The Good & Bad of Socialism & Capitalism. I

This is part one of a four part blog to summarize what's good and bad about socialism and similarly, what's good and bad about capitalism. I'll use those Marxist terms for both, even though in prior posts I've pointed out how inaccurate and pejorative they are in both directions.

Why this subject ?

The Panic of 2008 has created a huge wave of talk about changing "capitalism" with little true thinking about what it is, what is being changed and to what object is the change made. Without good theoretical and practical thinking, all this talk becomes blather and often a insidious power grab by bureaucrats and politicians. I will employ simple analysis of the basics of both and draw on actual examples of successes and failures as proofs for what I call the "good" and the "bad".

Today the topic is "What's Good About Socialism".

Socialism, or perhaps more accurately called communitarianism (NOT communism) - my preferred term is fraternalism - stresses that people should share and live in communities (as brothers or sisters) where all share in the work and product of the community "fairly", that no one take an outsized, disparate portion of the community's wealth, and all contribute to the care of the poor and indigent and simply unlucky. Aggregating many communities gives us an entire society, hence the term "socialism". Fine.

Does it work in theory and practice in aggregates of human beings? Yes, it can work. Of that there is no doubt. Socialism began very early in the 19th century in many small experimental communities in Europe and the US. You might be surprised by the US being a crucible for much early experimentation, but yes, it's true. Several scholarly books which I own and have read document a very large number of "communist" experimental communities (aka "utopias") in the US north and Midwest in the 19th century.

These were communities formed completely voluntarily - not by force by government. And yes, they did succeed providing much happiness for their members. People could join and could leave. So they had freedom, and thus prove that humans can live in such communities freely and achieve the "pursuit of happiness". BUT most of these communities broke up or failed after a few decades. Not all failed. Some still exist, but many are now historical sites to be preserved for education of the people about their past and for tourists, such as Zoar Village in northeast Ohio.

So these are definite counterexamples for those (many on the US right) who say socialism can't work. A counterexample - one - definitively disproves a hypothesis. Socialism can work and can provide happiness for its members.

The elevated good of socialism comes from the reduction in the negative: the community helps those in need (for whatever reason) and thus the aggregate happiness of the community is increased. And as I've proven in prior posts, under basic economic theory, that aggregate amount of increased happiness of those helped is MORE that the reduction caused by reallocation of resources away from some, due to the principles of diminishing returns and risk aversion.

In the experimental communities, this reallocation was voluntary in the sense that no one had to participate to remain in the community. Some "force" (in the general sense analogous to the force of gravity) is needed to bind the community as many humans are selfish by nature. In the experimental communities, a religious belief or the ideology of the community or even a charismatic leader provided the force. IF the force came from a charismatic leader, that was bad - after the passing of the leader, usually the community broke up. Religion or ideology worked better.

In modern nations, socialism has succeeded in nations like Norway, Sweden, and Denmark, permitting much happiness for their people. There is no doubt those nations are very prosperous and the people are quite happy. Socialism - to the extent its precepts are employed in those nations - also works in Germany and France. It has evolved in fits and starts in both, with some very bad turns, but now seems solidly entrenched and no doubt the people are mostly happy with the results. They freely return governments that intend to preserve its tenets of community care and support. Why deny it, as the American right often does? Facts are facts. Socialism can work and provide much happiness for people living in those places.

In modern socialism applied in nations, this reallocation is not voluntary (except as controlled by democracy IF that exists in the nation). But people can emigrate. If, as the American right spouts, socialism is so bad, why don't people leave those nations ? There is no wall or force of troops keeping Norwegians in Norway. Some nations welcome immigrants. Australian does, and the US does to a limited extent. These is no flood of Norwegians seeking to move to the US. Many or most Norwegians know English, so language is not a barrier. Neither is culture much of a barrier since American TV and movies are sooooo prevalent and viewed worldwide. Let's face it - socialism in Norway and those other nations does work without loss of much freedom.

Now look over that list of successful implementations. What do they all have ? They all have a relatively homogeneous population and shared culture. That provides a strong, nongovernmental force to hold the people together. And it provides a true sense of community values and feelings for each other. Sweden has only about 10 million people. Norway and Denmark have about 5 million each. Those are just the size of one major city in larger nations. France and Germany are larger, but are now internally bound by strong language and cultural ties that did not exist before around 1800. The force: shared culture, langauge, history and values. This should be no surprise as those are the foundations of what we would call a Community.

That's the good part of socialism: increased aggregate happiness for the people. Socialism can achieve its objective as proven in small and larger societies. BUT it does seem to need a force to bind the communty together. No successful multicultural, socialist society exists or has existed ... yet. Whether the EU can achieve a federalist - and multicultural socialist - society remains unproven.

Tomorrow I will write about what's good about capitalism.

Markets

Waiting. No new sell orders from Krypto as the rise in equity prices is rather uniform. I suspect that a few % more up will create some sell orders.

Word of the Day

"Abecedarian" - noun and adjective [$100] from reading Montaigne's Essays.
Abecedarian means (noun) 1. a person who is learning the letters of the alphabet; 2. a beginner in any field of learning; (adjective) 1; of or pertaining to the alphabet; 2. arranged in alphabetical order; 3. rudimentary, elementary, primary.
Sentence: This week's series of post will provide an abecedarian overview to the good and bad of socialism and capitalism.

Usage from Montaigne (Essays, Book One, 54 in Great Books, volume 23, page 191) "It is said with some plausibility that there is an abecedarian ignorance that comes before knowledge, and another, doctoral ignorance that comes after knowledge: an ignorance that knowledge creates and engenders, just as it undoes and destroys the first."