Socialism, Economic Calculation and Entrepreneurship
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Socialism, Economic Calculation and Entrepreneurship

Jesús Huerta de Soto

This highly topical book presents a new theory on the characteristics of entrepreneurial knowledge. It explores the recent shift among professional economists and scholars in their evaluation of the debate of socialism. Socialism, Economic Calculation and Entrepreneurship presents an application of Israel M. Kirzner’s theory of entrepreneurship to the theory of the impossibility of socialism. It discusses the influence of the fall of socialism, with particular reference to the evolution of economic thought.
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Chapter 3: Socialism

Jesús Huerta de Soto


The last chapter analyzed the concept of entrepreneurship, and this one begins with a detailed explanation of the nature of socialism and how it precludes the emergence of the coordinating tendencies necessary to life in society. Specifically, we shall study the effects socialism exerts on incentives and on the generation of information, as well as the perverse deviation it provokes in the exercise of entrepreneurship. In addition, we shall explain the sense in which socialism constitutes an intellectual error and always has the same essential nature, despite the fact that historically it has emerged in different types or forms, the main characteristics of which we shall attempt to isolate. The chapter will conclude with a critical analysis of the traditional alternative concepts of socialism. 1 THE DEFINITION OF SOCIALISM We shall define “socialism” as any system of institutional aggression on the free exercise of entrepreneurship. By “aggression” or “coercion” we mean all physical violence or threats of physical violence which another person or group of people initiates and employs against the actor. As a result of this coercion, the actor, who otherwise would have freely exercised his entrepreneurship, is forced, in order to avoid greater evils, to act differently than he would have acted in other circumstances, and thus to modify his behavior and adapt it to the ends of the person or persons who are coercing him.1 We could consider aggression, when defined in this way, to be the quintessential antihuman action. This is so because coercion keeps a...

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