Power & Market

Bad Capitalism and Good Socialism

Is socialism the enemy of the civilized order? It depends on what kind of socialism we are discussing. There are several varieties, not only one. If it is the version calling for government ownership and control of all the means of production, the complete nationalization of all industries, then yes, socialism is the work of the devil. All we need do to demonstrate this is mention economic basket cases like Venezuela, East Germany, Maoist China and the USSR. They produced dire poverty and the deaths of millions of innocent people.

There is a second, just as historically accurate definition of socialism as the first. It is predicated on the Marxian nostrum “From each according to his ability, to each according to his need.” If this goal is attained on a coercive basis, then, yet again, this compulsory egalitarianism is surely uncivilized. It amounts to stealing from the innocent rich. But suppose people agree to live under this principle? Ayn Rand might not like this too much, but, if it is truly voluntary, then instead of being incompatible with civilized principles, it is a paradigmatic case of them. That is, the rich agree to be “expropriated” in favor of the poor.

Are there any such institutions that actually flourish? Here are a few: the convent, monastery, kibbutz, commune, syndicalist association, cooperative. I teach at a Jesuit school, and all members of this order subscribe to the “from each, to each” philosophy. True, kibbutzim were initially subsidized by the state of Israel and are now shadows of their former selves, and Robert Owen’s commune in New Harmony, Ind., is no longer in operation. But neither does every business last forever. Then there is the average American family. It, too, lives according to this Marxian doctrine. The three-year-old girl eats, gets toys, and is clothed not in accordance with her ability to earn income, but based on her needs.

Capitalism is likewise divided into several varieties. If it is free market capitalism we are contemplating, or as near to that system as we can approach in this vale of tears, then this—along with voluntary socialism—is the very foundation of the civilized order. All boats rise on a tide of profit maximization and untrammeled entrepreneurship, as long as personal and property rights are respected. The experiences of places with expansive economic freedom, such as the US, Switzerland, Hong Kong, Singapore—and yes, Bernie, Scandinavia too—give ample testimony to this claim.

Yet under the veneer of economic freedom, markets have their dark side, too: crony capitalism. Uber is brutalized by the taxi industry in the name of protecting the public; young women who braid hair are hassled by licensed beauticians; domestic manufacturers lust after protective tariffs; farm states tried to outlaw dyeing margarine yellow; labor unions champion minimum wage laws to price their unskilled competitors out of the market. As Adam Smith wisely said, under this type of capitalism, “people of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.”

No, not all versions of socialism are the enemy of humanity and decency, nor are all types of capitalism their friend. It all depends on which variety of each we are discussing.

Published with permission of the author. Originally published on December 15 in the Wall Street Journal.

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