If Only One Owner Establishes Prices, Then They Lose Their Basic Feature as a Denominator for the Competition Process

Socialism is a system organized by one owner, where there are no entrepreneurs competing for the most valuable use of resources. Even if one owner establishes some numerical system, this in no way differs from a straight ranking of all the possible ways of producing things. These centrally administered “prices” do not change anything since one owner establishes them, one owner acts upon them, and one owner changes them ex post. From the very beginning he employs the managers (there is no market for corporate control) and decides what in the accounting books is registered as profits and losses. In contrast, market economy prices are the result of different actions of competing owners and this is their nature: as a common denominator for different property assessments. If only one owner establishes prices, then they lose their basic feature as a denominator for the competition process and become only the expression of one owner’s preferences (hence they cannot be used as an independent economic indicator). Using prices in a socialist system is equivalent to a straight ordinal ranking of the processes by a central planner.

—Mateusz Machaj, “The Nature of Socialism,” in Property, Freedom, and Society: Essays in Honor of Hans-Herman Hoppe, ed. Jörg Guido Hülsmann and Stephan Kinsella (Auburn, AL: Ludwig von Mises Institute, 2009), 344-345.