[ExI] Healthcare and governments thinking long range

[Stathis Papaioannou]

2009/6/21 Dan <dan_ust at yahoo.com>

> > Empirical fact trumps economic theory. Forgetting this led
> > to the
> > downfall of the Soviet Union.
>
> The downfall of the Soviet system was predicted by economic theory, specifically Mises's classic work _Socialism_ and his earlier essay on the impossibility of socialist economic calculation.  In fact, he and other Austrians took Lenin's adoption of the NEP as an implicit admission that Mises was right.  My point, however, is not that empirical reality and economic theory are in conflict, but, rather, correct theory must be used to interpret the empirical data.  Without such a theory, how would you know _why_ the Soviet Union failed?  After all, right up until its failure, mainstream economists, the US CIA, etc. all thought it was doing just fine.  Only certain Austrians and people like Rand were stating what we now know to be obvious: the Soviet system never really worked.

Marx's economic theory suggested that the Soviet Union would prevail.
After its downfall, some Marxists continued to hold that the theory
*had* to be right, and looked for alternative explanations; eg., that
the Soviet Union was not implementing the theory correctly, or that
communism would still triumph over capitalism eventually, as the
dialectic demands.

Faced with evidence that governments do some things, such as health
and science, better than private enterprise, your reaction is the same
as that of the recalcitrant Marxists: the theory suggests that this is
impossible, therefore there must be something wrong with the empirical
evidence or its interpretation, since there can't possibly be anything
wrong with the theory.


--
Stathis Papaioannou