Price controls? You mean communism

Shakespeare wrote that “a rose by any other name would smell as sweet.” Well, communism by another name — this time, “price controls” — would be just as disastrous.

Many Americans might not be too familiar with the idea of price controls and how they work (or don’t).

Still, this policy concept made national news last week when Kamala Harris, the current vice president and the 2024 Democrat nominee for president, announced support for a plan to pass a federal ban on what she termed “price gouging” on food:

“As President, I’ll work to pass the first-ever federal ban on price gouging on food. My plan will include new penalties for companies that exploit crises and break the rules. And we will support smaller food businesses that are trying to play by the rules and get ahead.”

In an article with a title that says it all (“When your opponent calls you ‘communist,’ maybe don’t propose price controls?”), Washington Post columnist Catherine Rampell immediately criticized Harris’s proposal, explaining that it is,

“In all but name, a sweeping set of government-enforced price controls across every industry, not only food. Supply and demand would no longer determine prices or profit levels. Far-off Washington bureaucrats would. The FTC would be able to tell, say, a Kroger in Ohio the acceptable price it can charge for milk.

At best, this would lead to shortages, black markets and hoarding, among other distortions seen previous times in countries that tried to limit price growth by fiat…there’s a reason narrower ‘price gouging’ laws that exist in some U.S. states are rarely invoked. At worst, it might accidentally raise prices.”

That’s right. If this ever came to fruition, you could kiss free markets goodbye and raise your hammer and sickle in salute to the statist, government-dictated economic intervention in the American market.

You can put lipstick on a pig, but you still won’t want to kiss it. Likewise, you can try to rebrand communism as price controls, but it will still land you in a breadline.

Here’s why price controls are communism by another name and why American Christians should reject it.

The mechanics of price controls

By definition, price controls refer to government-imposed limits on the prices that private businesses can charge for their products. At their core, price controls represent government intervention into the market to dictate the prices of goods or services, either by setting a maximum (ceiling) or a minimum (floor) price.

Price controls are implemented with the “intention” of making goods more affordable or ensuring a minimum income for producers. A price ceiling aims to keep prices low for consumers, often during times of inflation or scarcity, like during wartime or economic crises. Conversely, a price floor, like minimum wage laws, seeks to ensure that producers (or workers) receive a minimum compensation for their goods or services.

But even if the intentions are good, the results are disastrous.

Four reasons why price controls fail

First, they distort the market. By artificially setting prices, price controls disrupt the natural equilibrium where supply meets demand. This leads to either shortages (when prices are set too low) or surpluses (when they are too high). For instance, rent controls might make housing more affordable but lead to shortages as landlords reduce supply due to lower profits.

Second, they provide an incentive to cheat. Price controls often lead to black markets where goods are sold above the controlled price, undermining the very purpose of the controls. This not only creates an illegal market but also breeds corruption and inefficiency.

Third, they lead to a reduction in quality across every sector. With prices fixed, producers might cut costs by reducing quality, leading to inferior products or services. This is seen in various historical examples where price controls resulted in goods of lower quality due to the inability to charge what the market would bear. This is documented by the Hoover Institution, which noted that in the chapter “Price Controls” of The Concise Encyclopedia of Economics, “Rutgers University economist Hugh Rockoff points out that because of U.S. price controls during World War II, ‘fat was added to hamburger’ and ‘candy bars were made smaller and of inferior ingredients.’”

Fourth, they result in a misallocation of resources. The government’s attempt to control prices often leads to resources being allocated not by market demand but by political or bureaucratic decisions, which are inherently less efficient. This misallocation was rampant in communist states where central planning led to bizarre economic outcomes, like the infamous Soviet nail size problem.

Price controls as communism

In essence, communism advocates the abolition of private property and the ownership of the means of production by the state or the community.

Here’s how price controls can be rightly viewed as a fundamentally communistic policy:

First, both systems rely on central planning. Central planning is when the government decides economic outcomes rather than market forces. In communism, this extends to all aspects of production; in price controls, it’s specifically on pricing. Communism also seeks to eliminate the market mechanism entirely, while price controls attempt to manipulate it. Both actions remove the price mechanism’s role in signaling supply and demand, leading to similar economic inefficiencies.

Additionally, the essence of both systems is the state’s control of the market. In communism, this control is overall economic activity; in price controls, it’s over one critical aspect of economic interaction — pricing. Finally, both ideologies focus on outcomes (equality, affordability) over the process (market freedom, competition). This leads to similar issues of shortages, quality degradation, and black markets.

Why Christians should reject communist price controls

When approaching the idea of price controls from a biblical worldview, it’s clear that Christians should oppose such statist policies.

Christians are called to be stewards of what God has given them, including economic freedom (Matthew 25:14-30). Price controls infringe on this stewardship by dictating how goods should be valued, potentially leading to waste or misallocation, which is contrary to wise stewardship.

The Bible emphasizes voluntary giving and sharing (Acts 4:32-35), not forced equality through state mechanisms. Price controls, by enforcing economic equality, remove the voluntary aspect of charity, which is central to Christian ethics. And when the Bible speaks of justice, it’s not through the lens of economic leveling but through righteousness and fair treatment. Price controls, aiming for fairness, often lead to injustices like black markets, the inability of producers to sustain their livelihoods, and food shortages. If you need more evidence, just check out the sad and desperate story of Venezuela. 

Finally, price controls undermine human agency and dignity. Human agency and dignity must include the right to work and earn according to one’s labor (2 Thessalonians 3:10-13). Price controls can undermine this by artificially setting wages or prices that might not reflect the true value of work or goods.

Conclusion

Price controls might sound benign or even beneficial in intent. Who doesn’t want to pay less for groceries these days? However, in truth and practice, this policy mirrors the economic principles of communism by substituting government control for market dynamics.

From a Christian perspective, this approach fails not only economically but also ethically, as it contradicts principles of stewardship, voluntary charity, and the dignity of work.

Christians, therefore, should oppose price controls not just because of their economic inefficiencies but also because of their moral implications. They should advocate instead for systems where freedom, responsibility, and charity are upheld as God-ordained principles for human flourishing.

Originally published at the Standing for Freedom Center.