Few ideas have profoundly and significantly affected the world in the last two- to three centuries. They have not only shaped the intellectual life of the elites but have tried to shape the real world by those ideas. One of the most persisting and seductive ideas known to humankind is Socialism. Despite the multiple failures of this ideology, it has some great admirers in intellectual circles to this day. So, why socialism doesn’t work in real life?
Socialism, as it has been defined, is a political cum economic system where the state owns the means of production of resources. This economic system advocates for the public ownership of the goods instead of private property. It is based on equality for all human beings, where everyone has equal property.
Which economic system is more efficient?
There are two broad kinds of economic systems which is competing with each other. The one that is currently functioning: is the capitalist system. The other one is Utopian-based: the socialist system. Let us quickly analyze the features of both these economic systems.
The capitalist system is a socio-economic system that recognizes individual rights, including property rights, where all properties are privately owned. In the capitalist economy, all human relationships are voluntary and based on the person’s will. They have all the right to deal with one another based on their mutual choice and interest without any outside inference or coercion.
A free-market economy is a continuous process that possibly cannot be held static. It rewards the best out of the rest and eliminates those with less quality. It encourages productivity and efficiency because it is based on competition.
Economic freedom is the hallmark of any liberal democratic nation. It protects the sovereign rights of an individual. Free markets are the best way to ensure that the economic freedom of individuals is not suppressed by any totalitarian system which wants to replace it by claiming some high ground based on vague moral virtues.
There is a powerful connection between political freedom and economic freedom. A society that is deprived of economic freedom would ultimately be deprived of its political freedom as well. There can never exist a true democracy where individual rights are safeguarded in a socialist society. Only a free market can ensure the liberty of an individual. The other option that remains is some form of slavery and state coercion.
Two dozen socialist systems have existed in the world since the advent of the Soviet Union in 1917, led by Vladimir Lenin. Lenin is considered a father figure of all Communists, next only to Marx. He was, in reality, a tyrant dictator who his fellow socialists described as an ‘anarchist’.
Moreover, a woman socialist once attempted to assassinate him for “betraying the revolution.” During the infamous Leninist regime, orders for mass shootings were passed, and one such order called for no hesitation in applying mass terror.
Socialist systems are run through government intervention. The central authority or the government controls the means of production. As Marx envisaged, these means of production were to be controlled by the workers themselves, but in the central planning system, workers and the state infused with one another and became one. The government-owned industries produced things based on the direction of the elite political leaders who were deprived of the ordinary correspondence of the familiar people. The government-owned services didn’t get any reward, their services were destabilized, and their quality fell.
The bureaucracy controls and does the centralized planning of resources. The premise of central planning is beneficial to ordinary people. But the essential question here is who decides what is beneficial to whom; even in a marriage, there are often two contrasting opinions of what is beneficial to them and what is not. Then how can a few people sitting in bureaucracy decide for millions of people what is beneficial and what’s not?
Socialist society is fundamentally incompatible with human nature. The innate nature of humans is in want of more and more liberty, while Socialism restricts the sphere of liberty. Indeed the very existence of Socialism is inimical to liberty. Human nature is innately opposed to those who violate their personal space and infringe their freedom. Socialism fails because it doesn’t consider the incompatibility of liberty with the pursuit of equality.
The idea of eliminating all social equalities is a substantial monstrous fiction. It is inorganic and inconsistent with the natural evolution through which human societies operate. Complete and pure equality is an unachievable goal without regard to human nature. It is based on the structural changes of human nature by many politically motivated fallible socialist theorists.
Why socialism is a flawed theory?
The idea of Socialism though continuously failed and discredited is endorsed endlessly by leading world intellectuals. Socialists naively believe that the abstractions conceived in the ivory tower could be smoothly reconciled with the situational intricacies of the real world. Writing on the revolution in France, Edmund Burke made us realize that these much-vaunted theories and abstractions have only the vaguest relationship with how people’s actual lives are conducted.
An acute observer of men and manners can notice that most people are busy with their lives, families, friends, and customs and hardly think of the Utopia that socialism promises. The Utopia approached by the socialists devastatingly leads to oceans of blood, and one can never afford to reach there. The reason is simply that humans are far from perfection and are susceptible to greed, violence, and all other human emotions; whole human history is witness to this phenomenon.
Socialism came in the wake of the industrial revolution in the European countries. The socialist ideas came into the mainstream with Robert Owen, and until the advent of Karl Marx, they imperatively remained Utopian. Marx gave his theory a scientific color to not to get dismissed, socialism as merely a speculative fiction. However, the scientific predictions of Marx were proved as demonstrative lies.
Every forecast of Marx was eventually repudiated by the course of events that took place in the future:
- That the rate of profit would continue to decline in the Capitalist economy
- That the masses would be poorer than ever
- That capitalism would be defeated because of its inherent contradictions
- That workers would unite to crush capitalists and so on.
Indeed he predicted that Socialism would come first in the most advanced capitalist countries. Still, by contrast, Russia, composed of ninety percent peasants and hardly industrialized, became the first Socialist country birthed as the Soviet Union.
The Socialist planned economy enforced by the socialist government intervention eventually stagnated because it didn’t have possible incentives through which economic growth could be achieved. Socialist societies didn’t realize that for unlocking human potential, incentives matter the most.
Three Incentive enhancing components:
- Economic (material gain or loss)
- Social (reputation gain or loss) and
- Moral (conscience gain or loss), are absent in the centrally planned economies.
Centrally planned economies deprive both our freedom and dignity.
There has been a breed of democratic socialists emerging since the failures of the Soviet Union came to be known to the world. Essentially they democratically expounded Socialism, which could appeal to a western audience. These proponents of democratic Socialism believe in the idea of social democracy. They are yet to realize that democratic Socialism or any form of Socialism can never be implemented until an outside force imposes it.
Why Capitalism is a better choice?
The entrepreneurs and capitalists create wealth and employment, thereby creating prosperity. The profit and loss system succeeds in eliminating what is inefficient and ineffective and produces the best quality and living standards. Incentive enhancing institutions in the private sector naturally pave the way for a system of choosing the best product. An effective incentive mechanism is deemed necessary for the economic growth of the vast majority of the populace. Incentives matter the most in providing the best quality of products.
The private sector is engaged in the competition; thus, it often helps in price controls. The economic performance of the global economy improves because of the incentive structure. The fundamental principles of capitalism are relative betterment and prosperity of people. While Marx predicted that the middle class would shrink with the expansion of capitalism, as the future happened, it was proved a lie. The middle class expanded more with time.
Private property rights provide a formidable strength to individuals to exercise their liberty. Private property enables market forces to work for the social good in an unintended way; business people want to profit by providing the best services to the people enabling competition. Free markets have enabled ordinary and middle-class people to have material abundance, and the middle class has only expanded. Society has become less unequal, rather than Marx predicted.
Capitalism vs Socialism
Capitalism creates wealth and organically enhances economic performance as it inspires human creativity, for this economic system is incentive structure-based. While on the other end, Socialist economies are riddled with inaccuracies, inconsistencies, and lack of incentives resulting in poor quality. Henceforth, socialism fails eventually. Socialist economies become ultimately unsustainable, just like the Soviet Union.
The Utopian promised prosperity that was said to come in socialist countries is delivered as genocides, famines, and concentration camps. Social security in socialist countries is meager, and the public is disabled and destabilized. Poverty or misery is a significant feature of such a public. As we have seen, these are the consequences of the centrally planned economy.
Obfuscation of Marxist intellectuals
Marxist intellectuals have provided a cover to the vicious ideology of Socialism and Communism with a particular loathing of anything inherited from our ancestors. Even though ordinary people could not relate such abstractions to the concretes of the actual world, Marxists insisted on them exalting the virtues of scientific Socialism. The free market and indeed the freedom itself was considered to be a bourgeois evil. Political leaders opportunistically espouse socialist slogans to garner votes through their divisive rhetorics.
The progressive, emancipated, enlightened individual with the pretense of omniscient knowledge is more susceptible to embracing more tyrannical authority than religion, nation, or class. The enlightened individual who has lost his membership from some form of accumulated cultural association due to his disbelief yearns for some new association in the form of a struggle against the very existence of his previous, past association. Socialism is the holiest form of such new association, which enables him in the endless struggle against his roots.
Socialism situates itself in a world that doesn’t exist, in Utopia, to be precise. And to achieve the desired results, they throw away anything and everything that seeks to come in their way. Hence, socialists seek to destroy everything that a typical person holds in value and has inherited from his ancestors. Socialists obliterate our sense of reality and actuality by binding us into a monstrous fiction of class divide and antagonism. They scoff at the compromises, discussions, and deliberations through which civil society tries to maintain peace, harmony, and stability; they’re bourgeois values they are quick to squeak.
A very pertinent example to showcase the failure of Socialism would be the case study of North Korea and South Korea. While North Korea went the socialist way, South Korea adopted capitalism, which helped them allocate resources effectively because of an incentive structure. Private property rights were kept intact in South Korea, unlike in North Korea. Today South Korea is considered to be a part of the developed world. The GDP of South Korea was 54 times greater than that of North Korea in 2019. That should suffice to say about the record of Socialism. North Korea is ridden with dictatorship and impoverishment.
Edmund Burke warned us at the time of the French revolution about how very plausible schemes and ideas have often shameful and lamentable conclusions. We seem to have ignored him as the world is again going to the same dreadful and dangerous path, which Friedrich Fayek would label “The road to serfdom”!
Also, read about “World Dictators of All Time.”