TGIF: Is Socialism Good in Theory?

This is an expanded version of something I wrote for The Freeman, October 2003, during my tenure as the editor.

Socialism has been mortally discredited on economic grounds, thanks to Ludwig von Mises, F. A. Hayek, and history. But for many people it has not been discredited on moral grounds. You can tell this by how often people say that while socialism doesn’t work in practice, it is good, even beautiful, in theory. (Even Thomas Sowell has said that.)

Strange notion—that a theory which doesn’t work in the world can somehow still be good. Where else is it to be judged? William Graham Sumner, I believe, pointed out the contradiction: there must be a good theory that explains the system that does work in practice, but that theory would conflict with the other theory also held to be good. So we end up with two good but conflicting theories. Something is wrong.

Moreover, one would think that a theory whose consistent realization requires gulags, secret police, and terror would be morally disqualified even if by some weird standard it “worked.” (Notice that Mussolini gets no break for having the trains run on time--as well he shouldn't.)

I guess the people who say socialism is good in theory really mean they regret that it doesn’t work without the attendant unpleasantness. Why should that be regrettable? The typical answer is that in socialist theory people are not acquisitive or self-regarding; they are more concerned about others. (Right.) The regret about socialism turns out to be a regret about human nature.

Leaving aside the facts that the taint on self-interest is assumed not established and that one prospers in free markets by competitively and imaginatively attending to others, is statement regarding socialism socialism and self-interest valid? Originally socialism promised a superabundance of goods—so much of everything that no one would have to do without anything. That would make sharing unnecessary because scarcity would be abolished. Wasn’t that an appeal to acquisitiveness, even gluttony? To be sure, socialism’s miserable record in providing for consumers compelled its advocates to discover the “age of limits,” but that was only to make a virtue of necessity.

Socialism of course did promise to reconstruct humanity, but the message was always mixed. It promised to subordinate individuals to the service of society while also liberating them to be fully themselves—free of the necessity to make a living. Leon Trotsky wrote that “Communist man ... will become immeasurably stronger, wiser and subtler; his body will become more harmonized, his movements more rhythmic, his voice more musical. The forms of life will become dynamically dramatic. The average human type will rise to the heights of an Aristotle, a Goethe, or a Marx.”

But the nice Bolshevik also said, “In a country where the sole employer is the State, opposition means death by slow starvation. The old principle: who does not work shall not eat, has been replaced by a new one: who does not obey shall not eat.”

Was the new Socialist Man to be a self-centered achiever or a group-centered worker bee? It was never clear how both could be accomplished.

Maybe all that people mean when they lament socialism’s impracticality is that the theory held out hope for an end to material inequality. As intellectual historian Ralph Raico reminded us, it didn’t exactly do that. Marx promised only “to each according to his need.” He never said we all have the same needs. Besides, it is markets not socialism that have achieved essential material equality. As George Mason University Professor Donald Boudreaux has written:

Do a mental experiment. Imagine resurrecting an ancestor from the year 1700 and showing him a typical day in the life of Bill Gates. The opulence would obviously astonish your ancestor, but a good guess is that the features of Gates’s life that would make the deepest impression are that he and his family never worry about starving to death; that they bathe daily; that they have several changes of clean clothes; that they have clean and healthy teeth; that diseases such as smallpox, polio, diphtheria, tuberculosis, tetanus, and pertussis present no substantial risks; that Melinda Gates’s chances of dying during childbirth are about one-sixtieth what they would have been in 1700; that each child born to the Gateses is about 40 times more likely than a pre-industrial child to survive infancy; that the Gateses have a household refrigerator and freezer (not to mention microwave oven, dishwasher, and radios and televisions); that the Gateses’s work week is only five days and that the family takes several weeks of vacation each year; that each of the Gates children will receive more than a decade of formal schooling; that the Gateses routinely travel through the air to distant lands in a matter of hours; that they effortlessly converse with people miles or oceans away; that they frequently enjoy the world’s greatest actors’ and actresses’ stunning performances; that the Gateses can, whenever and wherever they please, listen to a Beethoven piano sonata, a Puccini opera, or a Frank Sinatra ballad.

In short, what would likely most impress a visitor from the past about Bill Gates’s life are precisely those modern advantages that are not unique to Bill Gates–advantages now enjoyed by nearly all Americans.

And while we modern Americans focus on how much more money Bill Gates has than the rest of us, our time-traveler would likely find the differences separating Gates from average Americans to be much smaller than the gargantuan differences between his own preindustrial life and that of today’s ordinary Americans.

He would also likely find the wealth differences between ordinary Americans and the richest Americans trivial compared to the differences between most preindustrial folk and the royalty who ruled them.

Moreover, as Michael Cox and Richard Alm have shown, the number of hours it takes the average worker to earn enough to buy virtually anything has shrunk dramatically over the decades. (Using work time as the standard avoids the problem of comparing prices in the light of inflation.) This progress is even more dramatic than it seems when you consider how much better goods are today.  And let's not forget all the things that average earners own that did not exist in, say in the 1970s, the passing of which many state socialism oddly seem to lament.

As Cox wrote in an update to his and Alm’s 1999 work:

At the average wage, a VCR fell from 365 hours in 1972 to a mere two hours today. A cellphone dropped from 456 hours in 1984 to four hours. A personal computer, jazzed up with thousands of times the computing power of the 1984 I.B.M., declined from 435 hours to 25 hours. Even cars are taking a smaller toll on our bank accounts: in the past decade, the work‐​time price of a mid‐​size Ford sedan declined by 6 percent.

Simply put, we get more and better services from our products for less and less toil--in other words, we get lots of stuff for free. The great liberal Frédéric Bastiat explained this in the first half of the 19th century in his magnum opus, Economic Harmonies, especially chapter 11, “Private Property and Common Wealth.” (I discuss this in my book What Social Animals Owe to Each Other, chapter 18.) 

The ugliness of socialist theory now comes into focus. Under individualist and free-market theory (and practice) each person is free to determine his own needs and, through the division of labor and voluntary exchange, to produce what’s required to satisfy them. (As the Spanish proverb has it, “Take what you want and pay for it.”) Under socialist theory the individual’s needs are determined and "satisfied" collectively, i.e., coercively. Dissent and venturing out on one’s own are not options. As Trotsky chillingly acknowledged, everyone is an employee and tenant of the collective—that is, the state.

It’s a mystery why anyone would find that theory beautiful or regret that it doesn’t work.

TGIF--The Goal Is Freedom--appears occasionally on Fridays.