Tuesday, July 10, 2018

“But This Time It Will Work!”

     Kurt Schlichter has penned a bitingly funny column about the Democrats’ embrace of socialism. As usual, it’s worth your time. However, Schlichter is largely in the business of entertaining (not preaching to) the choir. If our fellow Americans are to be defended against the further incursion of socialism into our polity, a more sober, factual, and analytical approach is needed.

     And who would better craft a sober, meticulously factual and rigorously analytical approach to socialism than your not particularly humble Curmudgeon?

     The empirical evidence against socialism is devastating...which is why the advocates of socialism regularly protest that “that wasn’t real socialism.” When asked to cite a successful socialist economy, they hem and haw. Some point haltingly and with obvious reluctance at the Scandinavian welfare states. Yet all of those have steadily backed away from their march toward socialism over the last two decades. A stable and prosperous socialist nation in which there is no forcible repression of dissidents does not exist anywhere on Earth, and never has.

     But advocates of socialism have their own version of the old trial lawyer’s maxim. You remember that one, don’t you, Gentle Reader?

  1. When the facts are against you, pound the law.
  2. When the law is against you, pound the facts.
  3. When both are against you, pound the table.

     With socialists, it goes like this:

  1. When the theory fails, argue for the practice.
  2. When the practice fails, argue for the theory.
  3. When both fail, call your opponent a tool of the plutocrats and an enemy of the proletariat.

     A fair number of socialist flacksters have plumped for method #3 above, but the ones more apt to receive respectful attention – from the major media, at least – distance themselves from the practical examples of socialist states and emphasize socialist theory. In doing so, they gloss over the nuts and bolts of the theory in favor of promises that “we know how to make it work now:” essentially an ad hominem against all those who’ve saddled other nations with socialist regimes and have brought them to ruin.

     So the theory is what will receive my attention today.

     Socialist theory rests on two premises:

  1. The Objective Theory of Value
  2. The Theory of Surplus Value (specifically, in capitalist systems of production).

     The second of those premises requires the first one, but let’s examine them one at a time.

     The Objective Theory of Value holds that the value of a product or a service is objective -- that is, inherent in the thing itself. For example: a man makes a chair out of wood he possesses. That chair, according to the Objective Theory of Value, has an inherent, objective value that derives from the materials used to make it and the labor the maker invested in it. In socialist principle, that value is measurable in monetary terms. Therefore, anyone who seeks to buy the chair “should” expect to pay the monetary measure of its inherent, objective value. To contrive somehow to pay less would be to rob the maker.

     The planners of a socialist economy devote a great percentage of their efforts to determining those values. The result is always a shortage of what their subjects really want and a surplus of what they don’t. Why?

     It would be flip simply to say that the Objective Theory of Value is wrong. That’s what we would naturally conclude from the experiences of socialist nations. But it remains important that one be capable of taking an analytical approach to the matter.

     There are several refutations to the theory. The simplest is the regression to elements. The value of the chair derives from the materials and labor, you say? But that implies that the materials and labor have objective values of their own. What if we were to separate those things? Would they still possess the same values standing apart from all else? The question is unanswerable.

     Additionally, we may ask: What if the same materials and the same quantity of labor were put to making something else – perhaps a mass of toothpicks? Would those toothpicks, in aggregate, possess the same objective value as the chair, even if there were no demand for them? Why? That question is equally unanswerable.

     Regression to elements is particularly devastating when it’s applied to services. Here’s an example: If there are exactly as many service providers – doctors; carpenters; ditch diggers; it doesn’t matter – as are required to provide all the services required at a given time, what is the objective value of the services of one additional provider? No one needs his labor or whatever it might accomplish, so how can it have an inherent, objective value? That question is also unanswerable.

     From the above, it becomes clear why socialism requires a command economy in which central planners decree how much of what shall be produced, who shall produce it, and at what monetary price it shall be sold. Coercion by the State is required to keep such a system in place. Absent such coercion, workers would produce what they thought they could sell at a profit, or would sell their labor to an enterprise whose executives would make such decisions (and do the work of marketing and distribution) for them. Purchasers would buy the goods and services they wanted, at prices set by the forces of supply and demand. Notions of objective value have no place in such a scheme...just as freedom of choice has no place in a socialist system.

     But let’s imagine that the Objective Theory of Value has somehow been vindicated, and pass on to the Theory of Surplus Value, which requires it. This is the core of Karl Marx’s attack on capitalism, and so requires a proper refutation.

     The Theory of Surplus Value holds that if a capitalist employer succeeds in selling a product produced by his workers at a profit – that is, at a price greater than the total cost of the labor and materials that went into it – that profit is actually surplus value invested in the product by his workers, and rightfully belongs to them. In Marx’s theory, his profit expresses the difference between what he pays the workers and the true, objective value of their labor.

     One can easily see the gaping holes in this notion. The employer must labor as well, mustn’t he? He must seek out markets for the product, must make deals with middlemen-distributors and retailers, must determine the appropriate rate of production, must provide any capital equipment his workers need, and must contrive to withstand market fluctuations, when production outpaces demand for the product. Perhaps more important than all of that taken together, he must conceive of the product, its most important characteristics, and how it would satisfy some need or desire felt by prospective purchasers. Such insight is required even by entrepreneurs who enter a field that already exists: making chairs, perhaps. If the employer’s workers’ labor has inherent, objective value, surely his does as well!

     The considerations above disappear only when every worker works entirely for himself: an impossible condition in an economy even slightly removed from the primitive hunter-gatherer condition of our Neanderthal ancestors. When they’re admitted and addressed, they introduce the problem of determining the inherent, objective value of the employer’s labor: a problem that can only be solved by recourse to the forces of supply and demand.

     Because socialist theory is so easily holed, contemporary socialists tend to avert such considerations, dismissing them as “vulgar Marxism.” They prefer to speak of other things. For example, they point to the common facilities whose production and maintenance we of the West have traditionally delegated to governments: roads, bridges, dams, armies, and the like. These, the socialist flackster will assert, are just as much socialist undertakings as anything else we might “choose to do together.” So you see, socialism can work!

     Three-Card Monte hucksters are more honest than that.

     Whenever an undertaking is delegated to a government, we must make certain sacrifices for the purpose:

  • First, we must surrender our freedom of choice about the facility that will be produced and what ultimate characteristics it will have.
  • Second, we must surrender all authority over that facility to the State.
  • Third, we must accept that there will be “free riders” who will get to use the facility without paying for it.
  • Fourth, we must accept that it will be produced, operated, and maintained inefficiently.

     The above are the reasons why free societies are extremely judicious about what facilities they’ll permit the State to build. Specifically, it is rational to permit the State to build and manage only those facilities:

  • That inherently manifest externalities: i.e., free riders will be able to use them without paying for them;
  • That have an overhead character: i.e., they’re neither capital nor consumer goods, but rather exist out of unavoidable necessity.

     The roads are a good example. The earliest roads produced in North America were privately planned, fabricated, and owned. They were about as good as any roads could be in that time frame. However, those who produced and maintained them eventually lost interest in doing so, specifically because of the free-rider problem. The road could not be made to return revenues that would meet its cost of operation, much less its cost of production.

     Along with that, a road is an overhead. We don’t build a road because we want it for its own sake – i.e., it’s not a consumer good – nor for its ability to help us produce something else – i.e., it’s not a capital good. We build roads because they’re necessary if we want to get around at an adequate speed and in adequate safety, conditions of vital importance to a society with a division-of-labor economy.

     The combination of externalities with overhead character renders the thing a public good: one that can justifiably be placed under the aegis of the State. Because we give the responsibility for producing them to the State, we must accept government authority over them and government-level degrees of inefficiencies and waste in their production, operation, and maintenance.

     Anarchist theorists have opined that even public goods can and should be produced by private operators for private reasons. There have been a few cases where that has occurred – there are a few privately-operated roads in the U.S., for example – but the societies of the West have almost uniformly preferred to leave such things to governments, despite the one-size-must-fit-all nature of the product and the inefficiencies and waste State action always incurs.

     “But this time will be different,” the socialist flackster protests. “Now we know how to make it work!” As Kurt Schlichter points out indirectly in his column, socialism can “work” if what one means by “work” is sufficiently evil:

     Socialism is about taking your stuff and your freedom and killing you if you complain. They try to pass it off as just Liberalism 2.0, but then you usually don’t call something by a name unless you mean it. If they don’t mean “socialism,” why do they call themselves “socialists?”...

     You see, socialism is the doctrine that people like you and I get to slave away for the benefit of the people those in charge decide are worthy – especially those in charge. Do you think when there’s socialized medicine you’ll find yourself on a six-month waiting list to get a wisdom tooth pulled next to Alexandria Ocasio-Cortez or any other bigwig?...

     Socialism means what’s theirs is theirs and so is what’s yours. Our private property – what we have worked for and accumulated over decades – is no longer ours. It’s theirs, to be done with – to be redistributed – as those in power wish. And if you object, they will send people with guns to make you comply.

     In practice, socialism invests the masters of the State with absolute power, which they use to become rich while those under their hand are impoverished. If that’s the outcome you want, then yes, socialism can “work.”

     But don’t expect Bernie Sanders, Tom Perez, or Alexandria Ocasio-Cortez to admit that that’s what they mean when they wax lyrical about the glorious socialist future. They’ll just call you a capitalist tool, and talk about some good your sweat must fund so they can provide it gratis to others who’ll vote for them. All in the name of the common good, of course.

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