One Must Be Free to Sell Property If the Information Necessary for the Market to Operate Is to be Created

We cannot overlook the fact that when Lionel Robbins was writing his 1934 book, The Great Depression, he took the opportunity, a year before Hayek wrote on the subject, to make some brief critical comments on the proposals for competitive socialism. According to Robbins, it is not enough for managers in the socialist system to try to “play” at competition and “compete” with each other when buying and selling their products, as if they were acting in a capitalist system. He feels that such proposals involve a simplistic conception of the economic system, as if it were a static system in which prices and all other information were generated ipso facto, in an objective manner, by the force of consumer demand.

In contrast, Robbins stresses that in the real world, tastes, technology, resources, and in general, all knowledge is in a process of continual change, and therefore, “the entrepreneur must be at liberty to withdraw his capital altogether from one line of production, sell his plant and his stocks and go into other lines. He must be at liberty to break up the administrative unit”. In short, one must be free to sell property if the information necessary for the market to operate is to be created, and this is clearly incompatible with public ownership of the means of production and the centralized control of the economic system which it ultimately entails. Hence, we see that along with the arguments against the computational, or purely algebraic, solution discussed earlier, Robbins offers a series of comments on “artificial competition”, and though they are brief, they are not altogether off-base.

—Jesús Huerta de Soto, Socialism, Economic Calculation and Entrepreneurship, trans. Melinda Stroup, New Thinking in Political Economy (Cheltenham, UK: Edward Elgar Publishing, 2010), 183-184.