Defining Socialism

1024px-Capitalism_P1130175
(Photo by Gunnar Ries Amphibol, via Wikimedia Commons)

I wanted to take a moment to follow up on my last post, in which I tried to dispel three common myths about socialism. Comments on my Facebook page reminded me that there is often quite a bit of confusion about what socialism actually means. As I see it, there are two ways of defining socialism: the right way and the wrong way.

The Wrong Way: Socialism as an Economic “System”

According to Merriam-Webster socialism is “a system of society or group living in which there is no private property” or “a system or condition of society in which the means of production are owned and controlled by the state.” This is a standard, safe definition, but it is problematic for a few reasons:

  1. It is misleading: The idea of state control calls to mind the Soviet Union, which was actually a dictatorship masquerading as socialism.
  2. It is incomplete: Thus it only alludes to other socialist systems, such as the democratic socialism of Sweden.
  3. It is inaccurate: Most socialist “systems” (particularly democratic socialism) allow for private property.
Trickle Down Economics
Trickle down economics (Photo by GR8 Telangana, via Wikimedia Commons)

The only example of a socialist system in which there is no private property would be a monastery. Socialism does not abolish private ownership; it just recognizes that the boundaries between private and public are negotiable in a free society. The philosopher Robert Nozick said that the right of private ownership is sacrosanct. Nobody can take what I “justly acquire” and “justly use.” The problem with that philosophy (aside from the ambiguity surrounding just acquisition) is that it would make a free society impossible. If private property is sacrosanct, then the state cannot even collect taxes from its citizens. But if we acknowledge that the state has some right to collect that which I call “mine,” then we also have to acknowledge that the extent of those rights are not set by some objective measure but the society which authorizes the state. There is no basis for saying that the state can collect 25% of my stuff, but not 40%, or for saying that the state can collect 25% from the middle class and 60% from billionaires.

You could say that this belief in the sanctity of private property is the sacred cow of doctrinaire capitalism, and socialism smashes that cow. But rather than melt it down and make the idolaters drink it, like Moses, we invest the proceeds in public education and nutrition programs (see Exodus 32:20.)

The Right Way: Socialism as a Conceptual Range

The economist Joseph Stiglitz was right when he suggested that it is best not to think of socialism and capitalism as two mutually exclusive “systems.”

Traditionally the debate about socialism, market socialism, and capitalism has been couched as the choice of alternative economic systems, This, I would like to suggest, is not the correct way of posing the question. The real question is, What should be the economic role of the state?

Occupy Wall Street Fist
(Photo by Occupy Designs, via Wikimedia Commons)

As long as congressional staffers buy paper or the military pays soldiers, the state will always be involved in the market. In capitalist countries like the United States, we sometimes forget how much the state exercises direct influence over the market, whether through subsidies to farmers, land grants to oil companies, research grants to scientists, and endowments to further the arts. We often assume that the government bungles most of these operations, but that is false. Our economy would not function without many of these inducements to private industry. (Stiglitz observes that without the huge land grants awarded to two private companies, the transcontinental railroad would never have been built.) One could argue that private industry tends to be more efficient than the state (though I think the BP oil spill showed us just how inefficient private industry can be), but sometimes efficiency is not the most desired outcome. For instance, Blackwater ran a very efficient para-military operation in Iraq. Sometimes the most desired outcome is justice.

Thus the difference between socialism and capitalism is not whether the state directs the market, but the degree to which the citizens of the state are allowed to direct the market. That is why I prefer Karl Polanyi’s definition of socialism. In The Great Transformation, he wrote, “Socialism is, essentially, the tendency inherent in an industrial civilization to transcend the self-regulating market by consciously subordinating it to a democratic society.”

One might argue that a weakness of socialism is that some versions of it, in the hands of mad genius, can be used to circumvent democracy. That is an undeniable fact. But I might also point out that there are plenty of mad capitalists doing the same thing (this frustration is what led to the Occupy protests.)

You might say that the only difference between a capitalist and a socialist is that a socialist thinks society should regulate the market rather than the market regulating society. In a free society, there must be no one who is in the market, but not of it; no one whose circumstances doom her to be little more than a cog in a machine. This is the most important characteristic of socialism: the market should be democratic, which means we have the moral obligation to use the resources of the market to increase access to the capacities it can provide for its citizens. In particular, socialists believe that for the market to be truly free, its resources must be redistributed from those who have benefited most from it, into social programs that benefit those at the bottom, in order that the wealth and opportunity the market system can provide, can be accessed by all its participants.

Young Mill Worker (via Wikimedia Commons)
Young Mill Worker (Photo via Wikimedia Commons)

Capitalists can be moral people. Many give freely of their resources to charitable organizations, which they insist can always do better to help the poor than state welfare programs. They argue that reducing the tax burden on so-called “job creators” will help grow the economy. They say that ever-increasing GDP is the best way for the poor to access the market to improve their lot in life. This is not an inherently immoral belief. It is just wrong. In my next post, I will tell you why.

3 thoughts on “Defining Socialism”

  1. I would say that socialism and a free market are not incompatible, partly because no market is ever "free" from the state. The question is always one of range. Sweden's market is more regulated than we have in the United States. In particular, its income-tax system redistributes resources in a downward direction, toward social programs that benefit the lower classes. I would say this is a common characteristic of the socialist end of the economic spectrum.

  2. If you look at a country like Sweden on measures of economic freedom, like the Economic Freedom of the World report or the Index of Economic Freedom or the World Bank's Doing Business report, it looks like a pretty free market. So, are you arguing for a lightly regulated market plus social welfare programs? That doesn't seem like socialism to me, but maybe that's your point.

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