Socialism

Socialism understands the link between efficiency and equity, enabling a more effective economic paradigm. It can also be easily embedded within specific schools of thought that focus on the importance of individualism. The question therefore becomes: why isn't it supported more? Is it purely about an irrational hatred generated through specific phenomena such as McCarthyism and a consensus political system that deliberately confuses socialism with government inefficiency?

 

Putting workers in control of the means of production democratically through the auspices and authority of the State is nothing short of the most disastrous ideology of the modern day. Tyranny of the slim majority would rule and decisions would be made in the self interest of the State apparatus, rather than the people at large.

There is never going to be some benign council of technocrats who will be incorruptable to the influence and wealth that is at their command. It would take an omniscient deity to come and personally handle the affairs of mankind for socialism to become a workable reality.

Besides, the real argument against socialism was never economic, but instead moral. It is one of All Powerful State vs Individual Liberty with Individual Liberty losing out tragically.

 

Socialism aims to make the state obsolete.

 

It might be helpful for you to explain exactly what you mean by socialism, so that we don't end up in a "not true scotsman" situation.

 

Aren't you a market socialist or something?
If not, what do you think about economic planning? Would you support a decentrally planned economy (Anarchist), a centrally planned economy (Stalinist/Maoist) or more centralized but democratic planning (Trotskyist)?

 

Not really required. First, socialism is easy to define: worker ownership and control of the means of production. The difficulties are in the alternative choices in delivering that result (which isn't part of the thread's purpose). Second, we're deliberately focusing on definition errors. Silicon, for example, has been kind enough to offer the standard error. From that we can try and understand the source of the error. I'd suggest that, with Silicon, it could simply reflect a hole in political economic knowledge. However, he might like to suggest otherwise and spiffingly offer a more specific explanation for it

 

I'm a supporter of the post-Hayekian market socialist approach that focuses on the importance of the tacit knowledge of the individual as a driver of economic success. However, I don't want to get into a debate into the vibrancy of socialist political economy (unless its used to explain the source of ignorance over what socialism entails; e.g. an offshoot of Stalinism)

 

Thank you for the definition.

 

Then what?

What problem does socialism solve? How does socialism prevent that problems reoccurance?

 

Greater efficiency, whilst delivering genuine choice (and therefore celebrating individualism)

 

How is worker ownership and control of the means of production increase efficiency?

If I want to move to a more interesting company, how do I acquire enough ownership of the new company to become a worker, how do I dispose of my ownership in the company I left?

When entrepreneur have little incentive to innovate, how are new companies formed to offer me more choice?

 

Consider, for example, the internal labour market and efficiency wage analysis. We drive a wedge between productivity maximisation and profit maximisation (e.g. inefficient hierarchy, independent of division of labour criteria, is required to divide and conquer the workforce). The empirical evidence confirms that worker management does lead to productivity gains.

You're asking for this to become a discussion about market socialism. That is not the thread's purpose. Its more about why people get socialism so wrong! For example, here you misunderstand how- given market planning is not required- its easy to integrate socialism within concerns of entrepreneurial tacit knowledge (e.g. with reduced inequities we'd actually expect greater firm creation). Where did you derive your ideas on socialism?

 

When I have asked you why, with better productivity (and now better efficiency), companies based on socialism don't dominate, you state they aren't competitive.

How do you maintain socialism in a free society?

Socialism is a business structure. How do you evaluate socialism without considering it's ability to adapt to market?

Market planning isn't required? Are you talking on the state level? What about the evaluation done by employees, resulting in a plan to penetrate a market?

The entrepeneur is more about persistance and risk tolerance than knowledge. The joke, based largely on truth, is an entrepeneur is somone too dumb to know a thing can't be done, so does it. When socialism removes the reward (ownership), it also removes the incentive to take risk.

I am merely extrapolating your description to see if socialism is sustainable. It isn't looking good so far.

 

Get it right now: there is a difference between productivity and profitability. Traditional firms are able to acquire economic rents and drive out the more productive. We see that, for example, with the failure of market forces to drive out inefficient discrimination.

You protect property rights. The role of government is reduced.

No socialism is a political economic paradigm.

Yes

We'd see a shift in favour of the invisible hand and away from the visible hand. Where the islands of planning continue (such as in the case of industries characterised by sizeable economies of scale and scope), we'd see a reduction in the problems created by distributed knowledge.

Its about understanding the nature of uncertainty. To the orthodox economist its about probability. Here, however, its about finding opportunity by removing ignorance. Tacit knowledge sums that up perfectly well.

Actually you're tending towards your usual tactic: asking nonsensical questions and ignoring the answers. Lets try to stop you from spamming and answer the pertinent question:

Where did you derive your ideas on socialism?

 

Please provide an example where traditional firms acquire economic rents, unavailable to a worker owned company.

How does protecting property rights allow a worker owned companies to compete with a "traditional" firm?

If socialism is ineffective at competing in business, what provides it's wealth, what drives its economic engine?

The invisible hand is the unplannable coordination that results from the interactions between many plans.

As an example, no person or persons coordinates everything needed to create a pencil, or wool coat. Yet, they get made, by companies that create, execute plans, and change plans in response to the market.

How does socialism eliminate the "visible hand"?

You place too much value on knowledge, and not enough on the motivation of the entrepeneur.

Nonsensical questions like how can your version of socialism, that isn't competitive, survive in a free society?

As I said above, I am responding to your description of socialism.

 

No, I'm not going to let you spam the thread: Where did you derive your ideas on socialism?

 

I think most people get the idea of socialism being inefficient from the misallocation of resources that occurred sometimes in the USSR - that and cold war era propaganda that greatly exaggerated the occurrences of bread lines and the like. The USSR was actually pretty (*)(*)(*)(*) efficient on the large scale. They managed to go from a backward (compared to the rest of the world) semi feudal monarchy to a modern industrialized society that overtook many of their neighbors.
The problem was that the system was imposed from above, and though is was efficient on the large scale it was very hard to manage - the ruling beureucracy hated it, but they couldn't easily change it without risking their own positions.

Of course you (Reiver) probably understand that this was no form of socialism because it wasn't controlled in any real sense by the workers - but since people think the USSR was socialist you understand the association with socialism being inefficient, yes?

 

Indeed. But how about standard nationalisation and how its been used within left wing political parties? To what extent is it an offshoot of the poor economic approach encouraged by Econ 101: i.e. private good, public bad.

 

The promotion and use of nationalization varies a lot between the left, and lately the centre-left has mainly abandoned nationalization as they've moved to the right. Much of the far left (mainly Trotskyist parties) have a policy of only using elections to spread knowledge of Marxist theory, and believe real change can only be made through revolutions - though I doubt that they wouldn't nationalize some stuff if they had the opportunity.
The prospect of further Nationalization has pretty much been dumped by the labor parties in the UK and AUS, not sure about in Canada. Perhaps the UK will reserect it as their economy gets worse.

I don't think much of standard nationalization - but if we could actually get some radical reforms through without getting our politicians assassinated and a US coup, it might be possible to get some more permenant reforms through like nationalization under worker's control.
I don't like the idea of nationalizing everything - even under worker's control. "Socialist" Autarky like the USSR is doomed to degenerate.
Global cooperatization under a market, and then gradually abolishing the capitalist mode of production is the way to go in my opinion - whether it's achieved by reform or revolution.

 

This is a comment about the subject, not on the subject.

I have been bedevilled for many years by the suggestion that socialist economics is inefficient. I don't mean that to sound defensive. Social ownership of the means of production is a basic value for me but the reality of implementation is the bit that has bedevilled me. So I am indebted to Reiver for bringing up the idea that the invisible hand might replace the visible hand, that sums it up nicely and suggests a way forward to defeat the conundrum.

Anyway I shall continue reading with interest.

 

Nationalisation itself isn't a left or right wing proposition. We all can refer to examples where the right have been more than happy to use it, particularly as a defence against capitalist crisis. Whilst we no doubt can refer to more extensive underprovision of public goods with the right wing, its how nationalist inefficiencies have been used to warp opinion which I'm interested in. 'Government is bad' is readily translated into 'socialism is bad', even though socialism will commonly see a reduced role for the state (at least in terms of direct interventionism to control the macroeconomy)

 

Oh I wasn't arguing that exactly. Nationalization can certainly be helpful for stabilizing capitalism and it's important to remember that the capitalist class aren't some hive mind - they have competing interests and influential capitalists can certainly band together and support the nationalization of any industry/businesses that they don't themselves reap capital from.
But it is an observable phenomenon that as the Labor parties have drifted to the right they've decreased and sometimes entirely dropped their enthusiasm for nationalization. Perhaps if they continue of the right they'll support nationalization again?
It comes down to where the left parties started off (ie why they had originally supported nationalization) and why they dropped it as they shifted to the right. In this case they supported nationalization because it was in the interest of the workers, but dropped it when their class loyalties got more ambivalent.

 

Asking you to back up your statement is spamming your thread?

To restate - You say socialism is more productive and more efficient. I asked why isn't socialism (worker owned) the dominant type of business? You say it is because traditional firms collect economic rents.

Give me an example of those rents.

I am not relying on any preconceived notion about socialism.

I see innovation is a major driver in the economy. But, innovation involves risk. You say uncertainty is removed by "tacit information", as if that means something. The "employee" sees unacceptable risk in the same information that entrepeneur sees opportunity.

Capitalism, with all it''s flaws, rewards those risks enough to promote innovation. I am asking you how socialism promotes innovation.

 

Given the tendency towards consensus politics that unfortunate drift is all to common. The nationalisation call, however, was typically bluster (and used to try and sideline more radical alternatives). However, its not a feature I'm particularly interested in. I'm an embittered voter nowadays. I only vote to try and get a cheer from seeing a defeated tory oik. Its the public-private distinction that interests me. That has always been blurred in capitalism, but orthodox economic analysis has still filtered down to us poor plebs and encouraged a simple- but untrue- understanding of the invisible hand. That would lead to a particular post-autistic economic conclusion: its the twisting of economics towards neoclassical theory that has encouraged such vacuous views on basic political economy

 

Can Socialism not be defined in broader terms? From my conception of the economic system, worker ownership and control of the means of production need not be a requirement. After all, the fundamental basis of ownership in Socialism is that it must be social in nature. In other words, the economic system moves away from the processes which promote private profit, and instead move to processes which promote the creation of goods and services for direct use. Such a definition does not exclude any variants of Socialism, nor does it include any forms of alternative economic systems.

At the same time, there is an added caveat to then "control of the means of production", one which opens the door for individualism within Socialism. This is the fact that the control, or as I put it, management, of the means of production, is cooperative in nature. Being that cooperation requires voluntary actions from its participants, one can say that the rights and freedoms of the individual do not need to be hindered for a Socialist economic system to ensue. In fact, for Socialism to truly take fold, it may be imperative that they exist to the fullest possible extent. Nevertheless, adding this caveat may exclude some existent variants of Socialism, such as State Socialism, which, in of itself, is uneasy.