how do you know what to produce? Without private property, how do you get these products? Without products, how can there be markets? Without markets, how can prices be set? Between 1918 and 1921, the Lenin government actually attempted to develop a system of nonmonetary accounting. Try this in your bankbook. “Let’s see, I withdrew the clean dishes from the dishwasher, and I deposited my kids at day care . . .” Absent the automatic commonsense mechanisms of supply and demand, what really happens is that all production and consumption decisions are made by . . . Joseph Stalin. Stalin went so far as to claim that economic policy was a Kremlin matter and economists should stay out of it. The absurdity of socialism made a dog’s breakfast out of the Soviet economy, just as it continues to ruin Cuba’s. But a visit to Russia is more interesting to an amateur economist than a visit to Cuba, because the truth about how socialist thinking beggared the USSR is now being told. Even some socialist thinkers are willing to tell it. Mikhail Gorbachev, in his Memoirs, says, “The costs of labor, fuel, and raw material per unit of production were two- to two-and-a-half times higher than in the developed countries, while in agriculture they were ten times higher. We produced more coal, oil, metals, cement, and other materials (except for synthetics) than the United States, but our end-product was less than half that of the U.S.A.” This end product was not, of course, insignificant. The Soviet Union was able to manufacture moon rockets and atomic bombs and enough AK-47s to make every shoeless jackanapes in the Third World into an NRA life member. But Soviet industrial might mostly ended up doing doughnuts on the lawn. The Russians used to say, “We build huge machines that dig coal and ore out of the ground. We burn the coal to smelt the ore to build huge machines that dig coal and ore out of the ground.” Even when Soviet factories produced something useful or necessary, central planning bunged it up. The government in Moscow would send commands called gross-output targets to all manufacturing facilities. The gross-output target told the factory manager what to make and how much of it. Anyone who has dealt with bureaucrats who are accountable only to other bureaucrats knows what happened next.
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