The era of big government is back, and although America remains a mixed system, the socialist element is greater now than in 1996 and momentum today favors more socialism.

Last fall marked the bicentennial of the birth of socialist Karl Marx in 1818, which triggered celebrations, encomiums, and memorials from innumerable contemporary socialists around the globe. Socialism today still isn’t a dirty word (like fascism), despite the mass poverty and the death of roughly 100 million innocents under Marxist-inspired political regimes over the past century. Socialists today aren’t deterred even by more recent cases like Venezuela, which went from the richest to the most chaotic, collapsing nation in South America because of just two decades of rule by democratically elected Marxist leaders Chavez and Maduro.

Interestingly, Marx’s writings were far more anti-capitalist than pro-socialist, which gave Marxist-inspired regimes plenty of wiggle room for capricious and unaccountable behavior. Given Marx’s belief that socialism was the necessary consequence of capitalism’s “inevitable” collapse, he was notorious for writing little (and ambiguously) about what a future socialist society would look like. Marx was clear, however, that socialism would launch with a super-grand larceny (an entire class of workers, the proletariat, would “expropriate” the means of production) and mass coercion (a “dictatorship of the proletariat”).

Most subsequent Marxist practitioners in politics made certain that those visions, at the least, were actualized. In The State and Revolution (1917), published during the Russian Revolution, Marxist practitioner Vladimir Lenin pledged that once all vestiges of capitalism were expunged, “the whole of society will have become a single office and a single factory, with equality of labor and pay,” and “the socialist principle, ‘He who does not work shall not eat,” will be universally “realized.”

Marx was suspicious and critical also of modernity, progress, and change — distinct features of capitalism. But in this he was surely not alone, at least historically. In the decades since the 1991 collapse of the (one-time) model socialist regime, the U.S.S.R., contemporary Marxists and “progressives” have denounced “neoliberalism,” or the “new” case for liberty made since the 1980s by Reagan-Thatcher-type conservatives.

Yet conservatives too have a long and well-deserved reputation for suspecting and criticizing modernity, progress, and change (albeit for slightly different reasons than those given by socialists). Conservatives have criticized capitalism for being irreligious, too secular, anti-family, and too happiness-obsessed. Some libertarians — self-described “left libertarians” or “bleeding heart” libertarians — share this suspicion of capitalism and assume it must degenerate into corporatism or cronyism.

Uncomfortable being unabashedly pro-capitalist, some (but not all) “neoliberals” have preferred to take the safer route of being merely anti-socialist, even though anti-socialism alone isn’t necessarily a pro-capitalist position. Anti-socialism tends to degenerate into a contradictory, idiosyncratic, and logically incoherent case for some unstable, impure mixture of the two systems. It’s a mongrel undeserving of the prize “first in class.”

The most influential political economist of the 20th century, John Maynard Keynes, who some saw as a savior of capitalism in the depression-ridden 1930s, argued not for capitalism or even semi-capitalism but for “semi-socialism” (in “The End of Laissez-Faire,” 1926). A year earlier he had expressed “elation” over Russia’s socialist “experiment,” even though in the same essay he said Marx’s economics was “obsolete,” “scientifically erroneous,” and “without interest or application for the modern world” (“A Short View of Russia,” 1925).

For Keynes, socialism may have its bad points, especially being economically inefficient, even destructive, but capitalism was bad too because it was occasionally unproductive and always immoral:

The decadent international but individualistic capitalism, in the hands of which we found ourselves after the war [WWI], is not a success. It is not intelligent, it is not beautiful, it is not just, it is not virtuous — and it doesn’t deliver the goods. In short, we dislike it, and we are beginning to despise it. But when we wonder what to put in its place, we are extremely perplexed. (“National Self-Sufficiency,” Yale Review, 1933)

Conservative Austrian economist, lifetime critic of Keynes, and 1974 Nobel Prize winner F.A. Hayek famously warned (in The Road to Serfdom, 1944) that mixed economies, over time, were prone to becoming ever-more mixed with socialism. The result would be serfdom, the extinguishing of both economic and political liberties. Hayek warned that the inevitable problems caused by socialist-inspired state interventions would be blamed improperly on any remaining free elements (capitalism) and lead to still more interventions and ultimately, to no liberty. As he put it, “once the free working of the market is impeded beyond a certain degree, the planner will be forced to extend his controls until they become all-comprehensive.”

Yet even while Hayek acknowledged that “all the changes we are observing tend in the direction of a comprehensive central direction of economic activity,” he endorsed not greater doses of capitalism but more socialism, by more extended schemes of “social insurance” than had existed already. “There is no reason,” he wrote, “why in a society that has reached the general level of wealth which ours has attained, the first kind of [minimal income] security should not be guaranteed to all without endangering general freedom.” “There can be no doubt,” he wrote, “that some minimum of food, shelter, and clothing, sufficient to preserve health and the capacity to work, can be assured to everybody,” “nor is there any reason why the state should not assist the individuals in providing for those common hazards of life against which, because of their uncertainty, few individuals can make adequate provision.”

“Despite having warned about a ‘road to serfdom,’ Hayek, by his own criterion, helped pave it.”

Indeed, “the case for the state helping to organize a comprehensive system of social insurance is very strong,” and under that system the state should “introduce measures which tend to make competition more or less ineffective.” Business cycles and mass joblessness also were due to capitalism, Hayek said, so interventions would be needed to solve “the supremely important problem of combating general fluctuations of economic activity and the recurrent waves of large-scale unemployment which accompany them.” Subsequent plans for a full-fledged welfare state appear in Hayek’s 1960 book, The Constitution of Liberty. Despite having warned about a “road to serfdom,” Hayek, by his own criterion, helped pave it.

In his recent State of the Union Address before a joint session of Congress, President Donald Trump declared that “here in the United States, we are alarmed by the new calls to adopt socialism in our country,” that “America was founded on liberty and independence, and not government coercion, domination, and control,” and “we are born free and we will stay free.” “Tonight,” he added, “we renew our resolve that America will never be a socialist country.” This was certainly a nice resolution to make, given socialism’s horrific track record. But anti-socialism is not necessarily pro-capitalism, and it should be obvious, even to the president’s harshest critics, that he’s far from being pro-capitalist. His 2016 campaign specifically rejected any reform (let alone phase-out) of any current social-insurance scheme like Social Security or Medicare, even though they’re insolvent and, with every new extension, only further diminish free choice.

In fact, Mr. Trump proposes to extend the mixed economy further toward controls by imposing mandates on corporations and state agencies to provide paid family leave and by imposing (through Medicare) price controls on pharmaceuticals.

Mr. Trump likely made his recent remarks about socialism in America because he rightly senses a pronounced move toward “democratic socialism” within the more vocal (and media-covered) wing of the Democratic party, especially among its younger members and the half dozen candidates who’ve announced recently their intention to seek their party’s presidential nomination in 2020. But to oppose some political ideology with nothing of equivalent power or persuasiveness is futile. Today no formidable movement on “the right” exists for a capitalist system, nor even for a mixed system that moves in a more capitalist direction. Political momentum, even if it’s in a bad direction, resides with proposers, not resisters. The best defense is a good offense; yet many people today still resist capitalism as morally offensive.

Capturing the incoherence of the mixed system, last fall the president’s Council of Economic Advisors issued a 70-page report titled The Opportunity Costs of Socialism. This is no ideological document, no brief against socialism on moral or political grounds. Nor does it argue for capitalism (on any grounds). The report barely mentions “capitalism” and then only defensively, to assure readers America is not a capitalist system: “This is an empirical report about socialism that takes as its benchmark current U.S. public policies. This benchmark has the advantage of being measurable, but it necessarily differs from theoretical concepts of ‘capitalism’ or ‘free markets’ because the U.S. government may not limit its activity to theoretically defined public goods.”

The CEA report is a technocratic cost-benefit analysis of the kind an amoral accountant or efficiency expert might perform, but which today is performed routinely by economists who won’t be political economists. As mere technicians, they believe their work is “scientific” merely because it is “value-free” and shorn of “normative economics.” Such efforts neither impede socialism’s cause nor advance capitalism’s cause.

Perhaps broad ideological-electoral support for the mixed political-economic system reflects a belief that it’s more legitimate and sustainable than its extreme rivals. Unfortunately, a persistent definitional murkiness often accompanies debates about capitalism and socialism. Few discussants seem able (or willing) to define their terms, which permits equivocation, incoherence, and arbitrariness. Some people deny that objectivity itself and reality-focused definitions are even possible; our unchosen identities allegedly bias our definitions, so a definitive case can’t be made by either “side” (if “side” can be defined).

Unwilling to surrender either a good debate or scientific objectivity, let me suggest two definitions. Let’s see if they might make sense. Whereas capitalism is a system of private property based on egoism, individualism, and rights that tends to bring peace and prosperity, socialism is a system of state property based on altruism, collectivism, and duties that tends to bring war and poverty.

To some, my definitions will seem biased in favor of capitalism and against socialism. OK. But based on the actual theories and histories of each system, they seem justifiable. Let’s debate it. Regardless, if indeed these are the essential elements, it would be strange if one preferred a mixture; suppose, similarly, that one was offered food or poison, but preferred a mix of them, to avoid being a “nutritional extremist.”

Friends of the mixed system who want more socialism in the mix typically ridicule critics for exaggerating the dangers of tipping into totalitarianism. But has this not happened before? In just a decade (1908-17), Russia went from a mixed system to Lenin’s Bolshevik-proletariat dictatorship. In less than a decade (1928-34), Germany, the civilized land of philosophers, composers, and poets, went from a mixed system (the Weimar republic) to the election of a party that would impose a despotic regime of national socialism (Nazism). More recently, in only two decades (1999-2019), Venezuela was transformed, by electorally adopted socialism, from the richest, most stable nation in South America to one of its poorest and most chaotic. Ideas have consequences — and very bad ideas have very bad consequences.

In January 1996, President Clinton famously declared, in his last State of the Union Address, that “the era of big government is over.” Now we have President Trump in 2019, in the same venue, resolving that “America will never be a socialist country.” By every measure today, the era of big government is back, and although America remains a mixed system, the socialist element is greater now than in 1996 and momentum today favors more socialism. Trump’s election in 2016 didn’t change this, nor would much change if he were re-elected. Something deeper than politics — a change in morals — would be needed to move us toward capitalism.

Made available by the American Institute for Economic Research. Visit their website at https://www.aier.org.

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Richard M Salsman

Dr. Salsman is president of InterMarket Forecasting, Inc., an investment forecasting and consulting firm in Durham, N.C. and assistant professor in the program on Philosophy, Politics and Economics (PPE) at Duke University. He is the author of numerous books, chapters and articles, including Breaking the Banks: Central Banking Problems and Free Banking Solutions (1990) and A Gold and Liberty (1995), both of which were published by the American Institute for Economic Research, and The Political Economy of Public Debt: Three Centuries of Theory and Evidence (Edward Elgar Publishing, 2017). He is also a Contributing Editor for The Objective Standard.

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