Portal:Capitalism/Selected quote/38

“ Because Soviet enterprises were not under the same financial constraints as capitalist enterprises, they acquired more machines than they needed, "which then gather dust in warehouses or rust out of doors," as the Soviet economists put it. In short, Soviet enterprises were not forced to economize-that is, to treat their resources as both scarce and valuable in alternative uses, for the alternative users were not bidding for those resources, as they would in a market economy. While such waste cost individual Soviet enterprises little or nothing, they cost the Soviet people dearly, in the form of a lower standard of living than their resources and technology were capable of producing.

Such a waste of inputs as these economists described could not of course continue in the kind of economy where these inputs would have to be purchased in competition with alternative users, and where the enterprise itself could survive only be keeping its costs lower than its sales receipts. In such a price-coordinated capitalist system, the amounts of inputs ordered would be based on the enterprise's most accurate estimate of what was really required, not on how much its managers could persuade higher government officials to let them have.

” — Thomas Sowell (1930)
Basic Economics , 2015