“In this situation (so I thought), of course you would need a powerful federal government to override price signals and make sure enough steel, rubber, gasoline, etc. went into the war effort…
he [Mises] first acknowledges the conventional view that free markets can be tolerated in peacetime but that government interference with markets is necessary for war. He then demolishes this viewpoint:
The realization of this program did not require the establishment of controls and priorities. If the government had raised all the funds needed for the conduct of war by taxing the citizens and by borrowing from them, everybody would have been forced to cut down his consumption drastically.”
So still the proper allocation could not happen without Government. This describes the most efficient way for the government to achieve its objective, but still requires very large taxes to accomplish the ends.
The message is that you still need a powerful federal Government, but that a wise Government will not try to override market forces, but to harness them.
Mises seems to be saying that a wise and powerful Govt. would use market forces by imposing very large taxes or borrowing and spending this on war efforts, rather than trying to impose non price mechanisms to direct production. This still requires a powerful Government.
“In this situation (so I thought), of course you would need a powerful federal government to override price signals and make sure enough steel, rubber, gasoline, etc. went into the war effort…
he [Mises] first acknowledges the conventional view that free markets can be tolerated in peacetime but that government interference with markets is necessary for war. He then demolishes this viewpoint:
The realization of this program did not require the establishment of controls and priorities. If the government had raised all the funds needed for the conduct of war by taxing the citizens and by borrowing from them, everybody would have been forced to cut down his consumption drastically.”
So still the proper allocation could not happen without Government. This describes the most efficient way for the government to achieve its objective, but still requires very large taxes to accomplish the ends.
The message is that you still need a powerful federal Government, but that a wise Government will not try to override market forces, but to harness them.
Mises seems to be saying that a wise and powerful Govt. would use market forces by imposing very large taxes or borrowing and spending this on war efforts, rather than trying to impose non price mechanisms to direct production. This still requires a powerful Government.