Economic Calculation in the CBDC/Digital ID/Net Zero Globalist Socialist Commonwealth

Revisiting F.A Hayek and Ludwig Von Mises Critique of communism a century later.

In 1920, Ludwig von Mises published his seminal essay, “Economic Calculation in the Socialist Commonwealth,” delivering a profound challenge to the feasibility of socialism. Mises contended that without private ownership of the means of production, no rational economic calculation could occur, as prices for capital goods would lack a market basis and become mere administrative artifacts. Friedrich Hayek later built upon this foundation, particularly in “The Use of Knowledge in Society” (1945), arguing that the dispersed nature of knowledge in society makes central planning inherently inefficient, as no authority can aggregate the myriad local insights that markets effortlessly coordinate through price signals. A century later, these critiques find renewed relevance in the rise of digital IDs and central bank digital currencies (CBDCs), tools increasingly envisioned to enforce “prescribed patterns of consumption” in the name of net-zero goals. By limiting access to carbon-intensive goods—such as restricting meat or gasoline purchases—these systems revive central planning under a globalist, socialist guise, promising ecological harmony but risking the same calculation and knowledge failures Mises and Hayek forewarned.

The modern socialist commonwealth is not the crude command economy of the 20th century but a sophisticated digital apparatus. Digital IDs, linked to biometric and behavioral data, create a comprehensive profile of each citizen, enabling real-time monitoring of consumption habits. CBDCs, programmable currencies issued by central banks, allow authorities to embed restrictions directly into money: a transaction for excess beef might fail if it exceeds a personal carbon quota, or gasoline purchases could be capped based on algorithmic assessments of “need.” Proponents tout this as a solution to climate imperatives, with pilots like China’s digital yuan already demonstrating traceable transactions that could extend to environmental controls, and EU discussions on digital wallets hinting at integrated carbon tracking. Yet, as Mises observed of socialism’s “planned chaos,” these mechanisms substitute bureaucratic decrees for market prices, distorting allocation and inviting inefficiency.

Mirroring Mises’s argument, consider the absence of genuine prices in this digital regime. In a free market, the price of meat or gasoline emerges from countless voluntary exchanges, reflecting scarcity, production costs, and consumer valuations. Under CBDCs with consumption limits, these prices are supplanted by administrative rations—arbitrary caps set by planners who decide, say, that 10 kilograms of meat per month per household aligns with net-zero targets. But how do they arrive at this figure? Without competitive bidding, there’s no mechanism to weigh alternatives: Is restricting beef more efficient than subsidizing plant-based innovations, or does it ignore regional variations where livestock farming is sustainable? Mises warned that socialism treats factors of production as “valueless” in calculation terms, leading to irrational decisions: “If the socialist commonwealth has no prices for the means of production, it cannot calculate.” Here, carbon becomes a centrally valued “factor,” but its “price” is a fiat imposition, detached from real economic trade-offs. The result is misallocation: overproduction of approved goods (e.g., subsidized electric vehicles) amid shortages of restricted ones, echoing the Soviet bread lines but for “green” commodities.

Hayek’s knowledge problem exacerbates this. Planners assume digital tools—big data from IDs and transaction logs—solve the aggregation challenge, enabling precise modeling of consumption patterns. Yet, as Hayek emphasized, much knowledge is tacit and localized: a family’s dietary needs vary by health, culture, or location; an entrepreneur’s insight into low-carbon farming techniques emerges from trial and error, not top-down data. CBDCs may track every purchase, but they cannot capture the “particular circumstances of time and place” that drive innovation. Instead, surveillance stifles it: fearing quota violations, consumers hoard or black-market goods, while entrepreneurs avoid risky ventures under rigid limits. The system breeds conformity, not efficiency, much as Hayek predicted central planning would reduce society to “one single plan” at the expense of spontaneous order. As Hayek noted, “The marvel is that in a case like that of a scarcity of one raw material, without an order being issued or anybody knowing the cause, tens of thousands of people... are made to use the material or its products more sparingly.”

In this net-zero socialist commonwealth, the flaws compound. Digital enforcement enables unprecedented control, but it amplifies distortions—Mises’s “impossibility” theorem writ large in code. Prices lose their signaling function, knowledge remains dispersed, and the economy lurches toward stagnation, all while claiming moral superiority in ecological terms.

Yet, a decentralized alternative exists: Free Market Ecology (FME), a system that fulfills the ecological aspirations of those deploying CBDCs—sustainable resource use—without their coercive pitfalls. Drawing from market principles akin to free market environmentalism, FME optimizes for maximum value per least resource through science-set extraction caps (e.g., 20 barrels of oil per day per site, determined by Earth system scientists), digital tagging of resources in supply chains, and consumer allotments that encourage savings and reinvestment. Unlike CBDCs’ top-down rations, FME internalizes environmental costs via market mechanisms: producers add markups for efficiency gains, passing tagged resources (e.g., 0.1 mL oil in a plastic fork) to consumers, who minimize consumption to reinvest savings in innovative ventures.

This fosters entrepreneurship—innovators compete to use resources more productively, earning dividends from markups—while enabling proper ecological price discovery: prices reflect true scarcity, adjusted by transparent tags and credits (e.g., for nutrients or habitats as a minimum viable product). Individuals can invest “ecological resources” (saved allotments) in efficient production, benefiting from others’ innovations to consume more sustainably. For instance, saving oil allotments funds a refinery upgrade, yielding returns in water or metal credits, creating a virtuous cycle of efficiency.

The investment mechanism is key to FME’s superior efficiency over central planning. By allowing individuals to “invest” saved ecological resources—unused portions of their allotments—into entrepreneurial projects, FME generates returns based on the ecological benefits of those investments. Consider a consumer who rides a bike everywhere, eats only vegetarian food, and stays within their 15-minute city for 10 years, accumulating unused carbon allotments. They could invest these in more efficient refineries or less environmentally damaging rare earth processors, reaping rewards through ecological resource markups from those companies’ gains. This might grant them access to air travel or a larger house, as the industries they’ve supported alleviate environmental pressure elsewhere—e.g., cleaner processing reduces overall habitat loss, freeing up global allotments. As Mises noted, “The market economy is the only system of social cooperation that enables us to utilize the knowledge of all.” FME extends this to ecology, ensuring resources flow to their highest-value uses without central coercion. The current CBDC/digital ID framework merely takes these resources from the consumer and gives them to government central planners, who cannot invest them efficiently due to the problems von Mises and Hayek documented—lacking true price signals and dispersed knowledge.

Central planners, burdened by the knowledge problem, cannot match this granular, bottom-up optimization; their quotas stifle such dynamic reallocations. FME, by contrast, leverages dispersed knowledge—entrepreneurs experiment within caps, markets price ecological scarcities accurately via tags and trades, and blockchain ensures transparent, tamper-proof tracking—achieving far more efficient “planning” through voluntary, profit-driven decisions. As Hayek wrote, “The price system is just one of those formations which man has learned to use... after he had stumbled upon it without understanding it.” In FME, this system evolves to handle ecological constraints, rewarding savers and innovators alike.

In a post-labor era, where AI and automation render work negligible, the focus shifts to resources: who gets them, and how are they allocated? Central planners, disconnected from local needs, risk exacerbating inequalities and stifling adaptation. FME addresses this through intelligent market mechanisms driven by human needs—decentralized, entrepreneurial, and responsive. It achieves net-zero goals not by mandate but by incentive, preserving the market’s calculation prowess that Mises and Hayek championed, turning sustainability from a planned mandate into a profitable, voluntary order. As Hayek observed, “The marvel is that in a case like that of a scarcity of one raw material, without an order being issued or anybody knowing the cause, tens of thousands of people... are made to use the material or its products more sparingly.” FME harnesses this marvel for ecology, ensuring scarcity signals drive efficiency without the hubris of central control.