“According to that tried and true statement, ‘wealthier is healthier.’ Free enterprise leads to greater wealth and, thus, to greater health and longevity, ceteris paribus.”
I am grateful to Merion West for its publication of Ben Burgis’s recent article making the case for democratic socialism. It gives me the opportunity, once again, to bash socialism. I shall consider, and refute, this author’s claim that socialism is better, more just, leads to greater prosperity, etc. by quoting from his essay and then indicating his errors.
Consider the following statement of his:
“I’m a democratic socialist. That means the core of my politics is about seeking to overcome the domination of society by wealthy interests. I want to empower the working class.”
Under pure laissez-faire capitalism, the system I defend against socialism, there is no force or fraud. Those are crimes. How is it supposed that the “wealthy interests” gain their station in the first place? There is one possibility—and only one possibility: They make an offer that the recipient of the offer “cannot refuse.” Why cannot he refuse? This has nothing to do with The Godfather. He cannot refuse because it is not in his best interest to refuse. For example, suppose we start off under a system of perfect financial equality. All people in the society have the same amount of money. They are all independent entrepreneurs, each one working solely for himself. Each is as productive as every other person. However, A saves part of his funds and B does not. A then offers B an employment contract. “Come work for me,” says the former to the latter, “and I will pay you $X.” $X is more than B can earn for himself on his own, so he agrees.
How can A afford to pay B this amount of money? Where is this extra productivity coming from? It emanates from economies of scale. The two of them, A and B, working together—B under the direction of A in this case— can produce more than double the amount of goods and services than each one can do so on his own. The point here is that there is no exploitation of any kind going on here. Each and every commercial interaction in the marketplace is one of mutual benefit. A pays B $X, but he earns $Y from this deal, where the latter is greater than the former. A sells the product that he and B have produced to C at the price of $Z. C agrees to the purchase. Why? That is because C values the product at a higher level and, thus, earns a profit on the deal. Without any exception, all commercial activity is mutually beneficial, at least in the ex-ante sense, and usual ex post as well (I buy a pair of shoes for $50. At that time, ex ante, I necessarily valued it at more than that amount; otherwise I would not have made the purchase. Later on, ex post, I may come to regret this decision.).
Next in the batter’s box is this contribution to political economy
“…cash-strapped diabetics sometimes die in the United States when they try to ration their insulin, while, as far as I know, this is not something that happens in, for example, Canada, the United Kingdom, Norway, or Sweden.”
One problem with the foregoing is that, at least in the first mentioned of these four countries, the waiting lists for medical service are horrendous. In Canada, horses wait less time for a veterinarian than do human patients for a doctor. A more serious problem is the very comparison. Burgis writes as if the United States is a purely capitalist society, whereas the other four are examples of socialism. Neither claim is true.
I am not here to defend the United States as an exemplar of the laissez-faire system I advocate. I only favor the pure version of this system, not an admixture of it with strong socialist and fascist elements. My claim is that capitalism leads to greater prosperity and is more just than socialism. However, as long as Burgis raises the issue of international comparisons in this regard, he might want to consult some empirical evidence that finds a strong positive relationship not only between economic freedom and per capita income but also between economic freedom and the growth in per capita income. According to that tried and true statement, “wealthier is healthier.” Free enterprise leads to greater wealth and, thus, to greater health and longevity, ceteris paribus.
In the hard sciences, controlled experiments are possible. This occurs not at all in any of the social sciences, such as economics. But sometimes, on rare occasions, we approach this possibility. East and West Germany are a case in point. This applies also to North and South Korea. Even today, many years after the split, there are lights that can be seen from an airplane in the latter but not in the former. The people in both of those territories shared the same language, culture, and history. Presumably, they had the same productivity, ability, intelligence level, ability to plan for the future, etc. However, due to an act of war, an accident as it were at least from the strict and narrow economic point of view, they were split asunder. One of them followed a socialist path and the other one of capitalism. We all know the results of that episode. East Germany became an economic basket case. People were desperate to move west. They were killed trying to do so. Case closed. QED.
Why cannot Burgis see this? Why does he still embrace socialism? He is an intelligent man. I can vouch for this characteristic of his. Albert Einstein was also a socialist. He was also a gifted intellectual. I cannot vouch for him, since I know little of his field of specialty, but I am willing to accept the views of many others on this matter.
According to this world class physicist, Burgis’s mentor in this regard: “I am convinced there is only one way to eliminate these grave evils, namely through the establishment of a socialist economy, accompanied by an educational system which would be oriented toward social goals. In such an economy, the means of production are owned by society itself and are utilized in a planned fashion. A planned economy, which adjusts production to the needs of the community, would distribute the work to be done among all those able to work and would guarantee a livelihood to every man, woman, and child.”
I suggest that the answer to the puzzle of how smart people can believe this balderdash has to do with sociobiology, in modern politically correct terminology, evolutionary psychology. There are some people, such as Burgis and Einstein, who are very intelligent but who are biologically limited, constrained, even, to support socialism despite all the evidence in the world that it is unfair, unproductive, and to reject capitalism, even though it leads to prosperity, which they strongly favor. They are in effect hard wired to take this position, no matter that logic and evidence lead in other directions. For some of us, such as the present author, our hard wiring in the direction of socialism is only so deep. It can be overcome by reason (I started out my political career as a fan of my high school classmate Bernie Sanders. But I was able to overcome my socialist egalitarian hard wiring. Biological hard wiring in favor of socialism can indeed be strong. It is a little late for Einstein, but I have hopes for Ben Burgis.). For others, alas, it cannot.
One last consideration: Egalitarianism is at the core of socialism. Advocates of this system cannot abide vast divergences in wealth and prosperity among individuals, races, genders, nations. This, too, is a vestige of our early experiences as hunter gatherers, as the socio-biologists have uncovered.
The best remedy for this intellectual blunder is the libertarian philosopher Robert Nozick’s Wilt Chamberlain example. This star basketball player announces he is willing to exhibit his skills for a small sum of money. At this time, there is perfect equality. Everyone has the same amount of money, down to the last dime. But thousands of people are willing to pay to see Chamberlain in action. At the end of this exercise, the masses have gained the satisfaction of seeing this athletic event more than it cost them, but Chamberlain is immeasurably richer than everyone else. What is the egalitarian of the ilk of Burgis to do if he were in charge (Socialists have a tendency to be more than willing to run other people’s lives.)? He has only so many choices. One, forbid this superb athlete from making this offer in the first place. Two, compel him to return all the money he has collected from his customers. Three, give up on egalitarianism. I know not how Burgis will answer this query, but I know he will not give up the third option. This man has his principles, no matter how misbegotten then are.
Walter Block, an Austrian school economist and anarcho-libertarian philosopher, is Harold E. Wirth Eminent Scholar Chair in Economics and Professor of Economics at Loyola University New Orleans. He was formerly a Senior Fellow at Mises Institute.
