What's Wrong with Socialism? The Randian Critique
Last week, I commented on Ayn Rand’s failure as a philosopher (https://fakenous.net/?p=2583). I said this partly because I find her most distinctive contributions to philosophy (particularly her ethical and metaethical theories) to be ill-considered. That being said, there is at least one issue on which I find Rand particularly insightful. That is the critique of socialism.
Rand lived through the early stages of socialism in Russia, before escaping to America. This is doubtless part of how she acquired her deep understanding of the system’s flaws. Her first novel, We the Living, is a vivid portrayal of how the system destroys people. It wasn’t merely that the system was economically inefficient, or that it curtailed some freedoms. It took otherwise decent people and corrupted them.
So now I’m going to explain what I took to be the core Randian critique of socialism, why I describe it as the most profound such critique, and how it applies to some things people are still advocating in America today.
The Core Problem
The system rewards those who are behaving badly according to the values of the socialists themselves, and punishes those who are behaving rightly according to those same values. That is the core problem that Rand saw with socialism.
That is partly a consequentialist problem, and partly a problem of justice: One cannot hope to promote some set of values by punishing anyone who acts according to those values and rewarding the opposite behavior. That is just not going to work out. It’s also obviously, paradigmatically unjust, if you think those are the correct values.
Now, why describe socialism in this way?
First, what are the values of the socialists? Marx’s famous dictum is a fair summary of a core socialist ideal: “From each according to his ability, to each according to his needs.” I.e., people should contribute to society in proportion to their ability to produce value for society; and people should receive resources from society in proportion to how much they need.
This sounds nice. But it contains within it the problem described above. The problem is that people have some degree of control over their own abilities and needs—and, even more so, over the abilities and needs that they appear to others to have. The people who are behaving well according to the socialist ideal are the people who are contributing to society as best they can. They will be developing their productive capacities, and revealing those capacities through their actual contributions.
These people are not going to be rewarded under the socialist system. They will just be expected to keep contributing, which would not be expected if they hadn’t made the mistake of revealing their ability, and they won’t get any reward for that.
The people who are behaving badly are those who are creating greater needs for themselves, or making themselves appear to have greater needs. They are behaving badly since they are putting greater burdens on society. But they will be in effect rewarded for this by the system—more resources will go to them because they appear to need more.
For a vivid portrayal of this dynamic, see this excerpt from Atlas Shrugged: https://libertygibbert.com/planet-ozboy/the-twentieth-century-motor-company/.
It’s a story told by a character who previously worked at the 20th Century Motor Company, about what happened when the company decided to implement the maxim, “From each according to his ability, to each according to his needs.” My summary: Everyone winds up trying to conceal their abilities and multiply their needs. People wind up hating each other and wishing each other ill. People start, for example, to resent it whenever someone at the company has a baby, because that places a burden on everyone else.
When every individual’s needs are socialized – to be paid for collectively – that creates a conflict between each person’s interests and everyone else. This conflict of interests does not engender harmony and brotherly love, as the socialists would like to imagine. It leads to resentment, and strife, and corruption.
The Most Profound Critique?
There are many other things wrong with socialism. For instance, there is the problem that the government has no way of figuring out what the prices of everything should be, because this decision depends on too many miscellaneous details about every individual person and every particular product. (https://wiki.mises.org/wiki/Economic_calculation_problem) This is also a sound critique.
But Rand’s is the most profound critique of socialism, because it addresses the core idea, and the critique is rooted in fundamental facts of human nature. You could not hope for this problem to be fixed by some modification to the system, or some future technological developments. If you say, “Okay, we’ll reward people for contributing more value to society,” that abandons the core idea of socialism. If you do that, you’re introducing a huge potential for inequality. This is in fact the main source of the inequality in the capitalist system that socialists decry as unjust.
You could of course propose a middle ground where people get a modest reward for productivity, less than they would get in a capitalist system. This mitigates the problem with socialism, but only by mitigating the socialism.
Modern Applications
Okay, but all of the above only applies to the most extreme position; it only applies to a complete government takeover of the economy, right?
No. The essential problem with socialism afflicts many other, less extreme proposals. Let me give a couple of examples.
College Loan Forgiveness
Actual proposal advanced by Elizabeth Warren while running for President (https://elizabethwarren.com/plans/student-loan-debt-day-one): We should cancel up to $50,000 of student loan debt per borrower, for almost all borrowers (in other words, the government should pay for it).
Not everyone who went to college has student loan debt. Some people worked extra hours, saved, and sacrificed to repay their debts. Others even worked their way through college without taking loans at all – again, at the cost of significant sacrifices. These people tried to be responsible, to carry their own weight and not burden others. These people would not get any “forgiveness” under the Warren plan – they would not get the $50,000 gift that Warren would give to those who took on $50,000 of debt and haven’t paid it back. Under Warren’s plan, the more you borrowed (up to $50k) and the less you’ve done to pay it back, the more you’ll be rewarded. That will of course be paid for by taxpayers. So in effect, the people who didn’t take on any debt or who paid back their debts get to pay for those who incurred big debts and didn’t pay them back.
That’s exactly the problem of socialism discussed above. The progressives don’t think that it’s bad to repay your debts. They would agree that the people who sacrificed to repay their debts were acting well. But the Warren progressives would still reward those who acted badly, at the expense of those who acted well.
Unemployment Insurance
Every U.S. state provides unemployment benefits – basically, if you lose your job, the state starts paying you money, until you find another job. The requirements to qualify for this vary by state, but in all cases, you’ll stop receiving the money if you get another job. Can anyone see any problem with this?
Again, that is rewarding the people who don’t mind being a burden on society, while people who contribute to society by working get no such reward.
In fairness, there is a requirement that one be “looking” for a job, so in (very stupid) theory, you can’t simply choose to be a burden on society; it’s only for people who can’t find work. But of course, you can always say you’re looking for work and simply find all the available jobs unsuitable for you.
There are many other examples. Most, perhaps almost all, left-wing economic proposals create perverse incentives. The most charitable interpretation is that progressives can’t imagine that human beings are not all altruists already. Or perhaps they think it is only “capitalism” that creates selfishness – the inequality spurs people to try to compete with each other, rather than cooperating altruistically as would be their natural inclination.
The opposite is the case. Capitalism causes people to cooperate with each other, because it rewards people for benefitting others – more precisely, for giving others what they want and are willing to pay for. Socialism makes people more selfish and less cooperative, because it sets people’s interests against each other.