Overview of Capitalism and Socialism for Effective Altruism

kbog16 May 2019 6:12 UTC
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(moderate updates since original post)

Capitalism is an economic system where the means of production—land, machinery, investment capital—are mostly controlled by private owners. Socialism is an economic system where they are controlled by the public in a collective or governmental organization. For a variety of reasons, it could be important to take a stance on the question of which is preferable.

Basic concepts

It’s not straightforward to judge capitalism and socialism because the question is simply too vague to be a valid basis for much direct research. There are many very different ways that these systems can be realized, so modern economic and political science scholarship focuses on narrower and better-defined issues. Acemoglu and Robinson write, “we do not believe the term capitalism to be a useful one for the purposes of comparative economic or political analysis… both Uzbekistan and modern Switzerland have private ownership of capital, but these societies have little in common in terms of prosperity and inequality because the nature of their economic and political institutions differs so sharply.” The discrete categorization is a poor model for actually understanding things, but because so many people and institutions wed themselves to the constructed categories of capitalism and socialism, we are forced to grapple with them.

Because of the vagueness, it is tough to pin down socialism in a way that is easy for us to judge. Deep ideological disputes exist among leftists in America, concrete policy proposals are rare and controversial, and there is no clear conception of what socialism would actually look like. The philosopher Slavoj Žižek, in a general opus of leftist analysis and response to the 21st century world, did not include a clear idea of a path forward, ultimately concluding “we do not know what we have to do, but we have to act now, because the consequences of inaction could be catastrophic.” The Socialism 2019 conference contained almost no discussion of how to structure a socialist economy.

If we want to evaluate the desirability of generic increases or decreases in the probability of socialist change, we cannot select a specific policy proposal that we would prefer. Instead we must survey the various possible forms and components of socialism to see if they are better or worse than the capitalist status quo, and produce a vague expectation over the lottery of possibilities.

A belief originating from Karl Marx is that socialism and eventually communism will inevitably replace capitalism sooner or later, in which case our judgment would require a slightly different framing about whether we should prefer socialism to arrive sooner rather than later. However, Marx’s theory of historical materialism doesn’t actually show that capitalism will end or that its successor would be communism (see page 111 of Why Read Marx Today? by Jonathan Wolff. Wolff comes across as a balanced and reliable author, not ideologically pro- or anti-Marx, and the book seems to be well regarded). Additionally, historical events have shown a reverse pattern, that socialism served as a transition state from feudalism to capitalism. Overall, socialism in the United States looks very unlikely, except for the fact that large numbers of younger people say they support it.

The picture from historical and economic evidence

First, when it comes to the centrally planned economic models of 20th century socialist states, economists overwhelmingly regard them as inferior to capitalist economies. This consensus is supported by the relevant literature.

There is disagreement on whether early Soviet industrialization was or wasn’t expedited much by central planning, but it had tremendous human costs nonetheless. The entire suite of socialist policies reduced Soviet agricultural productivity by about 50%. Central planning really went awry in the USSR when poor leadership appeared later on (see 2001 and 2005 papers by Robert Allen, an expert on the Soviet economy who takes a bit more positive view than most).

East German’s economic system failed.

Life expectancy in eastern Europe began to quickly increase after the fall of communism.

The communist system has been disastrous for Cuba, and the US embargo is not the sole cause of their problems (see Jales et al 2018, Salazar-Carrillo and Nodarse-León 2015, Ribeiro et al 2013, and Ward and Devereux 2012). America’s embargo only had a small negative impact on Cuba’s economy when it was introduced; I haven’t been able to find any reliable information on the magnitude of current losses caused by the embargo, but it’s probably not very large because it does not restrict Cuba’s trade with any other country besides America and it still allows a few kinds of trade with America. Cuba’s economy involves less trade than those of neighboring countries, suggesting that the embargo does have a significant impact. But anyway, while defenders of Cuban communism claim that the exogenous harm of the American embargo makes Cuba’s economic system look worse than it really is, they neglect the opposing fact that Cuba has also received exogenous benefits that make Cuba’s economic system look better than it really is. Cuba was buoyed by significant Soviet politically motivated aid and trade subsidies during the Cold War, and more recently is supported by $5 billion in annual remittances from expatriates, which is a large amount relative to the size of its economy and might greatly outweigh the losses from the embargo. Nor does Cuban communism perform very well on non-economic indicators: its literacy and healthcare metrics are reportedly very high now, but they were also relatively high before the revolution and have not improved at a stellar rate. Also, Cuba’s actual healthcare quality is worse than reported. A minor bright spot is that their hurricane preparedness is quite good.

Not only is there a consistent empirical trend, but there are plausible theoretical explanations for economic failures in centrally planned socialism. One is the famous “calculation problem,” another is the loss of appropriate incentives, another is Shleifer and Vishny’s argument that central planning creates opportunities for planners to artificially create shortages in order to collect bribes.

A recent defense of central planning is presented by Philips and Rozworski, who argue that large corporations demonstrate the viability of central planning in the context of modern age. Neither author is a professional economist and at a glance I’m not sure if this argument would work: the problem with central planning is not merely the idea that it requires too much information and computation, but that credible price signals are necessary and that members of the government will have bad incentives. Also, if effective central planning were possible with modern techniques, we should expect to see countries like Cuba or China doing it by now. But I haven’t read the book or seen any credible economic reviews, so I can’t dismiss it.

And one could argue that a democratic command economy would perform better. Democracy does not directly promote economic growth, but it does have positive indirect effects. This seems like it could partially explain the economic failures of 20th century socialism, but not fully.

But it may be the case that command economies actually lead to autocracy, which in turn usually implies nondemocracy. In that case they not only lack the nondemocracy excuse for their economic failures but are also responsible for some of the terrible repressions committed by their totalitarian governments, including the Cambodian Khmer Rouge regime which was probably the most murderous regime in modern history (relative to the size of the population). Every single socialist regime has been authoritarian, either from the outset or as an eventual outcome (although others were not as extreme as Stalinist Russia, Maoist China or the Khmer Rouge). This was often in spite of nominally good intentions. Stalin believed in the power of democracy and in using persuasion rather than military force, and the Soviet Union was supposed to derive its power from democratically elected workers’ councils (“soviets”); this later turned out to be meaningless. East Germany had a parliament, but it lacked real power to change economic plans.

One explanation for the trend of socialist autocracy is that central planning involves a huge array of tradeoffs and decisions to make, so only a bureaucratic elite can meet its burdens and they must ensure that everyone follows the plans (think tank book, pp. 44-49). It implies that any democratic system for central planning would have to dispense with robust checks and balances, empowering a leader or a select few with sweeping executive authority over matters of government. Another worry is that central planning of the economy creates an enormous concentration of power in the government, laying the foundations for totalitarianism (think tank book, pp. 49-52). The Marxist philosopher Slavoj Žižek (2011) acknowledges that “there is a grain of truth” in Ayn Rand’s idea that removing money-based organization only leads to worse oppression by force.

Another problem with historical socialist states is that they undermined the sense of psychological ownership, although they could have done better.

The consensus against centrally planned economies is currently shared not just by practically all economists, but also by historians and social scientists, and by almost all policymakers worldwide – including the Communist Party of China, which has an open commitment to Marxist ideology and the security to implement whatever policies it desires. And the majority of modern socialists also disavow central planning. That being said, it’s not straightforward to assume that it won’t be repeated. Many leaders of failed historical socialist nations were avid scholars of Marxist theory, not making ignorant mistakes about its content. Socialist regimes also varied significantly in their ideologies, such as the various stages of Soviet doctrine, Maoism, Juche, and other systems. Many of them were even explicitly regarded as ‘real’ socialism as distinct from previous failures. Yet they ended up as centrally-planned autocracies nonetheless. Moreover, a substantial minority of modern leftists do defend the economic track record of these regimes, with many defending Cuba in particular (think tank book, much more on social media). Others think that a similar model would be fine as long as it was a democracy, or think that modern computing would be adequate to solve the problems. This means there is a substantial chance that socialism in America would be a repetition of conventional central planning.

Instead, some advocate ParEcon, an economically radical idea which is difficult to properly evaluate. However it is often criticized by leftists and gets little attention these days. Socialists usually support a more straightforward increase in public ownership and control of economic decisions, extending the ideas of modern regulatory and welfare states and workplace democracy while falling short of proper central planning. Probably the most notable proposal for this is given by David Schweickart. I have not seen any rigorous, holistic evaluation of such schemes, and such an evaluation may simply be impossible until they are tried. But I can look specifically at the major components of these visions, which have been studied in isolation.

One aspect of many socialist plans is greater government regulation of the economy. But a literature review (2014) collected 198 relevant empirical studies published in highly selective social science journals, and I add two more recent ones (Jackson 2017, Grier and Grier 2020). The result is that economic freedom corresponds with good outcomes in 68% of studies and bad outcomes in just 4% of studies. The review authors find that this result might be weakened by publication bias but find no evidence to indicate that it would be overturned. A smaller 2019 literature review argues that economic freedom helps achieve the aims of social justice, which is generally a good thing. The think tanks which produce the rankings of economic freedom – mainly the Fraser Institute, but also the Heritage Foundation – are conservative, but highly ranked and the economic freedom rankings are commonly accepted in the academic literature. Such rankings have been criticized for allegedly assigning too much freedom to capitalist autocracies, but that implies that they will underestimate the benefits of economic freedom. Also, my specific evaluations of regulations have found that there are some good ones (some environmental rules, animal welfare rules, minimum wages) but also bad ones (occupational licensing, zoning restrictions, strict rent controls), so a sweeping increase in regulations across the board would likely be bad.

America is not a perfectly capitalist country, and we can look at its track record of central planning to see how well it does. One relatively recent attempt at central planning by American government bodies and associations, an effort to limit physician supply, went badly wrong. Another was the government regulation and provision of devices and services for the COVID-19 pandemic, especially including central planning of vaccine distribution; this too was an abject failure.

Another aspect of many socialist programs is supplanting privately owned enterprises (POEs) with state-owned enterprises (SOEs). Unlike government agencies in the tax-and-spend model, SOEs behave in a commercial fashion while still being directly accountable to the government. Market socialism is a system where this is a major basis for the economy. The Chinese government currently interprets socialism as a mix of state and private enterprises, with extensive public-private partnerships. Western socialists usually reject it with the label “state capitalism,” but the same reasoning that the Communist Party of China used to select its policies could be recognized sooner or later by an American socialist government. Looking narrowly at organizational effectiveness, two comprehensive literature reviews (Megginson and Netter 2001, Shirley and Walsh 2001) have shown that SOEs are inferior to POEs. Also, two recent studies (Boeing et al 2015, Fang et al 2015) have found that Chinese SOEs are inferior to POEs. Goldeng et al (2008) found that POEs outperformed SOEs in Norway in the 1990s. However, some of the recent work questions this point of view. Jakob (2017) looks at an international dataset and finds that there is no difference in performance between POEs and SOEs. A 2010 metanalysis found that privatization of local waste and water services has no effect. Omran (2004) suggested that privatization of Egyptian firms in 1994-1998 did not create significant improvements. Demsetz and Villalonga (2001) found that there is no systematic relationship between ownership and performance in US enterprises. Overall, the evidence is rather conflicting. But even if SOEs are just as good as POEs on the margin, it would probably be worse to push radical changes to implement many more of them. In the short run it could be unfair and disruptive. Looking more broadly at Chinese economic performance, their industrial policy has actually performed rather poorly. Finally on the theoretical side, Shleifer and Vishny (1994) argue that an economy of state-run enterprises merely magnifies the flaws of democratic governance (and American governance is indeed flawed, and will remain so for the foreseeable future).

State-owned enterprises receive varying support from leftists depending on the industry. A relatively popular SOE program in America would be nationalization of the finance industry, outlined by David Schweickart under the label “social control of investment.” But just as in other industries, public banks are less efficient than private banks. Furthermore, public banking in the West would cut investment in foreign economies, as public banks would be politically mandated to support projects which maximize employment for the domestic population. This would allow more severe poverty in the developing world.

Both command economies and market socialism involve government pursuit of politically determined objectives for the economy. If we believed that the economic objectives of an American socialist government would be particularly good (better than those of other socialist governments), then we could speculate that they might be worth the economic inefficiencies of socialism. However, we cannot be this optimistic about the goals of a socialist American government. Our policy evaluations in the rest of this report have uncovered a number of cases where the popular will or lobbying (including lobbying by labor groups) point in poor directions. Many of these cases are caused by structural problems in American government which wouldn’t necessarily be fixed by a switch to socialism.

Another major plan of many contemporary socialists is the use of worker cooperatives, firms which are owned and managed by the workers. In fact, worker cooperatives have broadly positive impacts - see Pérotin’s research summaries from 2015 and 2012. As for firms which are merely owned by workers, a 2016 literature review found that it is modestly positive for both firm performance and employee welfare, though a 2018 study found inconclusive and potentially negative impacts on firm efficiency in Portugal. But a significant downside of worker-owned and especially worker-managed firms in America’s particular context is that they discourage outsourcing to needier workers in poorer countries. The 20th century’s socialist programs also suggest that mandatory collectivization could have very bad effects, though their problems were probably caused by state control and mismanagement rather than the mere fact that they were collectives.

Leftists often allege that institutional bias from the capitalist system distorts the views and research of economists and historians, so that revolutionary socialist programs are better than they seem. But there just isn’t significant evidence of such bias, despite all the attention being paid to replication, retractions, publication bias, cancel culture, and other issues with academia. In fact, Marxism has been somewhat popular in academia. Marxist doctrine had significant presence in economics in the late 19th and early 20th century, and anticapitalist views are widespread and sometimes even unquestioned in certain subfields of humanities academia today. In reality, empirical analysis of socialist regimes is actually likely to be overly positive because they have typically been autocracies, which deceive their audiences (see Gregory (1990), Kornai (1992), and the classic Martinez (2019) paper comparing GDP with nighttime illumination visible from space). American economics textbooks systematically overestimated Soviet growth during the Cold War. And Cuba’s official statistics are notoriously unreliable, as I described previously.

To summarize, government control of the economy seems bad, greater public spending could be good or bad depending on the context of its implementation, state-owned enterprise seems bad, and worker cooperatives could be good or bad depending on the context of their implementation. However, these programs may have interactions with each other so that a multifaceted socialist program could not be reliably judged merely by taking the sum of its parts. Socialists usually believe that interactions will be positive – in other words, socialist projects could perform much better than what studies indicate if their environment has more socialist aspects in other ways. However, we have seen no good arguments for this view. Negative interactions actually seem more likely. The benefits of socialist programs might have diminishing returns as they stack – in other words, perhaps modest reforms would be sufficient to capture the potential benefits of socialist ideas, with additional reform being a pointless or destructive pursuit of unnecessary purity. This is underscored by the fact that the New Economic Policy, an unusual capitalist program in a mostly planned economy, was very successful. Per the Pareto Principle, perhaps preserving the core 20% of capitalism preserves 80% of its benefits. Furthermore, an excess of socialist programs can concentrate too much power in the government, creating incentives and opportunities for totalitarianism and abuse as we saw in the 20th century. So while the question of interactions does open up some theoretical space for better socialist projects to be devised, it doesn’t give us a good reason to change our point of view that a socialist system would probably be bad.

Practical dimensions

There is some value of information in testing a better model of socialism, if a good pathway to running a good test can be identified. Recent, refined socialist plans could be a bit different from historical programs. If a nation demonstrated that they can work well, then many other nations could improve their own policies accordingly. If a nation tried and failed, then they could eventually return to capitalism (though historically this has been a slow and painful process) and their experience would inform people in other countries to refrain from pursuing the matter. This benefit should be taken seriously even in the face of general skepticism about socialism. However, it is countered by the risk that a socialist movement or government would reduce the prospects for experimentation with different kinds of economic proposals. Other ideas for major socioeconomic reform such as communalism, charter cities, Georgism, liberal radicalism, crypto-anarchism and traditionalist revival fall upon hostile, deaf or at least merely academic ears when socialism is assumed to be the default remedy for the persistent ills of capitalism. And capitalist countries can still experiment with more modest policies, and these experiments have more external validity due to the economic system being shared with other states.

Experimental value would be more important if capitalism were leading to a great crisis. If business as usual were to lead to a major risk of catastrophic outcomes like entrenched capitalist aristocracy, global fascism, or devastating climate change, then testing something – anything – to avert the disaster would have more urgency. However, such pessimistic predictions generally seem false. Objective measurement of various indicators of the health of society shows that they are mostly improving. Climate change does not pose an existential threat to civilization. There were many negative developments in 2019, but also many positive ones. Our main existential threats come from international coordination failures and technological progress, not the specific choice of economic system.

Socialist change could come in the form of violent revolution, which would have a number of additional domestic and international costs. Historical attempts at communist systems were never introduced as a consequence of the party winning an election, it has only happened through force. American leftists have increasingly utilized or embraced violent tactics in the last several years, a pattern which has caused little direct harm but in some forms (antifascist, anti-Trump) garners a relatively high level of sympathy from some leftist media, academics, political actors and voters, thus creating a significant possibility for it to continue and grow in the event of a mass socialist movement. The notion of violent revolution is commonly endorsed in leftist circles, with some calling it inevitable. The Socialist Rifle Association in the US has a couple thousand members, although its behavior and rhetoric have been fine from what I have seen. Even if socialism were desirable, it may not be good enough to outweigh the risks of violence. And even if socialism were desirable enough to outweigh the costs of violence, the event of a failed violent revolution would still be a clearly bad thing. This gives an extra reason to prefer maintenance of the existing economic system and avoid insurrections in the first place.

Looking at the general degree of uncertainty in the issue, I am unsure about whether one could sketch out a feasible socialist proposal for the US that would be worth promoting over the current trend of capitalist policies across the advanced world.

However, that doesn’t mean that the actual results of a socialist movement would meet this standard. In fact, there are reasons to be specifically pessimistic about the results of a socialist movement. Trends among many current Western leftists undermine confidence that they will avoid the failure modes of 20th century socialist programs. These trends are: persistent overconfidence in their point of view, disinterest in policy planning, economic denialism and folk-economic beliefs, apologia for totalitarian socialism (there is just so much to find on the Internet, but some notable examples are in this article about Western reactions to the Khmer Rouge and this book about socialism in general), dehumanization and violence towards political opponents, widespread censorship of internal dissent in social media groups, extreme hate of some center-leftists, obsession with middle-class interests such as college debt relief and elite culture wars while neglecting problems of poverty, scapegoating of wealthy companies, businessmen and landowners, rejection of traditional norms of scientific objectivity, dismissive attitudes towards Effective Altruism, and vindictive attitudes on social justice politics boiling over into outright harassment and hate in certain contexts (e.g. the gender-critical/​transgender wars). A socialist movement that was led by ordinary American workers rather than by highly-politically-engaged leftist elites could be much more politically and socially healthy, but judging by the history of socialist revolutions and the weak state of labor unions in America, it’s unlikely to play out that way. In any case, a true bottom-up revolution of the workers could also have downsides in the form of incompetence and chaos.

These trends might be considered relatively benign in the current context, where leftists are a minority in a society with stable institutions. But the trends become more dangerous if they are prevalent in a revolutionary faction which can assert its own institutions and leadership. It’s worth noting that Lenin’s vision for the USSR actually involved a fair amount of experimental thinking, open-mindedness and respect for civility before Stalin took power and overturned these early ideas (See the appendix to Žižek 2011); a mostly decent movement can be hijacked by unsavory elements if the process of radical change has undone the norms and institutions responsible for protecting the government from such a development. In fact this has happened many times in the history of leftist revolutions.

Moreover, installing a socialist government could have more effects besides socialism itself. Socialists may leverage their power to install a suite of other programs, which might be inferred from the content of the Socialism 2019 conference: transfeminism, black liberation, open borders, abortion access, anti-Zionism, strong environmentalism, and weakening or abolishing the police and military. Socialists have also frequently been hostile to philanthropy, believing it to be unnecessary in the context of a socialist state, or even accusing it of inherently undermining the government. The overall desirability of socialists’ broad suite of secondary ambitions is unclear, which adds another layer of uncertainty on the matter.

Another potential problem is that as long as we remain in a capitalist economy, socialist beliefs can lead people to take positions of indifference or outright hostility to more reasonable immediate reforms. For instance, Kamala Harris’ proposal to try new after-school care programs which would relieve the child care burden off working families was met with hostility by a number of socialists who saw it as contrary to their vision of eliminating long working days entirely. However, there is a converse problem where popular antipathy towards socialism causes conservatives to oppose reasonable plans like universal healthcare.

A final and most worrisome issue is that rising socialist movements can inspire increased support for fascism; see Acemoglu et al’s 2020 paper looking at Italy after World War I. Fascism-as-a-reaction-to-socialism already seems to be a standard historical narrative which socialists agree with, and the threat of socialism/​communism was explicitly invoked by fascists including Hitler as a justification for their movements. Similarly, in an environment where the state is weak, threatening socialist organizations can increase support for organized crime.

Political philosophy perspectives

Cohen (2009) argues that socialism would theoretically be more compatible with ideal principles like equality and fairness, but Brennan (2014) demonstrates that Cohen’s argument does not work. Brennan further argues that capitalism is superior in terms of theoretical alignment with ideal principles, but Hall (2014) finds that this part of his argument fails. In any case, such appeals to ideal principles have little relevance for real economic and social outcomes. The argument for a strong principle of equality, where everyone ought to have equal access to a robust package of economic goods, has also been pushed by others (Gilabert and O’Neill 2019); however, the economic evidence suggests that socialism fails here anyway. Systems that lead to inequality might nonetheless lead to superior outcomes for everyone, but even leaving that aside, it’s plausible that aggregate welfare might be increased by systems that leave some people worse off, so we must reject this strong principle of equality. Gilabert and O’Neill seem to mention an idea that there is intrinsic importance in having economic democracy, but just as with political democracy, it is only as good as its real impacts on welfare and this is a matter for empirical study. Another proffered principle is the capacity to develop and realize one’s own desired projects and activities (Gilabert and O’Neill 2019); however this essentially boils down to economic welfare, as obtaining higher salaries, shorter working hours, higher job satisfaction, earlier retirement ages, and so on is nearly identical to this capacity. Another principle is community and solidarity, with society being better if people were legitimately motivated to help each other (Gilabert and O’Neill 2019). In intrinsic moral terms, this is false, but it holds substantial merit in instrumental terms. Still, it’s not clear if many forms of socialism would truly make people feel more positively about each other. Socialist movements themselves seem to be driven by rather one-sided partisan allegiances, and authoritarian socialist states don’t seem to have generally had good communal spirit, but there is plenty of potential for things to turn out better. Utopian socialist communal projects seem to have performed well in this regard, but comparable instances of homogenous capitalist cultures have had positive communal spirit as well.

Similarly, Marx argued that exploitation and alienation are inherent to capitalism (Wolff 2003), but there is no good evidence showing that this hurts aggregate well-being relative to alternatives. It is easy to argue that the capitalist organization of alienating and exploitative labor (assuming Marxist definitions of the terms) has led to substantial improvements in population size and quality of life over the history of industrial society, and replacing it could plausibly lead to inferior outcomes as we have pointed out previously. Numerous other principled philosophical arguments have been made in favor of socialism and against capitalism (Gilabert and O’Neill 2019) and there is a debate over whether socialism is atavistic but they similarly suffer from plausible countervailing considerations and the lack of clear determination of real socioeconomic outcomes such as quality of life. And just as Brennan effectively responded to Cohen’s arguments in kind with pro-capitalist arguments of ideal principles, it seems pretty straightforward to imagine similar rebuttals for other, similar writings. Fuerstein (2015) meanwhile argues that capitalism weakens democracy and further shows that this weakening of democracy has real social costs. However, he does not compare this to possible ways that socialist systems might weaken democracy, and he outlines solutions that are compatible with capitalism.

Note that a survey of academic philosophers found good evidence of an overall tendency to discriminate against right-leaning views and individuals (Peters et al 2019), and as the authors note in the beginning of the paper, philosophy (as a generally non-empirical discipline) seems especially vulnerable to producing poor conclusions when the researchers are biased. While capitalism can of course be held as a liberal point of view, and philosophers are more likely to be liberal-progressives rather than hard leftists, many of the political philosophy arguments for capitalism are grounded in right-leaning principles (such as self-reliance, economic freedom, equality of opportunity, and opposition to government coercion) which are marginalized by liberal-progressives in academia. Such liberal philosophers frequently have strong egalitarian moral beliefs with rich conceptions of restorative and redistributive justice, which means that they can only appeal to economists’ pragmatic arguments for certain capitalist policies – leaving little that can be written in philosophy journals to attack socialism. Yet the conservative philosophical arguments against socialism don’t seem any worse than the leftist philosophical arguments for socialism. Empirically, it seems to be a pattern for political philosophy arguments against socialism to be comparatively underexplored in current literature.

Peters et al did find that leftists actually perceived that they were discriminated against, but without the same supporting evidence as uncovered for discrimination against the right. The far left seems unusually disposed to perceive bias and discrimination in a wide variety of contexts, and political extremists generally have a less accurate understanding of the beliefs of their opponents (More in Common 2019), which casts more doubt on this survey result. That being said, it is plausible that far-left views do receive real discrimination. So overall, there are grounds for just a moderate presumption that political philosophy has leftward bias here. But in general, the political philosophy perspectives do not provide significant reason to change our point of view.

Most likely scenario for American socialism

To help inform a holistic judgment, here I explore what seems like the most likely specific scenario of American socialism. While the reality of socialism if it ever happens in America will probably be different because of just how many details can differ (the more details you include, the more likely it is that at least one of them will be wrong), this scenario may still capture the main themes, pros and cons, and provides a useful thought experiment.

Scenario: continued trends of polarization, urbanization, backlash against emerging right-wing quasi-fascism, and economic crises cause the Democratic Party to drift further to the left. Meanwhile, Republican power rests on a smaller and smaller demographic coalition, relying on the countermajoritarian structures in the American government. At some point the increasing Democratic majority becomes overwhelming and they establish a trifecta of House, Senate and White House control, guided mainly by progressive leftists. Democrats attempt to pass major reforms along the lines of Bernie Sanders’ 2020 platform, but still face many obstacles from Senate Republicans, conservative judges, and Republican governors. Democrats combine Trumpian executive obstinacy with a higher degree of political competence and determination in order to circumvent these obstacles. Democratic Party power and tactics feed into a resurgence of white nationalism with sporadic violence among the right. Democrats invoke the fear of white nationalism to justify expanded national and executive government powers; conservative and centrist resistance to this move is tarnished by association with the radical far right. The end result is a system where a simple majority of the country, guided by middle-class, educated urban leftists, is able to dictate major policy reforms from the national level. Corporate lobbying is suppressed, but other special interest groups retain considerable influence.

The biggest change in government policy is a major expansion in the scope and magnitude of its services. This includes universal Medicare with minimal cost sharing, fully paid university tuition, a federal job guarantee, public banking, trillions in climate spending, more public housing and racial reparations. The government also becomes more aggressive with the minimum wage, rent controls, and various regulations.

In order to hold together the progressive governing coalition, more power is granted to bureaucratic positions and committees whose seats are filled by politically influential representatives of factions such as race and gender minorities. The expanded, low-accountability public bureaucracy is increasingly preoccupied with balancing the demands of various activist groups, while being increasingly captured by professional special interest groups such as small business associations, legal and medical associations, and public sector unions. The quality of public services is pretty average.

Defense cuts and taxes on the wealthy pay for less than half of the increased expenses, so the government must chronically resort to increased borrowing as well as printing under the ideas of Modern Monetary Theory, leading to moderate inflation. The US government sees its credit downgraded to AA or so. The housing shortage continues, leading to a large population of disenfranchised youths who exit cities and rely on the federal jobs guarantee and other programs.

America enters a slow death spiral where general economic problems are blamed on the underperformance of a specific private industry, that industry is either nationalized or subjected to wage and price controls, and this move contributes to general economic shortcomings which increase dissatisfaction with remaining elements of the private sector. The misplacement of blame is caused by leftist ideology which assumes that the social performance of an industry is determined by the degree of meaningful democratic control over it, and it is caused by underperforming public institutions being so politically powerful (albeit compromised by special interests), bureaucratically thick and nationally centralized as to prevent the political system from turning against them.

This comes alongside a fair degree of culture warring, with the bureaucratic managerial class and urban voters veering more socially left-wing than the population at large. Opposition to the government and socialism is increasingly connected with right-wing cultural views and then marginalized.

Economically, America generally weakens, but with modest increases in economic welfare for some of the more marginalized groups. Socially, there is greater solidarity among the left, but with increased hostility and dissatisfaction for the politically marginalized rural and conservative white minorities. Culturally, the nation becomes more decadent and inward-focused. Internationally, America diminishes in power, and China becomes a regional hegemon with a greater amount of global influence.

Conclusion

Overall, there is good though not decisive evidence against socialist ideas. One might be able to design a particular form of socialism – either one which leverages worker cooperatives while maintaining competitive markets and a reasonably sized government, or one which has some sophisticated and well-incentivized form of central planning – that is worth small-scale testing. (However, there are better ideas besides socialism for those who are interested in radical change.)

But the reality of a socialist system if Americans decide to implement one will probably be worse than the status quo. And there is no guarantee that socialist change would be a peaceful process. Therefore, we should prefer that Americans have more faith in capitalism and resistance to socialism.

This finding is too weak and uncertain to be justified as a main cause priority. However, it still has interesting implications for Effective Altruism. Numerous writers have alleged that charity is worse than it seems because it could reinforce capitalism, and argued that EAs have a duty of justice to promote new economic systems that could help the developing world escape poverty. However, the finding here means that this argument must be reversed. Charity is extra good because it reinforces capitalism, and EAs have a duty of justice to reinforce (and refine) capitalism in order to help the developing world. Of course neither of these arguments actually make sense—the number of people whose political attitudes are actually changed by philanthropy is negligible as far as anyone can tell, and the “duty of justice” is a moral falsehood. But as far as philosophical debates are concerned, a good deal of academic orthodoxy will have to be revised in the light of this new idea that capitalist systems are usually superior to socialist systems.

Some further reading (which I haven’t read yet):

Capitalism and Socialism: A Review of Kornai’s Dynamism, Rivalry, and the Surplus Economy

Review of Why Women Have Better Sex Under Socialism

Goodbye Lenin, Hello Murat? The Effect of Communism on Individual Attitudes Toward Immigration (thesis) (wlu.edu)

kbog16 May 2019 6:12 UTC
62 points
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