Socialism? I Don’t Think It Means What You Think It Means

Socialism is a buzzword in American politics. In the political right, it’s a four letter word indicative of a freedom-killing boogeyman. Meanwhile, half of the political left seems to think “socialism” is a welfare state with lots of of subsidies and handouts.

What is Socialism?

Socialism is the state control of the means of production. In other words, a socialist society is one in which the government controls factories, services, businesses, etc.

Welfare is not socialism. Gun control is not socialism. Welfare and restrictions on personal liberty outside of the workplace might go along with socialism, but they are not socialism per se.

However, that does not mean welfare  states, restrictions on personal freedom, or socialism are good things.

Why Socialism Fails

It basically boils down to this: in any economy, resources and labor are limited. There is no mechanism or indicator in socialism which tells the central planner (the state in control of the means of production) how much of any good or service to produce. so the limited resources get misused and people tend to starve as a result.

In a capitalist system, businesses tend to prove adept at gauging and responding to demand with their own limited resources. To use an example often quoted by one of my favorite professors at Hillsdale, Dr. Wolfram, Starbucks sends exactly the right amount of coffee to their locations every single day. There’s rarely a shortage, and they don’t send a wasteful surplus.

That sort of thing is what socialism is incapable of. Just covering the bare necessities has proven to be disastrous in centrally planned economies. The Soviet Union could never get the amount of shoes, clothes, and food right. As a result, people in tattered rags starved to death.

But what about the socialist “paradises” of northern Europe? Actually, they are mostly not socialist. They are welfare states. They actually resent being called socialist because they work hard to maintain environments where businesses can operate freely (often more freely than in the United States). You can read more about that here. The reason their welfare works is because they are either cashing in on huge amounts of natural resources and preexisting wealth, relying on absurdly high taxes, or they’re running up debt.

Conclusion

The good news? We get to tell Bernie Sanders and his cohorts that they’re generally wrong about their own definition of socialism, the success of “nordic socialism,” and the ability of socialism to adjust to demand and use limited resources appropriately.

The bad news? The United States has so much governmental control and central planning in place that we are more socialist than countries we stereotype as “socialist.”

Learn from Starbucks. Trust the market.