Is Socialism Feasible?

I’ve been following Financial Samurai’s review of Capitalism: A Love Story, the newest documentary from Michael Moore.  The post itself is pretty impressive (although I haven’t seen the film yet, I’ve heard quite a bit about it through the grapevine), but even more fascinating is the discussion that has ensued following it.  FS had the foresight to not only ask about the movie itself (which, to judge from the comments, he might be the only person in the blog-o-verse to have seen), but about the relative value of capitalism, itself.

As you might expect from a crowd consisting mostly of personal finance bloggers (or at least, those who willing read and comment on personal finance blogs), the responses were primarily in favor of capitalism, and opposed to Mr. Moore’s conclusion that capitalism was horribly flawed.  But the conversation about the film, capitalism, and biggest alternative, socialism, got me thinking: is socialism even workable as an economic system?

Before we start looking closer at socialism and socialist societies, we should probably define the term.  Nowadays, it seems that it gets tossed around quite a bit, usually as an pejorative to describe the possible health care reforms.  But that’s hardly an objective definition.  Instead, let’s check the online reference of choice for word definitions,

Socialism: a theory or system of social organization that advocates the vesting of the ownership and control of the means of production and distribution, of capital, land, etc., in the community as a whole.

So, rather than private or corporate ownership of companies, utilities, and other services, the community as a whole (usually in the form of the government) owns everything.   It’s generally viewed as a more moderate form of communism, not completely eliminating private property and private ownership, but nationalizing most of the corporations and other large businesses.  A complete list of the (British) Socialist Party’s goals should shed more more light on what the socialists seek to accomplish.

Going through their goals, there seems to be a lot to like; maximum 35-hour workweek, free education from preschool to university, ensuring full employment: what’s not good about this?  It almost makes me want to run out to the nearest Socialist party meeting and sign right up; it sounds like a working class paradise.

The Problem with Socialism

If you start to read through the list of goals (actually, according to their own words, ‘Our Demands’), though, some things start to stand out as being troublesome, if not impossible to actually implement:

  • No transfers of jobs or production without the agreement of the workers. – I don’t know about you, but if I had a decent, well-paying job (and I’m open to any offers, by the way 😉 ), there’s no way in heck I’m going to let it go.  If this sort of law was on the books in 1920’s USA, there would still have been workers making Model T’s into the sixties.
  • All factories and plant threatened with closure to be brought into public ownership and used for socially-useful production, with compensation only on the basis of proven need. With one simple rule, you’ve ensured that no private corporation would ever close a plant again (unless the ‘proven need’ part is much easier to do than I would think).  If I were a business owner, I’d never even think of closing a plant again, regardless of how much money it was hemorrhaging.
  • Take into public ownership the top 150 companies, banks and building societies that dominate the economy, under democratic working-class control and management. Compensation to be paid on the basis of proven need. There’s that ‘proven need’ bit again; I’m going to go out on a limb and assume that none of the owners of the top 150 companies are getting any compensation, period.  Also, as anyone who’s watched government in action could tell you, democracy is great in principle, but slow at getting anything actually done.

There’s also any number of services that would be rendered, including free education for life, decent housing (with affordable rents) and a public transit system, all of which must be paid for in one way or another (taxes being the most obvious, although if the government owns the 150 biggest companies, I suppose their could just redirect the profits, although that’s just taxation by another name).

That’s not the only problem with socialism; as noted on the WikiAnswers page for socialism, socialist societies tend to have few incentives to participate, to work in order to become better at your job.  If you can easily get a job that provides you a living wage, more than enough to fund the essentials in life (especially if they are kept well below what you’re making) without having to work to advance your skills or efforts, why would you try to improve yourself?  The result is a society that promotes stagnation.

My Thoughts

Socialism is a nice theory, one that’s very attractive, particularly to those who aren’t exactly winning the capitalist game.  But it depends on people behaving in a way that is totally opposed to the natural tendencies most of us have; that is, to be greedy, selfish bastards.  Without the profit incentive, there needs to be something to encourage people to work harder and build society, and honestly, I’m not sure that anyone’s really stumbled across that something yet; even the countries we call socialist still have some private enterprise and the ability of people to advance their monetary situation.  Until human nature changes, I don’t think we’re going to see many successful truly socialist countries.

8 Responses to Is Socialism Feasible?

  1. I was a socialist for a while in university. I wasn’t beforehand, and it lasted about five minutes on leaving and getting a job.

    Once you see people lazing around riding on the back of your own and other more hard working types – in a system that supposedly roots out this kind of freeloading – you start to get suspicious about socialism.

    Then you get your first paycheck, and see the tax you pay and wonder where the money goes, and that’s that.

    Harsh but true!

    Still, the girls love a long haired socialist. I’d recommend everyone gives it a whirl once. 😉

    • @Monevator: That sounds about right. Isn’t the expression, ‘if you aren’t a radical when you’re young, you have no heart; if you aren’t a conservative when you’re old, you have no brain’? You’re quite right, of course; one or two examples of the lazy or otherwise undeserving getting rewarded unjustly because someone wants to be ‘fair’ and you’ll be heading for capitalism with open arms. (Not that such situations don’t arise in capitalistic societies as well; I add much more value to society than Paris Hilton, for example, and yet will be lucky to ever be worth more than a small fraction of her net worth.)

      As for girls loving a long-haired socialist, I’m not sure that’s true anymore. Most girls seem to go for rebels, and it’s been decades since growing your hair long and talking about spreading the wealth was considered even slightly rebellious. Now, you’re more likely to remind a girl of how her dad used to act.

  2. I have to admit I REALLY love handouts. I love free samples, free backstops, free bailouts, free everything, so long as I benefit.

    Too bad I don’t live in Bizarro World, and we’ve actually got to work for a living.

    Conceptually, I don’t think Socialism is all that bad. We should help our brother man if we are rich. It’s those who take advantage of free-riding which give Socialism a bad name.

    When I retire, I want to be a Socialist, so we can tax the rich and redistribute the money to us retired folks so we can live the good life off others dime. Is this so bad?


    .-= Financial Samurai´s last blog ..Punctuality Breeds Credibility – Stop Being Late! =-.

    • @FS: That’s part of the problem; in concept, socialism seems like it should work, even more than capitalism. If you tried explaining to an alien why people acting according to their own self-interest with no higher plan would prosper more than those who decide everything they’re doing ahead of time, you’d likely get some confused looks.

      It sounds like your retirement plan is awfully similar to Social Security. Not that I’m trying to disparage a system that has the overwhelming support of the AARP and would be political suicide to try to cut in any way…

  3. Both, socialism and capitalism have their merits and sound good in theory. But neither one seems to be working in practice when it is applied in its pure form. And that is why all modern capitalist systems have elements of socialism in it.

  4. Great article. It is scary actually how many of Communisms Tenents (taking a step forward from socialism) that America Currently hits:

    Regardless of my hatred for big government, I think Socialism is near impossible with a country as large as ours – large as in both population and geographic size.
    .-= Evan´s last blog ..I use ING For my Savings and You May Want to Also! =-.

    • @Evan: I don’t think we’re quite as close to a communist society as you seem to fear, although we might be getting close to a corporatist one; I’m more worried about corporate control of the government than vice versa. (Although, it might be all semantics; the powerful people in politics are closely linked to the powerful people in business, when they aren’t the exact same people.)

      Good point on the country size, though; I think that Socialism is most workable in small groups, particularly those who are related or otherwise have incentive to help each other out. Consider the number of families where a less successful member gets help from someone else with no expectation of a return; try to do that across an entire country, and you’ll get people revolting.

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