Socialism vs. Capitalism: Results – Theory – Morality

“Tyranny is the political corollary of socialism, as representative government is the political  corollary of a market economy. To suggest otherwise ignores history.”  (Ludwig von Mises)
Socialism vs. Capitalism: Results – Theory – Morality
By: George Noga – March 24, 2019

        Apologists for socialism disingenuously compare ideal socialism to the actual practice of capitalism. What if we compared ideal capitalism to real-world socialism? In this post, we compare results to results, theory to theory and morality to morality.

The Results of Socialism Compared to the Results of Capitalism

       No serious economist argues socialism produces better results than capitalism. Socialism never has created sustained prosperity. It can only achieve a brief illusion of prosperity by plundering a nation’s wealth, confiscating assets, inflating, borrowing, nationalizing, and printing worthless currency. But it always ends the same way, i.e. starvation amidst plenty. Socialism’s failures are legion: the USSR, Venezuela, Cuba, North Korea and the Chicoms. It never has worked for more than 25-50 people, such as a family, clan or tribe, where familial bonds supercede economic considerations.

In just the past 25 years (per the World Bank) capitalism has cut extreme poverty by 75% – equal to 1.2 billion human beings, with an additional 50 million being lifted out of poverty each year. Every day, another 135,000 people escape poverty. Today less than 10% of the world’s population live in extreme poverty and it could end within our lifetime. This is by far the greatest economic accomplishment of all time, thanks to capitalism. Capitalism’s successes also are legion: the USA, Western Europe, Japan, the Nordics, Singapore, Canada, Australia, Botswana, New Zealand and South Korea.

The Theory of Socialism Compared to the Theory of Capitalism

        Under ideal socialism, the governing values of the citizens are community and equality; they view their economic well being as a common enterprise. They share the work according to their abilities and no one demands extra benefits due to greater talent or work effort. All inequalities due to undeserved advantages or disadvantages are eliminated. In this socialist utopia, all the people are economically equal.

        Ideal capitalism means self interest and markets. Some citizens are more talented,  exert more effort or take greater risks; hence, some are wealthier than others. But this arouses no envy because all the citizens are unselfish. When someone is in need, neighbors help. Just as in the socialist utopia, the citizens care about each other and value community. All of the good aspects of the socialist utopia are present but so are additional benefits such as innovation and the production of more and better goods.

          If one assumes people under ideal socialism are entirely altruistic, then it is only fair to make the same assumption under ideal capitalism. Moreover, the free market isn’t dependent on altruism and it functions even when comity is in short supply. Socialism always fails, in theory and practice, because it is fundamentally opposed to human nature; people are hard wired to respond to self interest and to incentives.

The Morality of Socialism Compared to the Morality of Capitalism

        Comparing results to results is no contest; capitalism wins hands down. But when comparing ideal to ideal, capitalism also wins because, if people act altruistically, the incentives of capitalism produce greater prosperity. Socialists distort by comparing an idealized version of socialism to non-idealized capitalism and by assuming people act selflessly under socialism but selfishly under capitalism. What if we compared ideal capitalism to socialism as actually practiced – with its mass murders, brutal dictators, starvation, grinding poverty and human desperation as in say, Venezuela?

        Capitalism, non-coercive cooperation in markets, is also superior morally. People succeed only by providing goods valued by their fellow man. The most potent force on earth is a consumer armed with a free choice; even a large corporation can’t force anyone to buy its products. The political corollary of socialism is tyranny and it inevitably results in starvation amidst plenty; there is nothing moral about that.

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