Socialism: Flaws and Ills Lead to Failure

Sunday Paper - January 11th, 2009

Socialism has failed throughout the world time and again, yet its proponents are relentless in their efforts to somehow see it succeed.  The hope for their social utopia lies in implementing “pure” socialism, its perfect version.  Leaders who adopt the ideology are the arrogant, always believing that they will be the one to get it right.  The Johnny-come-lately is Barack Obama.

Socialism over promises and under delivers.  The repeating theme is the promise of equality, security, and prosperity never coming to fruition.  That promise is replaced with the reality of tyranny and misery.  Actually equality is achieved, in that all are equally miserable.  The fundamental flaw of socialism is that no incentive is provided to individuals.  By contrast, capitalism incentivizes individuals and as history has shown produces prosperity.  Furthermore, socialism has its dangers, more often than not, individuals suffer as their needs become secondary to the welfare of the state.  

What exactly is the incentive system that is present in capitalism that socialism is void of?   The incentive system has three major components, the first of which is price being determined by supply and demand.  When the free market is allowed to determine the price of a good or service, the relative scarcity of that good or service is reflected in the price.  Consequently, both consumers and producers modify their behavior to ensure economic efficiency.  For example, high gas prices signal that demand is currently exceeding supply.  Consumers now must drive less, utilize more fuel efficient vehicles, or incur the cost of higher prices.  Producers know they must increase the exploration and production efforts.  Creating artificial price controls, i.e. legislating floors and ceilings, results in inefficiency from constant shortages and surpluses.

The second component of the incentive system that socialism neglects is profit and loss accounting.  Firms that operate and utilize scarce resources the most efficiently and best serve the public interest, are accordingly awarded with profits.  Inefficient firms that do not serve the public well will suffer losses and ultimately fail in the marketplace.  The rewards and penalties guarantee that the limited resources will not be squandered by an unavailing firm but will be funneled to those that flourish and in turn direct the economy as a whole towards greater levels of prosperity.  Profit and loss are the economic scoreboard, when absent it is impossible to determine the efficient firms from the failing firms.  Resources are therefore not directed to the most productive firms and inefficiency results.  Inefficiency leads to failure and failure leads to poverty.

The third and final component of the incentive system that is truant in socialism is the right to private property.  Private ownership of property fosters individual care and concern for the property.  If something belongs to somebody they are responsible for it.  Since it has value they will work to preserve that value.  On the other hand, communal property is often neglected.  Human nature is to leave the care and upkeep to a third party.  This results in the misuse and wasting of the property.  The end result is that all parties suffer the loss.

Beyond the elimination of incentives for individuals, socialism for all intents and purposes eliminates the individual.  When power is centralized in the government, individual citizens have none.  This setup allows for the rise of a dictatorship.  All activity that takes place now must benefit the state.  This is exactly what occurred in Nazi Germany.  The right to bear arms was relinquished, people were imprisoned and often killed for “thought crimes,” children were taught that the state comes before family, the government controlled all aspects of life, and social outliers were dehumanized and eventually exterminated. 

A second example is what manifested from the vision of Lenin and Stalin in the Soviet Union.  Conditions were brutal for people in the USSR and it is estimated that in the years preceding World War II somewhere between 30 and 60 million people died at the hands of the state.  Many whose lives weren’t ended quickly were starved to death.  Those who committed “thought crimes”  against the state were enslaved in concentration camps.  These same patterns have played out in China and North Korea as well.

Even where there is “soft socialism” such as that seen in Great Britain, the state’s needs continually become more grandiose while those of the individual diminish.  For example, socialized medicine has been disastrous as the state decides whether or not an individual is worthy of the medical care they need.  Law abiding citizens have been disarmed and predictably crime against innocent citizens has risen dramatically.  Children are urged to report their parents if they commit a “green” crime and free speech is routinely stifled.  Again, even in this soft system, the life of the individual is constantly interfered with from a multitude of angles.

Perhaps the case against socialism is best put forth in the eloquent words of Sir Winston Churchill.  In his 1946 speech at the Conservative Party Conference, after he had just been replaced as British Prime Minister, Churchill rejects socialism saying:

“We oppose the establishment of a Socialist State, controlling the means of production, distribution and exchange. We are asked, “What is your alternative?” Our Conservative aim is to build a property-owning democracy, both independent and interdependent. In this I include profit-sharing schemes in suitable industries and intimate consultation between employers and wage-earners. In fact we seek so far as possible to make the status of the wage-earner that of a partner rather than of an irresponsible employee. It is in the interest of the wage-earner to have many other alternatives open to him than service under one all-powerful employer called the State. He will be in a better position to bargain collectively and production will be more abundant; there will be more for all and more freedom for all when the wage-earner is able, in the large majority of cases, to choose and change his work, and to deal with a private employer who, like himself, is subject to the ordinary pressures of life and, like himself, is dependent upon his personal thrift, ingenuity and good-housekeeping. In this way alone can the traditional virtues of the British character be preserved. We do not wish the people of this ancient island reduced to a mass of State-directed proletarians, thrown hither and thither, housed here and there, by an aristocracy of privileged officials or privileged Party, sectarian or Trade Union bosses. We are opposed to the tyranny and victimisation of the closed shop.  Our ideal is the consenting union of millions of free, independent families and homes to gain their livelihood and to serve true British glory and world peace.”

It has been clearly illustrated that socialism always fails.  The lack of incentive is the fundamental flaw and more importantly the elimination of the individual makes for treacherous waters.  Brutal, oppressive dictatorships commonly result and life can be a nightmare.  The fact that so many Americans failed to recognize Barack Obama as a socialist or were just ignorant of the ills of socialsim is downright frightening.  Regardless, no matter how sophisticated Barack Obama thinks he is or appears to others, his socialistic exploits will fail miserably, like all others before him.

For further reading:

This from American Thinker - October 13th, 2008

http://www.americanthinker.com/2008/10/why_obamas_socialism_matters_1.html

This from Modern History SourceBook

http://www.fordham.edu/halsall/mod/1946churchill-conservatism.html

This from Ideas on Liberty - June 1995

http://spruce.flint.umich.edu/~mjperry/Socialism.html

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