Likening today’s capitalist economies to the communist bloc of yesteryear might seem far-fetched. What could the free market possibly have in common with Soviet-style central planning?
However, the comparison increasingly offers useful insights into what has become of the winning side since the end of the Cold War.
Consider the “soft budget constraints” that socialist state-owned enterprises (SOEs) used to enjoy and which turned out to be one of the main reasons why Soviet-bloc economies failed. Similar financial conditions are becoming pervasive in capitalist America.
As Hungarian Marxist apostate Janos Kornai famously said, SOEs could ignore losses and consumer preferences,