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Economics/Capitalism vs. Socialism

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QUESTION: Hello,
I would like for you to recommend a book and, preferably, a free online article that is at an introductory level of capitalism; also, one that refutes socialist arguments against capitalism.

My background:
It seems that in South America (where I live), the majority of professors from middle to high school and also college are against capitalism and the USA.

Thank you!

P.S. In case I have posted in the wrong section, please direct me to the correct one.

ANSWER: You have come to the right place, Henrique! Thank you for your request.

The best writing on the subject of capitalism vs. socialism came from Ludwig von Mises 90+ years ago. It is called Economic Calculation in the Socialism Commonwealth ; you can click here to download it. The writing is excellent and highly readable. When it came out in 1920, this book converted an entire generation of young economists in Vienna. At the time--in the wake of the Bolshevik Revolution in Russia--economists, the media, and the intellectual class were all enchanted by the (unattainable) promises of socialism and the "equality" at its heart. Like you, they were collectivists who offered no alternatives for students to ponder. Later, Churchill said it best: "The inherent vice of capitalism is the unequal sharing of blessings; the inherent virtue of socialism is the equal sharing of miseries."

A book-length manuscript by Mises is also available as a free PDF. It is called Socialism: An Economic and Sociological Analysis ; you can download it free here. This book came out in 1951, after Mises and his wife had fled the Nazi advance on Vienna and relocated to the United States where Mises taught at New York University. Like all of Mises's writing, this book makes for compelling reading.

As you can tell, I take a dim view of what you've heard from your professors. And, for what it's worth, in the U.S. we're seeing just how badly socialism works in the abominable roll-out of 'Obamacare'. What a fiasco.

Please let me know if these recommendations help you, Henrique. If they don't, I'll keep after it until we find something that works for you. Thank you so much for your inquiry. I'm delighted to refer to the writings of Mises. If you like what you see there, I encourage you to consider the work of Israel Kirzner, who studied under Mises at NYU. Like Mises, he is also a fine writer. Kirzner focuses on entrepreneurship, on the market as a 'process of discovery,' and on the silliness of neoclassical microeconomics. Please let me know if I can make some specific recommendations for you. Kirzner is terrific!

---------- FOLLOW-UP ----------

QUESTION: The Economic Calculation book is great. Small, but effective.

Could you send me some questions so I can think over them as I read and try to answer them? I guess reading and questions make a great combination that helps in the learning process.

Thanks

Answer
Thank you for your follow-up, Henrique. Glad to try to help.

Let me start by asking you to list the question(s) that gave rise to your first inquiry. What prompted you to ask me "to recommend a book and, preferably, a free online article" that would "refute socialist arguments against capitalism"? Did you hear a professor say something in particular that galvanized you to seek a different point of view? Once I know the context that prompted you to begin this journey, I should be able to provide some questions.

Not trying to be difficult here. If you'll bear with me, I think you'll see that we're on a good path.

Thanks again.

Warren

Economics

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Warren D. Miller, CFA, CPA, ASA

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My expertise in economics is limited to three sub-disciplines: Austrian economics, industrial organization, and evolutionary economics. Questions dealing with macroeconomics and other sub-disciplines of the subject should be submitted to those who have the appropriate expertise. N.B.: I DO NOT ANSWER QUESTIONS MARKED 'PRIVATE' because I believe that knowledge should not be hoarded. I also believe that such questions are likely to come those trying to cheat. Also, as one who was a full-time academic for half a decade, I can recognize test/homework questions several time zones away. Do not demean yourself by submitting such questions to me. Those who do so are cheating; I WILL call you out publicly. I have a zero-tolerance policy for cheating and dishonesty. In addition, please don't emulate the businessman who posted a request for help in August 2008. He expressly denied that he was seeking "investment advice" and said that his query was for, and I quote, "educational and informational purposes." Later, he allowed as how his questions related to the possible purchase of a $500K piece of equipment. I said I thought he had misrepresented himself. Bottom line: high-end business consulting is how I make my living. I am the sole support for my family. Please respect that fact and don't try to get for free what our clients pay for. If your company is big enough to have a sophisticated problem, it can afford to pay for the expert advice we and others provide. Beckmill Research, LLC, is a 95-octane firm. We're small, but we've been at this for nearly 20 years. We know what we're doing. Segue: Early on, some asked me for career advice; I gave it. I now get many such requests. The demand for a valuable good that is free is unlimited, so I now charge for that advice. Email me: cfa2005@gmail.com. Finally, PLEASE DO NOT ASK FOR INVESTMENT ADVICE. I am not licensed to provide such advice. If you want such counsel, talk to your financial planner or other financial adviser.

Experience

I work with Austrian economics (which differs in major respects from the traditional economics), industrial organization (which is about industry structure, conduct, and performance), and evolutionary economics (almost, but not quite, the economic analog of its biological counterpart) every day in my work. I appraise closely-held businesses, provide exit-planning services, and offer high-level strategic analysis, advice, and solutions to CEOs and owners of mid-sized businesses. Understanding, applying, and writing about these disciplines is an essential part of how I have made my living since 1993.

Organizations
CFA Institute, Strategic Management Society, American Society of Appraisers, Academy of Management, Culver Legion, National Association of Scholars.

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CFA Magazine, Strategic Finance, Valuation Strategies, Journal of Advanced Property Economics, Harvard Business Review, American Fly Fisher, CFA Digest, CPA Expert, Business Valuation Review, among others

Education/Credentials
Chartered Financial Analyst designation (2006); Accredited Senior Appraiser in Business Valuation (2006); Certified Public Accountant (1992); MBA - Oklahoma State University (1991); Completed all of my Ph.D. coursework in strategic management - Oklahoma State University (1983-87); BBA in finance and accounting - U. of Oklahoma (1975)

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Business Valuation Volunteer of the Year (2001) - American Institute of CPAs; Winner - Oklahoma Humorous-Speaking Contest - Toastmasters International (1971)

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Names are confidential. However, the "sweet spot" of our target market is companies that are too big to be small and too small to be big. Usually, those are companies with employees in the 15-to-100 range. At the low end of that range is where companies can first take advantage of the specialization of labor. However, having everyone do everything is a tough habit for many--most, I would argue--small enterprises. That is why they not only remain small, but also fail to survive beyond a second generation. Only 5% (one in twenty) companies make it to the third generation of ownership.

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