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Like Marx, Lenin believed that capitalism had solved the problem of production and that the state could simply expropriate the commanding heights of industry and produce wealth for the “common good.” He declared that “any literate person” was capable of managing any part of the economy, from banks to factories. Very quickly, however, he learned that running a business was far more complex than he had ever imagined. With political commissars in charge, production plummeted, people starved, and peasants rioted.
What Lenin never understood is that real wealth does not lie in the factory itself – the hardware – but in the knowledge of the entrepreneurs and managers who planned, built, and established the myriad procedures by which it is run. The real wealth lies in the software – the information and procedures stored in the minds of the people who operate the factory. Confiscating the hardware left the Bolsheviks with useless hulks devoid of the essential software that had enabled them to create wealth.
Leftists of the “you didn’t build that” mindset from Barack Obama to Elizabeth Warren are speeding us down the same dead end road that Lenin traveled nearly a century ago. They see wealth in materialistic, static terms; as something that can be doled-out until everyone is “equal.” They don’t realize that wealth is created in the software: the laws and institutions that protect the freedom necessary for individuals and entrepreneurs to work and create. Should they destroy those laws and institutions in their blind race toward their vision of equality, they will succeed only in destroying America’s wealth.
Image Credit: Flickr user Edward Kimmel.