Socialism Is Not Neighborly – Econlib

Minnesota Governor Tim Walz, the Democratic vice presidential nominee, recently urged his supporters to not “shy away from our progressive values. One person’s socialism is another person’s neighborliness.” Socialism is sharing a cup of sugar with the family across the street, and who could object to that?

Walz’s identification of socialism with neighborliness is reminiscent of Bernie Sanders’s remark that, “to me, socialism doesn’t mean state ownership of everything, by any means, it means creating a nation, and a world, in which all human beings have a decent standard of living.” Here Sanders equates socialism not with any particular set of economic institutions, but rather with the uncontroversial idea that we should create a world in which everyone has a decent standard of living. 

Even socialist philosophers and writers are guilty of this kind of rhetorical sleight of hand. G.A. Cohen once argued that voluntarily sharing food and equipment with one’s friends on a camping trip is an embodiment of socialist principles. And according to George Orwell, socialism is the notion that “everyone does his fair share of the work and gets his fair share of the provisions;” he says that the merits of socialism so defined are “blatantly obvious.”

I agree with Orwell—to a point. It is obvious that we should want an economic system that fairly distributes burdens and benefits. But it’s not obvious that socialism is this system. Merely identifying socialism with a fair economic system is no more of a convincing defense of socialism than merely identifying capitalism with a fair economic system is a convincing defense of capitalism. This is a bit like someone arguing that the paleo diet is the healthiest diet because they’ll simply label whatever foods turn out to be the healthiest as “paleo.” To fruitfully compare capitalism and socialism, then, we need an understanding of the specific economic institutions that characterize socialism and capitalism.

At the most general level, socialist economies are those that mandate the collectivization of productive property. That is, they allow you to privately own “personal property” like your shoes, but not “productive property” like a shoe factory. Collectivization can be institutionalized in different ways. For instance, old-school socialists would favor state ownership of the shoe factory. But that style of socialist economy is less popular today given the overwhelming evidence that it is not prosperous, kind, or fair (see Venezuela for a recent example). 

Contemporary socialists have therefore taken to advocating for workplace democracy: roughly, workers collectively own firms and make decisions democratically. This arrangement allows for market competition—worker-owned firms may openly compete with one another—and so avoids some of the traditional Hayekian critiques of socialism.

Still, it’s not clear to me that this style of socialism is all that neighborly. Sure, some people might prefer to become worker-owners of a democratically-run firm, just as some people might prefer to work remotely rather than in an office. But others might prefer a capitalist firm—and those people are out of luck under socialism. As the philosopher Robert Nozick points out, capitalism allows socialist-minded people to pool their resources together to create democratic worker cooperatives if they so choose, but socialism does not allow capitalist-minded people to create capitalist firms.

And there are plenty of good reasons why people might prefer capitalist firms. For example, as Don Lavoie notes, workers “may not want to take on the risk, expense, and responsibility involved in managing a firm.” He continues, “After all, there are potentially several advantages to workers who choose to specialize in earning wage income in order to be insulated from the vicissitudes of market competition. There is often an advantage in allowing someone else to be the boss and thereby reducing one’s concerns to the fulfillment of a wage contract, letting the management fret about the firm’s profit and loss statements.” 

To illustrate the point, suppose Lance wants to start his own landscaping business and needs to hire an employee. Moe just wants stable employment and a steady wage; he doesn’t want a piece of the business and the headaches that come along with it. So Lance hires Moe to mow some customers’ lawns. 

As a result of the wage contract, both Lance and Moe get what they want. Yet, as Nozick would say, this is one of many “capitalist acts between consenting adults” that must be prohibited by a socialist regime if it is to remain socialist. A socialist regime would compel Lance to give Moe a share of the business if he’s hired even though both parties would be worse off as a result. But forcing people into workplace arrangements they’d rather avoid is not kind or friendly; to the contrary, it sounds downright unneighborly.

Christopher Freiman is a Professor of General Business in the John Chambers College of Business and Economics at West Virginia University.