Tuesday, 6 November 2018

Most Socialists Can't Even Define Their Own Ideology



Claims that "socialism is freedom" sound bizarre. That's because they are, explains Daniel Mitchell in this guest post.

I’ve written many times about socialism, often a frustrating task because people's definition is often so slippery.
A new generation is increasingly under the illusion that socialism is simply "big government with lots of handouts financed by class-warfare taxation." Since that’s the common perception however, is that the definition we should use?
    The technical definition of socialism is government ownership of the means of production. This requires central planning, price controls, and other forms of force and intervention. So, at the risk of being pedantic, is that how the term should be defined?
As an economist, I prefer the latter approach, which is why for example I’ve pushed back (though not necessarily in a favourable way) against those who called Obama a socialist.

A few years ago, I tried to reconcile this definitional conflict by creating a diagram to show that there are several strains of socialism (or statism, leftism, progressivism, or whatever you want to call it).


I also created a 2×2 matrix to show how various nations should be characterised when measuring redistribution and intervention.
The Problem is That Even Socialists Don't Know What Socialism Is

If you think I’m somehow being unfair, check out this recent column in the New York Times. Even an advocate for socialism has a hard time saying what it is:
Public support for socialism is growing. Self-identified socialists like Bernie Sanders, Alexandria Ocasio-Cortez and Rashida Tlaib are making inroads into the Democratic Party…  Membership in the Democratic Socialists of America, the largest socialist organisation in the country, is skyrocketing, especially among young people. …what do we mean, in 2018, when we talk about “socialism”? 
    … Socialism means different things to different people. For some, it conjures the Soviet Union and the gulag; for others, Scandinavia and guaranteed income. But neither is the true vision of socialism. What the socialist seeks is freedom. … when the basic needs of life compel submission to the market and subjugation at work, we live not in freedom but in domination. Socialists want to end that domination: to establish freedom from rule by the boss, …  from the obligation to sell for the sake of survival.
If his claim that "socialism is freedom" sounds bizarre, well, that because it is. But it’s not new. It’s the crazy idea of so-called “positive liberty” that was the basis of FDR’s so-called economic bill of rights - that, basically, we should all be “free” to live off of other people (with those "others" having little or any say in the matter).

This cartoon sums up one reason Venezeuelans, for one, are discovering why that approach doesn’t deliver the goods:


Though that’s just the start. Socialism eventually will mean…well, the proletariat will decide at some point. From the New York Times:
There’s not much discussion, yet, of classic socialist tenets like worker control or collective ownership of the means of production. …today’s socialism is just getting started. … In magazines and on websites, in reading groups and party chapters, socialists are debating the next steps: state ownership of certain industries, worker councils and economic cooperatives… Mass action — sometimes illegal, always confrontational — will determine socialism’s final form. … . As Marx and Engels understood…it is workers who get us there, who decide what and where “there” is. That, too, is a kind of freedom. Socialist freedom.
Is that the “freedom” to set up gulags and exterminate enemies?

You can either sit and wait and see. Or you can reach for a history book and calculate how long it generally takes a truly socialist society to get there.

The Many Downsides of Socialism

Writing for Bloomberg, the hand-wringing Professor Noah Smith is both sympathetic and worried about the putative resurgence of socialism:
Observing the disaster that is Venezuela, many free-market proponents are inclined to say that socialism always fails. To bolster their claim, they can also point to the Soviet Union, to North Korea, or to Vietnam and China before those countries implemented free-market reforms. Those self-described communist systems generated vast poverty and famine… defenders of socialism have their own historical examples to cite. … Though one can quibble over the definition of the word “socialism,” there’s little question that the so-called social democracies of Denmark and Sweden offer some of the world’s highest living standards.
That being said, even Smith is concerned that advocates of socialism don’t understand the risks of too much government. He cites a couple of examples, including the failure of price controls and how India suffered from statism before initiating reforms in 1991.

But his comments about the United Kingdom and the Thatcher reforms may be the most important because the Brits actually did try real unalloyed socialism, i.e., government ownership of the means of production:
… the U.K. provides a cautionary tale. After World War II, the U.K. nationalised industries like steel, coal, aviation, electricity, rail transport and some manufacturing. But the British economy lagged behind its continental European peers during the midcentury. Manufacturing and transportation especially stagnated. By the time Margaret Thatcher became prime minister in 1979, both France and Italy were richer in per capita terms… Thatcher unleashed a wave of privatisation, along with other free-market policies. Britain…growth accelerated, and by 1997 it had caught up and passed France and Italy.
Here’s a chart from his column showing how the U.K. fell behind when it was socialist, but then regained the lead following pro-market reforms.


Professor Smith’s cautionary words are noteworthy since he (based on having read dozens of his columns) leans to the left.

And here’s another criticism of socialism, this time from an unabashed liberal (in the modern sense of the word, not classical liberalism). Bill Scher has a withering review of a new book by a group of socialists:
Felix Biederman, Matt Christman, Brendan James, Will Menaker and Virgil Texas—of the socialist, satirical podcast 'Chapo Trap House'… make bank by selling you a candy-coated version of socialism, one that may offend real socialists even more than liberal gruel-peddlers like myself. …The indoctrination begins with a condemnation of America’s containment of Soviet communism. …“Who cares?” if the Soviets won the Cold War, they write. … After blaming American-led capitalism for the world’s ills, the authors take aim at their favourite target: liberals. … In their evisceration of liberals and establishment Democrats, we get the usual left-wing criticisms of the Barack Obama and Bill Clinton presidencies… The Chapo crew’s romp through the history of feckless liberalism doesn’t stop with Obama and Clinton. Jimmy Carter is slammed… Lyndon Johnson is excoriated… Not even Franklin Delano Roosevelt escapes.
By the way, I can’t resist interjecting to point out that socialists had good reasons to condemn Bill Clinton’s presidency. After all, economic freedom increased during his tenure, though I suppose they also should be free to criticise other Democratic administrations for the supposed sin of not moving to the left at a faster rate.

The conclusion of Scher’s review however is brutal:
After slogging through 276 of the book’s 282 pages of bad history… the authors finally get around to their grand plan. Spoiler alert! This is literally it, in its entirety:
“After setting everyone on equal footing (by seizing the billionaires’ money, socialising their wealth, and handing the keys of production over to workers), you’re looking at an economy that requires something like a three-hour workday, with machines taking care of most of the drudgery; and—as our public fund pays for things like health care, education, scientific research, and infrastructure—all this technology actually makes work quicker, easier, and more enjoyable.”
The notion that socialism is going to slough off all that annoying labour to our forthcoming legion of robot slaves may come as a surprise to many socialists. …The Chapo hosts’ aversion to hard work extends to this book. Why suffer the details of how this non-workers’ paradise, free of paper pushing and ditch digging, is going to be realised, when you can take in more than $1 million a year by dressing up stale arguments and thin policy ideas with inside jokes? The infomercial socialists of Chapo have exploited the free market expertly, and at least saved themselves from the 9-to-5 prison.

I confess that these clowns were unknown to me until I read this review, but I’m going to take a wild guess that (like Michael Moore) they don’t share their wealth with the masses.

A Serious Critique of Socialism
Let’s close by now perusing a serious economic analysis of socialism -- which is important because, when socialism fails people economically, its leaders invariably pull out the guns to enforce the behaviour they deem economically necessary. Mark Perry explains Why Socialism Fails, from which I'll pull out a short series of excerpts:
Socialism is the ultimate Big Lie. While it falsely promises prosperity, equality, and security, it delivers the exact opposite: poverty, misery, inequality, and tyranny. Equality is achieved under socialism only in the sense that everyone is equal in his or her misery. …Socialism does not work because it is not consistent with fundamental principles of human behaviour. …it is a system that ignores incentives. … 
    A centrally planned economy without market prices or profits, where most of the property is owned or controlled by the state, is a system without an effective incentive mechanism to direct economic activity. … 
    The strength of market-based capitalism can be attributed to an incentive structure based upon the three Ps: (1) Prices determined by market forces, (2) a Profit-and-Loss system of accounting, and (3) Private Property Rights. The failure of socialism in countries like Venezuela can be traced directly to its neglect of these three incentive-enhancing features.
The price system is a remarkable means of informational transmission that sets economic activity humming. This system however is non-existent in the socialist nirvana.
The only alternative to a market price is a government-imposed price that always transmits misleading information about relative scarcity. Inappropriate behaviour results from a controlled price because false information is transmitted by an artificial, non-market price. … 
    The situation in socialist Venezuela provides a current example of the chaos and inefficiencies that are guaranteed to result from government price controls. As could be easily predicted, the widespread price controls imposed by the socialist regime in Venezuela in recent years led to chronic shortages of basic goods like milk, flour, rice and toilet paper, and long lines of customers waiting for hours to buy groceries at stores that frequently have mostly empty shelves.
Just as the price system is rendered non-existent and non-effective, so too are profits. Here are excerpts from Perry's analysis of socialism and profits:
A profit system is an effective monitoring mechanism that continually evaluates the economic performance of every business enterprise. The firms that are the most efficient and most successful at serving consumers are rewarded with profits. … the profit system provides a strong disciplinary mechanism that continually redirects resources away from weak, failing, and inefficient firms toward those firms that are the most efficient and successful at serving consumers. …Under central planning, there is no profit-and-loss system of accounting to accurately measure the success or failure of various firms and producers. Without profits, there is no way to discipline firms that fail to serve the public interest and no way to reward firms that do. … Instead of continually reallocating resources towards greater efficiency, socialism falls into a vortex of inefficiency and failure.
And here are portions of what he wrote about socialism and property rights:
The failure of socialism around the world is a “tragedy of commons” on a global scale. …When assets are publicly owned, there are no incentives in place to encourage wise stewardship. While private property creates incentives for conservation and the responsible use of property, public property encourages irresponsibility and waste. …Public ownership encourages neglect and mismanagement. …Venezuela today is moving in the opposite direction. Under Hugo Chavez, the private property and assets of foreign-owned oil companies from the US, France, and Italy were nationalised and converted to state-owned, state-managed assets. The results were completely predictable: corruption, lack of investment, deteriorating capital assets, mismanagement and a sharp and ongoing decline.
His conclusion is especially powerful:
By their failure to foster, promote, and nurture the potential of their people through incentive-enhancing institutions, centrally planned, socialist economies deprive the human spirit of its full development. Socialism fails because it kills and destroys the human spirit… Programs like socialised medicine, free college, guaranteed jobs, free housing, and living wage laws will continue to entice us… But those programs, like all socialist programs, will fail in the long run…because they ignore the important role of incentives. … 
    Socialism is being repackaged and recycled by today’s left-leaning politicians including Sanders and Ocasio-Cortez and is being taken seriously by a new young and gullible generation, many who weren’t even alive when the historic events of the 1980s and 1990s occurred including the fall of the Berlin Wall and the collapse of the Soviet Union. But the lessons from history about the defects, deficiencies, and failures of socialism are very clear. As we’ve learned from countless examples throughout history, including now Venezuela, the main difference between capitalism and socialism is this: Capitalism works.
Amen.

The observation that capitalism works and socialism fails is the point of my two-question challenge for my left-leaning friends.


To be sure, my challenge applies to conventional leftists, as well as all varieties of socialists.

The advocates of bigger government surely should be required to show at least one example of how their policies work in the real world. But they can’t.

I’ll close by sharing this wonderful video of Dan Hannan explaining to Jeremy Corbyn and the Oxford Union why liberty is better than socialism -- because socialism's defining characteristic is coercion:


If you enjoyed that video, you can also watch Hannan in action here and here.

P.S. And if you want to laugh at socialism, check out this collection.

[Cartoon by Nick Kim. Guest Post by Daniel J. Mitchell from his post at the Foundation for Economic Education]
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