Three Flaws with Socialism

Announcement. I have been interviewed. A podcast of an interview I performed recently is up at "Common Sense Atheism" titled, CPBD 003: Alonzo Fyfe - Morality without God..

Elsewhere, some members of the studio audience, in the comment section of this blog, have expressed an affection recently with socialism. They believe that, in the battle between socialism and capitalism, that capitalism has proven itself a failure, and socialism wins.

I disagree with that assessment.

For the record, my view on the Capitalism vs Socialism debate is that it is much like a debate that might occur among construction workers.

One worker proclaims all of the work that a hammer can do better than a saw – from pounding in nails to breaking rocks – and declares, “All construction work can and should be done with a hammer.”

The other worker lists all of the things that a saw can do more efficiently than a hammer, such as cut planks to length, and declares that all construction work should be done with a saw, and none with a hammer.

I look at the two participants in this debate as both being wrong. Capitalism and socialism (the free market and the state) are both tools. Each has their strengths and weaknesses, and it is foolish to limit ourselves to just one of these two tools.

Since the pendulum is swinging more toward socialism in recent weeks, I think it would be useful to remind ourselves of its weaknesses.

Here are three.

(1) Socialism puts decision-making power in the hands of people who are substantially ignorant as to many of the relevant facts for making a decision.

Each person seeks the fulfillment of the most and strongest of his desires. Now, when it comes to the fulfillment of Person A’s desires, we can give that authority to one of two people. We can give that authority to Person A himself (the individual), or we can give it to Person B (the state).

We should, as our default position, give authority in making particular decisions to the people who are the most well informed of the facts relevant to those decisions. So, when it comes to directing the course of Person A’s life, we should give the decision-making capability to Person A – unless Person A is known to be mentally incompetent (e.g., Person A is a child.)

In other words, we are better off giving people the power to make their own decisions governing their own lives in a free market of voluntary trade among individuals, then we are handing those decisions over to somebody else, such as the state. The state simply lacks the information it needs to make wise decisions in many cases. So, it will make poor decisions, even if all of its members were saints.

Which is another problem with socialism. It puts massive amounts of power in the hands of people who often are not saints.

(2) Each individual is the least corruptible guardian of his own interests.

Each person necessarily acts so as to fulfill the most and strongest of his own desires, given his beliefs.

One of the things we can count on with respect to this government spending program to try to jump start the economy, is that every single Senator and Representative will cast a vote that best fulfills his or her own desires, given his or her beliefs.

And what are those desires?

No leader is motivated solely by the public interests. They all have friends, and are going to be tempted to act so as to make their friends better off.

They like money – because the more money they have the greater ability they will have to spend it to fulfill the more and stronger of their desires – so this will motivate their votes in some instances.

Some of them may want sex, or simply be in love (even if it is an unrequited love without sex), and will seek to pleasure of the person who is the object of his or her affection. And who knows what that person wants?

Some are motivated by a desire for power, and will see merit in various plans (even to the point of deluding themselves that certain claims are true or arguments are valid that lack any support) that promises to deliver more power into their hands or do harm to rivals.

Consider giving full control of your money over to somebody who knows you and cares about you. You will no longer direct the spending of your own income, but you will give it over to your best friend. That friend will have instructions not to come to you for advice on how to spend it, but can only consult outside experts (each acting so as to fulfill the most and strongest of their desires).

Do you seriously think that the money will be spent as wisely in the fulfillment of your desires as it would be if you were given the authority to spend the money yourself?

(3) Socialist systems respond too slowly to information and not always in the best possible way.

Imagine a large community gets hit by a sudden petulance that wipes out the bulk of its food crop.

This community needs to immediately start treating food as a scarce commodity. It needs to quit using food for things (e.g., decorations and art, glue, dyes) where it is not being consumed for calories and to switch to other substitutes. It needs to immediately set to work discovering new sources of food that it can add to its stores. And, as new discoveries are made (e.g., new food is discovered or there is a fire that destroys some of the remaining food), it needs to respond as quickly as possible to this new information.

Socialist systems are very slow to react to news. It is slow even to recognize that a significant event has taken place and that a change of policy is in order. The government must be assembled. It must weigh the various benefits and costs (this process being hampered by the two problems already described – decision makers who have limited information and who are going to act so as to fulfill the most and strongest of their own desires). It must make a decision. Then, it must implement decision.

In a capitalist system, the response to new information is instantaneous. The instant – the very second – that news hits a market that some product in high demand will become scarce, the price goes up. The higher price signals people that they need to start looking for substitutes to use in place of the scarce commodity. It inspires people to go out and find substitutes, and to put extra effort into increasing the supply of the product that has suddenly become scarce.

It does not need to call a meeting into order. It does not need to engage in endless debate. It instantly puts society to work mitigating the damage that the change in the news implies.

Conclusion

These, then, are three unavoidable problems that will plague this multi-hundred-billion dollar economic recovery bill. The final results of the bill will be put together by people who lack sufficient information to do a good job, by people who are easily persuaded to act in ways not necessarily in the public interest, and who will institute a system that will respond very poorly to changes in information.

Capitalism has its own problems. This is not a claim that socialist tools should be abandoned entirely and only capitalist tools should be permitted. It is an invitation to consider seriously that the socialist tool is not perfect – it has its flaws – and we must give an honest consideration of the implications of those flaws.