DJ Duk

November 13, 2004

Socialism Pt 2

At long last we return to the subject of socialism. Time for the good part, failure.

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4. Decline Even the best run socialist utopia eventually begins to crack. The further you get into a centrally controlled economic system the less people have to gain through innovation or entrepreneurship. People's freedom to buy and sell what they choose disappears. Along with the loss of economic control comes a loss of political freedom. No wholly socialist country has ever existed for long without becoming a totalitarian state.

As all labor is considered equal jobs that require additional incentives to attract employees are unable to do so. Unpleasant jobs begin to go unfilled. Few people choose to be garbage collectors when they work at McDonalds for the same pay. The controlling body then must coerce people into these jobs. In the past governments derived from socialism have resorted to putting people in prison who refuse to do the job the government assigns to them. Eventually in some places certain jobs have been made hereditary. If your father was a garbage man you will be to, or else.

The other side of this is skilled labor is made to be equal to unskilled labor. Those people who spend extra time in school to learn a more difficult trade are given the same consideration as our garbage man. Seeing that they end up in the same place people will usually forego the extra school and find a way into a job that pays the same in the end but requires less actual work. This is what's happening to the socialized medical systems today in Canada and the UK. Because prices are fixed for consumers, providers, that is drug companies and doctors, have little incentive to go into business there at all. Fixing the cost damages the regular supply and demand action that takes place and the industry has failed to grow with the increasing demand. In both of these countries they have resorted to rationing. Medical care is basically free and available to everybody, but because there are not enough providers people are forced to wait for, in some cases, as long as six months for basic care and longer for certain critical items. This continues to get worse until governments try to lower the amount of care provided, as is happening in Germany accompanied by large scale protests, or raise taxes further to fund health care, as is happening in places like France and Sweden.

5. Bail out/collapse/dictatorship Socialism cannot last forever. Eventually the decline stage reaches a breaking point and something happens. Fortunate countries are bailed out. Somebody, usually the United States, dumps a great deal of money into the country to prop up its socialist institutions. They can then continue to toddle along until the next inevitable collapse or bail out situation.

Another option and probably the most desirable of a bad lot is collapse. The system simply folds and there is no more social organization. People eke out an existence in anarchy until some more concrete system comes along. If the rule of law can be established it usually turns into a capitalist economy. In the absence of law the system degrades. This is essentially what happened at the end of the Roman Empire. Roman socialism and law collapsed and until laws could be established again the best they could do was a Feudal Barter system. Eventually the barbarians were repulsed and assimilated and law was established. Commerce made a dramatic recovery and capitalism reasserted itself again. In the meanwhile we had the Dark Ages; a thousand years of misery and fear that represents the price of the first experiments with a welfare state.

The third possibility is a dictatorship. The erosion of economic freedoms leads in almost all cases to the loss of political freedom. A number of times in history in order to forestall a collapse a society has completely ceded its political freedom and allowed a dictator to rule them. The results are typically tragic. Joseph (Iron Joe) Stalin came to power in essentially this way. Another fun guy, Adolf Hitler got his start from socialism. After WWI the Germans developed the Weimar Republic. The Weimar republic was very in tune with the ideals of socialism. Instead of allowing a collapse that government, when it ran out of money, simply printed more, essentially an effort at self bail out. The actual result was rampant inflation. The depressed Germans turned to the National Socialist, or Nazi, party to bail them out again. Hitler took over as absolute dictator proceeded to ravage Europe for about a decade.

That's about all for now. I'd be happy to field questions. If you have any questions either leave a comment at the end of this post or e-mail me at DJDuk (at) DJDuk (dot) com.

Posted by DjDuk at November 13, 2004 02:43 PM