The late stand-up comic George Carlin had a wonderful routine about oxymorons. He pointed out the absurdity of such phrases as “jumbo shrimp” and “civil war.” If Carlin were still alive, he could add another one to his list: “democratic socialism.”
I’m using the terms “socialism” and “democracy” in their traditional senses. The traditional meaning of socialism is an economic system in which the means of production – factories, farms, stores, hospitals, restaurants, etc. – are all owned and run by the government. The traditional meaning of democracy is a system of government in which power resides ultimately with a nation’s citizens, who exercise that power either directly, such as through referendums, or via elected representatives.
Although those two ideas may not sound incompatible at first glance, history has shown, time and again, that a socialist economic system is incompatible with democracy. The reason is simple: Because socialism does not work as an economic system, the only way to make it last for any length of time is to employ an enormous amount of coercion. Because free citizens of a democracy will not tolerate that much coercion, the only way to maintain such a system is to destroy democracy itself. We have seen that story play itself out not only in the Soviet Union but also in North Korea, Cuba, and Venezuela. Other formerly socialist countries such as China and Vietnam have succeeded economically because they have embraced markets while, unfortunately, retaining the levels of coercion their governments became used to wielding while they were still trying to impose socialism.
There are many reasons why socialism does not work as an economic system. A major one is simply human nature. Although Karl Marx’s famous phrase “from each according to his ability, to each according to his needs” sounds nice, it is naïve and impractical. It assumes that everyone will work to the fullest of their abilities regardless of whether anyone else is doing the same. In reality, people are very sensitive to being exploited. If people sense that others are benefitting from the system without also doing their fair share of the work, they, too, will stop working. Its promise that everyone’s needs will be taken care of regardless of whether they work further encourages people not to work.
Another reason socialist economies don’t work has to do with the way that all large-scale economies work. In a market economy, prices serve as signals regarding how much of a particular good or service is needed. If something is in short supply, its price goes up, so manufacturers not only know that it is in demand but also have an incentive to meet that demand. If something is abundant, its price falls, and manufacturers know that, if they want a profit, they should make something else. As a result, there is no need for central planning.
Socialist economies, in contrast, necessarily involve central planning. But, in the absence of a market, how can central planners know how much of any particular good or service is actually needed? They can’t, so they just make something up, probably something that makes more political sense than economic sense. The short-term result will be either more of a particular good or service than is actually needed or not enough of it. And the long-term result is also easy to predict: a tremendously inefficient and, ultimately, unproductive economic system with a large, impoverished majority ruled over by a lavishly wealthy dictatorial elite, just as we have seen in all the countries that have truly tried to make socialism work.
Some self-described democratic socialists, such as U.S. Senator Bernie Sanders, are fond of referring to the Nordic nations as examples of what they have in mind. While those countries did experiment with a version of socialism in the 1960s and 1970s, they abandoned that approach when it sank their economies. In its place they erected a lively and vigorous market economy combined with a generous welfare system supported by high taxes. The Swedish embrace of markets has been so thorough that it has more billionaires per capita than does the United States.
Of course, in today’s political discourse, the term “socialism” is often used rather loosely. Although self-described democratic socialists often do call for government ownership of some sectors of the economy, such as health care, education, day care, and housing, in many other ways they simply advocate for a generous welfare state supported by high taxes, preferably on the rich. But, of course, if you want to tax the rich, then there must be some rich people to tax. In socialist economies, the only time anyone gets rich is when those in power use their power to take wealth from everyone else. In markets, in contrast, people become wealthy by creating goods and services that others want to pay for voluntarily. And it is only by allowing people to become wealthy that you can also afford the many costly social benefits that today’s democratic socialists advocate.
In the traditional sense of the word, the biggest socialist in the United States today may not be, say, New York mayor Zohran Mamdani but, rather, President Donald J. Trump. Under Trump, the federal government has obtained a ten percent equity stake in the computer chip manufacturer Intel, similar stakes in several mining companies, and a “golden share,” meaning that Trump has veto power over corporate decisions, in U.S. Steel. And it is now in the process of acquiring equity stakes in many more firms. The result may not be full-blown socialism, but it does create the possibility for decisions by these companies to be driven not by good economic reasons but by political ones, just as in socialism. Rather than “democratic socialism,” one might call what Trump is doing, oh, I don’t know, something like “national socialism.”
Just imagine what George Carlin could have done with raw material like this!
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This piece reflects the author’s views, not necessarily the entire magazine. We welcome a range of pro-liberty perspectives. Send us your pitch or draft.
