down. The entire mythology of revolutionary violence as the method of social regeneration, promoted since the French Revolution, went down with it. As I wrote in my 1968 book, Marxism was a religion of revolution, and Marxism died institutionally in the last month of 1991.

Yet we cannot show conclusively that “the West” defeated the Soviet Union. What defeated the Soviet Union was socialist economic planning. The Soviet Union was based on socialism, and socialist economic calculation is irrational. Ludwig von Mises in 1920 described why in his article, “Economic Calculation in the Socialist Commonwealth.” He showed in theory exactly what is wrong with all socialist planning. He made it clear why socialism could never compete with the free market. It has no capital goods markets, and therefore economic planners cannot allocate capital according to capital’s most important and most desired needs among by the public.

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