Robert Wenzel: 'Murray Rothbard On Socialism's Incentive Problem'

Source:Robert Wenzel- Economist Murray Rothbard. 

“Murray Rothbard on Socialism’s Incentive Problem” 

From Robert Wenzel

The main problem with state-ownership, or Marxism (named after Karl Marx) is the lack of incentives that comes from competition and individual choice. People making decisions and then seeing for themselves how they worked and didn’t work.

When you have a central authority in charge of an economy, with the central government responsible for the management of the national business’s, those companies don’t have to succeed and produce in order to stay in business for those employees to keep their jobs. The state up to a certain point anyway, can simply just bailout the failing business’s and borrow the money up to a point to do that. When you don’t have competition, you don’t have to produce a good product to stay in business, because your customers have no other choices.

So to sort of pick up on what Murray Rothbard was saying about socialism: if everyone is equal and entitled to same benefits in life, you’ve eliminated the incentive to individuals to be individuals and for them to produce, contribute, to self-improve, to be creative, to learn, because you are telling them that everyone is equal regardless of what they bring to society and therefor entitled to the same benefits in life, that of course will come from government. 

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