Has the Market Economy Still a Chance? On the Lack of a Disciplining Challenge

Abstract

The question raised in the title may sound peculiar, the more so, if we remember how the two antagonistic social and economic systems have been developing. It seems that one of those systems finally turned out to be what competent analysts, like Ludwig von Mises and Friedrich August von Hayek expected on the basis of arguments which were neglected or played down for a long time, namely a blind alley in societal evolution. Within a dramatically short period of time practically all socialist systems have crumbled. The heritage they left was poverty, decay and potential conflicts, so that even the most hard-headed socialists in capitalist countries were at least temporarily dumbfounded. However, for systems based on a democratic political constitution and a market oriented economic constitution, the loss of the socialist challenge may aggravate immanent dangers. Von Hayek warned us about these dangers almost five decades ago in his political book “The Road to Serfdom”. And it was not a matter derision when he dedicated the book “to the socialists of all parties”. For him socialism as a model of society enjoying much sympathy in the West had already discredited itself a hundred years ago after the appearance of the Communist Manifesto.

My answer is based on a number of earlier studies, the list of which is given at the end. Further references can be found in the studies listed.