The re-elected Venezuelan president, Hugo Chavez, yesterday announced his plans to nationalise the main telecoms company and the likely nationalisation of a power company. The announcement is part of President Chavez's pledge "to radicalise his administration during his new 6-year term and fully convert Venezuela into a socialist state (FT)."
Mr Chavez should know better that socialism does not work. The theory of socialism might seem appealing but the practice has shown that only free market will bring about an economically strong country. For example, as Ludwig von Mises writes: The only certain fact about Russian affairs under the Soviet regime with regard to which all people agree is: that the standard of living of the Russian masses is much lower than that of the masses in the country which is universally considered as the paragon of capitalism, the United States of America. If we were to regard the Soviet regime as an experiment, we would have to say that the experiment has clearly demonstrated the superiority of capitalism and the inferiority of socialism.
Goverments do not have the capability to make right decisions that would benefit all groups of the society and they lack the intelligence of how to best manage the economy. Governmental authorities do not need to take economic calculations and profits into account as private businesses have to. Private companies will only survive in the market place if they are able to offer a product or service to customers at a competitive price.