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Not Every Bad Policy is Socialist

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Not every criticism of markets or property rights is socialist. This point might seem obvious, but it often gets lost in the incessant social media shouting matches that surround economic policy. In free-market circles, just about every government intervention these days is dismissed as “socialist,” with the predictable result that the term has lost much of its meaning.

In some ways, it’s unfortunate that socialism no longer carries much weight as a critical term. If it did, it might have done some good in countering the recent wave of enthusiasm for “democratic socialism.” But the lack of critical attitudes toward the word socialism itself should actually serve as a wake-up call, a reminder that a free society can’t be defended simply by using the kind of guilt-by-association arguments that we invoke by indiscriminately shouting “socialism!” every time someone proposes a tax increase.

In other words, labels aren’t arguments, and calling a policy “socialist” isn’t the same as criticizing it.

First, using the word socialism in an uncritical and dismissive way diminishes its effectiveness. In fact, the overuse of the term by critics is likely part of the reason why it no longer holds any bite, especially among younger people interested in democratic socialism.

Second, the problem isn’t only that overusing the term is bad strategy: it’s also inaccurate. For socialism to mean something, we have to restrict its definition and limit the ways in which we apply it. Yes, that does mean sacrificing the occasional “gotcha!” moment, but the reward for focusing less on words is that we can often concentrate more on the substantive ideas they represent.

For example, probably the most common idea associated with socialism is egalitarianism, especially policies for wealth redistribution. In fact, it often seems as if supporters of free markets simply define socialism as a kind of wealth redistribution. But there are important ways in which such policies are not socialist (although they are objectionable on other grounds).

A useful source on this topic is the section of Mises’s book Socialism that discusses “pseudo-socialist” economic systems. These systems include “various proposals for expropriation” that are intended to achieve a more egalitarian distribution of wealth. With regard to these policies, Mises observes that,

[Historical] movements for the reform of property generally culminate in the demand for equality in wealth. All shall be equally rich; no one shall possess more of less than the others… Clearly, this is not Socialism... Socialism does not want to divide the means of production at all, and wants to do more than merely expropriate; it wants to produce on the basis of common ownership of the means of production. All such proposals therefore, which aim only to expropriate the means of production are not to be regarded as Socialism; at best, they can be only proposals for a way to Socialism (Mises, 1951, pp. 266-267; emphasis added)

Mises is suggesting that wealth redistribution is related to socialism, but doesn’t fully capture it. Of course, there are many links between socialism and redistribution policies, but at the heart of socialism is the question of how to organize and carry out production when the factors of production are publicly owned. Wealth redistribution may well be part of a larger strategy for instituting socialism, but that’s not what economists typically mean when discussing socialist economic policies. Mises’s view actually adds to our understanding by giving us a more nuanced way to think about how different kinds of economic policies and systems interact.

Of course, we could waste a lot of space arguing about what economic terms like socialism “really” mean. But my point is not that there’s some correct definition of socialism that must be used at all times and in all contexts (although I do find Mises’s definition to be the most useful). Instead, I’m suggesting that we need to avoid using these words so broadly that they apply almost universally.

Furthermore, we should be careful with the definitions that we do choose. Consistently applying terms does mean that we must sometimes refrain from using them when doing so could score rhetorical points. At the same time, it encourages us to think about the deeper issues involved. Importantly, it also lets us avoid trivializing important examples by equating them with lesser ones.

Using words like socialism consistently and sparingly ensures that they’ll carry more weight when we do need to invoke them. It’s also an effective counter to opponents who misuse their own terminology, for example, by defining terms like “free market” as “everything I don’t like about the world.”

Matthew McCaffrey is assistant professor of enterprise at the University of Manchester.


Matthew McCaffrey

Matt McCaffrey, former Mises Research Fellow, is assistant professor of enterprise at the University of Manchester.

Note: The views expressed on Mises.org are not necessarily those of the Mises Institute.
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