Socialism in theory is just as defective as socialism in practice
The dysfunctions of socialism stem partly from Marx’s moralizing
Capitalism invests more faith in everyday people than does socialism
“Real socialism has never been tried.” That is a standard line of argument from socialism’s apologists, and it is a high-school debaters’ trick. The shortcomings of socialism, as practiced in the real world—shortcomings that range from those mountains of oranges in California to the mountains of skulls that Pol Pot piled up in Cambodia—are dismissed as deviations from “real socialism.” This line of argument might be restated in this way: “The ideal version of my system is preferable to the non-ideal version of your system.”
Of course it is true that a pure, undiluted, uncorrupted, ideal expression of the socialist state has never existed, just as an entirely unfettered, perfectly competitive expression of capitalism has never existed. There never has been an ideal constitutional republic, liberal democracy, or technocratic management state. Ideals do not exist; the literal meaning of the word utopia is “no place.” Utopias exist only in the imaginations of political idealists and stoned poli-sci undergraduates.
A variation on this is the argument that goes, “Socialism is great in theory, but it doesn’t work in practice.” Is socialism great in theory? And if the theory is so great, why do the results always disappoint? In truth, the theory behind socialism is deeply flawed: it is intellectually narrow, inhumane, and deeply irrational in that it fails to account for the ways in which knowledge works in a society. Socialism in theory is every bit as bad as socialism in practice, once you understand the theory and stop mistaking it for the common and humane charitable impulse.
Comparing the socialist ideal to the capitalist one is an exercise in intellectual frippery. What we can do, however, is look at how socialism has operated in the real world. To do this is to operate under the radical theory that socialism is what socialism does, not what socialists would like socialism to be. But the idea that the USSR, Cuba, Venezuela, Vietnam, China, and others have failed socialism—not that socialism has failed them—persists. And it persists at relatively high levels of intellectual discourse, as in left-wing patron saint Noam Chomsky’s shameful defense of the genocidal Khmer Rouge.
But it also exists in low-level discourse, where this notion perhaps does the most damage. Consider this admittedly unsophisticated but entirely typical exchange from an online debate: “Just for the record—communism has never existed, not a single day. Today you can only judge the idea of it. [The] USSR tried to build communism, but they’ve failed. China is still on its way. Communism is utopia—everyone is equal, there’s no money, everyone just gets what they need.”1 This was followed by, “Communism in theory, great; in practice it just doesn’t work.”2 Other observations included these: “Sure, most communism has failed; however, this is not due to a fundamental flaw in the theory, rather it is due to a flaw in implementation,”3 and “Obviously, absolute communism doesn’t work. Nor does absolute capitalism. However, in direction and ideals, it leaves the overwhelming majority much better off. Look at Venezuela, Cuba, and even much of Europe. They don’t have nearly the disparity and class warfare problems that hardcore capitalists do. It leaves the masses in a much better and happier environment rather than allowing a select few to inherent wealth generation after generation.”4
Such is the sophomoric appeal of socialism, but we need not limit ourselves to actual sophomores. An extraordinary number of national leaders, many of them among the world’s best-educated people, have fallen for the fool’s gold of central planning. In the West, this has contributed to economic stagnation and political calcification. In the Third World, it has led to absolutely tragedy. As former secretary of state Zbigniew Brzezenski notes in The Grand Failure:
In different ways, the new governments of such major countries as India or Indonesia and of the new African states adopted some form of state socialism as the norm, though in every case insisting that they were blending it with their own specific national cultures. The leader of West Africa’s new state of Guinea, Sékou Touré, responding to [Soviet leader Nikita] Krushchev, expressed that mood when he stated, “The Marxism which served to mobilize the African populations, and in particular the working class, has been amputated of those of its characteristics which did not correspond to the African realities.” Nonetheless, the new leaders did find the Soviet support helpful and were inclined to flirt with Soviet-propagated doctrines, especially for political reasons. They were particularly attracted by Leninist techniques for the seizure and maintenance of power, and the concept of a disciplined and hierarchical ruling party was especially appealing to the new generation of rulers.
. . . In the 1970s, several African countries thus embraced Marxism as their doctrine and proclaimed themselves to be engaged in the task of building socialism. Six—Angola, Mozambique, Madagascar, the Congo, Benin, and Ethiopia—even went so far as to adopt Marxism-Leninism as their guiding framework and stressed their fidelity to the broad outlines of the Soviet experience in building socialism. Nine others—Algeria, Libya, Cape Verde, Guinea-Bissau, Guinea, Sao Tome and Principe, Zambia, Tanzania, and the Seychelles—became self-avowed socialist regimes, though stressing the centrality of their own national conditions in the actual implementation of socialist goals and avoiding any explicit identification with Leninism. All of them, however, did elevate the state into the central organ of socioeconomic change.5
“The [Cuban] government claims it takes no political prisoners. The numbers provided by human rights agencies—an estimated 500,000 since 1959, with thousands executed—tell a different story. In Castro’s Cuba, it is a crime to meet to discuss the economy, to write letters to the government, to report on political developments, to speak to international reporters, to advocate human rights, to visit friends or relatives outside your local area of residence without government permission. Cubans are arrested without warrants and prosecuted for ‘failing to denounce’ fellow citizens, for general ‘dangerousness,’ and, should some crime not be covered by these criminal code provisions, for ‘other acts against state security.’
“. . . Cubans found guilty under this criminal justice system—and their fate is rarely in doubt—often serve 10 to 20 years in jail for political crimes. But most Cuban criminals are not political. A large proportion of the estimated 180,000 to 200,000 common criminals in Cuba’s 500 prisons are people who broke the law by killing their own pigs, cattle and horses and selling the excess meat on the black market.”
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Larry Solomon, National Post, May 2003
Of course our anonymous online commenter, praising the wonders of Cuba and Venezuela, would not want to deal with such basketcases as Ethiopia or the Congo. But the Congo is easy pickings for the critic of socialism. Let us do that commentator the courtesy of examining the cases he holds up as exemplars of socialism: the Venezuela-Cuba model and the more socialist corners of Europe. There is something to his observations. (Not much, and not what he thinks, but something.) Let us look at the world’s various models of socialism and the representative countries. Let us look at their prosperity, disparity, and class-warfare problems, as compared to more capitalist countries. And, above all, let us look, as our commentator suggested, at the directions and ideals at work. In fact, let us begin with those.
At the heart of the difference between capitalism and socialism is a question about the calculation of economic value. In a free-market economy, economic values are established economically; that is, a product is worth what you can sell it for on the marketplace. Ayn Rand’s followers, who are some of the most energetic defenders of capitalism in the world, call themselves “Objectivists,” but in truth capitalism assumes a radical subjectivism in the marketplace. The real, objective economic value of things is identical to how people subjectively value them.
We can debate whether Lady Gaga or J. S. Bach is the superior musical composer (okay, no we can’t, but never mind that for now), but what is certain is that in the first decade of the twenty-first century, Her Ladyship commanded a larger market share than did Mr. Bach. Likewise, pornographic actresses may command higher salaries than do professors of philosophy. Consumers may have bad taste, they may have immoral tastes, but their tastes are what their tastes are, and the market allows us to understand them.
Look at it this way: a top-flight surgeon does not command high wages because of his intelligence, his skill, or his expensive education, important as those things may be. He earns a big salary because his services are highly valued by the people who want them. He may be a brain surgeon doing life-saving work, or he may be a cosmetic surgeon tweaking a nose in Beverly Hills. A surgeon’s work may be, in some sense, more socially important than a professional basketball player’s or a pop star’s. It may be socially less important than a priest’s or a teacher’s. But the reason your average surgeon earns more than a priest or a teacher, but less than an NBA point guard or a pop princess, has nothing to do with any objective features or qualities of his work. It has nothing to do with the moral value of his work: boob-jobs pay just as well as treating kids for cancer. Capitalism’s approach, in other words, is to answer economic questions economically. This theory is not normative; it has nothing to say about whether people should value goods and services in the way they do.
Socialism breaks with capitalism on precisely this issue. It seeks to infuse the fundamental, deep processes of the economy—the setting of prices—with moral meaning. Indeed, normative, moralistic methods for calculating economic values have obsessed socialists and other utopian thinkers for more than a century. It is one of history’s great ironies that capitalists built decent and humane societies on the basis of an amoral approach to the economics of pricing, whereas socialists built exploitative and inhumane societies on the basis of a morally inflamed approach to economics. Of those normative approaches to prices and wages, the best known comes from the father of socialism, Karl Marx, and it is called the “Labor Theory of Value.”
In broad strokes, Marx holds that the real value of a product is measured by the labor necessary to produce it, regardless of the market price or value of other material inputs. If it takes twice as much labor to produce widgets as it does to produce gadgets, then widgets are twice as valuable, to Marx, in real economic terms, as gadgets are. “That which determines the magnitude of the value of any article,” he writes in Capital, “is the amount of labour socially necessary, or the labor-time socially necessary, for its production.”6 Marx’s analysis is morally normative in that he insists that, since labor is the measure of value, wages must equal the price of the product. The mere existence of profits—squeezing economic value out of a product beyond what workers are paid—for Marx was proof of capitalists’ exploitation of workers. It was indistinguishable from outright theft.
Marx was not entirely simplistic, and he made room for the fact that some kinds of labor are going to be worth more than others. (He is, it must be said, sometimes vague, sometimes abstruse; one can derive many meanings from conflicting and inconsistent passages in his work. One may quote Marx to all ends, just as one may quote Scripture to all ends.) In The Poverty of Philosophy he writes:
Does labor time, as the measure of value, suppose at least that the days are equivalent, and that one man’s day is worth as much as another’s? No.
A poor, starving citizen of North Korea takes it upon himself to protest in front of Kim Jong Il’s official residence. He yells over the fence, “We have no food! We have no electricity! We have no water! We have nothing!”
Naturally, he is seized by the local gestapo, who take him into one of Pyongyang’s many police dungeons and interrogate him. After they’re done, they decide to give him a good scare, so they tie him to a chair and point a gun at his head. He doesn’t know it’s full of blanks. The policeman pulls the trigger—BANG!—and says, “Let that be a lesson to you.” To which the dissident replies, “We have no food! No electricity! No bullets! Nothing!”
Let us suppose for a moment that a jeweler’s day is equivalent to three days of a weaver; the fact remains that any change in the value of jewels relative to that of woven materials, unless it be the transitory result of the fluctuation of demand and supply, must have as its cause a reduction or an increase in the labor time expended in the production of one or the other. If three working days of different workers be related to one another in the ratio 1:2:3, then a change in the relative value of their products will be a change in the same proportion of 1:2:3. Thus values can be measured by labour time, in spite of the inequality of value of different working days.7
Got that? Good. Adam Smith, the supreme anti-Marx in the popular imagination, entertained a version of a labor theory of value himself, and he explains the issue slightly differently in The Wealth of Nations:
But though labor be the real measure of the exchangeable value of all commodities, it is not that by which their value is commonly estimated. It is often difficult to ascertain the proportion between two different quantities of labour. The time spent in two different sorts of work will not alone determine this proportion. The different degrees of hardship endured, and of ingenuity exercised, must likewise be taken into account. There may be more labor in an hour’s hard work, than in two hours easy business; or, an hour’s application to a trade which it costs ten years’ labor to learn, than in a month’s industry at an ordinary and obvious employment. But it is not easy to find any accurate measure, either of hardship or ingenuity. In exchanging, indeed, the different productions of different sorts of labor for one another, some allowance is commonly made for both. It is adjusted, however, not by any accurate measure, but by the higgling and bargaining of the market, according to that sort of rough equality, which though not exact, is sufficient for carrying on the business of common life.8
Here we begin to understand the real moral flavor of socialism. Adam Smith, a classical liberal, created a school of economics that took into account human error, human foibles, and human shortcomings. Eschewing any rigid ideology, he had faith in the “higgling and bargaining of the market”—which is to say, faith in people—and was satisfied with a system that, for all its imperfections, is “sufficient for carrying on the business of common life.”
Socialism, on the other hand, became a creed of revolutionaries, and it retains its revolutionary characteristics even today, when the dream of worldwide socialist revolution is as limp and dingy as a sweaty Che Guevara T-shirt. That kernel of, “Hey, let’s pick up an AK-47 and solve this problem” thinking always is there. It does not begin with Marx, but Marx made it orthodoxy, and his writing is florid with angry, puritanical moralism. His critique of liberalism is not just economic, but moral, and scaldingly so: “Capital is dead labor, which, vampire-like, lives only by sucking living labor, and lives the more, the more labor it sucks.”9 When it comes to philosophy, Marx wrote, “The point is not merely to understand the world, but to change it.”10
Together,
We can take everything:
Factories, arsenals, houses, ships,
Railroads, forests, fields, orchards
And turn ’em over to the people who work.
Rule ’em and run ’em for us people who work.
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Langston Hughes, “Good Morning, Revolution”
The question of how we set prices and wages may seem, at some level, like a trivial one, but it is the cornerstone of socialism. Once a socialist central-planner is empowered to go into the marketplace and start issuing diktats—that the value of X is something other than what the producer and consumer of X have agreed it is, and that the world must bend to that judgment—then a cascading array of political problems and questions must follow. The first one is this: if prices aren’t set in the marketplace, then who sets them? And how do our new lawgivers know what they should be? That is the topic of our next chapter.