Nation of Beancounters

The intellectual vice of socialists

Posted in Essays by Navin Kumar on December 29, 2012

1. Socialists, when confronted with Chinese famines, Soviet purges, North Korean labour camps or Cambodian massacres, are quick to insist that these are the faults of the elites in power in these specific periods and places, and ought not be ascribed to socialism, the ideology, which is anyways not the same as communism. Fair enough. However, they are too quick to ascribe everything from war and poverty to mental problems to capitalism, especially in the US. This double standard invokes derision and distrust from everyone else. Terry Eagleton’s Why Marx was Right is the latest example of this tendency.

2. Socialists are quite quick to point out the difference between the interests of capital owners and the interests of society. They are disinclined to discuss the difference between the interests of workers and society: the former would like to work as little as possible at a given level of compensation, to the detriment of the latter.

Absent a change in human nature, this conflict requires some sort of incentive mechanism to ensure that specialized groups of workers (co-operatives) produce what is required, and to honestly reveal what they are capable of producing. This in turn requires the destruction of dysfunctional groups, including groups where culture rather than incentives, is the cause of decay. Capitalism destroys dysfunctional and outdated firms, except financial firms. I find it hard to believe that socialism will allow workers from dysfunctional non-financial cooperatives to suffer the full cost of dissolution.

After reading Governing the Commons by Elinor Ostrom, I cannot take the idea of a change in human nature seriously. Community owned fisheries, canals etc that are centuries old (pre-dating capitalism) require enormous amounts of monitoring to be functional, and are sometimes fragile. And these are cases where violators directly interact with their neighbors. I find it hard to believe that norms will be enough to keep workers accountable to anonymous consumers on the other side of the country.

I no longer think existing socialist plans (parecon, market socialism) are feasible. Socialism is dead, at least in it’s pure form where there exists no private property or market exchange. I do not think that capitalism is the end of history but I do not think that socialism is it’s successor. I do not know what it’s successor will be, nor when it’ll end.

This Jacobin essay left me heartbroken. It started off so well. Even as it astutely identified soft budget constraints as the root cause of socialist under-production, it failed to explain how to avoid the problem. I highly recommend it regardless.

Until socialists come up with, in even broad strokes, a plausible solution to the problems of incentives, innovation and information, I cannot take them seriously. So this is me signing off on this topic till some distant later date.

Inspired by Tyler Cowen’s discussion of the vices of libertarians, liberals and conservatives.

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