Squaring the Culture

"...and I will make justice the plumb line, and righteousness the level;
then hail will sweep away the refuge of lies,
and the waters will overflow the secret place."
Isaiah 28:17

02/11/2009 (6:20 pm)

Why Socialism Fails

Yesterday’s passage of the Senate version of the stimulus bill moved conservatives to an American writer’s version of seppuku: navel-gazing the demolition of the greatest free economy in history. George Melloa at the Wall Street Journal contemplated stagflation, Rich Lowry at National Review Online contemplated the end of limited government, and James Lewis at The American Thinker contemplated the rapacity of socialists generally. It was one of Lewis’ commenters, however, that pointed me toward the best find of the day: a marvelously lucid discussion regarding why we prefer limited government to socialism from a Cato Institute contributor named Charles Murray back in 1991. His thesis draws heavily on things we commonly understand about human behavior, and concludes that the reason we should prefer limited government has nothing to do with economic performance, and everything to do with the simple pursuit of human contentment.

What follows here are my own thoughts, but heavily influenced by Murray’s paper; I heartily recommend you read his analysis, as it’s one of those papers that helps us clearly understand the stakes of liberty in human terms. None of the religious references I make occur in Murray’s work.

Let me begin with a Marxian fantasy, with goods moving “from each according to his abilities, to each according to his needs.” Such a system could actually work if God (yes, that God) served as the arbiter of inequities. So long as the participants trusted God to meet their needs properly, and to satisfy justice in the long haul, people might be content with the rewards they received. God would see to it that everybody was working in the role where they were best suited, people would expect their rewards to be according to their input (because God is just, you see,) and what inequalities exist could be explained away as a temporary necessity for God to achieve His inscrutable purposes, to be leveled appropriately later.

The American free market, when it existed and most of the nation was Christian in some form or other (you have to wind the clock back between 150 to 200 years,) actually worked a little like this in the minds of many participants, albeit not perfectly. Participants in the system generally felt that performance would be rewarded with satisfaction, promotion, and financial success, and felt that a just God was the arbiter of what they received. If they were receiving an unjust amount, they trusted that justice would be served eventually. Faith produced contentment, and contentment permitted both a local and a national sense of cooperation and participation. The inequality of the system was regarded as one of it’s better features, as it reflected the judgment of God, and also something that could be overcome with appropriate virtue, labor, and ingenuity. (I’m ignoring obvious social inequalities and the spectrum of human foibles for the moment, to simplify the argument.)

Socialism attempts to produce a system like this artificially, by substituting the State for God. However, if participants will not invest the same confidence in the State that they would invest in God, then two problems arise that will eventually cause the system to fail, and in the interim will produce suffering for all the participants: distrust of the arbiter of abilities and needs, and unwillingness to accept inequalities in provision. People feel their own lack, see inequalities, distrust that the arbiter has permitted those inequalities for some ultimate good, and lose hope that justice will prevail. Universal poverty and dissatisfaction eventually erode the government’s ability to govern.

One of the ironies of real-world socialism is that the proponents of such a system deliberately introduce envy into the system, even though envy inevitably causes it to fail. Socialism in the real world invariably comes to power on the wings of radical egalitarianism, which is nothing but envy inverted into a virtue. Instead of viewing envy as a vice (“Thou shalt not covet,”) radical egalitarianism makes it a vice to own more than the next man, and paints a righteous patina on ordinary envy. We want what the next man has, and radical egalitarianism allows us to call our want “noble suffering,” and to call his plenty “immoral.” Welcome to the Victim Culture.

A couple of caveats here: first, I’ve presented this so far as though the operative element were peoples’ expectations of the arbiter of justice, be it God or the State. It’s important to note that these expectations are sensible; it’s sensible to trust God, and it’s sensible to expect the state to apportion goods imperfectly and corruptly. Second, it’s important to remember that radical egalitarianism is not the same as the earlier, libertarian egalitarianism expressed in the Declaration of Independence. That earlier egalitarian sentiment simply rejected inherited nobility, and posited in its place every man’s right to achieve whatever station he could achieve by his intellect, effort, and virtue. Modern, radical egalitarianism simply says nobody is permitted to have what anybody else lacks, demanding equal outcomes in a manifestly unequal world.

Now, envy always produces lack in an economy because it aims venom at the most productive elements. Once the wealthy have been demonized, who will want to become wealthy? This is the fallacy in Obama’s “equal shares of the pie” analogy; as soon as the government asserts the right to slice up the bigger pieces and give the excess to others less wealthy, there’s no longer any incentive to work for the big pieces. As a result, the whole pie gets smaller. And then, the formerly productive elements get blamed for deliberately shirking production, and get shot or jailed. The entire system becomes coercive, but it never recovers the ability to produce. Once the old villains have been eliminated, the State produces new villains, but persecuting them will never recover productivity. Eventually, the economy collapses, unless the State reintroduces private enterprise and reward for initiative.

In a downward spiral like the one I just described, the only safe place to obtain creature comforts is the government (or the press, which inevitably becomes an arm of the government). One can obtain creature comforts there because the arbiters of “fairness” get to allocate sufficiency to themselves; it’s safe, because the government will never spin itself as the villain. Consequently, all sorts of conniving, climbing, and undermining behavior becomes normal in the government, the government inevitably allocates unfairly to itself (see “Wagyu beef”,) and people lose trust in the State.

Thus socialism rises by fanning discontent, produces need and misery, foments a permanent victim mentality, encourages a vicious struggle for political power as the only means of obtaining sufficiency, and eventually destroys itself.

Where socialism rises by discontent, capitalism succeeds by permitting positive social behavior. Ultimately, inequalities become livable if we are given the opportunity to right them ourselves by working harder or improving ourselves. So long as there is hope of overcoming inequality and obtaining satisfaction, we can be content. That’s why liberty (both economic and political) enables the pursuit of happiness, and permits us to get along.

If a socialist system could obtain power without stirring envy, and allocated resources fairly and wisely, the spiral I described might not occur. Is that possible, or are there other characteristics of socialism that would cause it to fail even if men were honest?

I think the main problem is that a centralized function never produces the ingenuity that motivated individuals bring to the party, so an enlightened socialism will never be as effective as a comparable system with free markets and limited government. Beyond that, though, insofar as power is given to governments, individual choices become limited. When choices are limited, we have to rely on the government to allocate fairly; and then inequalities become less livable because we lack the power to address them ourselves. In such a system, civility breaks down. Murray explains at length the importance of small, social associations in all our lives, and observes that when government takes over an increasing number of functions, to that extent it replaces community. We lose the reasons that we associate with each other because the government has co-opted them, and we become isolated islands.

I introduced God at the beginning of this discussion because God actually makes a difference in how the system functions. Free markets and limited government work without reference to God, but they tend toward social Darwinism, wherein people tend to compete for power and wealth and ignore those who are less able. Fans of Ayn Rand like to exalt selfishness as a virtue, which, while it won’t destroy the productive capacity of an economy the way socialism will, can produce social malformations that are just as destructive.

The error in Objectivism (Rand’s philosophy) is the notion that selflessness is unproductive. This rests on an incorrect model of selfless behavior. What we call selfless is not really a person who never serves his own needs but always serves the needs of others. We all know people like that; we call them “people-pleasers,” and they’re usually neurotic and unhappy. The people we refer to as selfless always have their own needs met abundantly (sometimes by deliberately lowering their expectations, as do monks and nuns,) and they gladly offer the excess over and above their needs to others. This can be highly productive behavior; it begins with sufficiency, and invites others into it to enjoy it as a community.

As the United States increasingly falls into the downward spiral of envy-driven socialism, it will become vital for those who oppose it to be able to explain rationally why socialism fails. This is why articles like Murray’s are essential reading for the coming Age of Obama.

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February 11, 2009 @ 7:13 pm #

I found your posting to be very insightful and enjoyed reading it. I would further claim that “enlightened socialism” would fail as well using the arguments of classic liberalism. Even if people in govt were not corrupt, they would still never be able to perform as “just arbiters” because they lack sufficient information and so would be unable to allocate resources either efficiently or justly. The free market does a much better job (although still far from perfect) of this because the market has every participant providing information on what prices goods or services should be given. The amount of information is vastly increased. A system under God would be perfect because He would always perfectly know the value of everything.

February 12, 2009 @ 8:06 am #

First, to bolster your argument, Adam Smith believed that as every life was the equal of every other so would everyone’s earnings tend to become equal. When he addressed the variation of value in work, he quickly ran into guilds and local monopolies, which he cast as counter-productive. Intellectual property was only a collection of tricks that should be generally shared.

Second, Rand didn’t hold that selflessness was ‘unproductive’ but rather that it didn’t exist. Those who practiced altruism did so as selfishly as any but towards ends which were evil, looting via taxes, mooching via moral shame, destruction via thoughtless acts pursuing impossible objectives.

While she didn’t dwell on generosity, she did consider it a good thing if it was at the will of the generous.

February 12, 2009 @ 5:46 pm #

[...] clipped from http://www.plumbbobblog.com [...]

February 14, 2009 @ 7:06 pm #

One alternate support for socialist management which isn’t managed here is personal investment: i.e., a direct emotional connection to the other people affected by your economic decisions. In other words, if you can’t establish an anti-empathetic distance between you and the people you want to take wealth from, taking that wealth requires not just natural appetite but pathological sociopathy.

This is probably among the most important reasons, it seems to me, why every anthropological example of a functional and healthy, yet non-capitalist/non-hierarchical, culture (of which there certainly have been many) seems to have been structured around single community groups of a few hundred at best. A State cannot be trusted to function like God, but asking it to function like your family — especially if it’s small enough and closely connected enough that it virtually is your family — gives you a lot more flexibility and accountability in how it’s organized.

February 14, 2009 @ 7:39 pm #


You seem to be discounting the economic fact that in a normal, free exchange of goods and services, wealth is taken from nobody. One of the most powerful characteristics of the free market is that economic exchanges, apart from imperfect knowledge, are all win-win transactions. Furthermore, sound economic activity that produces wealth does not do it at the expense of someone else, but actually creates wealth where none existed before.

If I farm, I buy seed from another farmer. He’s willing to part with his seed for cash; I’m willing to part with my cash for seed. We both win. Then I plant the seed and grow the crop. I’ve just created wealth where there was none before, and I’ve not taken wealth from anybody.

In short, distance from those affected by my economic decisions is not necessary in normal circumstances because my economic decisions don’t hurt anyone. The only decisions that hurt others are those involving theft or fraud.

February 15, 2009 @ 12:05 am #


I actually agree with most of what you’ve pointed out; I’m not defending socialism per se, if anything I’m observing that since one of its key social requirements, the low, isolated and emotionally-interconnected population, simply can’t exist in today’s world, a system which neutralizes human flaws by counterbalancing them is necessarily preferable to one that requires them all to be overcome on an individual level to function.

At the same time, I’ll express a devil’s advocate caveat or two. For starters, you characterize all economic interactions as win-win transactions, “apart from imperfect knowledge.” I’ll counter that by pointing out that fallible humans can’t have perfect knowledge and it’s therefore possible for any transaction to go wrong, in ways the loser will blame the winner for but the winner takes no responsibility for — say, the farmer who sold you his seed honestly didn’t know (and nor did you) that the seed doesn’t grow well in the soil of your farm; but by the time you find that out, he’s spent the money you paid him on stuff you have no use for, and now the only way you can make the profit you need to feed your family would deprive him of the profit he needs to feed his. Not a single principle of the free market has been violated here, but the wealth creation has been far from mutual, and enough people clever enough to get away with enough transactions like this — fraud in spirit, if not in the letter of a broken contract — can eventually leave the wealth concentration so unbalanced that socialism starts to look tremendously appealing again. Economic monopolies are as problematic as political ones, if generally shorter-lived.

The theory of mutual wealth creation has a lot of practical evidence to it, but it does presume an infinite fungibility between commodities, and therefore an effective infinite sufficiency of resources, that reality does not always provide. Sometimes, there just isn’t enough of what you need to go around, or there just isn’t somebody willing to buy what you have to sell at enough to get what you need to buy (as the victims of the Irish potato famine found out). Moreover, thought exercises like the Prisoner’s Dilemma or the Shared Grazing Terrain show that the rational self-interest presumed to drive the free market does have limits beyond which it stops being mutually beneficial, especially in a society large enough, fluid enough and complex enough that evading the consequences of your actions is a feasible way of life, or when put up against absolute, non-rational values like essential human dignity, or familial bonds, or irrational ego.

Put simply, socialism presumes that you can always count on the average citizen’s social virtue and altruism; capitalism presumes you can always count on the average citizen’s rational economic self-interest. The simple fact is that neither is true, and when they fail, the systems built around them are perfectly capable of collapsing.

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