“What’s wrong with communism?” It’s a question I heard recently, and while “pretty much everything” is accurate, it deserves a bit of additional elaboration. Here are a few thoughts on what’s wrong with communism.
As Bryan Caplan points out in his article on communism for the Concise Encyclopedia of Economics, “Communism” and “socialism” were basically synonyms until the Bolshevik Revolution. After that, “communism” came to be more closely associated with the revolutionary philosophy of Vladimir Lenin. The two terms can be used interchangeably, and they basically mean “a centrally planned economy in which the government controls the means of production.” In the Communist Manifesto, Karl Marx and Friedrich Engels write “the theory of the Communists may be summed up in the single sentence: Abolition of private property.”
Later, Ludwig von Mises would write that “socialism is the abolition of rational economy.” Means of production that are not privately owned cannot be exchanged. Therefore, no market prices can emerge. Without market prices, we don’t get profits and losses. Without profits and losses, we don’t learn whether or not we are using resources wisely (producing things consumers want more urgently and thereby earning profits) or wastefully (producing things consumers want less urgently and thereby earning losses).
