THE COLLAPSE OF SOCIALISM by Murray N. Rothbard
4 min readSep 15, 2019
The Collapse of Socialism
Murray N. Rothbard
W e are now living thorough the most significant and ex-
citing event of the 20th century: nothing less than the
collapse of socialism.
Before the rise of the new idea of socialism in the mid and
late 19th century, the great struggle of social and political phi-
losophy was crystal-clear. On one side was the exciting and
liberating idea of classical liberalism, emerging since the 17th
century: of free trade and free markets, individual liberty,
separation of Church and State, minimal government, and
international peace. This was the movement that ushered in
and championed the Industrial Revolution, which, for the
first time in human history, created an economy geared to the
desires of and abundance for the great mass of consumers.
On the other side were the forces of Tory statism, of the
Old Order of Throne and Altar, of feudalism, absolutism,
and mercantilism, of special privileges and cartels granted by
Big Government, of war, and impoverishment for the mass of
their subjects.
In the field of ideas, and in action and in institutions, the
classical liberals were rapidly on the way to winning this bat-
tle. The world had come to realize that freedom, and the
growth of industry and standards of living for all, must go
hand in hand.
Then, in the 19th century, the onward march of freedom
and classical liberalism was derailed by the growth of a new
idea: socialism. Rather than rejecting industrialism and the
welfare of the masses of people as the Tories had done, social-
ists professed that they could and would do far better by the
masses and bring about “genuine freedom” by creating a
state more coercive and totalitarian than the Tories had ever
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contemplated. Through “scientific” central planning, social-
ism could and would usher in a world of freedom and super-
abundance for all.
The 20th century put the triumphant idealism of the 19th
into practice, and so our century became the Age of Social-
ism. Half the world became fully and consistently socialist,
and the other half came fairly close to that ideal. And now,
after decades of calling themselves the wave of the future,
and deriding all their opponents as hopelessly “reactionary”
(i.e. not in tune with modern thinking), “paleolithic,” and
“Neanderthal,” socialism, throughout the world, has been
rapidly packing it in. For that is what glasnost and perestroika
amount to.
Ludwig von Mises, at the dawn of the Socialist Century,
warned, in a famous article, that socialism simply could not
work: that it could not run an industrial economy, and could
not even satisfy the goals of the central planners themselves,
much less of the mass of consumers in whose name they
speak. For decades Mises was derided, and discredited, and
various mathematical models were worked out in alleged
“refutation” of his lucid and elegant demonstration.
And now, in the leading socialist countries throughout
the world: in Soviet Russia, in Hungary, in China, in Yugo-
slavia, governments are rushing to abandon socialism.
Decentralization, markets, profit and loss tests, allowing in-
efficient firms to go bankrupt, all are being adopted. And
why are the socialist countries willing to go through this
enormous and truly revolutionary upheaval? Because they
are really saying that Mises was right, after all, that socialism
doesn’t work, and that only desocialized free markets can run
a modern economy.
Some are even willing to give up some political power,
allow greater criticism, secret ballots and elections, and even,
as in Soviet Estonia, to allow a one-and-one half party sys-
tem, because they are implicitly conceding that Mises was
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THE FREE MARKET READER
right: that you can’t have economic freedom and private
property without intellectual and political freedom, that you
can’t have perestroika without glasnost.
It is truly inspiring to see how freedom exerts its own
“domino effect.” Country after socialist country has been try-
ing to top each other to see how far and how fast each one
can go down the road of freedom and desocialization.
But much of this gripping drama has been concealed from
the American public because, for the last 40 years, our
opinion-molders have told us that the only enemy is Commu-
nism. Our leaders have shifted the focus away from socialism
itself to a variant that is different only because it is more mili-
tant and consistent.
This has enabled modern liberals, who share many of the
same statist ideas, to separate competing groups of socialists
from the horrors of socialism in action. Thus, Trotskyists,
Social Democrats, democratic socialists, or whatever, are able
to pass themselves off as anti-Communist good guys, while
the blame for the Gulag or Cambodian genocide is removed
from socialism itself.
Now it is clear that none of this will wash. The enemy of
freedom, of prosperity, of truly rational economics is social-
ism period, and not just one specific group of socialists.
As even the “socialist bloc” begins to throw in the towel,
there are virtually no Russians or Chinese or Hungarians or
Yugoslavs left who have any use for socialism. The only genu-
ine socialists these days are intellectuals in the West who are
enjoying a comfortable and even luxurious living within the
supposed bastions of capitalism.
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