The recent ignorant ranting of politicians—the complete misrepresentation of the healthcare proposal as socialized medicine rather than statism or more accurately fascism or nationalized healthcare discredits the arguments of the supposed conservatives—and pundits about the methodical and systematic march towards socialism indicates that the arguments made by Marx and other socialists are still relevant and that an understanding of Ludwig von Mises’ argument of the impossibility of socialism as a viable form of social cooperation is of great consequence. Socialism is characterized by a particular set of means or intermediate end, the state ownership of the means of production, and an ultimate end, the end of history in which perfect social harmony will be permanently established. Social harmony is achieved by the abolition of the exploitation of the proletariat, the transcendence of the alienation of the proletariat, and, most importantly, the transformation of society from the “kingdom of necessity” to the “kingdom of freedom.” The socialists argue that, by “rationalizing” the means of production through state ownership of the various factors of production or scarce resources, material production will be advanced beyond the limited output of capitalism and, thus, humanity will be ushered into a post-scarcity utopian society; a world in which material wealth is abundant. Thus socialism, in addition to prescribing a particular set of means that require bureaucrats or central planners to control the means of production, also involves a specific set of ends, which includes the ultimate goal of social harmony or the elimination of the class structure which is achieved through the intermediate end of advancing material production to previously unimaginable levels.

Marx and other socialists attempt to demonstrate the productive inferiority of capitalism and its supposedly chaotic allocation of scarce resources. Their arguments include strong critiques of capitalism on the grounds that its method of production is “irrational,” that capitalism tends towards monopolization that produces the disenfranchisement of a growing proportion of the population, and that the disenfranchisement of a growing proportion of the population inevitably leads to the booms and busts of the business cycle which makes capitalism inherently unstable; Keynes’ psychological argument that animal spirits are the source of the booms and busts of the business cycle is not far removed from Marx’s attempt to account for the business cycle with the psychological argument of the disenfranchisement of the proletariat. Thus, the social organization of production under capitalism reflects the “kingdom of necessity,” but the social organization of production under socialism will deliver humanity into the “kingdom of freedom” where, through the rationalization of production, scarcity is overcome and material wealth is abundant. Since the utopian ideal of a “kingdom of freedom” produces an abundance of material wealth, it eliminates the need for the state to redistribute wealth; all class struggles are eliminated as society reaps the benefits of an unimagined profusion of material wealth.

Therefore, the success of the socialist project rests on the intermediate end of rationalizing production: by rationalizing production, socialism will avert the waste inherent in capitalism’s “anarchy of production,” purge society of capitalism’s tendency towards greater monopolization, eliminate capitalism’s inevitable crises, and, as such, produce an unprecedented and heretofore unimaginable increase in material wealth. The productivity gains of the intermediate end will usher in a post-scarcity era, which will provide the material preconditions for creating lasting social harmony; it will permanently establish the “kingdom of freedom.” The argument made eloquently by Ludwig von Mises against socialism refutes the premise that the rationalization of production through state ownership of the means of production will achieve the promised productivity gains; i.e., that the intermediate end of socialism is unattainable. If socialism cannot accomplish the intermediate end of advanced material production, then it cannot achieve its ultimate end: social harmony. The impossibility of the intermediate end of an unimagined abundance of material wealth precludes the possibility of a utopian post scarcity world that eradicates the historical class struggle; i.e., the apparent historical inevitability of socialism is questionable.

Mises proves that it is impossible for the socialist means to achieve socialism’s intermediate end of advanced material production because of the inability of bureaucrats or central planners to engage in rational economic calculation. Mises’ argument starts with the fact that the socialist means entail the complete abolition of the private ownership of the means of production. The absence of the private ownership of the means of production prohibits the voluntary exchange of these means of production. The lack of voluntary exchange of the means of production leads to the abolition of market prices for the means of production and, without market prices for these means of production, socialism cannot rationally allocate these means of production. Rational allocation requires that scarce resources be allocated in such a way that urgent market participant’s demands do not go unsatisfied because scarce resources have been allocated to some less urgent market participant’s demands. Under capitalism, market prices, which are demonstrated subjective preferences, enable economic calculation; i.e., market prices provide the subjective information that entrepreneurs need to allocate scarce resources towards productive activity that satisfies the needs of the most urgent demands of market participants. However, without these market prices, allocation of scarce resources towards the most urgent demands is impossible. The abolition of market prices for the means of production by socialism eliminates the very mechanism that enables market participants to rationally economize their actions. The very possibility of the rationalization of production demands knowledge of the various subjective preferences of market participants. How are bureaucrats or central planners going to allocate scarce resources? What information or knowledge of the subjective preferences or demands of market participants do they possess? Thus, a socialist economy based on the intermediate end of the supposed rationalization of the production process is impossible; i.e., socialism’s inability to rationally allocate resources and achieve the intermediate end of an unimagined abundance of material wealth precludes the possibility of realizing socialism’s post scarcity utopian world.