Socialism Doesn't Work

At least in Venezuela it doesn't.

Some shopkeepers have reportedly taken to weighing rather than counting the wads of cash customers hand them, and standard-size wallets have become all but useless in the socialist South American state. Instead, many people stuff huge volumes of cash into handbags, money belts, or backpacks, in scenes analysts have said are suggestive of "runaway" inflation.

Perhaps we can have a polite and civil discussion on economics. I'll start it out with some genuine questions.

  • Is Sweden/Norway a legitimate case of socialism succeeding? I've heard this many times.
  • Has capitalism failed on a scale as large as socialism has (seemingly multiple times: Venezuela, Russia, Germany)?
  • According to a redditor and

    , Estonia experienced a post-USSR reform based on Milton Friedman's Free to Choose. Is this entirely true (especially curious on this one as I love Milton Friedman)?

  • I've heard that comparing [country that socialism failed in] to U.S is like comparing apples to oranges. Do you agree?

I understand I may be preaching to the choir here, but I'd love to see your thoughts.

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Comments (14)

Nov 28, 2016 - 11:55pm

I think that socialism focuses too much on money--how and what people are buying or selling--while capitalism focuses on accommodating different types of people who all take some part in society as either a buyer or a seller. The former looks for a solution in the wrong place, in money, while the latter is more about people. That's why socialism doesn't work and capitalism exceeds it by far. It doesn't matter what money does, because it is itself just all conceptual, while the people who agree on prices and toil for their day's earnings are all that really matter, and capitalism does a good job of responding fluidly for the different dynamics that come to be associated with so much diversity and unpredictability in human life.

Nov 29, 2016 - 9:36pm
capitalism does a good job of responding fluidly for the different dynamics that come to be associated with so much diversity and unpredictability in human life.

Couldn't have said it better, wise words right there. Thanks for the insight

Best Response
Nov 29, 2016 - 12:13am

Sweden and Norway aren't true socialist economies. They are more left leaning then the USA, and provide a huge amount of social support, however they are still fundamentally a market based economy.

It's a spectrum, not an absolute state of existence. Where the "optimal" point on that spectrum lies is up for debate, and is arguably not constant, and not homogenous for all countries (as per your last point, apples and oranges). For me personally, I'm of the opinion that some level of government is required, but should only exist to help the market reach it's natural conclusion in a soft and less damaging manner. I liken it to over-population. Over-population will sort itself out through "market mechanics", given enough time – famine, disease, natural disaster, etc – or, it can be guided towards its conclusion by us, in a way that is seen as less disastrous (e.g. less births). Where this regulation turns into contrdicition of the state of the affairs though, is where I deem central planning to be dangerous.

An interesting book I've been reading is this, which provides a compelling argument towards some level of protectionist government policies for developing economies. As you may know, this flies in the face of most current mainstream economic thought.

https://analepsis.files.wordpress.com/2011/08/ha-joon-chang-bad-samarit…

Nov 29, 2016 - 9:43pm

Interesting thoughts all around.

It's a spectrum, not an absolute state of existence. Where the "optimal" point on that spectrum lies is up for debate, and is arguably not constant, and not homogenous for all countries

I'd have to agree, but is any institution capable of finding and walking that fine line without overstepping in their own interests?

For me personally, I'm of the opinion that some level of government is required, but should only exist to help the market reach it's natural conclusion in a soft and less damaging manner

I think so too, but I think greed plays a massive role and this where governments begin exerting their power excessively.

Nov 30, 2016 - 11:11am

Free market or capitalism, how they are generally defined, are like biology. It is what happens when you leave people alone, when you let nature take its course. The failure of this is that it creates a growing schism of haves and have-nots.

Socialism, communism, central planning are human constructs which are created at the point of a sword.

Put 100 people on an island without weapons and you get 'capitalism'.
100 people on an island and a few have weapons, you get some sort of central planning.
Put 100 lazy people on an island and you get socialism followed by starvation.

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Nov 30, 2016 - 11:20am

Think that the government is better at running things than the free market? Imagine if you had to go grocery shopping at your local DMV.

Overwhelming grasp of the obvious.
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Nov 30, 2016 - 11:24am

Just as a note, socialism has never existed in its true form. It's come close, but then it's always been overtaken by power-hungry authoritarians. Socialism always ends in a classless society, so even the USSR was not really a socialistic state ("state capitalism" is the term I've heard many times).

I think that we get too much into the labels. If you remove the term "socialist" from Venezuela, I think that even some of the most ardent Trump supporters might agree with some of the populist measures that were carried out in Venezuela. That being said, the country needs to get their act together. Vice did a nice piece on them a few weeks ago, and the lack of even medicine and bandages is astounding.

Nov 30, 2016 - 12:01pm

socialism can never exist in its true form because it is an ideological pipe-dream. It just isn't feasible and it is against human nature. We respond to incentives and socialism incentivizes people to do the bare minimum because they will receive the same benefits regardless of productivity. This obviously leads to terrible productivity and lack of innovation, which in turn leads to the decline of the socialist society and its eventual death. At its best, socialist elements should be incorporated into a capitalist system in order to provide a safety net for those that lost in the capitalist game (we have great incentive to do this because it makes business easier to conduct and reduces the chance of a populist uprising). Actually having a utopian society where everyone works for the greater good, where people are allocated to their most productive occupation, and everyone is equal demands a fundamental rejection of human nature.

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Nov 30, 2016 - 1:37pm

I agree with most of what you said. But I don't believe we need a social net, per se. Government is an important piece to the three prong capitalist society, because it provides protection from harm. I don't think it's only function should be to incarcerate bad guys for things like murder or rape, because there's different types of harm and not just physical harm. Sometimes people allow power to run to their head and they become the bad guys, infiltrating on someone's freedom or preventing someone from gaining freedom unduly, such as by believing they've got some destiny from God (i.e. racism, sexism, etc.). So, we need different types of protection, which is the only type of government we need. That might require very reasonable and limited social spending programs, but to depend on a 'social net' is already problematic, because that's a guarantee. Government should stop interfering with the market and centralizing what we can or cannot buy.

Nov 30, 2016 - 12:24pm

Venezuela is an example of how Dutch disease screws up any state, whether capitalist or socialist. However, in Venezuela's case, I'd say the form of socialist government exacerbated the problem.

Hard socialism generally fails, in my opinion, because it fails to take into account the shittery, short-sightedness, irrationality and self-interest of human beings. Works fine in theory, but the reality of human psychology fucks it up in practice.

In not dissimilar ways, hard libetarianism, capitalism and free market economics also generally fail (with different results) because they fail to take into account the shittery, short-sightedness, irrationality and self-interest of human beings.

We are creatures of evolution. Unfortunately, much of our economic and political thought is based on Age of Enlightenment models which preceded the study of psychology and evolution.

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Nov 30, 2016 - 2:29pm

My 2 cents on this:

•Is Sweden/Norway a legitimate case of socialism succeeding? I've heard this many times.
A: No. The Nordics are not "socialist"countries (I remember an interview with a Danish politician saying he always had to explain that). They do, however, tend to focus a lot more on reducing income inequality and building a strong state (in the sense of taxation, welfare etc).

•Has capitalism failed on a scale as large as socialism has (seemingly multiple times: Venezuela, Russia, Germany)?
A: I guess it depends on who you ask. People who sympathize with socialism will tell you that (a) "we are yet to see the true socialism", (b) point you to cases like Greece, Argentina (think '01/02 Crisis) or some poor country in Africa and say "Ha! Look how good capitalism was for them!", or, in the most severe cases of dementia (c) say that these failures are "CIA propaganda".
IMO, it shouldn't take much to figure this out. The thing is that pratically 100% of the socialism experiences failed (if you consider as failure things like massive poverty, starvation, corruption, lack of competitiveness and repression). This was widespread. Take Cuba, Angola, Cambodia, North Korea, the USSR, East Germany, whatever. While in most countries adopting capitalism you had more or less functional societies.

•According to a redditor and this corresponding video, Estonia experienced a post-USSR reform based on Milton Friedman's Free to Choose. Is this entirely true (especially curious on this one as I love Milton Friedman)?
A: No idea, I know that Chile experimented with Friedman's theories during their dictatorship era.

•I've heard that comparing [country that socialism failed in] to U.S is like comparing apples to oranges. Do you agree?
A: Agree. But you can compare other countries, like the former two Germanies, Colombia X Venezuela - neighbouring countries with similar contexts, yet Venezuela is moving fast towards the stone age. People there can't even find toilet paper and are even resorting to canibalism (true story), or the classic comparison of North X South Korea.

Nov 30, 2016 - 5:10pm

This specific problem in Venezuela isn't really tied to socialism. It is just a problem of hyperinflation, which can exist in economies that are are more socialistic or capitalistic. The problem with countries that are heavily skewed toward the side of socialism is that progress stagnates. This is the real universal rule of primarily socialistic economies because there is little incentive to actually progress because little benefit is achieved from taking risk.

As for the Sweden debate it really isn't a valid one to be made at all. The country receives so much money from the sale of raw materials (oil) that is uses to make up for its tax budget shortfall due to its social programs that the country seems to be a financial success. The realities will hit them when the profits from their oil exploration fall and they are forced to deal with their deficit spending in a more normal way. Also there isn't enough that can be said about the vast cultural differences between Scandinavia and other western countries.

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Nov 30, 2016 - 10:39pm

Your first paragraph is patently false. It is like saying the civil war was about states rights, and it was... about state's rights to keep slavery. Going back to Venezuela, their "government" had mandated production quotas which led to what has happened to every socialist country when run by central planners. Saying that their economy was caused by Hyperinflation is like saying the flu killed someone with aids.

Pretty spot on in your second paragraph.

Dec 1, 2016 - 5:38pm

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