Socialism’s Missing Economics and Its Political Comeback
Ludwig von Mises judged socialism as a political theory without a cogent economic theory and saw that it lacked a workable method for economic calculation. He knew of Technocracy but did not treat it as an economic system divorced from a political framework. Marxists of his day called Technocracy a whack-a-doodle economic system that wanted “nothing less than the abolition of human labor,” which had “become non-essential to society.”
I studied von Mises extensively in the 1970s but had no grasp then of historic Technocracy. It’s notable now because ideas dismissed as fringe decades ago are resurfacing in new forms. That blind spot matters because policy today borrows old utopian language while ignoring practical economics.
The socialist project has been around for more than 150 years, and the Soviet Union offered a full-scale test from the 1920s to the early 1990s. Revolutions in Asia, Cuba, and Africa provided repeated experiments in centralized planning. Those experiments largely confirmed von Mises’s insistence that socialism lacked a functioning economic calculus.
Von Mises warned early on that without market prices and profit-and-loss signals, planners cannot allocate resources rationally. His books from 1920 and 1923 laid out that fatal flaw. The historical record shows widespread shortages, inefficiencies, and eventual collapse in systems that tried to run the economy top-down.
By 1989 even sympathetic observers admitted failure, and Robert Heilbroner captured that shift of opinion when he wrote in The New Yorker:
The Soviet Union, China & Eastern Europe have given us the clearest possible proof that capitalism organizes the material affairs of humankind more satisfactorily than socialism: that however inequitably or irresponsibly the marketplace may distribute goods, it does so better than the queues of a planned economy…. the great question now seems how rapid will be the transformation of socialism into capitalism, & not the other way around, as things looked only half a century ago.
Heilbroner still worried that capitalism might crumble under cultural and political pressure, echoing Joseph Schumpeter’s anxieties about modernity. He conceded Mises’s economic point yet stopped short of a robust defense of markets. That ambivalence left room for new appeals to moral outrage against capitalism rather than sober economics.
Critics today blame capitalism for poverty, high prices, and housing shortfalls, and they often point fingers at billionaires as the symbol of systemic failure. They ignore how rent control and other regulations tighten supply, or how monetary policy stokes inflation and asset bubbles. Political rhetoric wins hearts even when the causal story does not add up.
Even with socialism’s practical failures, its political pitch focuses on plausibility and moral framing. Declares the socialist publication Jacobin:
For socialists, establishing popular confidence in the feasibility of a socialist society is now an existential challenge. Without a renewed and grounded belief in the possibility of the goal, it’s near impossible to imagine reviving and sustaining the project. This, it needs emphasis, isn’t a matter of proving that socialism is possible (the future can’t be verified) nor of laying out a thorough blueprint (as with projecting capitalism before its arrival, such details can’t be known), but of presenting a framework that contributes to making the case for socialism’s plausibility. (emphasis theirs)
That is a tactical truth: promise plausibility, win elections, and defer hard economic management. The Nation made the strategy explicit in advice about electoral gains:
Most importantly for DSA (Democratic Socialists of America), Democrats cannot control their ballot lines like they once did. There are no mechanisms for dissuading DSA challengers from running; blocking a candidate from the ballot is far more difficult than it used to be. Today’s Democratic Party is a shell waiting to be inhabited by whoever claims the prizes of elected office.
If Bernie Sanders, a democratic socialist, is elected president of the United States, the Democratic Party will slowly become his party. And if he loses, inspiring still more DSA recruits and fueling down-ballot victories, socialists can continue to win council, legislative, and even congressional seats on Democratic lines, wielding tangible clout.
In New York, there is one socialist in the state legislature: DSA member Julia Salazar. She has helped lead campaigns for public control of power companies and a universal right to housing. Five DSA-backed candidates are seeking legislative seats this June, challenging establishment-backed Democrats.
If they all win, they will start to gain back the momentum of the 1920s. This time, there will be no reactionary legislative leaders to unseat the new socialists, no Red Scare to feed a public frenzy against their anti-capitalist views. Salazar is a member of the Democratic majority, an ally of the progressive block, unlikely to lose an election anytime soon.
Electoral success in big cities proves the tactic: candidates mimic populist affordability pitches, win, and then confront the arithmetic of governance. Promises collide with budgets and incentives, and the political class stretches explanations to avoid blame. Yet voters are often left holding the bill.
The intellectual case for socialism still leans on rhetoric and redefinition rather than operational economics. Critics point out that much of modern leftist thought elevates moral intent over market signals. When real choices and trade-offs appear, the old calculation problem reasserts itself.
It is usually futile to try to talk facts and analysis to people who are enjoying a sense of moral superiority in their ignorance.
Socialists talk strategy and turnout far more confidently than production and allocation. When elected, they will face the same economic constraints every planner does, and political virtue will not balance budgets or create goods. The historical lessons remain clear: grand moral claims cannot substitute for functioning economic mechanisms.