Book Report

Last thing I remember I was running for the door
I had to find the passage back to the place I was before
'Relax,' said the nightman, 'We are programmed to receive.
 'You can check out any time you like, but you can never leave.'
--Eagles

In addition to professional endeavors, a personal goal during my sabbatical was to read up on the capitalism (a.k.a. market economy) socialism (a.k.a. planned economy) dyad. I was particularly interested in what smart folks had to say about the middle ground between the two poles. This middle ground, often referred to as managed capitalism, mixed economy, or interventionism, is where every modern economy is positioned to some degree.

"How stable is this middle ground?" was my primary research question. "Is a mixed economy a 'steady state' sort of design, or is it prone to migration toward one of the poles?"

I plowed thru some seminal books plus an article or two--some by economists, others by social commentators. Bibliography below. While certainly not an exhaustive reading list, there were some noteworthy findings nonetheless:

• It was nearly unanimous that the middle ground is not a steady state position. The exception was Reinhart and Rogoff (2009) who seemed to believe that managed capitalism is the endgame. Hirshleifer (2008) offered an interesting counter argument against such regulatory regimes.
• Most felt that the gravitational pull was away from capitalism and toward socialism. 
• Some felt that a socialist endgame was inevitable (e.g., Marx & Engels, 1848; Marx, 1862; Schumpeter, 1942). Even Garrett (1953) seemed pretty fatalistic. 
• Others felt that, while the pull favored socialism, intervention by liberty minded people could reverse the trajectory toward capitalism (e.g., Chodorov, 1959; Hayek, 1944). 
• Rothbard's (1979) work was the only one suggesting a primary pull toward free markets--using US colonial context for his analysis. 
• Mises (1951, 1998) concluded that the economics of socialism were inferior to capitalism. 

My key lessons learned? Many great thinkers think that mixed economies migrate toward socialism. This is, after all, what you get when governments get into the wealth redistribution business--currently a worldwide bureaucratic practice. However, the more an economic system moves in the socialistic direction, the weaker it becomes (think debt and lower standard of living as capital is misallocated and innovation extinguished). Before it ever reaches the pole, a socialistic system is likely to sink like a stone.

The old Soviet Union, the current EU situation offer real life examples in this regard.

While the Road To Serfdom points toward socialism, the journey appears difficult to complete.

References

Chodorov, F. 1959. The rise and fall of society. New York: The Devin-Adair Company. (see also here and here)

Garrett, G. 1932. The bubble that broke the world. Boston: Little, Brown, & Company.

Garrett, G. 1953. The people's pottage. Caldwell, ID: The Caxton Printers, Ltd.

Hayek, F. 1944. The road to serfdom. Chicago: The University of Chicago. (see also here)

Hirshleifer, D. 2008. Psychological bias as a driver of financial regulation. European Financial Management, 14: 856-874.

Lane, R.W. 1954. Give me liberty. Caldwell, ID: The Caxton Printers, Ltd.

Marx, K. 1867. Das kapital, Vol. 1. Hamburg: O. Meissner. (see also here)

Marx, K.H. & Engels, F. 1848. Manifest of the Communisty Party. London: Burghard.

Mises, L. 1951. Socialism: An economic and sociological analysis. New Haven: Yale University Press. (see also here)

Mises, L. 1998. Interventionism: An economic analysis. Irving-on-the-Hudson, NY: The Foundation for Economic Education, Inc. (see also here)

Reinhart, C.M. & Rogoff, K.S. 2009. This time is different: Eight centuries of financial folly. Princeton, NJ: Princeton University Press.

Rothbard, M.N. 1979. Conceived in liberty, Vol. 4. New York: Arlington House, Publishers.

Rothbard, M.N. 1996. Origins of the welfare state in America. Journal of Libertarian Studies, 12(2): 193-232.

Schumpeter, J.A. 1942. Capitalism, socialism, and democracy. New York: Harper & Brothers.