The End of Socialism

The End of Socialism (2014) by James Otteson is a book that makes the practical and moral case that Socialism is a bad idea. Otteson was interviewed on Econtalk and presents a summary of his ideas there. Otteson is a professor of economics.

Otteson first goes into the practical details of Socialism where he points out that the Knowledge problem, or Socialist calculation problem provides an incredibly difficult, probably impossible challenge to the construction of a successful Socialist society. He also points out the enormous motivational problems that a Socialist economy has. He also makes the interesting point that people who espouse Socialism rarely think about, yet alone examine, exactly how wealth would be produced under complete Socialism let alone increased.

This section on the practical details of Socialism is bolstered by all available evidence and the fact that there has never really been a wealthy socialist society.

In the second section Otteson goes into how he believes that capitalism is also a more moral system than socialism. Otteseon points out that Socialism necessarily fails to recognise and respect the moral choices made by individuals. He also applies Coatesian externality theory to point out that if luck leads to differing outcomes that it is just as unfair to take something away from one person as it is to give to another.

The book makes the practical case very strongly and easily but the moral case is one that is less often made. While Otteson is arguing against a system that, generally speaking, has failed in the real world it’s still an argument worth making. Toward the end of the book he starts to criticize the welfare state somewhat. But these ideas are Otteson’s ideal level of welfare are not discussed in detail.

The book is definitely worth reading and thinking through. For anyone unfamiliar with the Socialist calculation problem it’s an excellent introduction to the problems involved.


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