There are few topics in the United States that get beat down like a hammer pounding a nail into a board than socialism. It’s as if the very word is a curse or slander of something dear to you. One hears: “Socialism in the US, I’d rather DIE first!”; “You’re a Socialist?? then go live somewhere where you’re wanted!”; “Creeping Socialism is like weeds in a garden; once it gets started, it spreads everywhere!”
But, what exactly is socialism? And how does it relate to countries such as China, the Soviet Union, and Venezuela? Many define it as an economic and political system whereby the workers own and control the means of production, not their bosses.
That is, in a socialistic system there is not a group of “owners” who decide what prices to charge, what wages to pay, and what markets to in which to sell goods. These are decisions made by the government. There are still managers and those in charge of production and output, it’s just that these managers do not make the decisions about how much workers are paid, what kind of benefits they receive, and how much should be charged for the products that are produced.
The instant implications of this are that wages do not vastly vary between individuals doing similar jobs, nor do great gaps exist between the managers and the workers. All are paid a living wage, but none are paid exorbitant wages (as they often are in capitalism). Prices are also determined by actual costs, not by costs plus the additional amount that must be charged for the exorbitant wages of owners, the dividends of shareholders, the waste of advertising, corporate lawyers, consultants, corporate jets, and the many-handed Vice Presidents (and other vagabonds who infiltrate the corporate structure like termites)!
The system of favoritism and worship is replaced by a system of necessity and supervision. Granting certain privileges, opportunities, and access rights based upon bribes, tribute, or allegiances is replaced by a system that evaluates function, contribution, and purpose by a government body that benefits the same as everyone else.
Socialism as an economic system is the difference between allowing a single person to determine how much you will be paid, how much a product will cost, and how available that product will be versus a system in which a committee of elected officials decides those same questions. The “single person system” (capitalism) is faster, has no debate, and is immediately implemented while the committee system is slow, cumbersome, and takes more time to implement.
But, the “single person system” is subject to whimsy, preference, and extravagance while the committee system (socialist) is subject to fairness, uniformity, and consistency. This is akin to a justice system wherein one individual (a king or priest) makes decisions about right and wrong, and truth and punishment (versus those decisions being made by a committee in a more democratic manner).
One important aspect of socialism – and one that I feel better explains the primary distinction between it and other systems of governance – is who owns the banking system? That is, who controls how much money is printed, how much value each unit of money has, and how the money is distributed in the economy? Is this done by private entrepreneurs or by the government?
Using a game metaphor, in a system in which you receive hundreds of points for each score (and in order to score you must first be approved, selected, or designated by some individual who is in charge of making those decisions), you will only succeed if you are anointed by someone in the system. If, on the other hand, points are awarded based upon criteria that are objective, non-discriminatory, and motivated by preferred outcomes instead of preferred behaviors, those who will succeed is much more evenly distributed throughout the population.
In a system in which the “banking establishment” is trying to make a profit, loans have higher rates of interest, credit is based on the ability to repay loans (not the need for them), and the value of the currency is constantly manipulated so that more money is worth less than it was before. This is a system which gives incentives for the accumulation of money, not the production of goods and services. This leads to the now-famous characterization of capitalism as creating a 1% which controls most of the money and a 99% which labors to try to keep food on the table.
So, to implement a system of socialism, 1) banks must be “nationalized” (owned collectively), 2) private decisions about wages, prices, and production must be done away with, and 3) a system of the monetization of goods and services is replaced with a system of needs and contributions.
So, If goods and services are distributed by a system of money, then whoever has the most money will receive the most goods and services. It’s winner take all; dog eat dog. But, if goods and services are distributed by a system of needs and contributions, then everyone who contributes to the system will get at least some of the goods and services they need (presumably in proportion to their contribution to the production of those goods and services).
Instead of a system which distributes goods and services BLINDLY – like Adam Smith’s “invisible hand” is supposed to do – a system of socialism distributes goods and services with a sense of social justice which makes certain that essential goods and services are received by all. As well, luxury goods and services are only received by those whose contribution is exceptional, unique, and necessary. This is, doctors receive a greater share of the social goods than do maintenance personnel, but not on the scale of 10:1 as is often the case in America; more like 2:1. Ideally, the intrinsic rewards of being a physician are taken into account, too.
What this does is immediately shift the emphasis from ownership of capital to contribution. No longer would one or a few owners determine how much people receive from the marketplace of goods and services. Instead, one’s contribution to the production of goods and services is fairly assessed. That would mean that professional athletes, corporate CEOs, lawyers, stockholders, entertainers, and middle-level executives – whose contribution to essential output is negligible at best – would be “mitigated in value,” whereas the output of dentists, farmers, medical workers, builders, and many others (whose essential output is higher) would be greater.
In a proper form of socialism, at last the distribution of output would correspond to the production of output, and the incentives to produce and consume would be put into better balance.
Superfluous and vacuous things centered around the accumulation of capital would no longer dominate market decisions; rather, those who actually contributed to the improvement and betterment of society would see gains compared to the current system of crony capitalism that marks America.
This kind of economic system would restore the “values of capitalism” which have been obscured and nearly obliterated by a system of money, and replace them with the values of socialism which place need and contribution in greater prominence.
Indeed, socialism would restore the values that most people revere – education, hard work, reliability, fairness, justice, and cooperation. Greatlydisincentivized would be values that only the “well-to-do” tend to appreciate – accumulation, control, favoritism, and privilege. This would usher in an economy of balance, priority, and harmony.
This post was written by guest blogger Carl Conrad. Carl is a writer, former instructor at Davenport University, and holds a master’s degree in economics (minor in philosophy) from Western Michigan University. Asked about his interest in economics, he noted “I was continually intrigued by the efforts of writers who attempted to describe an ideal society. Slowly, as I studied, learned, and taught, I filtered out those elements of virtue and justice that I thought would help to bring about a prosperous society. I coalesced my ideas into what I call “A Theory of Prosperity”. Look for his 4-part theory to be explicated in future blog posts.
Editor’s Note: This is what I would characterize as pure “offense” when it comes to socialism, but there isn’t much “defense” here. For example, does this plea for socialism in modern America take stock of the fact that, as the eminent German-American humanistic philosopher, Erich Fromm, wrote:
“The ideals of the Judeo-Christian tradition cannot possibly become realities in a materialistic civilization whose structure is centered around production, consumption, and success in the market.”
As well, the noted libertarian philosopher Friedrich von Hayek wrote: “[Socialistic] economic planning, regulation, and intervention pave the way to totalitarianism by building a power structure that will inevitably be seized by the most power-hungry and unscrupulous.”
However, there is also this to consider: “I am opposed to socialism because it dreams ingeniously of good, truth, beauty, and equal rights.” ~ Friedrich Nietzsche
A hybridized economic system is something I can get behind. A free market with government regulation and oversight and alternative means of ownership of production. A progressive tax. Heavy investments in education, health, job training, etc. Protections for unions. Reversal of the permission for “dark money” in politics granted by the Supreme Court in Citizens United and associated rulings. It is what Bernie Sanders is after, and it also can boast many successful and happy countries in Scandinavia and Europe.
For example, in this blog, John Abrams touts his 40-year-old project running a mid-sized employee-owned company. A capitalism-socialism hybrid is much more likely to succeed – and sell to the American public – than is pure socialism. In my opinion. Though, you do find me criticizing capitalism or crony capitalism, and lobbying for more democratic socialism here in this country, capital-S Socialism which requires a too-strong central government is an unattractive goal, by and large.
You will find a lot of good information in this series of videos about economics on YouTube, “The Commanding Heights.” Both capitalism and socialism are treated to withering critiques. I would also check out An Inside Job, if you can stomach it. It’s not good news about our modern system of crony capitalism in America.
Email Carl Conrad about this article at email@example.com, he wants to hear from you!
There are nearly 100 quotations about socialism in The Wisdom Archive, available HERE. Do some of your own digging. Explore other blogs in the category of Social and Economic Justice here on this site.