Opponents of the Market Economy Have Shifted Their Ground; They Now Oppose It on "Social" rather than Economic Grounds; They Accuse It of Being Unjust rather than Inefficient

Everywhere today in the free world we find the opponents of the market economy at a loss for plausible arguments. Of late the "case for central planning" has shed much of its erstwhile luster. We have had too much experience of it. The facts of the last forty years are too eloquent.

Who can now doubt that, as Professor Mises pointed out thirty years ago, every intervention by a political authority entails a further intervention to prevent the inevitable economic repercussions of the first step from taking place? Who will deny that a command economy requires an atmosphere of inflation to operate at all, and who today does not know the baneful effects of "controlled inflation?" Even though some economists have now invented the eulogistic term "secular inflation" in order to describe the permanent inflation we all know so well, it is unlikely that anyone is deceived. It did not really require the recent German example to demonstrate to us that a market economy will create order out of "administratively controlled" chaos even in the most unfavorable circumstances. A form of economic organization based on voluntary cooperation and the universal exchange of knowledge is necessarily superior to any hierarchical structure, even if in the latter a rational test for the qualifications of those who give the word of command could exist. Those who are able to learn from reason and experience knew it before, and those who are not are unlikely to learn it even now.

Confronted with this situation the opponents of the market economy have shifted their ground; they now oppose it on "social" rather than economic grounds. They accuse it of being unjust rather than inefficient. They now dwell on the "distorting effects" of the ownership of wealth and contend that "the plebiscite of the market is swayed by plural voting." They show that the distribution of wealth affects production and income distribution since the owners of wealth not merely receive an "unfair share" of the social income, but will also influence the composition of the social product: Luxuries are too many and necessities too few. Moreover, since these owners do most of the saving they also determine the rate of capital accumulation and thus of economic progress.

--L. M. Lachmann, "The Market Economy and the Distribution of Wealth," in On Freedom and Free Enterprise: Essays in Honor of Ludwig von Mises, ed. Mary Sennholz (1956; repr., Auburn, AL: Ludwig von Mises Institute, 2008), 175-176.