Why Black Markets Thrive in Socialist Economies

cross-posted from: https://lemmy.ml/post/8237612

in the Soviet Union, any significant goods had two price tags: one real and another virtual. The state set the first price through some obscure methods; the usual mechanism of supply and demand established the second price on the market. If you were lucky, after several hours of standing in a queue, you could purchase goods at the state price. However, due to the chronic lack of everything for everyone, the same product could be bought on the black market at a much higher price.

The virtual price became real on the black market and reflected the actual value of the goods for the buyer. The presence of two price tags is a confirmation of the thesis of Ludwig von Mises regarding the impossibility of economic calculations under socialism. At the same time, this is proof of the immortality and immutability of the economic laws of the free market, even under a totalitarian regime. Therefore, two economic systems and two sets of prices co-exist under socialism.

Edit: the article has a bias against socialism but still interesting read on black markets under socialism.

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Why Black Markets Thrive in Socialist Economies(fee.org)

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