Socialism – the mere mention of the word brings fear and loathing to conservatives all across America. When we were young, we all just knew that there’s no such thing as individualism and constitutional rights in a socialist country – and all the proof we needed was the Soviet Union a.k.a. The Union of Soviet Socialist Republics. But what is socialism? Here’s one definition:
Socialism is an economic and political theory advocating public or common ownership and cooperative management of the means of production and allocation of resources. A socialist society is organized on the basis of relatively equal power-relations, self-management, dispersed decision-making (adhocracy) and a reduction or elimination of hierarchical and bureaucratic forms of administration and governance; the extent of which varies in different types of socialism. This ranges from the establishment of cooperative management structures to the abolition of all hierarchical structures in favor of free association.
Now most of us who were raised in capitalist democracies are aware that such political structures – like true communism, true anarchism, and true libertarianism – sound nice in theory, but are simply unworkable on a macroscopic scale. Why are these political philosophies, these ‘isms’ doomed to fail? Because in order for society to function under such regimes, the great majority of people must be like-minded. The populace must by and large be okay with everyone having a say in such ‘dispersed decision-making’, with management and leadership being minimized or eliminated altogether. The problem with this is that (1) society as a whole is suddenly run by committee, and (2) the leadership positions that remain will then expand to fill the power vacuum left by the departure of the other management.
In other words, due to the fact that humans tend to either lead or follow, any political structure that by design leaves a leadership power vacuum will lead unerringly to dictatorship. This is true not only of pure socialism, but also of pure forms of communism, anarchism, and libertarianism.
But does that mean that pure capitalism is the best and most effective solution for society? It turns out that Albert Einstein had some very interesting, indeed, even prophetic warnings about ‘pure’ capitalism. Now some might question his wherewithal to speak on any subject other than high-energy physics, but I strongly feel it would be a great error to ignore his opinion. Why? Because those of high intelligence are not limited to one interest or field of study. Here is what Einstein had to say about capitalism:
Private capital tends to become concentrated in few hands, partly because of competition among the capitalists, and partly because technological development and the increasing division of labor encourage the formation of larger units of production at the expense of the smaller ones. The result of these developments is an oligarchy of private capital the enormous power of which cannot be effectively checked even by a democratically organized political society. This is true since the members of legislative bodies are selected by political parties, largely financed or otherwise influenced by private capitalists who, for all practical purposes, separate the electorate from the legislature. The consequence is that the representatives of the people do not in fact sufficiently protect the interests of the underprivileged sections of the population. Moreover, under existing conditions, private capitalists inevitably control, directly or indirectly, the main sources of information (press, radio, education). It is thus extremely difficult, and indeed in most cases quite impossible, for the individual citizen to come to objective conclusions and to make intelligent use of his political rights.
Einstein goes on to note where this would ultimately lead:
Production is carried on for profit, not for use. There is no provision that all those able and willing to work will always be in a position to find employment; an “army of unemployed” almost always exists. The worker is constantly in fear of losing his job. Since unemployed and poorly paid workers do not provide a profitable market, the production of consumers’ goods is restricted, and great hardship is the consequence. Technological progress frequently results in more unemployment rather than in an easing of the burden of work for all. The profit motive, in conjunction with competition among capitalists, is responsible for an instability in the accumulation and utilization of capital which leads to increasingly severe depressions. Unlimited competition leads to a huge waste of labor, and to that crippling of the social consciousness of individuals which I mentioned before.
This crippling of individuals I consider the worst evil of capitalism. Our whole educational system suffers from this evil. An exaggerated competitive attitude is inculcated into the student, who is trained to worship acquisitive success as a preparation for his future career.
Is this not precisely what has happened over the past thirty years of ‘trickle-down economics’? But genius though he certainly was, Einstein was not infallible, for I suspect every reader here on BC can see the errors inherent in his proposed solution:
I am convinced there is only one way to eliminate these grave evils, namely through the establishment of a socialist economy, accompanied by an educational system which would be oriented toward social goals. In such an economy, the means of production are owned by society itself and are utilized in a planned fashion. A planned economy, which adjusts production to the needs of the community, would distribute the work to be done among all those able to work and would guarantee a livelihood to every man, woman, and child.
Indeed, Einstein himself sees the danger inherent in his proposal:
A planned economy as such may be accompanied by the complete enslavement of the individual. The achievement of socialism requires the solution of some extremely difficult socio-political problems: how is it possible, in view of the far-reaching centralization of political and economic power, to prevent bureaucracy from becoming all-powerful and overweening? How can the rights of the individual be protected and therewith a democratic counterweight to the power of bureaucracy be assured?
Is this ‘enslavement of the individual’ not the same danger of socialism rightly warned against by conservatives? Yes, it is.
So what’s the solution? How can we achieve the profitability demanded by the immutable laws of the marketplace, of supply and demand, while still preserving the social justice and the social safety net that enables a high standard of living even by those in low income brackets? I presented the solution a few days after the last presidential election: Goldilocks freedom. Not too much freedom and deregulation, nor too little. Moderation in all things…even with individual freedoms. We need to ensure proper and pragmatic governance and regulation. We must resist depending upon the old saw that the government that governs least, governs best…the error of which should be evident in the everyday function of any region that has no functioning government.
As Einstein so eloquently illustrated, pure capitalism will unerringly lead to an oligarchy that is disastrous for the populace…but he was wrong about the necessity of the wholehearted embrace of socialism. We need to accept the most beneficial tenets of capitalism and combine these with those facets of social democracy that ensure the rights of the people are protected. I strongly feel that the resulting combination – Social Capitalism based on the framework of a small-d democracy – is the most realistic and most effective form of human governance. This is what most of the British Commonwealth and Western Europe have now…and this is why, despite the overwhelming size of our economy – our GDP is greater than China, Japan, and Germany combined – America does not have the best standard of living in the world today.