Socialism, Communism, and Three Paradoxes

According to Wikipedia, socialism

is a range of economic and social systems characterised by social ownership of the means of production and workers’ self-management, as well as the political theories and movements associated with them. Social ownership can be public, collective[,] or cooperative ownership, or citizen ownership of equity.


is the philosophical, social, political, and economic ideology and movement whose ultimate goal is the establishment of the communist society, which is a socioeconomic order structured upon the common ownership of the means of production and the absence of social classes, money, and the state.

The only substantive difference between socialism and communism, in theory, is that communism somehow manages to do away with the state. This, of course, never happens, except in real communes, most of which were and are tiny, short-lived arrangements. (In what follows, I therefore put communism in “sneer quotes”.)

The common thread of socialism and “communism” is collective ownership of “equity”, that is, the means of production. But that kind of ownership eliminates an important incentive to invest in the development and acquisition of capital improvements that yield more and better output and therefore raise the general standard of living. The incentive, of course, is the opportunity to reap a substantial reward for taking a substantial risk. Absent that incentive, as has been amply demonstrated by the tragic history of socialist and “communist” regimes, the general standard of living is low and economic growth is practically (if not actually) stagnant.*

So here’s the first paradox: Systems that, by magical thinking, are supposed to make people better off do just the opposite: They make people worse off than they would otherwise be.

All of this because of class envy. Misplaced class envy, at that. “Capitalism” (a smear word) is really the voluntary and relatively unfettered exchange of products and services, including labor. Its ascendancy in the West is just a happy accident of the movement toward the kind of liberalism exemplified in the Declaration of Independence and Constitution. People were from traditional economic roles and allowed to put their talents to more productive uses, which included investing their time and money in capital that yielded more and better products and services.

Most “capitalists” in America were and still are workers who made risky investments to start and build businesses. Businesses that employs other workers and which offer things of value that consumers can take or leave, as they wish (unlike the typical socialist or “communist” system).

So here’s the second paradox: Socialism and “communism” actually suppress the very workers whom they are meant to benefit, in theory and rhetoric.

The third paradox is that socialist and “communist” regimes like to portray themselves as “democratic”, even though they are quite the opposite: ruled by party bosses who bestow favors on their protegees. Free markets are in fact truly democratic, in that their outcomes are determined directly by the participants in those markets.
* If you believe that socialist and “communist” regimes can efficiently direct capital formation and make an economy more productive, see “Socialist Calculation and the Turing Test“, “Monopoly: Private Is Better Than Public“, and “The Rahn Curve in Action“, which quantifies the stultifying effects of government spending and regulation.

As for China, imagine what an economic powerhouse it would be if, long ago, its emperors (including its “communist” ones, like Mao) had allowed its intelligent populace to become capitalists. China’s recent emergence as an economic dynamo is built on the sand of state ownership and direction. China, in fact, ranks low in per-capita GDP among industrialized nations. Its progress is a testament to forced industrialization, and was bound to better than what had come before. But it is worse than what could have been had China not suffered under autocratic rule for millennia.

A Paradox for Liberals

Libertarianism is liberalism in the classic meaning of the term, given here by one Zack Beauchamp:

[L]iberalism refers to a school of thought that takes freedom, consent, and autonomy as foundational moral values. Liberals agree that it is generally wrong to coerce people, to seize control of their bodies or force them to act against their will….

Beauchamp, in the next paragraph, highlights the paradox inherent in liberalism:

Given that people will always disagree about politics, liberalism’s core aim is to create a generally acceptable mechanism for settling political disputes without undue coercion — to give everyone a say in government through fair procedures, so that citizens consent to the state’s authority even when they disagree with its decisions.

Which is to say that liberalism does entail coercion. Thus the paradox. (What is now called “liberalism” in America is so rife with coercion that only a person who is ignorant of the meaning of liberalism can call it that with a straight face.)

There is nothing new about this paradox, as far as I’m concerned. I wrote about it 14 years ago in “A Paradox for Libertarians“:

Libertarians, by definition, believe in the superiority of liberty: the negative right to be left alone — in one’s person, pursuits, and property — as long as one leaves others alone. Libertarians therefore believe in the illegitimacy of state-enforced values (e.g., income redistribution, censorship, punishment of “victimless” crimes) because they are inimical to liberty.

Some libertarians (minarchists, such as I) nevertheless believe in the necessity of a state, as long as the state’s role is restricted to the protection of liberty. Other libertarians (anarcho-capitalists) argue that the state itself is illegitimate because the existence of a state necessarily compromises liberty. I have dealt elsewhere with the anarcho-capitalist position, and have found it wanting. (See “But Wouldn’t Warlords Take Over?” and the posts linked to at the bottom of that post.)

Let’s nevertheless imagine a pure anarcho-capitalist society whose members agree voluntarily to leave each other alone. All social and economic transactions are voluntary. Contracts and disputes are enforced through arbitration, to which all parties agree to submit and by the results of which all parties agree to abide. A private agency enforces contractual obligations and adherence to the outcomes of arbitration. (You know that this anarcho-capitalist society is pure fantasy because a private agency with such power is a de facto state. And competing private agencies, each of which may represent a party to a dispute are de facto warlords. But I digress.)

Now, for the members of this fantasyland to enjoy liberty implies, among other things, absolute freedom of speech, except for speech that amounts to harassment, slander, or libel (which are forms of aggression that deprive others of liberty). But what about speech that would sunder the society into libertarian and non-libertarian factions? Suppose that a persuasive orator were to convince a potentially dominant faction of the society of the following proposition: The older members of society should be supported by the younger members, all of whom must “contribute” to the support of the elders, like it or not. Suppose further that the potentially dominant faction heeds the persuasive orator and forces everyone to “contribute” to the support of elders.

Note that our little society’s prior agreement to let everyone live in peace wouldn’t survive persuasive oratory (just as America’s relatively libertarian economic order didn’t survive FDR, the Constitution notwithstanding). Perhaps our little society should therefore adopt this restraint on liberty: No one may advocate or conspire in the coercion of the populace, for any end other than defense of the society.

Why an exception for defense? Imagine the long-term consequences for our little society if it were to dither as a marauding band approached, or if too few members of the society were to volunteer the resources needed to defeat the marauding band. What’s the good of the society’s commitment to liberty if it leads to the society’s demise?

Now, the restraint on speech and the exception for defense couldn’t be self-enforcing. There would have to a single agency empowered to enforce such things. That agency might as well be called the state.

Here, then, is the paradox for libertarians: Some aspects of liberty must be circumscribed in order to preserve most aspects of liberty.

The last word goes to Beauchamp, or rather to Carl Schmitt who is quoted by Beauchamp:

Even if Bolshevism is suppressed and Fascism held at bay, the crisis of contemporary parliamentarism would not be overcome in the least. For it has not appeared as a result of the appearance of those two opponents; it was there before them and will persist after them. Rather, the crisis springs from the consequences of modern mass democracy and in the final analysis from the contradiction of a liberal individualism burdened by moral pathos and a democratic sentiment governed essentially by political ideals. A century of historical alliance and common struggle against royal absolutism has obscured the awareness of this contradiction. But the crisis unfolds today ever more strikingly, and no cosmopolitan rhetoric can prevent or eliminate it. It is, in its depths, the inescapable contradiction of liberal individualism and democratic homogeneity [emphasis added].

The Crisis of Parliamentary Democracy (1926),
translated by Ellen Kennedy

(See also “Inventing ‘Liberalism‘”, which is about the advent of the modern abomination, and “Conservatism vs. ‘Libertarianism’ and Leftism on the Moral Dimension“, especially the footnote about “libertarianism”.)