Economics 101

What Everyone Needs to Know About the Folly and Failures of Socialism

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The world recently celebrated the thirty-year anniversary of the fall of the Berlin Wall. Thirty years ago people peacefully took down a wall that was erected to keep people inside. Such walls are always the result of totalitarianism.

When governments centralize economic planning we lose the very thing that allows ordinary people to create wealth: human creativity and cooperation.

In the years immediately after the fall of the Berlin Wall, you would be hard-pressed to find an American politician advocating for “democratic socialism,” yet several decades have now passed and here we are. Democratic Socialism is en vogue and heralded as the solution we need to return to an egalitarian society and as the best hope for the poor. That’s why this list of important books produced by the Independent Institute is essential for anyone with questions about the dangers of centralized economic planning and its consequences.

While this list includes dozens of recommended titles, here are just ten that I’d like to highlight for you today:

Collectivist Economic Planning

Edited by F. A. Hayek. Routledge & Kegan Paul, 2015. (Download PDF here)

This volume contains Ludwig von Mises’s essay “Economic Calculation in the Socialist Commonwealth,” along with a foreword and afterword by Nobel Laureate in Economics F.A. Hayek. It also contains related essays by N.G. Pierson, George Halm, and Enrico Barone.

The Case Against Socialism

by Rand Paul with Kelley Ashby Paul. Broadside Books, 2019.

Rand Paul writes: “One of the greatest ironies of modern political history is that as socialists around the world rose to overthrow authoritarian regimes, they ultimately replaced them (despite their promises to establish free democracies) with authoritarian regimes of their own.”

Red Plenty

by Francis Spufford. Graywolf Press, 2012.

A historical novel. Tom Palmer writes, “Spufford … describes the period [under Nikita Khrushchev] when many believed that the USSR would surpass the ‘capitalist west’ in the production of consumer goods … Spufford does an admirable job of explaining the real functioning of the economic system that existed in the USSR, with a focus on the role of blat (the exchange of favors) and the tolkachi (the “pushers” or “fixers” who organized complex chains of indirect exchange to supply what was missing).

Between Immorality and Unfeasibility: The Market Socialist Predicament

by David Ramsay Steele, Critical Review, (vol. 10, no. 3) 1996. Reprinted in his book The Mystery of Fascism. St. Augustine’s Press, 2019.

“Market socialism,” if it works at all, cannot live up to the utopian dreams of its proponents.

The End of Socialism

by James R. Otteson. Cambridge University Press, 2014.

Otteson draws on Adam Smith’s Theory of Moral Sentiments (1759) to criticize G. A. Cohen’s Why Not Socialism? Smith warned us about of the “man of system” who wants to arrange and move human beings like pieces on a chessboard. Socialist central planners treat human beings as objects and don’t care that people, unlike chess pieces, have a moral right to their own lives, purposes, and projects.

Liberty of the Press under Socialism

by Williamson M. Evers. Social Philosophy & Policy (vo. 2, no. 6) Spring 1989, 211–34. Reprinted in Socialism, edited by Ellen Frankel Paul. Basil Blackwell for the Social Philosophy and Policy Center, Bowling Green State University, 1989.

Socialist theorists make extravagant claims about retaining liberty of the press under actual socialism, but without private property rights such liberty has not survived and cannot survive.

The Moral Collapse of Communism: Poland as a Cautionary Tale

by John Clark and Aaron B. Wildavsky. Institute for Contemporary Studies, 1991.

A detailed case study of Poland as an actually-existing socialist society. People at all levels had to rely on connections and networking to obtain goods and services. Benign use of such connections easily shaded over into corrupt uses and moral degradation. The country’s economic disorganization and shortages provided the basis of the ruling elite’s privileges. The authors write: “It was in communist Poland … that the state repressed the masses, sought to impose the ideological hegemony of the ruling class, and pursued policies that seem to have no purpose other than to protect the political power and economic well-being of the fortunate few.

Nineteen Eighty-Four

by George Orwell, with an Introduction by Julian Symonds, Everyman’s Library, 1993.

Orwell depicts a dystopian future that largely extends the features of Communist Russia in a further nightmarish direction that he calls oligarchical collectivism. Nineteen Eighty-Four explores such themes as perpetual warfare, propaganda, speech controls, cults of personality, and government surveillance. David Ramsay Steele writes: “The severest socialist critics of Orwell, like [Raymond] Williams, [Isaac] Deutscher, and E.P. Thompson, were generally people who generated an immense quantity of verbiage about socialism, which they believed ought to be democratic, without ever grappling with the arguments indicating that socialism can never be democratic

Reflections on the Failure of Socialism

by Max Eastman, Devin-Adair, 1955.

Henry Hazlitt writes, “Mr. Eastman argues that socialism has failed over the last century in every nation and in every form in which it has been tried. He explains why political liberty depends upon a … competitive market and the price system. His arguments are all the more persuasive because of his personal history. He began as an extreme left-wing Socialist. As editor of the Masses and later of the Liberator, he ‘fought for the Bolsheviks on the battlefield of American opinion with all the influence my voice and magazine possessed.’”

Socialism: The Failed Idea That Never Dies

by Kristian Niemietz. Institute of Economic Affairs, 2019.

They all began as democratic socialism—before turning into coercive, stratified, hierarchical societies run incompetently by a technocratic elite. When today’s proponents of democratic socialism say “this time it will be different,” they are only saying what was promised in every preceding effort to put socialism into practice. Chapters on Stalin’s Soviet Union, Mao’s China, Cuba, North Korea, Khmer Rouge’s Cambodia, Albania, East Germany, and Venezuela.

Final Thoughts

The lessons of economics extolled in this list are important, perhaps now more than ever. Adding the word “democratic” to the word “socialism” does not change what socialism is: increasing central control of economic planning. It always yields the same results.

We need to return to the power of economic thinking which this book list offers. We cannot forget that socialism, under any name, is neither cooperative, democratic nor egalitarian. What the world needs now is market-fueled cooperation and productivity. Our lives depend on it.

 

What about capitalism? Order the book, Counting the Cost: Christian Perspectives on Capitalism, to read an honest and empathetic look at capitalism and its critiques from a biblical perspective.

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