Socialism Always Fails

by William L. Anderson

The Nation, which enthusiastically has supported every totalitarian communist regime that has existed in the past century (and that includes Pol Pot’s Cambodia and North Korea) is now firmly riding the Bernie Sanders bandwagon. This article, entitled “Why American Socialism Failed—and How It Could Prevail Today,” unwittingly gives away the mentality of American socialists which claims all economic issues as being “solved” by the implantation of socialism—regardless of the actual economic outcomes.

Three years ago, I wrote “The End of Socialists is Socialism, Not Prosperity,” and this article follows some of the same themes. In that article, I argued that socialists do not necessarily believe that socialism produces better economic outcomes than capitalism—indeed, one would have to be willfully blind to fail to recognize the differences—but that socialists believe it doesn’t matter. Socialism is a moral imperative, and the only thing holding back the implementation of this system in the USA has been the failure of socialists to present a plausible alternative—something that socialists claim now is being done.

People who follow the arguments based in Austrian economics are intimately familiar with the economic calculation problem of socialism as laid out by Ludwig von Mises in 1920 and Murray N. Rothbard on numerous occasions, as well as the secondary “knowledge” argument presented by F. A. Hayek in 1945. Mises and Rothbard presented what clearly are irrefutable claims that the only kind of socialist economy that could exist would be a primitive, extremely basic economy that could not support any kind of complex economic activity. Even a die-hard socialist like Robert Heilbroner would admit to as much in his 1989 commentary in The New Yorker:

The Soviet Union, China & Eastern Europe have given us the clearest possible proof that capitalism organizes the material affairs of humankind more satisfactorily than socialism: that however inequitably or irresponsibly the marketplace may distribute goods, it does so better than the queues of a planned economy….the great question now seems how rapid will be the transformation of socialism into capitalism, & not the other way around, as things looked only half a century ago.

However, as I pointed out three years ago, the collapse of the USSR and the eastern European socialist states did not “convert” Heilbroner to becoming an advocate for capitalism, nor did China’s transformation from Mao’s giant commune to a quasi-capitalist economy (and subsequent economic growth) change his mind. Indeed, socialists seem almost impervious to factual arguments, and despite a gaggle of “what would a socialist economy look like” articles in publications such as Jacobin, socialists have never refuted the Austrian arguments. For that matter, socialists really cannot appeal to economics at all despite their claim that their goal is to provide a better economic society for those ubiquitous workers. Jacobin declares:

For socialists, establishing popular confidence in the feasibility of a socialist society is now an existential challenge. Without a renewed and grounded belief in the possibility of the goal, it’s near impossible to imagine reviving and sustaining the project. This, it needs emphasis, isn’t a matter of proving that socialism is possible (the future can’t be verified) nor of laying out a thorough blueprint (as with projecting capitalism before its arrival, such details can’t be known), but of presenting a framework that contributes to making the case for socialism’s plausibility.

(Note that the Jacobins are famous for unleashing the infamous Reign of Terror during the French Revolution, in which thousands of so-called enemies of the state were murdered. That American socialists today willingly associate themselves with genocide speaks volumes of what these people will do if they ever gain real power here.)

In other words, the implementation of a socialist order is not so much dependent upon a plausible model of a socialist economy, but rather is an exercise that depends upon convincing people that somewhere over the rainbow we can make the whole thing work, despite the failures of the past. And that is where the recent articles in The Nation and the Daily Mail reveal much about the socialist mentality.

In The NationRoss Barkan argues that the barriers to implementing a socialist system are political, not economic. Indeed, in “Why American Socialism Failed” he writes that there was just too much political resistance to reorganizing the United States into something like what at that time was being done in the Soviet Union. (It should be noted that he seems to view the Russian Revolution with much sympathy—and fails to note that perhaps Americans at that time were not interested in implementing a regime that would mirror the atrocities being committed by the Red Army and the new Soviet government.)

Instead of following the old political strategy of having people run as members of a socialist party, Barkan says that the better plan is for socialists simply to take over the modern Democratic Party by electing socialists from the presidency on down. He writes:

Today’s Democratic Party is a shell waiting to be inhabited by whoever claims the prizes of elected office. If Bernie Sanders, a democratic socialist, is elected president of the United States, the Democratic Party will slowly become his party. And if he loses, inspiring still more DSA recruits and fueling down-ballot victories, socialists can continue to win council, legislative, and even congressional seats on Democratic lines, wielding tangible clout.

In New York, there is one socialist in the state legislature: DSA member Julia Salazar. She has helped lead campaigns for public control of power companies and a universal right to housing. Five DSA-backed candidates are seeking legislative seats this June, challenging establishment-backed Democrats. If they all win, they will start to gain back the momentum of the 1920s.

This time, there will be no reactionary legislative leaders to unseat the new socialists, no Red Scare to feed a public frenzy against their anti-capitalist views. Salazar is a member of the Democratic majority, an ally of the progressive block, unlikely to lose an election anytime soon. The DSA members seeking to join her will be free to advocate for radical change. It’s a future that would have surprised the class of 1920 because Socialists never took over New York, let alone America. But today’s socialists march into the 2020s without the daunting roadblocks of a century ago. They don’t need their own party anymore. They can just take someone else’s.

In other words, the entire question of socialism is political; socialists can speak about their utopian visions, be elected on those platforms, but really don’t have to explain how they actually will make a socialist economy perform in a way that will even begin to match the output of a private enterprise–based economy. Yet, when confronted with the reality of the actual performance of a socialist economy, all the writer can do is to appeal to the election of socialists, which should not be surprising, since the end of socialism is political power and nothing else.

The death of a Canadian teenager of leukemia while waiting for the government’s permission to have a bone marrow transplant speaks volumes both of the performance of socialist systems and the way that people under socialism submit to the system. Laura Hillier, 18, of Ontario died before she could receive a transplant, which is not particularly unusual in the Canadian system, as “standing in line” for care is the typical experience, even when a life is at stake. From the Daily Mail:

Laura might have experienced a few more milestones if a Hamilton, Ontario, Canada, hospital had been able to accommodate a bone marrow transplant for the young woman. Numerous donors were a match with Laura and ready to donate, but Hamilton’s Juravinski Hospital didn’t have enough beds in high-air-pressure rooms for the procedure. Hospital staff told her they had about 30 patients with potential donors, but the means to only do about five transplants a month.

Although Hillier’s obituary “slammed” the wait times in Canada, nonetheless, nothing will be done because Canada’s “single payer” system is both politically sacrosanct and a socialist politician’s dream. It is sacrosanct because it provides the “free healthcare” that socialists promise and a politician’s dream because it provides unending opportunities for “reform.” In reality, the economic calculation problem is front and center, making it impossible to “fix” the Canadian single-payer system, something no Canadian politician will admit.

One doubts that Hillier would have died in the same way in the United States. For all of the criticism American medical care receives from the left (and the current system hardly fits the claim by socialists that it is “free market”), one can be reasonably assured that a young woman here would not die because of a lack of hospital beds.

In Canada, however, such deaths are a matter of course, and for all of the “this shouldn’t happen” statements from both politicians and victims’ families, it will continue to happen. (Canada, perhaps not surprisingly, has relatively poor cancer survival rates.) Under socialism, one stands in line and does not challenge the system, since the system is based not upon the successful delivery of services, but rather on the prospect of such services being made available “to the people” for no fee, the product of a “compassionate” socialist state.

Note that at no point in his article does Barkan write of any way that socialism would improve the lives of Americans. Socialism is not about providing needed services to those who cannot receive them otherwise, nor is it about raising the living standards of the poor, despite socialist claims to the contrary. Socialists do not create goods and services; they commandeer them for political purposes, and such things are useful only as a means of putting and keeping socialist politicians in power.

No politician in Canada will be voted out of office for the premature death of Laura Hillier, nor will any hospital administrators be sacked. Had medical officials given in to sentiment and bumped Hillier up the transplant list, someone else would have died for lack of space. The enemy here is scarcity, and under socialism, scarcity is multiplied. Canadians have come to accept this situation, all the while convincing themselves that theirs not only is a morally-superior system to anything that exists in their neighbor to the south, but also enables them to receive medical services that they believe would be denied them if their government were not paying. They have become like the cave dwellers in Plato’s allegory, believing that the medical shadows they see on the wall represent the best care possible.

Socialists might well take over the Democratic Party; indeed, American voters are capable of putting someone like Bernie Sanders in the White House. They well could make the electoral gains that the writers at The Nation have coveted for decades. What they cannot do, however, is tell the truth about socialism. Another article in Jacobin, written by Sam Gindin, demonstrates this last point:

Murray Rothbard, a lifetime disciple of the archconservative Ludwig von Mises, lamented that when he entered grad school after World War ii “the economics establishment had all decided, left, right, and center, that…socialism’s only problems, such as they might be, were political. Economically, socialism could work just as well as capitalism.” With socialism carrying such a degree of economic credence, the elaboration of the details of a functioning socialist society seemed decidedly less pressing for socialists than developing the politics of getting to it.

Gindin then goes on to “refute” Hayek’s “knowledge problem” critique of socialism (while ignoring the Austrian “economic calculation” issue). The rest of the piece essentially can be shortened into this one sentence: forget the past failures of socialism; this time we will make it work.

We have been hearing this kind of thing for more than a century. Socialists tell us that if the rest of us will give them total power over our lives, this time they will provide prosperity, and unlike previous socialist regimes, they won’t strip us of our liberties. We should have as much confidence in their words as the loved ones of Laura Hillier had in the empty promises of Canadian medical officials.

William L. Anderson is a professor of economics at Frostburg State University in Frostburg, Maryland.


The views expressed on austriancenter.com are not necessarily those of the Austrian Economics Center.

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