New York and Seattle have elected socialist mayors, and many young Americans express support for socialism in polls. Economist Thomas Sowell observes that socialism’s record is so bad that only an intellectual could support it. Does contemporary support for socialism reflect a failure of economic education?
Before answering, I do not believe that any science can tell people what to choose. All economics, public health, or any discipline can do is detail the benefits and costs of different options.
To answer this question we must focus on whether economics alone makes the argument against socialism or whether the case relies on values, which lie beyond economics. Economics can provide a theoretical evaluation of proposed systems of socialism and scrutinize the record of socialist or communist nations.
But values also matter. In his inauguration address, Zohran Mamdani called on New Yorkers to reject “rugged individualism and embrace the warmth of collectivism.” Opponents of socialism might reference freedoms, like starting businesses, working in the occupation of one’s choice, and keeping money is normative.
Economic theory offers three factors affecting socialism’s performance: scarcity, incentives, and information.
Scarcity recognizes that goods and services must be produced using factors of production – labor, natural resources, and tools – available in limited quantities. No society can produce everything people want. Life involves tradeoffs about what to produce.
Professor Sowell in A Conflict of Visions describes the two major themes in Western political economy as constrained and unconstrained. The unconstrained view, which includes Marxism, denies scarcity in various ways. But scarcity cannot be wished away.
Incentives are a second factor. People choose actions that advance their goals. Economic institutions – like private or government ownership – determine incentives and people then respond to the incentives. Socialists cannot expect people to ignore incentives.
Information affects the quality of decisions. Economic activity generates knowledge, but this knowledge is dispersed across the economy. Socialist government planners must access this knowledge to make good decisions.
In 1920, as Lenin was trying to implement Marxism in the Soviet Union, economist Ludwig von Mises challenged whether a socialist economy could generate the knowledge contained in prices without markets. Scarcity, information, and incentives demonstrate the folly of socialist fantasies about free stuff.
Communism’s track record is dismal, bringing death and poverty to country after country. Socialism transformed Venezuela from one of the wealthiest to one of the poorest Latin American nations. Does this evidence not confirm socialism’s theoretical weaknesses?
Perhaps not. To be sure, any young American unaware of communism’s historical record is too poorly informed to offer a serious opinion. But is this violent history relevant for America in the twenty-first century?
Let’s start with communism’s nearly 100 million victims. Neither Russia in 1917 nor China in 1949 were liberal nations. The core element of liberalism is moral equality. A liberal government must serve the people and cannot sacrifice individuals for regime goals.
Liberal nations build constitutional safeguards to protect individuals. But these safeguards work because citizens serving in government accept moral equality. Liberal leaders will not imprison, enslave, or kill citizens.
Lenin was not a liberal and the communists in Russia and China came to power through violent revolutions. The result was leaders willing to their fellow citizens.
Socialism in a liberal nation should be different. Claiming that Bernie Sanders or Alexandra Ocasio-Cortez would automatically repeat the atrocities of Stalin or Mao is offensive. Few Americans today likely reject socialism over communism’s death tolls.
Communist poverty is undeniable but could also be due to its illiberal, violent origins. Despite the Marxist rhetoric, Stalin, Mao, and Castro might have ruled to enrich themselves like other dictators. Communist regimes also faced external pressure – e.g., the Russian civil war, the U.S. trade embargo with Cuba – which could have undermined their economies.
Economic education can dispel socialist fantasies about free stuff. But values like the freedom of individuals to keep what they earn are a big part of the case for capitalism.
Daniel Sutter is Affiliated Senior Scholar at the Mercatus Center and Professor of Economics at the Manuel H. Johnson Center for Political Economy at Troy University.
