Hazlitt’s essay turns a question about Soviet agriculture into a compact restatement of the socialist calculation argument. He begins not with abstract doctrine but with an empirical puzzle: why a regime claiming scientific planning repeatedly had to buy food from the capitalist world.
A correspondent recently asked me why it was that Soviet Russia seemed to be suffering in recent years from chronic “crop failures,” and found itself forced to import increased quantities of foodstuffs from the United States and other capitalistic countries.
His answer is that the failures are institutional, not accidental. In a market order, farmers need not understand the whole economy; profit and loss guide them toward crops, quantities, grades, and methods that consumers and other producers are actually willing to support. Prices condense dispersed information about scarcity, demand, storage, transport, weather, and expectations into signals that can be acted on locally.
Under “capitalism” (Karl Marx’s vocabulary)—that is to say, under a free market system—the individual farmer is rewarded by earning a profit if he grows the right things in the right amounts, and is penalized by a loss if he grows the wrong things.
Hazlitt’s emphasis falls on the complexity of coordination. The farmer sees only a small part of the system, but the price structure connects his decisions to innumerable alternatives and competing uses. Central planning, by contrast, must replace this constantly revised network with commands. It can issue quotas, but it cannot discover the relative urgency of all possible uses of land, labor, machinery, fertilizer, storage, and transport.
Without a set of previous real and recent market prices, without informed expectations, the bureaucracy would have to make 64 trillion blind guesses.
The essay is careful not to equate the United States with a perfectly free market. Hazlitt notes that subsidies, price supports, and milk-price controls also distort production. This qualification strengthens rather than weakens his argument: the contrast is between price-guided allocation and command allocation, not between national mythologies.
The section on communist planning presents Soviet prices as derivative and parasitic. When planners use foreign quotations, past market data, or black-market indications, they tacitly rely on the very mechanism they denounce. Where no such guide exists, they must guess; and wrong guesses become compulsory because the state controls production.
Apart from this, a communist bureaucracy is working in the dark.
Hazlitt links this darkness to weakened incentives. The individual producer under communism is not rewarded in proportion to successful adaptation, nor punished in proportion to misallocation. Private plots and illicit exchange partially relieve scarcity only because they reintroduce fragments of market behavior. The theoretical core is explicitly Misesian: rational allocation requires genuine prices formed through exchange of privately controlled resources.
The communists, in short, cannot engage in what the late Ludwig von Mises labeled "economic calculation."
Hazlitt then extends the argument from what to produce to how to produce it. Markets test methods through costs, revenues, and losses; inefficient techniques can persist, but the system tends to expose and penalize them. Planning freezes error into policy because administrative targets cannot substitute for competitive comparison.
The closing pages move from Soviet agriculture to Marxist doctrine. Hazlitt argues that Marxism survives less because of analytic strength than because it appeals to resentment and the promise of expropriation. Marx’s labor theory of value, in Hazlitt’s view, ignores land, capital, entrepreneurship, knowledge, risk, and differences in skill.
The essay’s significance lies in its compression. Hazlitt uses food shortages to show that “market prices” and “communist commands” are not rival technical devices. Prices are instruments of discovery and correction; commands without prices are attempts to organize production without the knowledge needed to do so.
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