One of the things that Mises emphasized in his critique of socialism was that the real problem was in the economic calculation for the factors of production. Because mainstream economists tend either to be clueless about factors or to assume the factors into market supply and demand functions, they miss one of the central reasons as to why socialism fails.

The government of Venezuela under Hugo Chavez nationalized the oil companies a while back and, surprise, surprise, production has fallen severely. In 1998 before Chavez assumed power, production stood at 3.2 million barrels a day. Now, it is at 2.4 million and I estimate that production will fall even more in the next few years.On top of that, Chavez has assumed that his oil money will be able to bankroll socialist revolutions around the world, and he is selling oil at cut-rate prices to other socialist governments. Alas, he throws good money after bad, as Bolivia, rich in natural gas resources, has nationalized its gas industry and, surprise, surprise, output is falling.

The reason it will get even worse for Chavez is that capital wears out, but because he will spend the profits on socialists schemes instead of new capital, Venezuelan production will fall as the government will lack the machinery necessary for pulling the oil out of the ground and getting it to port. Furthermore, he will not be able to attract new capital investment because his government seized private investment in the past and is extremely hostile to private enterprise.

So, sit back and watch Chavez wreck the economy. People are worried because they are afraid he will become another Castro. Indeed, like Castro, he will destroy a once-productive economy and drag people down to poverty. I say let them do it. If the people want socialism, let them enjoy its fruits.