Stalin resized
Socialism is popular in Britain. More popular than capitalism, at any rate. That was the result of a YouGov survey last year, in which 36% of respondents expressed a favourable view of socialism, while only 32% expressed an unfavourable one. Capitalism, meanwhile, is viewed unfavourably by 39% of respondents, while only 33% view it favourably.

Yes, I know: It all depends on how you frame the question. But “Do you have a favourable or unfavourable opinion of socialism and capitalism?” does not strike me as a manipulative way of framing it. Besides, if more than a third of the population expressed a favourable view of, say, the flu virus, we would question their sense of judgement, regardless of how exactly the question is worded.

So what explains the enduring appeal of socialism? Part of the story is that socialism’s proponents have always been very effective at distancing themselves from real-world examples whenever they have ended in tears (as they invariably do). ‘North Korea, Cuba, Venezuela? The Soviet Union, Mao’s China, the Khmer Rouge? Nothing to do with me, mate: That wasn’t real socialism. Real socialism has never been tried.’

This would not work the other way round. When confronted with (actual or imaginary) downsides of the market economy, its supporters would never get away with a response like ‘That wasn’t real capitalism. Real capitalism has never been tried’.

But what, then, is the difference between real and ‘unreal’ socialism? What is it about, say, North Korea’s socialism that puts it into the ‘unreal’ category, and what would the North Korean government have to do in order to earn that elusive Real Socialism blue tick verification mark (which, remember, has never been awarded)?

When pushed, socialists usually struggle to give an answer. This is because most of the time, the not-real-socialism meme is a post-hoc rationalisation. Every socialist experiment has, at some point, been waxed lyrical about by Western intellectuals, including Stalin’s Soviet Union and Mao’s China. It was only when their horrors could no longer be denied even with the best will in the world that the blue tick was withdrawn retroactively.

And yet, there are exceptions to this, such as the Socialist Party of Great Britain (SPGB). They are not, and as far as I know, never were, apologists of Soviet-style socialism, which they describe as ‘state capitalism’. They are among the few socialists who have at least some idea of what they mean by ‘real’ socialism. They use that term to describe a hypothetical system in which working-class people own and control the economy’s productive resources directly, not via the state; a system in which public ownership is not mediated through a government bureaucracy.

I have no idea how this should work in practice, but I suppose we could imagine some combination of public ownership with Swiss-style multi-level direct democracy. Even then, though, at least one massive problem remains:

You can define an economic system by its institutional characteristics (e.g. public ownership), and perhaps by its aspiration (e.g. widespread prosperity, giving ordinary workers control over economic decisions). But you cannot sensibly define a system by the extent to which it is successful in meeting those aspirations. Whether a system actually achieves what its proponents want it to achieve is a question which must be testable and falsifiable. Otherwise, I could define a capitalist economy as ‘an economy based on individual property rights and voluntary exchange, in which everybody is fabulously rich’. Whenever an actual economy that is based on individual property rights and voluntary exchange then fails to make everybody fabulously rich, I could proclaim that that economy is not ‘really’ capitalist. Real capitalism has never been tried. And No True Scotsman would do such a thing.

‘Empowering the workers’ is an aspiration, not an institutional design feature of a system. More, it is an extraordinarily lofty aspiration, and so far, nobody has worked out how to do it. Politicians of all parties constantly talk about ‘empowering ordinary people’. Every NHS reform is supposed to be somehow about ‘empowering patients’, every educational reform about ‘empowering parents’, every electoral reform about ‘empowering voters’. We are surrounded by people who promise to ‘empower’ us in one way or another, and yet somehow, most of us don’t feel all that ‘empowered’. The EU referendum was supposed to be ‘empowering’, and look at where that got us. Plenty of Remainers now feel that an illegitimate result (‘won on the basis of lies; unscrupulous populists duping low-information voters’) is being forced upon them. Plenty of Leavers now feel that sneering elites are secretly plotting to overturn their decision (‘ENEMIES OF THE PEOPLE!’). The ‘true’ socialists’ claim that their system is one which ‘empowers the workers’ is not that special. Everybody claims that. And nobody is particularly good at it.

But never mind. What would a combination of socialism with direct democracy look like? Let’s put it that way: the homeland of direct democracy, Switzerland, is already experiencing something of a referendum inflation, even with the current, relatively limited scope of the sphere of collective decision-making. Last year, a resident of the Canton of Zurich could have voted in 13 referenda at the federal level, 8 at the cantonal level, and God knows how many at the municipal level. It works, though. Voter turnout at Swiss referenda rarely falls below 40%.

Now let’s imagine that Switzerland turned socialist, and expanded its model of direct democracy to the newly socialised sectors. This would mean referenda on the production of razors, carpets, gloves, ink cartridges, curtains, hair straighteners, kettles, toasters, microwaves, baking trays, washing-up liquid, tiles, hand blenders, pizzas, and many, many other things. You would need literally thousands of referenda to organise an economy in this way.

And that is the real reason why ‘real socialism’ has never been tried: even if it could be done logistically (which I doubt), it would be an absolute pain in the neck. Voter turnout would soon drop to rock-bottom levels. The economic planning process would become dominated by vocal single-issue groups, not ‘ordinary workers’. Eventually, all the heavy lifting would have to be delegated to expert committees. At that point, ‘real’ socialism would become ‘unreal’ again.

But such efficiency arguments aside, ‘real socialism’ would also be a recipe for permanent social conflict and resentment. Are you a ‘Remoaner’, still bitter about not getting your way in the EU referendum? Wait until beer production is socialised, and you find yourself on the losing side of a referendum about discontinuing the brewing of your favourite beer brand.

 

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Head of Health and Welfare

Dr Kristian Niemietz joined the IEA in 2008 as Poverty Research Fellow, becoming its Senior Research Fellow in 2013 and Head of Health and Welfare in 2015. Kristian is also a Fellow of the Age Endeavour Fellowship. He studied Economics at the Humboldt Universität zu Berlin and the Universidad de Salamanca, graduating in 2007 as Diplom-Volkswirt (≈MSc in Economics). During his studies, he interned at the Central Bank of Bolivia (2004), the National Statistics Office of Paraguay (2005), and at the IEA (2006). In 2013, he completed a PhD in Political Economy at King’s College London. Kristian previously worked as a Research Fellow at the Berlin-based Institute for Free Enterprise (IUF), and at King's College London, where he taught Economics throughout his postgraduate studies. He is a regular contributor to various journals in the UK, Germany and Switzerland.

7 thoughts on “Has ‘real’ socialism never been tried?”

  1. Posted 17/02/2017 at 13:14 | Permalink

    The problem with this argument, Kristian, is that ‘That wasn’t real capitalism. Real capitalism has never been tried’ is EXACTLY what many advocates of free market capitalism do claim. At the very least they say ‘There might have been some real capitalism in the 19th century but all we’ve had in the last hundred years is state-capitalism.’ And state-capitalism, like state-socialism, is not the pure form and suffers from numerous distortions. Why, otherwise, are countries in the capitalist West not doing so well? Because of high taxes and state interventions, of course, which is evidence that they are not ‘really’ capitalist at all, but that most wicked (but useful) of chimera, ‘social democratic.’

    Advocates of both capitalism and socialism fall back on ideal-theory when challenged, and claim that real-world states are just shadows cast on the wall of the cave. Equally, if we do compare real-world capitalist and socialist societies, we fall foul of the fact that almost all are mixed economies and both sides claim credit for all the good that has come out of them (e.g. whether it was market forces or labour unions that drove up real wages or improved healthcare outcomes).

    So let’s be fair: free-marketeers – within the IEA as well as outside – are all too quick to decry countries such as the UK and the US as not really being ‘real’ free market/capitalist societies when the country being discussed is not performing well.

  2. Posted 17/02/2017 at 13:40 | Permalink

    Tom, yes, that tendency does exist among the more infantile libertarians.
    (-“That’s not a REAL free market! It’s rigged!”
    -“In what way is it rigged?”
    -“By… well, it’s just rigged.”
    -“By what?”
    -“By, er, regulation.”
    -“What regulation?”
    -“The, er, the regulation that rigs it.”)
    But how many are these? Is it more than 25 people in the whole country? Most of the time, when free-marketeers describe an economy as ‘not really free-market’, they CAN pinpoint SPECIFIC interventions that they oppose. And they also have some idea of the magnitude of the effect of that intervention. That’s one hell of a difference.

    2nd massive difference is that free-marketeers believe in a positive dose-response relationship. We believe that markets can work reasonably well even if they’re NOT perfectly free. The relevant question is not “Was the GDR economy 1000% pure undiluted socialism?” (no it wasn’t) or “Was the West German economy pure capitalism?” (clearly not), but “Was the GDR more socialist than the Federal Republic?” (absolutely yes). And the difference in outcomes was large enough.

  3. Posted 17/02/2017 at 15:21 | Permalink

    I agree with your second point. In comparing socialism and capitalism it is best to compare the real to the real, while it is perfectly acceptable to compare a real example with an ideal if one wants to suggest the real could be improved.

    On the first I’m not so sure. Firstly, there is a question of consistency: if you are arguing from ideal theory you have to allow your opponents to do so to. Secondly, I think many socialists DO have very specific reasons for why soviet of Maoist communism wasn’t socialism (and FWIW even I would have to say that the Khmer Rouge were not ‘real’ socialism, despite their adherence to that great man, Karl Marx-Lenin).

    I suspect that the Marxists you argue with are not at the thinking end of the spectrum, just as most of the (I suspect a lot more than 25) free-marketeers who might argue as you suggest are young men who have read a few articles on mises.org and think they have a grasp of political theory.

  4. Posted 19/02/2017 at 07:52 | Permalink
  5. Posted 19/02/2017 at 08:56 | Permalink

    ‘Socialism is popular in Britain. More popular than capitalism, at any rate. That was the result of a YouGov survey last year, in which 36% of respondents expressed a favourable view of socialism, while only 32% expressed an unfavourable one. Capitalism, meanwhile, is viewed unfavourably by 39% of respondents, while only 33% view it ‘

    ‘So what explains the enduring appeal of socialism? ‘

    I think this explains a lot
    https://fee.org/articles/capitalism-is-the-wrong-word/

  6. Posted 21/02/2017 at 08:30 | Permalink

    Tom is right about a small number of libertarians. However, most supporters of a free market do, at least, discuss the interventions that they believe cause the problem and are able to deduce from their nature and the nature of economic systems and human nature why they cause a problem. “Real socialists” tend to talk as if they just want to go back to a group of mice and have another go because all the mice died when their first experiment was tried (something that would be predicted by people who do understand human nature).

  7. Posted 21/02/2017 at 08:32 | Permalink

    the other difference, I think, is that nobody reasonably denies the interventions in a free economy that are socialist (socialists champion them and have introduced them for a purpose – financial regulation or the NHS).

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