I’ve spent the last days doing a deep dive into the theory and history of socialism in the 20th century, as commissioned by National Review. It’s been fascinating to revisit all the arguments and chilling to read detailed accounts of the experience in every country.
If you have done this you will agree with me just how insanely strange it is that the word and the ideal still have credibility, especially among young people born after 1989. Besides a lack of interest in history, it’s very difficult to figure out the core error here.
Still, I’m going to try.
I suspect people who think they love socialism (meaning many people who identify with the political Left; the Right has different problems) have not dealt with the problem of scarcity as an economic reality.
By scarcity, I do not mean shortage. It instead refers to the absence of an infinite abundance of everything that people want when they want it. It’s due to a feature of the material world that prevents you and I from exercising equal amounts of control over the same material good at the same time. We both can’t wear the same shoes or drink from the same water bottle at the same time. You eat the bite of steak, or I do. Or we divide it in half. There is no magic reproduction machine that causes steak to appear ex nihilo.
Scarcity also refers to the condition of life that stops you from consuming everything you desire at the same time. Every choice you make involves the cost of the choice you did not make. You are reading this right now rather than something else. You can’t hike, fish, and swim at the same time. Everything you buy requires the expenditure of money you have declined to save.
This is what economists call scarcity, and it is this that gives rise to the need to economize — that is, to choose among competing ends. It is part of reality. No matter how much prosperity we experience, no matter what kind of technological advance comes our way, the reality of scarcity will always be with us. The material world of human beings will always and everywhere outstrip what is available, no matter how much wealth there is, simply because of the reality of scarcity.
We need some rational and peaceful way to deal with it.
It was the realization of this truth in the deep history of the human experience that led to a better solution than endless fighting to get a bit to eat. Some 150,000 years ago, we gradually discovered the social benefits of private property, trading, contract keeping, complex capital structures, enterprise, and consumer choice. We also discovered, very gradually, that adhering to these social conventions — mine and thine – permitted the division of labor, capital accumulation, complex production structure, and that amazingly magical phenomenon: the creation of more wealth.
The socialists imagine that they have another solution besides private ownership to the problem of scarcity. We should just say, “Let there be socialism,” and that will fix the issue. That might not sound very believable.
Why would anyone go along without a compelling explanation of how this would work in practice? Well, the way it’s worked in the past is that you wrap up your demand for what seems impossible in a highfalutin theory of history involving dialectics and inevitabilities of social forces that resolve otherwise-intractable conflicts that drive the meta-narrative of progress — or something along those lines. If you talk enough, maybe we will finally say, “Okay, fine, let’s try socialism.”
Once you believe that it's possible, then many other things seem worth trying: free college, free and universal income, free health care, free everything, plus universal redistribution without damaging the pool of wealth. That such ideas can be tossed around with no sense that the costs could be a problem, or that such structures could create problems for the practice of human liberty, might trace to this denial of scarcity. In the more extreme form, a blind spot toward scarcity could lead one to think that creating communism is just a matter of flipping a switch on the narrative machine of history.
Let’s try a mental experiment. Let’s try to create socialism over one single good. Let’s try it on shoes with just a three-person economy. It’s you and two friends. You all wear the same shoe size. Someone snaps his finger and says: “Let there be socialism.” Nothing much seems to change. But then you notice that your friend has shoes you want. So you say: “I will wear your shoes.” He says: “But then I can’t wear them.” You say: “Yes, but there is now socialism, so he must give them up.”
But this is confusing. Just because there is socialism now doesn’t mean that one person is entitled to another man’s shoes. True. But at the very least it means that no man can claim exclusive ownership over his own shoes. In this case, there are all kinds of new questions about deciding who gets to wear whose shoes.
How to decide? Well, there is the possibility of seeking unanimity, or you could establish majority rule. Two out of three. One person is likely to resent the results. You have now incentivized gaming the outcomes through factional organizing. This is likely to lead to more suspicion, more conflict, more resentment, more fighting. That might, in turn, lead to another outcome: the strongest among the three gets to decide. Now you have a dictatorship. It’s all very easy to create, with just three people, once you decide to create socialism over one good.
It’s already clear that the hoped-for shoe utopia has not dawned. Announcing the existence of socialism produced no new shoes. It changed nothing about the nature of the human beings in that room. It changed nothing about the material world. All it did was reshuffle the rules. Whereas people used to be rather satisfied with their lot, now they seethe in resentment against what other people have.
Now, my proposition is this. If socialism can’t be made to work in such a small and simple case like this, why would one think that all these problems would go away once you expand the idea of common ownership to the whole of society and all existing goods? It seems rather more likely that the attempt would only expand the fundamental problem to the whole of society.
It’s a Simple Matter
Socialism in the modern sense emerged in the 19th century as part of the general anti-liberal revolt. The new doctrine split into an infinite number of factions: religious, syndicalist, utopian, scientific, moral, national, you name it. But they all have in common this one incredibly simple mistake. They have failed to recognize the need to economize, and they thus create chaos and conflict.
The alternative to the socialist fantasy is ownership, trade, cooperation, and production — all through voluntary means, using no violence against person and property. If you want a sensible and humane social order, there really is no other option. That socialism as an idea could survive hundreds of years — even back to the ancient world — is a tribute to the capacity of the human mind to imagine it can create that which reality will forever decline to make possible.