I’ve previously argued that the term “socialist” should not be slavishly confined to its dictionary definition (common ownership of the means of production to achieve more equally distributed wealth).  Conservatives and classical liberals use it casually to describe redistributivist philosophies.  Today, I stumbled on a story about Ludwig von Mises that I think underlines my point.   From a Reason interview of Milton Friedman:

Reason: But you knew Mises personally. Did you see the intolerance that you find in his method also in his personal behavior?

Friedman: No question. The story I remember best happened at the initial Mont Pelerin meeting when he got up and said, “You’re all a bunch of socialists.” We were discussing the distribution of income, and whether you should have progressive income taxes. Some of the people there were expressing the view that there could be a justification for it.

I’ve been reading about Mises in Brian Doherty’s Radicals for Capitalism.  A leading economist of the Austrian school, Mises famously argued in his book Socialism that socialism faced intractable difficulties.  Mises snorts at sloppy labeling in one of the prefaces to Socialism.

My own definition of Socialism, as a policy which aims at constructing a society in which the means of production are socialized, is in agreement with all that scientists have written on the subject. I submit that one must be historically blind not to see that this and nothing else is what has stood for Socialism for the past hundred years, and that it is in this sense that the great socialist movement was and is socialistic. But why quarrel over the wording of it! If anyone likes to call a social ideal which retains private ownership in the means of production socialistic, why, let him! A man may call a cat a dog and the sun the moon if it pleases him. But such a reversal of the usual terminology, which everyone understands, does no good and only creates misunderstandings.

Assuming Friedman’s recollection was accurate, why did Mises (in circa 1948?) commit the error he criticized in 1932?  I think Socialism may partly answer the question itself.   A commonly owned system of production, Mises explained in the book, faces crippling knowledge problems.  All decisions on what to produce must be made by central (governmental) planners.  But planners have no way of knowing the best way to use any given set of inputs.  Because of dispersed knowledge about production, there is no guarantee that it will pick an efficient manufacturing scheme.  And because tastes vary, there is no objectively identifiable target basket of goods to aim for.  Without access to inherently subjective consumer preferences, planners cannot meaningfully choose between apples and oranges, much less between guns and butter.  In order to gain access to this knowledge, we need markets and private property.  Consumers reveal their true preference – in a way no census could capture – by the very actions of buying and selling on the market.

Many view the collapse of the Soviet Union as evidence that Mises was correct.  But, as Brian Doherty explains, this may miss the point:

To Mises, the so-called socialist economies never achieved a true functioning socialism, which was not possible to begin with.  The Soviet Union and other communist countries suffered from a particularly virulent form of interventionist state capitalism larded with hampered merkets.

If pure socialism is truly “impossible”, then to reserve the word for complete instances of its academic sense is to kill it.  Progressives who realize how toxic the term has become would no doubt be comfortable with this.  But conservatives and classical liberals use it in another commonly understood way outside of the university.  As with Mises at the Mont Pelerin meeting, the word describes redistributivist policies that aim at better equalizing income.  Pedantically discarding this more common meaning, which everyone uses, does no good and only confines our rhetorical lexicon.