Why does Socialism Fail?

In spite of the best intentions of its supporters and the intellect of its designers and administrators, why has it failed so miserably in every attempt? That is the question I am going to try and address in this post. I want to make it clear that I am not an economist. I have no degree in finance. In fact, I am a man of only average intellect. But in spite of my unimpressive resume I believe the answer to this question is so simple given the historical record that even I can both understand it, and explain it in simple terms.

Before we can begin to judge any economic system concerning its advantages and disadvantages we need to agree on the criteria to be used to measure it. I believe the following three broad criteria are both the most important and most revealing criteria to be considered when trying to ascertain the realistic attributes of any economic system.

1. How does a system impact Incentive? The presents or absence of incentive affects productivity, efficiency, and quality. Therefore this question must be one of the primary considerations when judging an economic system.
2. How does an economic system affect the efficiency of distribution? Efficiency of distribution is the measurement of the inherent waste and overhead within a given system. So this attribute of any system must be honestly appraised.
3. How does a system ensure adequate equity of distribution? In other words, how does a system ensure that the resources that are available are distributed widely and evenly enough to insure that as many people as possible have access to as many resources as possible?

In order to determine the merits of a system we first need to understand the true attributes of the system when put into practice. Its strengths and weaknesses, and its manageability when actually employed rather than a systems theoretical intentions because while intentions are admirable, they are meaningless unless they can be realized when put into practice. So only when we have determined a system’s true attributes can we understand why it fails or succeeds in practice. So here goes.

What are the real attributes of Socialism in practice?

Before we address attributes of Socialism that are directly related to the items listed above we need to discuss one of its theoretical attributes: Its promise to eliminate or at least reduce greed, envy, and corruption. This is an empty promise, and therefore an invalid attribute, and here’s why.

1. Most Socialists make the mistake of forgetting, or intentionally not accounting for, the realities of human nature when judging Socialism yet they include them in there assessment of Capitalism. Why? Assuming that man’s nature is a result of the system employed skews the results of any analysis of the real impact of these systems. I think that this is the primary reason Socialism in practice never lives up to its theoretical claims and I thing history bears this out. Man’s tendency to look out for his own self interest exists regardless of which system a society employs. Greed, envy, and corruption are the result of man’s nature not of the economic system employed and will exist in equal measure in any system. So Socialism’s promise to eliminate these characteristics of man’s nature is an empty one. In practice the realization of this promised effect is impossible to realize.

Now we can discuss the attributes of Socialism that directly impact the criteria above, accounting for man’s true nature and allowing for it:

In theory Socialism promises the equal distribution of resources and makes it the highest priority.

1. While it is true that Socialism might be able to deliver on this promise, in making equity of distribution a requirement of the system and making it the highest priority, a society must construct a bureaucracy that is large enough and powerful enough to control all of that societies’ resources. Doing so negatively impacts the first and second desired result of the economic model, incentive and efficiency of distribution.
   1. It negatively affects incentive because by having the bureaucracy take control of distribution the worker looses control of his or her reward for their labor. The state determines their reward based not on the workers effort or level of production but on his or her “need” in an attempt to maintain equal distribution. Therefore, without incentive the worker produces less and is not inclined to be concerned about quality because he doesn’t feel that he has a stake in it. This results in a reduction in the quantity and quality of available resources. This is counter productive. So even if the system is good at forcing the equality of distribution, the unintended consequences are a reduction in what’s available for distribution which leads to shortages and rationing. Historical evidence proves it.
   2. It negatively affects the efficiency of distribution because the apparatus that must be constructed to manage the distribution of resources will have to be extremely large. While size can increase efficiencies in some areas it ultimately becomes very unwieldy and difficult to manage. The size of the bureaucracy and the power that the people within it wield eventually leads to widespread corruption. Remember, it is the nature of man to look out for his self interest and where there is power and influence there will be corruption! So due to the absolute power and inherent size of the bureaucracy the efficiency of distribution will decline. History again proves it.
   3. So while it might be true that a Socialist system might be better at ensuring equal distribution of resources. The quantity and quality of the resources available for distribution will be negatively impacted due to the nature of the system that has to be constructed to manage it. In essence, Socialism puts the cart before the horse!
2. In theory Socialism promises prosperity for all.
   1. Well I believe that the historical evidence going back at least a hundred years shows unequivocally that what Socialism promises and what it delivers in this regard are two drastically different things. Due to the effects of the absolute falseness of the first promise and the negative impact on incentive and efficiency of distribution explained concerning the second promise. It is no surprise that a Socialist economic system simply cannot deliver on its promise to provide prosperity for all and again, history bears this out.

So in reality what it boils down to is Socialism cannot deliver on its promises due to its total disregard for human nature. That is its fatal flaw. In addition to the negative unintended consequences listed above, Socialism has an Achilles Heal that trumps everything else. Because a Socialist system requires that the distribution of resources be centrally controlled it is very susceptible to becoming a tool of control over the society it was constructed to support. Ignoring the realities of human nature as it relates to the power of the system over the society makes a Socialist economic system incredibly dangerous. It ultimately becomes a weapon that the powerful “within” the system use against those who have become dependent on it. Again, history supports this conclusion almost without exception. So in spite of the good intentions of those who want to employ a Socialist system to achieve the equitable distribution of resources the realities of Socialism’s true attributes dooms the system to failure when put into practice. Even without accounting for the dangerousness of centralized control that makes a Socialist system possible. Its other attributes make it a fatally flawed system that cannot deliver on its promises. When you introduce its hidden attribute of absolute power concentrated in the state and combine that with the unchanging nature of man and his desire to look out for his own interests over those of others, you end up with a system that, regardless of the benign and altruistic intentions of its supporters, is as a dangerous and evil system.

If you don’t believe me read your history books. Socialism has failed to deliver on its promises in every society that has attempted to put it into practice. In fact, its hidden and true attributes (concentration of power, widespread corruption, and totalitarianism) have been the only ones that seem to have been ultimately and irrefutably proven.

Respectfully,

Logical Liberty