by Benjamin Marks, Economics.org.au editor-in-chief
We at Economics.org.au disagree with your “buy Australian” advocacy (protectionism), your championing of government interference in population control (partial communism) and your urging for increased charity (capital minimisation). We have clearly explained our reasoning on our www.DickSmith.info page. But we are big fans of Dick Smith Electronics, which does preserve and accumulate capital to reinvest back into the business, does make life more affordable for those who want more business, and does sell products that are foreign owned, designed and manufactured. These practices go a long way towards preventing poverty by making electronics more affordable.
I am writing to you because I have a solution that will bridge the gap between your politics and your business. Before I share it with you, a quick economics lesson on the importance of economic calculation unsabotaged by government intervention for balancing supply and demand, as provided by Ludwig von Mises (please skip to last sentence of the quote for the executive summary):
Are we really dealing with the necessary consequences of common ownership of the means of production? Is there no way in which some kind of economic calculation might be tied up with a socialist system?
In every great enterprise, each particular business or branch of business is to some extent independent in its accounting. It reckons the labor and material against each other, and it is always possible for each individual group to strike a particular balance and to approach the economic results of its activities from an accounting point of view. We can thus ascertain with what success each particular section has labored, and accordingly draw conclusions about the reorganization, curtailment, abandonment, or expansion of existing groups and about the institution of new ones. Admittedly, some mistakes are inevitable in such a calculation. They arise partly from the difficulties consequent upon an allocation of general expenses. Yet other mistakes arise from the necessity of calculating with what are not from many points of view rigorously ascertainable data, e.g. when in the ascertainment of the profitability of a certain method of procedure we compute the amortization of the machines used on the assumption of a given duration for their usefulness. Still, all such mistakes can be confined within certain narrow limits, so that they do not disturb the net result of the calculation. What remains of uncertainty comes into the calculation of the uncertainty of future conditions, which is an inevitable concomitant of the dynamic nature of economic life.
It seems tempting to try to construct by analogy a separate estimation of the particular production groups in the socialist state also. But it is quite impossible. For each separate calculation of the particular branches of one and the same enterprise depends exclusively on the fact that is precisely in market dealings that market prices to be taken as the bases of calculation are formed for all kinds of goods and labor employed. Where there is no free market, there is no pricing mechanism; without a pricing mechanism, there is no economic calculation.
Now, despite the eloquent and simple (but not simplistic) reasoning of this passage, it may be difficult for some people to comprehend it, even if they reread it repeatedly, which I suggest they do. This is where Dick Smith Electronics comes in. They could help explain the difference between capitalism, interventionism and socialism by producing a calculator with three settings:
- The first setting is labelled “Capitalism”, which refers to a free-market without any government intervention whatsoever. This setting turns the calculator on, and makes it work like a standard calculator.
- The second setting is labelled “Interventionism”, which refers to government interference with the price signals of the market. This setting turns the calculator on, makes a random number appear whenever the equals button is pressed, and randomly registers the numbers typed in (6, 7, 8, etc.) as either the number that was typed in or a different number (maybe half the time the right number appears and half the time the wrong number appears).
- The third setting is labelled “Socialism”. This setting turns the calculator off.
If Dick Smith Electronics, with its brilliant network of electronics manufacturers, designers and distributors, got this unique calculator made, it would result in more support for free trade and less support for government. It would also earn lots of money for those with the financial and business capital to invest in producing the product, as it is functional, entertaining, affordable, educational and unique. It will be used for mathematics calculations, economics lessons, pranks and gifts.
So, Dick Smith, please act on this and make a lot of money from it. More than five years ago, a group of us discussed the idea on the Mises Institute blog, but no one has acted on it as yet. Maybe someone knows how to make a smartphone app that will do it, but I think Dick Smith Electronics could attract more attention from creating a traditional calculator-only styled device. This will be a huge service to the enlightenment of the population and the preservation and expansion of civilisation. Everyone who cares about sustainability, the poor and the Australian economy will help to advertise it. I cannot think of anything else that will be anywhere near as effective in communicating economics. In the short term, its implementation is up to Dick Smith. I know he might no longer be involved with Dick Smith Electronics, but maybe he could still exert some influence.
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