by Robert Arvay
There is no shortage of anecdotes to prove that socialism is an inherently self-destructive economic system. Yet, for centuries, humans have persisted in their efforts to make it work. History continually repeats itself. An unbroken string of tragic failures has taught socialists nothing. Here is a short list of them.
When the Pilgrims first came to the New World (America), they instituted a socialist, indeed a communistic, economy. Everything was to be equally shared by everyone. All the work, and all the fruits of labor, belonged to one and all alike. The result was predictable: starvation on a large scale. It seems that people are much more willing to share in the fruits of other peoples’ labors, than they are to share in the labor itself. The consequence was deadly. Too little was produced, too much was consumed and the only thing that was shared was hunger. About half of the settlers died before they adopted a capitalist, private-ownership philosophy of economics. After that, the Pilgrims became prosperous and well fed. (For more details:www.libertyunderfire.org)
When the earliest Christians formed their first society (see the Acts of the Apostles in the New Testament) they used a similar model. Indeed, the Bible even chronicles how two of the members of that society were put to death after they held back some of their money from the community. This Bible passage has been used by some to propose that communism is the most Christian form of society.
However, when the exact passage is read, a very different picture emerges. Ananias and Sapphira were punished, not for holding back, but for fraud. They expected to pay less than they had agreed, while partaking of the full benefit of the social contract they had signed.
The primary difference between the form of communism practiced by the earliest Christians, and the form practiced by modern day totalitarians, is that no one was forced to join the Christian community.
An anecdote for which I cannot presently find the reference relates the experiment with socialism in a small town in Minnesota in the 1800s. The town council was outraged when it discovered that merchants selling food in the town market were charging exorbitant prices. The merchants would buy food from farms, and sell them in town for ten times what the farmer got. That is a one thousand percent mark-up! A law was passed, limiting the price of food to a ten percent mark-up. The merchants protested that this narrow margin was not enough to cover their costs, their losses, spoilage, unsold food, wear and tear on their wagons, and so forth. The town council would not yield. The merchants then stopped buying from the farmers. With no food in the market, citizens had to go themselves to the farms. There, they discovered that once they had to bear the costs that the merchants had borne, the effective price of food was far more than what the merchants had charged. Competition between merchants had kept food affordable, and suddenly, it was no longer affordable.
Reluctantly, the town council repealed its unwise law, and once again, the markets were open. Interestingly, however, the citizens remained resentful. Despite the clear experience of the failure of their misbegotten law, they continued to believe that the merchants were being unfair.
Another example from memory (I have the college economics textbook somewhere) involves a factory. The workers made such enormous demands, under threat of strike, that the owners finally decided to sell the factory. When they were unable to find a buyer, the owners decided to simply close the business down. The workers, faced with loss of their jobs, offered to buy the property and run it themselves. For a time, matters seemed to go well. The factory belonged to the workers. When any worker slacked off on the job, the other workers had an incentive to prompt the recalcitrant worker to do his job. Profits were still too low to provide much pay, so the workers paid a management company to increase profits. Sure enough, profits went up, and so did salaries, but the workers were still not happy, so they decided to sell their shares in the company to investors, who then bought the factory. Once this was done, the workers immediately resumed their unrealistic demands for higher wages, for paid time off, and for more benefits. They did this, even knowing that it was such demands that had driven the factory to ruin in the first place.
The common theme here is that (with the exception of the Pilgrims), people never seem to learn from their experiences. Failure is supposed to be a great teacher and this is often true for individuals, but not so for society at large.
One explanation for this is that free markets are portrayed by socialists as predatory, feudalistic, rigged systems, such as those in many third world nations; but the so-called evils of free markets do not result from free markets, rather, they result from un-free markets. In the United States today, markets are politicized to the point where the government’s undue influence benefits only the government and no one else. Free markets do indeed require government— good government. When that government sees its function as that of preserving freedom, free markets are amazingly successful. Examples of government’s proper role include the passage of anti-trust laws, contract enforcement, anti-fraud, full disclosure rules and other principles vital to free markets.
Unfortunately, the US government has itself become predatory, fraudulent and feudal. Instead of preserving and protecting individual freedom, the US government restricts freedom far beyond what is necessary and prudent. The US government views its citizens as existing only for the benefit of the government, and not the other way around.
As was the case with the Pilgrims, it will probably require a total collapse of the American economy, complete with tragedies and atrocities, before Americans return to free market principles. Once Americans have properly learned that lesson, and begin enjoying the blessings of freedom— they will, in all likelihood, promptly forget, and set back on the road to socialism once again.
Robert Arvay is a Contributing Writer to The Patriot’s Notepad