Presentation on what’s wrong with socialism

This post will be work in progress for the next few days as I put together is my presentation on “What’s Wrong with Socialism?” that I am presenting to the School on March 13. Anyone wishing to add comments to help clarify the arguments are more than welcome to do so. In particular, I am worried about overstating my case so would be pleased with any criticisms and suggestions that help me stay on course.

Anyone wishing to come along to the presentation here in Melbourne is most welcome: Wednesday from 1:00-2:30 at RMIT’s City campus. I will put up the exact venue next week.

The basis for the presentation is my belief that a modern course in economics, based on standard economic texts in which the standard economic theories are presented, will leave a student without an adequate understanding of why a socialist economy cannot work.

This is based on my observation that very few – whether an economist or otherwise – can explain why socialism inevitably leads to poverty, although anyone willing to look can see this is true. There are innumerable political and philosophical reasons for fearing socialist ideas:

  • centralised political control
  • extraordinary power granted to government
  • loss of political freedom
  • diminished personal responsibility
  • diminished independence
  • encourages sloth

The presentation is based on my just-published, “I, Mechanical Pencil” which has been put out by the CIS and which you can find a copy of here.

My approach to the presentation is first to list the six absolutely essential elements of an economy, the absence of any one of which will cause the economy to cease working other than in the most rudimentary way. These six are:

(1) entrepreneurs who make decisions for themselves
(2) an independent financial system
(3) an operating price mechanism
(4) business profitability as the major determinant of what is produced and how it is produced
(5) sound government regulation, and
(6) a robust defence of property rights.

 

(1) Entrepreneurs

Every productive enterprise must be run by someone. There are many decisions to be made, all of which require a constant ability for someone to respond both to opportunities that present themselves and the problems which are both frequent and inevitable. In a market economy, productive enterprises are run by individual members of the community who do so because that is how they seek to earn their incomes. No entrepreneur is a government employee, nor are they chosen by governments to run these firms. Instead, entrepreneurs are the individuals who truly care about the welfare of the business, partly because every mistake takes money from their pockets, but also because the business is their creation in the same way that a work of art is the creation of an artist.

Entrepreneurs are not mere managers nor can they be replaced by managers. They are the individuals for whom the business is their own, and which they spend their lives trying to shape into as good a business as it can possibly be. It is not just a job. It is a vocation.

Yet no text on economics discusses the role of the entrepreneur. You can do ancillary courses in which the entrepreneur is discussed, and these are almost entirely courses that focus on innovation. The actual superintendence of a business is seen as of almost no relevance to the operation of a firm.

It is also the entrepreneur who determines what will be produced, and is entirely responsible for the commercial introduction of innovation onto the market.

(2) An independent financial system

Similarly, finance is not discussed as part of the education of an economist. There is money, banking, interest rates and the role of saving that do get a run through, but the determination of which firms are determined to be potentially the most viable by those who make lending decisions is at most a paragraph worth of discussion.

More crucial, the very issue at stake in the decisions that go behind finance is the allocation of a nation’s available saving among all the alternative uses that savings might be channelled towards. And here there are two massive blunders which almost totally obscure what it taking place.

Saving is discussed almost entirely (perhaps entirely) as a flow of money. And in a standard macro analysis, it is made up of the difference between current income and current consumption: S = Y – C.

Then, beyond this, the level of saving is taken to be the sum of money that is generated during the course either of the quarter or the current year, but whatever period is chosen, the present, or near present is all that counts.

Thus, the very concept of saving is totally lost. What is actually being determined by finance decisions is completely misstated. Saving is not a sum of money, saving is that stock of productive assets (eg machines and buildings) and available labour that can be used to build additions to the nation’s capital stock. What those who provide finance actually do is determine to whom to give sums of money that allow particular businesses to purchase in the various forms of capital and labour with which they can complete their own investment projects.

More destructive still is the imbedded Keynesian belief that recessions are caused by excess saving. The entire and madly destructive theory that explains recessions as a sign of that savings levels are higher than businesses wish to invest has led to decisions across the world for governments to engage in largely wasteful and unproductive spending to soak up those savings, as if sums of money sitting in bank accounts or in some other way left unspent is evidence that our savings are being left unused.

The reality is that virtually every form of saving (capital equipment and labour) are owned by someone who does everything they can to ensure that the capital and labour they own (the labour is, of course, their own labour) are being put to work. There are periods of transition when capital and labour are idle – factories close and people lose their jobs for all kinds of reasons – but unemployed workers along with whomever owns the capital will do everything they can to find alternative forms of work. We systematically ruin our economies by following Keynesian models and prescriptions.

(3) An Operating Price Mechanism

This is the one that counts since it is both the most obscure but also the most important. This was the issue at the heart of the “socialist calculation debate” that went on from the 1920s and through until the 1950s and then ceased. No one, other than in a few classes here or there, is ever taught anything at all about any of this.

More to the point, in a world in which there are infinitely more uses for most of the resources that are available, and also many ways that any particular output could be produced, there is an absolute need to ensure that some means to choose the least resource-intensive means to produce each good or service. Unless you understand why a business cannot decide which way to produce using the fewest resources if there is no price system in existence, you will never be able to undermine socialism. Here is a made-up example for the production of a number of units of X.

X = 2A + 3B + 4C + 9D
X = 3A + 4B + 3C + 7D
X = 7A + 5B + 2C + 4D

All of these might be ways to make the same number of units of X but unless you know in a realistic way how much A, B, C and D cost, you cannot determine which way to produce at the lowest cost. These are not technical questions but entirely economic.

What is the relative value of a tonne of steel in comparison with a tonne of copper? Is it cheaper to build a wall out of plaster or out of wood? Only in a market system, where the producers of every single input have to price what they sell to earn a positive return on their outlays, can there even be an estimate made of which array of inputs would provide the lowest cost to the economy in providing the same utility to the buyer.

As in the above example, you will still get X irrespective of which combination of inputs is chosen, but some of those resources are rare and have other more valuable alternative uses. Without a price mechanism based on the proper relative valuation of the output, that can only be determined in a market setting by entrepreneurs, a central planner cannot even begin to decide how to go about producing anything.

And it has ever been thus in every attempt to introduce socialism. Every socialist economy immediately loses its bearings because it has no means to decide which alternative would use up a smaller proportion of the resource base of the economy, and if it cannot do that, it will choose means of production that will waste prodigious amounts of resources on each particular item so that fewer items in total can be produced.

There was a long debate over whether central planners could manufacture a reasonable facsimile of relative prices that happen naturally through entrepreneurial pricing on the market. It was at one time understood even among the defenders of socialism that an answer to this question was crucial if a socialist system was to function. And the fact is, that this issue was never properly resolved, as was evident by the collapse of the Soviet Union in the late 1980s.

The most astonishing example was the different standards of living in East and West Germany. The differences were immense since the East Germans could not even remotely maintain the same living standards, and this was even though they tried to determine costs by using the relative prices generated in West Germany and apply these to their own production techniques. But as close as they were both geographically and culturally, the relative price structure generated automatically in the West were near useless to the central planners in the East since they did not in any way reflect their own production costs.

(4) Business Profitability

For reasons that I will not explain here, but every economist is taught, the ideal model of the operation of an economy is described as PERFECT Competition, and is contrasted with all other forms which are described as Imperfect Competition. For some reason, the ideal form of market structure is one in which, as it says below, “no one earns a profit”.

Perfect Competition – No One Earns a Profit

In perfect competition, the market is the sum of all of the individual firms. The market is modelled by the standard market diagram (demand and supply) and the firm is modelled by the cost model (standard average and marginal cost curves). The firm as a price taker simply ‘takes’ and charges the market price (P* in Figure 1 below). This price represents their average and marginal revenue curve. Onto this we superimpose the marginal and average cost curves and this gives us the equilibrium of the firm.

Source

The conception to reach this conclusion is so entirely static that it is absurd to think of this as in any way representative of the operation of a market economy. The very existence of profit shows, so far as economics is concerned, that the economy is not running at peak efficiency. There are also questions of an improper distribution of income since in a truly competitive economy, and in the long run, a larger return than the absolute minimum somehow implies that the market is not functioning at its optimal level. All other market structures, which in reality represents about 98% of the economy, are inefficient because firms are able to adjust their level of supply to earn a profit above the efficient minimum. But the existence of profit, as defined within an economics text, is a negative.

(5) Sound Government Regulation

There are schools of economic thought for which the very notion that government regulations have any role to play is anathema. There is no doubt that there can be over-regulation, and we experience just that everywhere today. The principle seems to be that if someone can think of some negative potential in some action, that it will either be examined to death or forbidden. But the opposite principle is just as bad, that business should just be allowed to get on with things without any scrutiny or direction from government.

The point here is not just that regulation is essential, but that regulation must be limited to just those forms of control that will actually pass some kind of cost-benefit test. Here the issue for modern economics is not that there should be regulation. That is much of what an economics course now is – a discussion of market failure and the need to remedy the errors of the market. So in this instance, the point here is to recognise that some regulation is essential.

This is from Mises’s Human Action. And while it is clear that Mises is reluctant to state that there is such a role for governments because of the principle of give-them-an-inch-and-they-will-take-a-mile, nevertheless, he does accept that government does indeed have such a role.

There are certainly cases in which people may consider definite restrictive measures as justified. Regulations concerning fire prevention are restrictive and raise the cost of production. But the curtailment of total output they bring about is the price to be paid for avoidance of greater disaster. The decision about each restrictive measure is to be made on the ground of meticulous weighing of the costs to be incurred and the prize to be obtained. No reasonable man could possibly question this rule. (Mises [1949] 1963: 748)

Regulatory overkill has been a disaster for the functioning of our economies. I truly never understand how the entrepreneurial types I know put up with it. You would think that those who set the rules are doing so with the intent of killing businesses off.

(6) Property Rights

Socialist governments are notoriously opposed to the private ownership of the means of production. “Expropriate the expropriators” is the ancient expression. Nationalisation of the commanding heights of the economy and whatever.

Whether this is driven by envy or by some unstated economic rationale, the aim to achieve something described as “equality” is the mantra. The result is that those who produce are taxed to provide incomes to those who produce less or produce nothing at all. And in the socialist commonwealth, the levelling is complete, with the masses living in poverty and those at the top living upon the meagre levels of wealth the economy might be capable of producing.

If property rights are included in a standard text, it has escaped me. There is nothing in how modern economics is taught, with it abstract and often mathematical discussion of the operation of the various forces to produce the strangest economic notion of all – equilibrium – that anywhere mentions that only if the producers of capital believe they will maintain the ownership of what they have crafted, will that capital come into existence in the first place.

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48 Responses to Presentation on what’s wrong with socialism

  1. It is often said that if one cannot define their terms, they do not understand them.
    In this vane, might I suggest early in the piece defining your understanding of Marxism, Socialism, Communism, and Fascism?
    For instance, I would attempt with Marxism is an umbrella term which includes the others, and is proposed by Karl Marx and Frederic Engles as being a system in which contributors and beneficiaries share production and consumption fairly. However, Marx and Engles never considered the unexpected consequences. One might add that it is an ideology in mirror like contradiction of the Libertarian ideals of Ayn Rand.
    One could define socialism as a system in which central planning controls the consumption of material goods.
    Communism is a variation in which central planners exercise power over not only productive assets, but the production and consumption of goods and services.
    Fascism is a variation in which ownership of productive assets are allowed to remain in private hands, but central planning exercises power over the means of production as well as consumption.

    In every instance in which any of these variations has been attempted to date, the unintended consequences are that a select few feast on the effort of the many, and inevitably use force, coercion, extortion, and violence to enforce the dictates of the planners.

  2. Sean Fergusson

    It’s time to stop looking at socialism as a valid economic theory which has been badly implemented and start calling it a fiscal weapon designed to destroy the host. It’s weaponized economics.

  3. Beachcomber

    Hi Steve

    I will have a read of your ‘I, Mechanical Pencil’. The great one, Milton Friedman, also used Read’s ‘I, Pencil’ to explain how a free market economy promotes cooperation and harmony in society.

    Can’t suggest any improvements to your presentation, although I wouldn’t bother with the graphs. My only comment is that your ‘six absolutely essential elements of an economy’ are all anathema to our establishment ruling class. Everything they do destroys these elements because they are not concerned about a healthy economy and society, they are concerned about increasing the power and control of government. It is their swamp creature domain.

    They are very effectively replacing (5) sound government regulation with total government control.

  4. Philip

    In a nutshell…its “Supply Failure”. All the referenced reasons are only aspects that create supply failure..The reasons why people withdraw both drive and capital that ultimately shrinks Supply are the aspects requiring focus. As you are fighting a rearguard action, focus on things that will have a meaningful negative impact on the current Supply function.

  5. Pyrmonter

    Steve – the Cat is a lay audience; it really isn’t ‘right’ to say ‘no-one earns a profit’ without adding that ‘profit’ in this sense has a technical meaning to people who’ve studied intermediate micro (or even introductory micro) that differs from its usual meaning.

    For any lay-readers, a ‘profit’ in this sense is a profit over and above the ‘normal’ profit necessary to retain capital in the firm’. The condition of perfect competition is not that a business has no return or accounting profit, but that that profit is only the ‘normal’ return, adjusted for risk and expectations of uncertainty.

  6. Beachcomber

    Reading ‘I, Mechanical Pencil’. Your ‘Errors of Socialist Theory’ are like a guide book for our establishment ruling class. It’s what they have almost completely achieved in our economy!

  7. IainC

    I would enlarge Axiom 1 in your sine qua nons above:
    (1) entrepreneurs who make decisions for themselves and are permitted to keep the bulk of their profit if successful, and go bankrupt if not.
    For a short but scything hatchet job on Marx, Communism and Socialism, and a defence of Capitalism, I enjoyed:
    MARXISM/SOCIALISM, A SOCIOPATHIC PHILOSOPHY CONCEIVED IN GROSS ERROR AND IGNORANCE, CULMINATING IN ECONOMIC CHAOS, ENSLAVEMENT, TERROR, AND MASS MURDER: A CONTRIBUTION TO ITS DEATH by George Reisman

  8. Enoch Root

    I would focus on the fixing of a dysfunctional economy. Keynesians think they can fix it by increasing government expenditure to keep the demand artificially high. But the real fix comes from (1) letting the economy find it’s “new normal”, by breaking quick and breaking early and (2) cutting taxes and government costs. I would focus in the idea that the dysfunctional economy is, ultimately, the effect of large governments, and in order to fix it, government have to be downsized to fit the “new normal”.

  9. rickw

    30 slides of different piles of skulls.

    Year, location, rationale as to why it was going to work “this time”.

  10. Colonel Crispin Berka, King's Fusiliers Corps.

    In your “Errors of Socialist Theory” section, surely Point 1 and 5 are the same thing?

    A Socialist might claim the whole piece is a strawman. An easy point of contention would be that your “blueprint” for Socialism doesn’t exactly match the definition given by the old-school Marxists or the modern Progressives. Socialists have been slippery about this, sometimes arguing Socialism is a set of methods and institutions, and some arguing Socialism is the pursuit and attainment of a particular material state of affairs (by any means). I think making some more effort to source and reference an actual socialist giving their definition of Socialism, plus an argument that their definition logically entails all your blueprint points (or give real examples), would go a long way to ensuring the attack does not miss the target.

    Looks good.

  11. Mullumhillbilly

    profit is only the ‘normal’ return

    Thanks Pyrmonter, that’s cleared up something that’s been puzzling me since I read Steve’s 2nd edition a few yes ago. The only previous explanation I’d seen was that the principle was wrong because no one has perfect knowledge of MR. That’s a practical objection to relying on the principle as a modelling algorithm, but not a refutation per se of the validity. But it does seem to contain some cicularity; if MC=MR, and C includes opportunity cost of capital, what is a ‘normal’ profit?

  12. Empire 5:5

    100 million murdered in the 20th Century by mob proxy rule.

    Mandatory collectivism- the unnatural notion that compulsory homogenous collective solutions can solve personal shortcomings – is at heart an anti humanistic delusion.

    Data and graphics are nice, but like rickw says, a decent meme with a pile of skulls is a far more powerful means of communication.

  13. Rohan

    Philip
    #2953348, posted on March 8, 2019 at 2:59 pm
    In a nutshell…its “Supply Failure”. All the referenced reasons are only aspects that create supply failure..The reasons why people withdraw both drive and capital that ultimately shrinks Supply are the aspects requiring focus. As you are fighting a rearguard action, focus on things that will have a meaningful negative impact on the current Supply function.

    Yep, and how Stalin stole the grain from Ukranian farmers before starving them to death, which certainly killed supply during and after the Holomodor.

    But Numbnuts would approve.

  14. Rohan

    rickw
    #2953454, posted on March 8, 2019 at 5:29 pm
    30 slides of different piles of skulls.

    Year, location, rationale as to why it was going to work “this time”.

    I’ve got a mate who managed to escape this as a kid. Lift one of those pics for your slideshow.

  15. 2dogs

    The problem with this approach is the Leftist dictionary. How they define socialism changes constantly, and socialists will adopt whatever definition is the necessary one to disprove the opponent’s argument at hand. They do the same with their definition of capitalism.

    If they had intellectual honesty to be clear and consistent, and they could be pinned down, making the case against socialism would be very easy. There are strong arguments against socialism regardless of what definition they use. They avoid these arguments only by being a constant moving target, forever shifting the goalposts back and forth.

    If you are trying to build an argument, I think initially your time would be better spent trying to pin socialists down on what they mean by socialism. One thing I would like to see is a socialist statement on the system of government, and what the constitution should say.

  16. Pyrmonter

    @ Mullum

    A good question. ‘Normal’ profit is defined in an almost circular fashion, as the profit sufficient to keep the capital deployed in the firm there. If profits fall below ‘normal’ (eg, demand falls, and in the short run, there is ‘excess supply’) capital will be redeployed elswhere; while if they are ‘super normal’, capital will be attracted.

    What exactly the ‘normal’ profit is will differ from market to market. An interesting question is whether it can vary over time, and if so, why.

  17. Colonel Crispin Berka, King's Fusiliers Corps.

    Thinking about it more, there is a whole raft of stuff that people blame Capitalism for.

    e.g. “Prosperity only followed after a stronger central government regulating companies. We wouldn’t have an 8 hour workday or weekends otherwise.”

    e.g. Pollution https://i.imgur.com/ledeveP.jpg

    e.g. High drug prices https://imgur.com/gallery/f7huB

    Does an attack on Socialism require a defense of some other ideology as an alternative? Probably yes it does to be persuasive, as people don’t want to give up one plan without another plan to motor with.
    Maybe list off a few common complaints about Capitalism and show how they are not a necessary product of capitalism, or that they are a necessary product of Socialism, or that they are necessarily a product of Capitalism but (insert excuse here, eg anything else is worse).

  18. min

    The tale of two Harry’s is a simplified, with cartoons, explanation of the difference between socialism and capitalism on Pickering Post . It was made to demonstrate to kids who cannot understand why socialism is useless.
    Years ago Steve, I had a fill in position to teach some psychology in marketing course at RMIT , thus I have dealt with students whom I found then ,very naive and unworldly . Probably different these days but maybe more brainwashed. But even with older people I still work on the KISS principle fewer words and more visuals because how they operate these days and also average IQ theses days is below 100.
    Anyway remember didn’t Alberici confuse turnover and profit ?

  19. Leo G

    Michael Daley says he spoke to one million dead fish. I expect they’ve been enrolled to vote in the state election.

  20. 2dogs

    But it does seem to contain some cicularity; if MC=MR, and C includes opportunity cost of capital, what is a ‘normal’ profit?

    The market rate of return – what investors are generally getting. CAPM stuff. It’s not circular, but ultimately comes down the time and risk preferences of the general public in deciding whether to invest or spend their money.

  21. Trax

    In socialism everyone wants to maximize consumption by getting money through government. This is done at the expense of investment and maintenance of the productive economy. So productivity collapses and ends in poverty as the money/resources for consumption runs out.

  22. Petros

    Maybe mention the lack of choices. Young, deluded, left-wing Westerners never consider this issue. Point out how they do not have the choice of bakeries, restaurants etc. that they are used to. Maybe some examples from the Soviet Union. Photographs of the bakeries named only with a number. Funny how when one Googles this stuff not much comes up. We need the testimony of those who suffered under these regimes. Here is one link.

  23. John A

    (5) sound government regulation, and
    (6) a robust defence of property rights.

    I would reverse the order of these (implied ranking of importance) and modify old (5) to show the following:

    (5) a robust defence of property rights, and
    (6) sound government regulation, strictly limited to enabling (5).

  24. Mr Black

    Perhaps you should note that socialism is not now and never was an economic system, it was a political system for using the threat of force by the poorer masses against the rich, forcing the rich to give up power and putting new men of no merit in control, then using the wealth of the rich to bribe the poor for their continued support.

  25. A Lurker

    My advice – look up some of the political memes against Socialism and Communism on the net and use those which work the best because many times a simple image or cartoon has more power than a page full of written words.

  26. Nob

    As a kid who thought he was a socialist, I always had misgivings about “From each according to his ability, to each according to his needs”.

    I knew too many people who thought their “wants” were “needs” and lazy selfish bastards who thought they were working to their ability.

  27. Empire 5:5

    (1) entrepreneurs who make decisions for themselves
    (2) an independent financial system
    (3) an operating price mechanism
    (4) business profitability as the major determinant of what is produced and how it is produced
    (5) sound government regulation, and
    (6) a robust defence of property rights.

    Is the order correct? What conditions must exist for entrepreneurs to want to make decisions for themselves? What if the order is reversed and government regulation is tightly proscribed?

  28. Iampeter

    Working draft of my presentation on what’s wrong with socialism

    Nothing here comes close to identifying what is wrong with socialism. This is just boilerplate economic consequences, but nothing to do with the actual issue, which is one of ethics, not economics.
    Socialism is the system based on the Christian ethics of altruism. It is the idea that you can sacrifice the individual for a greater good. This goes against the self interest required by people to live on this earth and is what is actually wrong with socialism. Until you’re ready to fight altruism, you’re not ready to fight socialism.
    No amount of economics is every going to change these facts or persuade anyone to act against what they think is moral.

    Also, you’re post doesn’t work on it’s own anyway. You’re someone who supports regulating trade and immigration. You can’t then go on to cry about “loss of political freedom” or “diminished independence.”
    How can you even seriously write this? Don’t you see your own glaring contradictions?

  29. Roger W

    It seems to me that capitalism is essentially freedom and what freedom allows to happen, and socialism is about centralized control and what happens when freedom is not allowed.

  30. A Tangential thought after reading your comments on Entrepreneurs… The Entrepreneur, the founder, the person with the idea nurtures his company as a parent (hopefully) nurtures their children. No manager can have the love, the commitment, the drive, to do whatever it takes to ensure the success and growth of the company, of the idea. Just like those appointed by the state to look after children, they will do the basics and then go home, because they will get paid, no matter what.
    Is this the reason that so many once successful companies die and wither ? As the company grows, the entrepreneur has less and less impact, as more and more managers are brought in. Even if the company is passed on to the founder’s children, they will have been taught to approach the “job” as if they were managers, because that’s what Dad or Mum wanted… The company is not their creation… they are managers, even though they are owners.
    And thus is every company is doomed to failure by its very growth, as this growth forces the Entrepreneur into the background, as the Entrepreneur brings on more and more Managers ?

  31. Mrwashout

    Steve, explain the socialist calculation problem. To me that is the key why planned economies don’t work, the price mechanism is the important point.

  32. Terry

    “Socialism is the system based on the Christian ethics of altruism.”

    Altruism is not being mugged for your wallet at gunpoint.

    That is a victim, or in the context of our tax system, a serf.

    Altruism requires a voluntary decision made by the donor.

    Similarly, bureaucrats re-distributing confiscated wealth are not “altruistic”.

  33. Tel

    The concept of Altruism was invented by Auguste Comte in the early 1800’s and he was not religious, nor was his work in any way based of church doctrine.

    Christianity never has espoused Altruism … it has encouraged Charity which is a quite different concept.

  34. min

    A lurker I agree about visuals ,but do not think that youngsters would get your examples.

  35. I’m listening to another Econtalk podcast between Russ Roberts and Mike Munger that might add grist to the mill. Discussing ‘crony capitalism’.

  36. REX

    Good piece.

    Fundamentally the issue is a misunderstanding of human nature. Socialists are naive utopians, who misunderstand the hard wired human desire to dominate others – a love of power.

    Socialists genuinely believe that power-sharing among human beings, even though daily life, let alone history, disproves this.

    https://www.libertarianism.org/columns/lust-power

  37. REX

    Good piece.

    Fundamentally the issue is a misunderstanding of human nature. Socialists are naive utopians, who misunderstand the hard wired human desire to dominate others – a love of power.

    Socialists genuinely believe that power-sharing among human beings is possible, even though daily life, let alone history, disproves this.

    https://www.libertarianism.org/columns/lust-power

  38. Amused

    Everything.

    That’s what is wrong with socialism.

  39. Alex Davidson

    You are not going to find the answer to the question: “What is wrong with socialism” in utilitarian economic analysis.

    At its most fundamental level, socialism is wrong because it denies individuals their birthright of freedom, and it does this by failing to respect and uphold individual property rights. Instead, it confers ownership upon the political class by way of a legal system that permits them to use force to achieve ends, while outlawing it for the rest of us.

    As we can see here in Australia, such a system inevitably leads to widespread plunder via the euphemisms of taxation, levies, licence fees, etc; vast over-regulation accompanied by draconian enforcement; unproductive make-work schemes; loss of privacy; and wasted potential. It also results in ever increasing numbers of individuals living off the backs of others, reduces the incentive to be productive, and encourages dishonesty.

    Socialism operates according to the principle ‘might makes right’, and as such can never be the basis of a just or prosperous society. Surely that is about all that needs to be said.

    What we should be aiming for is a system based on contract, consent, and respect for individual property rights. One where laws apply equally to all, including the government. One where the only legitimate use of force is defending person and property, not as a means to the whims of the political class.

  40. AussieMAGA

    Socialism is bad because Liberalism is bad and Socialism is a Liberal project — an outgrowth of Liberalism, not its opposite (dumb people can’t understand this).

  41. Petros

    You’re very impressive, Tel. Very much a polymath. The Greek word used in the New Testament for charity is agape αγάπη. We would just translate that as love. In fact just giving money to the poor is not condoned in Corinthians if it is not done with love.

  42. Jeremy

    Great Piece Steve!
    My only comment along with others above is that the first essential is Private Property Rights.
    Private Property Rights should be number one.
    Unless you have the right to retain what you possess and create, none of the others matter.

  43. Bruce Paix

    Don’t forget ” always ends with a pile of skulls…”

  44. Tel

    Petros #2954678,
    Thanks! Mostly, I just take the 15 minutes to look something up, because you know we have this amazing tool called the Internet which can expand human knowledge … no one ever need be ignorant again. Oh yeah, but most people are too lazy to use it properly. Never mind, seemed like a nice idea at one stage.

    Good point on the Greek translation stuff … linguistics isn’t my forte, but I think you are spot on. I’m an atheist but picked up Christian philosophy from hanging around here, and also from Bob Murphy’s writings. Because I’m interested in the theory of evolution (it’s more of a theorem since it’s a tautology) the whole argument over Altruism vs Charity has some history with me. It’s pretty hard to get around the conclusion that if you believe in evolution, Altruism does not and cannot evolve (because it is self destructive). Evolutionary biologists showed their hand by simply redefining the meaning of “Altruism” … if you go to Wikipedia there’s two separate pages covering “Altruism”, one for the biologists, one for everyone else … that’s got to raise a pink flag at least.

    On that topic I’ll link to Bob’s Show where he rambles on some of these topics (but you need a very long drive or extended gardening session to listen to this). It isn’t all religion, most of it is people, but religion comes into it.

    https://www.bobmurphyshow.com/ep-21-the-god-of-social-media-demands-sacrifice/

  45. BorisG

    I thought socialism as an economic theory has been dead and buried and does not need any more critique. Modern progressives tend to deny they are socialists let alone Marxists. Thus any criticism of Marxism or even socialism will be correct but will miss the point. Sanders does not consider himself a socialist, not sure about Corbyn.

    The problem is not just Sanderses and Corbyns, but millions of their misguided followers.

    Definitions are essential.

  46. bespoke

    2dogs
    #2953547, posted on March 8, 2019 at 7:16 pm
    The problem with this approach is the Leftist dictionary. How they define socialism changes constantly, and socialists will adopt whatever definition is the necessary one to disprove the opponent’s argument at hand. They do the same with their definition of capitalism.

    iv noticed that every thing that involves cooperation is starting to be described as Socialist by Leftist.

  47. 2dogs

    Further to my earlier point about the Leftist dictionary, some definitions of socialism include distributism. Distributism is able to meet each of the following criteria:

    (1) entrepreneurs who make decisions for themselves
    (2) an independent financial system
    (3) an operating price mechanism
    (4) business profitability as the major determinant of what is produced and how it is produced
    (5) sound government regulation, and
    (6) a robust defence of property rights.

    I acknowledge the limitations that distributism has with (1) – because of the inability of entreprenuers to fully capture their value, and (4) – because of worker welfare considerations.

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