Magazine | January 24, 2011, Issue

Socialism Is Back

(Darren Gygi)
And it’s in your face

‘Socialism” is a word that has vexed thoughtful conservatives since 2008, along with the related terms “Marxist,” “radical,” and the whole nomenclature of leftish extremism. In his painstakingly documented book Radical-in-Chief: Barack Obama and the Untold Story of American Socialism, Stanley Kurtz dwells at great and profitable length on the president’s connections, and his coterie’s connections, with avowedly socialist and radical organizations. Glenn Beck, Jonah Goldberg, and other observers have with varying degrees of rigor pursued related lines of inquiry, locating affinities between Obama’s clique, along with mainstream Democrats more broadly, and the sinister fringe. The Left’s response to these investigations has ranged from the insane (e.g., Lewis Diuguid arguing in the Kansas City Star that “socialist” is a codeword for “black”) to the inane, protesting that “socialist” is being used as a mere smear word, empty of other content. The Left knows whereof it speaks, having spent half of the 20th century describing its critics as “fascists,” with no regard for the meaning of that word. (Goldberg’s deft reversal in Liberal Fascism, reconnecting contemporary progressivism with its pre-war authoritarian models, took away that rhetorical toy and thereby produced a symphony of delicious caterwauling from left-wing critics, one or two of whom may even have read the book.)

“Americans have no clue what socialism is,” declared the noted political philosopher Bill Maher during a seminar with the equally cerebral Larry King. Rep. Anthony Weiner used almost precisely the same words, thundering at a critic: “You don’t know what socialism means.” Conservatives should pay some careful attention to the formal meaning of socialism, because it is vital that we recognize it, understand it — and contain it. While Mr. Kurtz is right to worry about the radicalism of President Obama and his lieutenants, it is not “the untold story of American socialism” that most threatens our nation, but the told story. It is not hidden socialism that presently undermines our institutions, weakens our economy, and fritters away both present and future prosperity, but unhidden socialism. A sharpened definition of socialism, made more precise and reflecting the conditions of the 21st century rather than those of the 19th, is a necessary tool for understanding our current political crisis, and what follows are some notes toward a more relevant definition of socialism.

The current Random House Dictionary definition of “socialism” is serviceable but dated: “a theory or system of social organization that advocates the vesting of the ownership and control of the means of production and distribution, of capital, land, etc., in the community as a whole.” (Land? Clearly, this was written back in ye olde days, when real estate was an asset, not a liability.) Political entrepreneurs are no less creatures of innovation than are market entrepreneurs, and so it is necessary to take issue with one conjunction in this definition: It should read “ownership or control” rather than “ownership and control.” As we have seen in the cases of enterprises such as Fannie Mae and Freddie Mac, it is entirely possible for government economic planners to intervene deeply (and, in this familiar case, catastrophically) in the economy while maintaining private economic forms, such as government-chartered for-profit corporations. The government did not own Fannie Mae or Freddie Mac, which are nominally private, shareholder-owned corporations; but it most certainly did control them, and created them to implement an economic policy. Likewise, the identification of “the community as a whole” with “the state” is no longer intellectually defensible, the work of the public-choice economists having very thoroughly established that governments do not reliably act on behalf of the communities they purport to represent.

#page#A more complete definition of socialism incorporates two criteria: The first is that socialism entails the public provision of non-public goods. The second is the use of central planning to implement that policy.

What is a public good? Economists distinguish between public and non-public goods on two grounds, features known as rivalry and excludability. Public goods, under the economic definition, are goods which are non-rivalrous in their consumption and non-excludable in their distribution. A couple of examples will make these distinctions clear. A rivalrous good is one for which my consumption of one unit of the good leaves one unit less for your consumption. A mango is rivalrous in consumption: Every mango I eat is a mango you cannot eat. But some goods are non-rivalrous: a highway, for instance. If I drive down a mile of highway, that does not leave one less mile for you to drive down.

But not all non-rivalrous goods are public goods. That hypothetical highway could be a private turnpike. That’s where the second criterion, excludability, comes in. Excludable goods are those for which we can limit consumption to paying parties. Those mangos are excludable goods; if you don’t pay me, you can’t have any of my mangos. But some goods are non-excludable: for instance, a big fireworks display. You could sell tickets to a fireworks display, but people on the periphery would still be able to see the show. Public goods are those goods which are both non-rivalrous and non-excludable.

There are obvious examples of government action, such as national defense and law enforcement, that provide classical public goods. But there also are less obvious examples, and it bears keeping in mind that useful public goods will vary from place to place. For instance, in New Delhi, there is a terrible problem with mosquitoes. Each year, hundreds of people die of dengue fever, and many others are sickened by mosquito-borne diseases. So the local authorities conduct mosquito-spraying campaigns at public expense. Mosquito control is non-rivalrous (a mosquito that is dead to you also is dead to me) and non-excludable (you cannot arrange it so that mosquitoes refrain from attacking only paying parties) and therefore meets the definition of a public good. But a public good is not synonymous with “something that is good for the public at large.” Mosquito spraying in a place with no mosquito problem would be a “public good” that is a waste of resources. Likewise, one might argue that there are significant public benefits from things like public schooling, government-subsidized health-care programs, and Amtrak, but those things, whether we enjoy them or not, whether we desire them or not, do not meet the technical definition of a public good.

Every government undertaking engaged in the public provision of non-public goods is an instance of socialism, at least at a trivial level. But most socialism of that sort probably is better described as “welfare-statism.” As a practical matter, all modern governments engage in some public provision of non-public goods. That does not mean that every government is, in a meaningful sense, socialist, or that it would make sense to describe every government that maintains a public school or a public highway as socialist. There are questions of degree, and questions of judgment, and the answers to those questions will vary from case to case.

#page#So what distinguishes a garden-variety welfare state from a system that well and truly deserves to be identified as socialist? Beyond the public provision of non-public goods, a second factor — economic central planning — is crucial to identifying and understanding what differentiates real socialism from the normal mishmash of welfare-state policies typically found in Western liberal democracies and affiliated forms of government.

Which is to say: Socialism is not redistribution. Socialism is central planning. Under socialism, The Plan is everything. The presence of The Plan, and the empowerment of The Planners, is to socialism what the Eucharistic sacraments are to Christians and what the Mosaic Law is to the Jews: the fundamental expression of what is good and true. When The Plan conflicts with the desire to redistribute income or to subsidize the poor and the working class, The Plan always prevails. Indeed, even Mikhail Gorbachev, a committed socialist who believed he could reform the Soviet Union’s single-party system from within, gave up on the idea of equalizing incomes when doing so interfered with the ability of central authorities to implement The Plan; “Wage-leveling,” he told the Soviets’ Central Committee in a 1988 speech, “has a destructive impact not only on the economy but also on people’s morality, and their entire way of thinking and acting. It diminishes the prestige of conscientious, creative labor, weakens discipline, destroys interest in improving skills, and is detrimental to the competitive spirit in work. We must say bluntly that wage-leveling is a reflection of petty bourgeois views which have nothing in common with Marxism-Leninism or scientific socialism.” Such sentiments would be at home at the annual luncheon of any American chamber of commerce — except for the scientific socialism part.

What Gorbachev is making clear here — and what too many critics of socialism fail to understand — is that the necessary thing from the socialists’ point of view is not egalitarian economic outcomes, but state control. And that control need not be enacted nationwide or imposed by a single-party dictatorship of the Chinese or Soviet sort. State direction comes in many degrees and can take many forms, from Venezuela’s nationalizations under Hugo Chávez to FDR’s cartels to Richard Nixon’s regime of wage and price controls. American socialists for years have been eager to use the Medicare/Medicaid system to impose a system of price controls on pharmaceutical companies and other medical-service providers — and the 2010 legislation we know as Obamacare today lays the groundwork for empowering them to do so. Stalin argued for “socialism in one country,” while American progressives argue for socialism in one industry — or, one industry at a time.

The modern experience suggests that the economist Ludwig von Mises was only partly correct when he wrote, “The socialistic State owns all material factors of production and thus directs it.” That was true for the authoritarian, single-party powers of his day. In our own time, the converse is a more accurate description of the real economic arrangement: Under socialism, the state directs the material factors of production as if it owned them. The state does not have to actually own factories, mines, or data centers if it has the power to dictate, in minute detail, how business is conducted within them. Regulation acts as a proxy for direct state ownership of the means of production.

#page#Even in its more dispersed modern forms, socialist central planning is fairly easy to spot, because it has an easily identifiable signature: failure. Socialism reliably produces economic failures when applied nationally (the USSR, China, India, Chile, Vietnam), when applied in modified forms across mixed economies (post-war Britain’s nationalized industries), and when applied to particular sectors within largely capitalist economies (national health-care programs). Pockets of socialism found within largely liberal countries can be evaluated — as socialism — regardless of the fact that they are operating within a largely non-socialist context, just as the limited free-market activities that were permitted within Soviet Russia or Deng Xiaoping’s China can be evaluated as free-enterprise initiatives. Socialist economic failures spring from well-understood defects within the socialist form of organization itself; those failures are not dependent upon the intelligence, goodwill, or moral character of those who are attempting to implement a socialist system, though often enough venal human failings have magnified the inherent problems of socialism.

Socialism’s main defect is the inability of political decision-makers to make rational decisions without the information provided by prices generated by marketplace transactions. The repression associated with socialist regimes is in most cases a reaction to the failure of The Plan. As Mises’s colleague F. A. Hayek argued in The Road to Serfdom, central planners frustrated by their inability to mold the economic world to their will inevitably are tempted to run roughshod over the rights and interests of the individuals they purport to serve. Sometimes this takes the relatively innocuous form of high-handed officials in the Canadian public-health service denying a procedure or timely access to care; sometimes it takes one of the diverse forms explored with such horrific vigor by Kim Jong Il. Hayek’s diagnosis, which is widely misunderstood and exaggerated, is not perfect, but he was correct that there is a path that connects the many stops on the road to serfdom. But we need not travel to exotic lands to experience socialism firsthand. Any American public school will do.

Americans have an instinctive understanding of the economic contradictions of collective farming on the Soviet or Maoist models. We understand why socialist enterprises such as Venezuela’s state-run petroleum companies are destined to failure. But we fail to recognize that many of our own systems — using central planning to implement the public provision of non-public goods — are organized along precisely the same lines. The outstanding local example of this is the American public-school system.

While Otto von Bismarck’s Prussian model of compulsory universal education would eventually come to be adopted in the United States, the public provision of schooling in America far precedes the establishment of the country itself, dating back to the Old Deluder Satan Law of colonial times. Early advocates of public education believed that schooling could be used to produce better Christians; later advocates believed that it could be used to produce better human economic inputs. The Prussian approach would be explicitly presented as a component of national economic planning; students would be taught skills that would make them productive workers, national examinations would be used to channel them into suitable jobs, and the whole enterprise would be integrated into a rational plan of economic development. This was the essence of the progressive vision for education. The progressive thinker Calvin Stowes was influential in seeing the Prussian model adopted in the United States. He was explicit in arguing for state ownership of the individual, taking the military as his rhetorical model for the public schools:

If a regard to the public safety makes it right for a government to compel the citizens to do military duty when the country is invaded, the same reason authorizes the government to compel them to provide for the education of their children. . . . A man has no more right to endanger the state by throwing upon it a family of ignorant and vicious children, than he has to give admission to the spies of an invading army.

#page#The aim of public education is, and has always been, to make members of the public more standardized and thus better suited for incorporation into The Plan. It is unsurprising that socialists have taken up the cause with verve. President Obama, speaking to an audience of schoolchildren, described in some detail how he expects the schools to produce students who will serve the needs of the state; unsurprisingly, he cast the situation in terms of his own agenda, emphasizing health care, racial discrimination, and job creation:

What you make of your education will decide nothing less than the future of this country. What you’re learning in school today will determine whether we as a nation can meet our greatest challenges in the future.

You’ll need the knowledge and problem-solving skills you learn in science and math to cure diseases like cancer and AIDS, and to develop new energy technologies and protect our environment. You’ll need the insights and critical-thinking skills you gain in history and social studies to fight poverty and homelessness, crime and discrimination, and make our nation more fair and more free. You’ll need the creativity and ingenuity you develop in all your classes to build new companies that will create new jobs and boost our economy.

We need every single one of you to develop your talents, skills, and intellect so you can help solve our most difficult problems. If you don’t do that — if you quit on school — you’re not just quitting on yourself, you’re quitting on your country.

Obama here is describing a right of eminent domain over the lives of American children, without putting it quite in those words. Obama may be a radical of some sort, but that speech could have been given as easily by George W. Bush or Mitt Romney, and its assumptions would have been precisely the same: The public provision of educational services is understood today, and has long been understood, as a component of national economic planning. (Just don’t ask whether it works!)

It would be difficult to find in the United States any profession so dedicated to socialism as that of educators, and difficult to find any argument for socialism as popular as the cause of public education. When some parents objected to the broadcast of the Obama speech quoted above into all the nation’s government-run schools, on the grounds that it constituted political indoctrination, they were roundly mocked by the Left. One diarist at the left-wing website Daily Kos, noting that some of Obama’s critics had described his platform as a “socialist agenda,” wrote, “If your kids are in public school, they’re already living that agenda.” To make his point especially clear, he headlined the post, “Public Schools Are Socialist.” Likewise, writing in a forum for The New York Times, Emory University history professor Patrick Allitt cited public schools as evidence that “millions of Americans . . . are ardent supporters of socialism.” “It’s odd,” he wrote, “that so many critics of [the Obama] administration should use ‘socialism’ as a devil word.” Devil word: Perhaps he’s never heard of the Old Deluder Satan Law.

This is a common trope on the left: “Socialism” sounds scary, but we’re really talking about things like public schools and public highways. Education blogger Jerry Webster, writing at, headlined his post on nationalizing teacher-pay decisions “Give Socialism a Chance.” Writing in the arts and humanities journal Helium, Daniel Reneau asks, “Like public schools? . . . Then say, ‘Thank you, socialism!’” Other writers on the left have similarly argued that the popularity of the public schools suggests that Americans are more comfortable with socialism than they let on.

#page#As indeed they are. The public schools constitute one of the most popular instantiations of socialism in American life, though Social Security and government-funded transportation systems no doubt rank nearly as high. But popular with whom? Certainly the educators and administrators who run the system are largely pleased with it, as they should be; the noncompetitive nature of government-run education provides them with salaries and benefits far exceeding what they plausibly could earn in the private sector. Some parents and property owners are very happy with the public schools as well. The well-off and well-connected tend to enjoy reasonably good public schools, which help sustain high residential real-estate values in the largely suburban communities that host them. But other Americans are much less pleased with their government schools, particularly the poor, non-whites, and those living in inner cities. Black families, in particular, consistently rate their government schools as performing poorly, and their subjective impressions are borne out by empirical data. The public schools are not a random or inexplicable failure. They are a classical socialist failure, with massively misallocated resources, an ensconced bureaucratic class, and a needlessly impoverished client class.

Public schools fail for the same reason that all socialist enterprises fail: lack of information. In marketplace transactions, prices communicate critical information about who is producing what, who is consuming what, and what it is that producers and consumers want and need. This information is always local and contingent and is otherwise impossible to aggregate. This is not a new argument: Socialism’s real intellectual death-blow was dealt in 1920 by Mises based on the relatively dry and technical question of the use and nature of prices in an economy.

As we know from the Labor Theory of Value, socialists of the Marxian bent hold prices to be at some level objective. Somewhere out there, in the economic ether, is a universally true and just price for any given prescription drug, rent-controlled apartment, semester’s tuition, or credit-card fee. In part, this is an outgrowth of socialism’s pretense that it is a scientific system for understanding and organizing a society. If economic values are in constant, unpredictable flux, then central planning is impossible. To counteract that criticism, socialism posits that economic values are fixed and knowable. For the socialist, a product has a certain value, and it is a moral imperative that the worker be compensated at a level equal to the value of the thing produced.

Under the socialist understanding, prices are endogenous, an aspect of the thing itself, reflecting the material, resources, time, expertise, and — above all — the labor involved in its creation. But for Mises, and for practically all modern economists, prices are exogenous, reflecting only how people value a particular product. This may seem like an oversimplification — a product is worth only what you can sell it for — but, in practice, the radical subjectivism of Mises provides an infinitely richer and more nuanced model of pricing — and thus of human action — than does the static Marxist model. That’s because the Mises model asks not only, “What is it worth?” but, “What is it worth? To whom? At what time? In what context? In relation to what other goods?”

Where there are no real market transactions, there are no real prices. Where there are no real prices, there is not much real knowledge about actual economic conditions. In the United States, we have an education system that already is socialized to a greater extent than Lenin managed for Soviet agriculture. We have a health-care system that is well more than half socialized. We have a mortgage market that is largely socialized. Not surprisingly, our schools, our health-care system, and our mortgage market are the three most prominent failures of major institutions in recent memory. That is not the fault of Barack Obama and his hidden socialism. That is the fault of longstanding American economic policy and its unhidden socialism. If you are worried about socialism, start at the schoolhouse, not the White House.

– Mr. Williamson is a deputy managing editor of National Review and the author of The Politically Incorrect Guide to Socialism, from which this essay is adapted, which will be published on January 10.

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