When Socialism Works

From FEE.org:

Because of Bernie Sanders’s campaign for the presidency, many Americans are asking if “democratic socialism” is possible. Can there be a form of socialism that really includes the voices of all the people?

In a March 17 feature at FEE.org, economist Sandy Ikeda offered some strong reasons to doubt it (see “‘Democratic Socialism’ Is a Contradiction in Terms”). What Ikeda says is right, but notice what his argument does notimply: that democratic socialism will fail in all contexts. His critique addresses the application of democratic socialism to a large-scale heterogeneous group. But if we think about very small, more homogeneous groups, something like democratic socialism can work. Not only can it work; it largely does work within such small groups all throughout the modern liberal, capitalist order. In fact, the liberal order can be seen as the unplanned interaction of lots of little socialist institutions.

To see this point, we need a brief detour into the long history of humanity to explore an important distinction that F.A. Hayek makes in his later work: We humans spent most of our evolutionary past in small, kin-based groups of several dozen people. As a result, our brains evolved in ways that were adaptive for that environment. (See Mike Reid's "The Myth of Primitive Communism" on why communal property was also a cultural adaptation.)

In such an environment, which Hayek termed an “intimate” order, we know everyone we interact with personally. We know what they like and what they need. That intimacy enables us to make rough interpersonal utility comparisons in ways we can’t otherwise. It therefore enables us to be collectivist and altruistic. In other words, we can structure such groups with forms of socialism because of their small size, intimacy, and homogeneity.

These contrast with what Hayek called the “anonymous” order of a market-based commercial society. In the market, many of our dealings are with people we do not know personally. Think about how many people you interact with directly in market transactions where you know absolutely nothing about them. Do you know anything about the cashier at the grocery store? Now extend that out to the people you deal with over the phone or the Internet. And now extend that to the millions of people who contributed directly or indirectly to making your clothes, or that pencil you’re using. We rely on millions of anonymous others every single day.

Hayek advises us that anonymous social orders cannot be collectivist or altruistic or socialistic. There’s no way for any one person or group to acquire enough knowledge about everyone’s preferences or about how best to use existing resources to make the things others might want. This is the classic debate over the possibility of rational calculation under socialism. But both Hayek and Ludwig von Mises understood that the impossibility of socialism did not apply to small, intimate, homogeneous social units where those knowledge problems did not exist.

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So we should be careful when we say democratic socialism “can’t work.” What we should be saying is that it can’t work for a society of any size beyond the smallest and most intimate. As Hayek says, even the broad, extended, anonymous order of the great society will contain within it numerous small groups of deliberate organization. The key is ensuring that those groups can interact in ways that produce peace, prosperity, and social cooperation — and that goal requires a market. Pursuing such aims through democratic socialism will only produce conflict, poverty, and totalitarianism.  [read more]

Bernie Sanders and others like him would never get the point of the article because socialism is a religion to them. They have blind faith in it. But the article makes perfect sense. Socialism might work if the members of the society share not only the benefits but the costs. Even in a family setting that might not be the case.