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{{Socialism}}
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{{about|criticism of socialist economic systems and political movements|criticism of Communist states|Criticism of Communist party rule|criticism of Marxism, a branch of socialism|Criticism of Marxism|criticism of social democracy and welfare capitalism|Criticism of welfare}}
'''Criticisms of ]''' range from disagreements over the efficiency of socialist economic and political models, to condemnation of ] described by themselves or others as "socialist." Many ] dispute that the ] distribution of wealth advocated by socialists can be achieved without loss of political or economic freedoms. There is much focus on the economic performance and human rights records of ]s, although some proponents of socialism reject the categorization of such states as socialist.
] titled ''Socialism and Cholera'', depicting what Vernet thought were two ills that were plaguing France during the mid-19th century]]
{{socialism sidebar}}
'''Criticism of socialism''' is any critique of ] and ] models of organization and their feasibility, as well as the political and social implications of adopting such a system. Some critiques are not necessarily directed toward socialism as a system but rather toward the ], ], or existing ]. Some critics consider socialism to be a purely theoretical concept that should be criticized on theoretical grounds, such as in the ] and the ], while others hold that certain historical examples exist and that they can be criticized on practical grounds. Because there are many ], most critiques are focused on a specific type of socialism, that of the ] and the experience of ] that may not apply to all forms of socialism as different models of socialism conflict with each other over questions of property ownership, economic coordination and how socialism is to be achieved. Critics of specific models of socialism might be advocates of a different type of socialism.


According to the ] economist ], an economic system (specifically centralized economic planning) that does not use money, financial calculation, and market pricing would be unable to effectively value capital goods and coordinate production, and therefore in his view socialism is impossible because it lacks the necessary information to perform economic calculation in the first place.<ref>Von Mises, Ludwig (1936) . '']'' (English ed.). p. 119.</ref><ref name="Mises">{{cite book|title=Economic Calculation in the Socialist Commonwealth|access-date=8 September 2008|last=Von Mises|first=Ludwig|author-link=Ludwig von Mises|year=1990|publisher=Mises Institute|url=https://mises.org/pdf/econcalc.pdf}}</ref> Another central argument leveled against socialist systems based on economic planning is based on the use of dispersed knowledge. Socialism is unfeasible in this view because information cannot be aggregated by a central body and effectively used to formulate a plan for an entire economy, because doing so would result in distorted or absent price signals; this is known as the economic calculation problem.<ref name="hayek">F. A. Hayek, (1935), "The Nature and History of the Problem" and "The Present State of the Debate," in F.A. Hayek, ed. ''Collectivist Economic Planning'', pp. 1–40, 201–243.</ref> Other economists criticize models of socialism based on ] for their reliance on the faulty and unrealistic assumptions of ] and ].<ref>{{cite book|last=Stiglitz|first=Joseph|title=Whither Socialism|publisher=MIT Press|year=1996|isbn=978-0262691826}}</ref>
Socialism itself is by no means a monolithic movement; there are important points of disagreement between its several branches. Therefore, some of the criticisms presented below may not apply to all forms of socialism (for example, many of the economic criticisms are directed at a ]-style ], while some proposed socialisms advocate different methods of economic planning, and others reject planned economics altogether).


Some philosophers have criticized the aims of socialism, arguing that equality erodes away at individual diversities and that the establishment of an equal society would have to entail strong coercion.<ref name="Self">Self, Peter. ''Socialism. A Companion to Contemporary Political Philosophy'', editors Goodin, Robert E. and Pettit, Philip. Blackwell Publishing, 1995, p. 339 "Extreme equality overlooks the diversity of individual talents, tastes and needs, and save in a utopian society of unselfish individuals would entail strong coercion; but even short of this goal, there is the problem of giving reasonable recognition to different individual needs, tastes (for work or leisure) and talents. It is true therefore that beyond some point the pursuit of equality runs into controversial or contradictory criteria of need or merit".</ref> Many critics point to the ] as an indictment of socialism; some socialists respond that they were aberrations, point to mass deaths they argued were caused by capitalism and imperialism, and some say that they are not the socialist model they support. ] and ] view ] of the ] and the market exchange as natural entities or moral rights which are central to their conceptions of freedom and liberty and view the economic dynamics of ] as immutable and absolute. As a result, they perceive ] of the means of production and ] as infringements upon liberty.<ref name="milton">{{cite web|url=http://www.sangam.org/taraki/articles/2006/11-25_Friedman_MGR.php?uid=2075|title=On Milton Friedman, MGR & Annaism|publisher=Sangam.org|access-date=30 October 2011}}</ref><ref name="Bellamy, Richard 2003 60">{{cite book|author=Bellamy, Richard|title=The Cambridge History of Twentieth-Century Political Thought|publisher=Cambridge University Press|year=2003|isbn=978-0521563543|page=60}}</ref>
==Incentives==


== Critique of centralized planning ==
According to its supporters, a profit system is a monitoring mechanism which continually evaluates the economic performance of every business enterprise. In theory, under capitalism the firms that are the most efficient and most successful at meeting consumer demand are rewarded with profits. Firms that operate inefficiently and fail to serve the perceived public interest are penalized with losses.
=== Distorted or absent price signals ===
] chart: political intervention in the creation of prices on a ] through ] leads to a deviation from the ], according to socialism's critics, causing a multitude of undesirable side effects.]]
The ] is a criticism of ] which exists in some forms of socialism. It was first proposed in 1854 by the Prussian economist ].<ref>{{cite book|last1=Gossen|first=Hermann Heinrich|title=Entwickelung der Gesetze des menschlichen Verkehrs, und der daraus fließenden Regeln für menschliches Handeln|trans-title=Development of the laws of human intercourse, and the rules following therefrom for human action|location=Braunschweig, (Germany)|publisher=Friedrich Vieweg und Sohn|date=1854|language=de|page=231|url=https://books.google.com/books?id=BzFGAAAAYAAJ&pg=PA231}} "... nur durch Feststellung des Privateigenthums ... deren Lösung die Kräfte einzelner Menschen weit übersteigt." ("... only through the establishment of private property is to be found the measure for determining the quantity of each commodity which it would be best to produce under given conditions. Therefore, the central authority proposed by the communists for the distribution of the various tasks and their reward, would very soon find that it had undertaken a task the solution of which far exceeds the abilities of individual men.")</ref><ref>{{cite book|last1=Gossen|first1=Hermann Heinrich|last2=Blitz|first2=Rudolph C., trans.|title=The Laws of Human Relations and the Rules of Human Action Derived Therefrom|date=1983|publisher=MIT Press|location=Cambridge, Massachusetts, USA}}</ref><ref name="Mises & Kahane">{{cite book|last1=Mises|first1=Ludwig von|last2=Kahane|first2=J., trans.|title=Socialism: An Economic and Sociological Analysis|location=Indianapolis, Indiana|publisher=Liberty Fund|date=1981| page=117}}</ref> It was subsequently expounded in 1902 by the Dutch economist ],<ref>{{cite journal|last1=Pierson |first1=Nicolaas|title=Het waarde-probleem in een socialistische maatschappij|journal=De Economist|date=June 1902|volume=51|pages=421–456|doi=10.1007/BF02286704|s2cid=154882112|url=https://babel.hathitrust.org/cgi/pt?id=hvd.hnnvnu;view=1up;seq=433|trans-title=The problem of value in a socialist society|language=nl}}</ref><ref>{{cite book|last1=Pierson|first1=Nicolaas|editor1-last=Hayek|editor1-first=Friedrich|title=Collectivist Economic Planning|date=1963|publisher=Routledge & Paul Kegan|location=London, England|pages=41–85|chapter=The problem of value in the socialist society}}</ref> in 1920 by ]<ref name="Mises"/><ref name="Mises & Kahane"/> and later by ].<ref>F.A. Hayek, (1935), "The Nature and History of the Problem" and "The Present State of the Debate," in F.A. Hayek, ed. ''Collectivist Economic Planning'', pp. 1–40, 201–243.</ref> The problem referred to is that of how to distribute resources ] in an economy. The ] relies on the ], wherein people individually have the ability to decide how resources should be distributed based on their willingness to give money for specific goods or services. The price conveys embedded information about the abundance of resources as well as their desirability (]) which in turn allows—on the basis of individual consensual decisions—corrections that prevent ] and ]. Mises and Hayek argued that this is the only possible solution and without the information provided by market prices socialism lacks a method to rationally allocate resources. Those who agree with this criticism argue it is a refutation of socialism and that it shows that a socialist planned economy could never work. The debate raged in the 1920s and 1930s and that specific period of the debate has come to be known by ]s as "the Socialist Calculation Debate".<ref name="School">{{cite web|url=http://cepa.newschool.edu/het/essays/paretian/social.htm|title=The socialist calculation debate|access-date=3 April 2007|last=Fonseca|first=Gonçalo L.|year=2000s|publisher=HET|quote=The information here has not been reviewed independently for accuracy, relevance and/or balance and thus deserves a considerable amount of caution. As a result, I would prefer not to be cited as reliable authorities on anything. However, I do not mind being listed as a general internet resource.|url-status=dead|archive-url=https://web.archive.org/web/20090218142504/http://cepa.newschool.edu/het/essays/paretian/social.htm|archive-date=18 February 2009}}</ref>


Mises argued in a famous 1920 article "]" that the pricing systems in socialist economies were necessarily deficient because if government owned the means of production, then no prices could be obtained for ] as they were merely internal transfers of goods in a socialist system and not "objects of exchange", unlike final goods, therefore they were unpriced and hence the system would be necessarily inefficient since the central planners would not know how to allocate the available resources efficiently.<ref name="School"/> This led him to declare "that rational economic activity is impossible in a socialist ]".<ref name="Mises"/> Mises developed his critique of socialism more completely in his 1922 book '']''.<ref>Von Mises, Ludwig (1936). ''Socialism: An Economic and Sociological Analysis'' (English ed.). London: Jonathan Cape. {{oclc|72357479}}.</ref>
By rewarding success and penalizing failure, the profit system provides a strong disciplinary mechanism which continually redirects resources away from weak, failing, and inefficient firms toward those firms which are the most efficient and successful at serving the consumer demands of their corresponding market segment. A competitive profit system ensures a constant re-optimization of resources and moves the economy toward greater levels of efficiency. Unsuccessful firms cannot escape the strong discipline of the marketplace under a profit/loss system. Competition forces companies to profit (which advocates of capitalism tend to equate with serving the public interest) or suffer the consequences.


Mises argued that a socialist system based upon a planned economy would not be able to allocate resources effectively due to the lack of price signals. Because the means of production would be controlled by a single entity, approximating prices for capital goods in a planned economy would be impossible. His argument was that socialism must fail economically because of the economic calculation problem—the impossibility of a socialist government being able to make the economic calculations required to organize a complex economy. Mises projected that without a ] there would be no functional ] which he held essential for achieving rational and efficient allocation of capital goods to their most productive uses. According to Mises, socialism would fail as demand cannot be known without prices. These arguments were elaborated by subsequent Austrian economists such as Hayek<ref name="hayek"/> and students such as ]. In 1977, Hayek argued that "prices are an instrument of communication and guidance which embody more information than we directly have" and "the whole idea that you can bring about the same order based on the division of labor by simple direction falls to the ground. ... f you need prices, including the prices of labor, to direct people to go where they are needed, you cannot have another distribution except the one from the market principle".<ref>. ] interviewed by Thomas W. Hazlett for '']''.</ref>
In a ], there is no profit-and-loss system of accounting to accurately measure the success or failure of various programs. Without profits, critics argue, there is no way to discipline firms that fail to serve the public interest and no way to reward firms that do. Therefore, they claim that centrally planned economies do not have an effective incentive structure to coordinate economic activity. ] made this point in ''How We Survived Communism & Even Laughed'',<ref>ISBN 0-06-097540-7</ref> where she argued that a major contributor to the fall of socialist planned economies in the former Soviet bloc was the failure to produce the basic consumer goods that its people desired. She argues that, because of the makeup of the leadership of these regimes, the concerns of women got particularly short shrift. She illustrates this, in particular, by the system's failure to produce ]s.


Hungarian economist ] has written that "the attempt to realize market socialism ... produces an incoherent system, in which there are elements that repel each other: the dominance of public ownership and the operation of the market are not compatible".<ref>{{cite book|url=https://books.google.com/books?id=9HOIGdNK_EoC&q=the+attempt+to+realize+market+socialism&pg=PA7|first=Bertell|last=Ollman|title=Market Socialism: The Debate Among Socialists|author2=David Schweickart|year=1998|publisher=Routledge|isbn=978-0415919661|page=7}}</ref>
In response, most socialists claim that the incentives in a socialist planned economy should come from the democratic nature of the system. Economic planners are supposed to have an interest in doing a good job and delivering what the people need because that ensures the people will keep voting for them in elections, while if the planners are doing a bad job and the economy is stagnating, the people would vote them out of office and elect a new government with a new economic plan.


Proponents of '']'' ] argue that although private monopolies do not have any actual competition, there are many ] watching them and if they were delivering inadequate service, or charging an excessive amount for a good or service, investors would start a competing enterprise.<ref> by ]</ref><ref> by ].</ref> The ] economist ] argues that in the absence of prices for the means of production, there is no cost-accounting which would direct labor and resources to the most valuable uses.<ref>Hans-Hermann Hoppe. A Theory of Socialism and Capitalism {{Webarchive|url=https://web.archive.org/web/20081216212917/http://www.mises.org/etexts/Soc%26Cap.pdf|date=16 December 2008}}. Kluwer Academic Publishers. p. 46 in PDF.</ref> According to ], "ithout a market in which allocations can be made in obedience to the law of supply and demand, it is difficult or impossible to funnel resources with respect to actual human preferences and goals".<ref name=tibor2001>Machan, R. Tibor, , Hoover Press.</ref>
Drakulic lived under a system that was not a democratic one, and it can be argued that the planners had no incentive to cater to the needs of the people. Some socialists do not consider such an undemocratic system to be socialist at all. As a corollary to this argument, socialists claim that inefficient planned economies can only exist for prolonged periods in undemocratic conditions, where the people cannot reward or penalize the state for its performance.


According to economist ]: "The loss part is just as important as the profit part. What distinguishes the private system from a government socialist system is the loss part. If an entrepreneur's project doesn't work, he closes it down. If it had been a government project, it would have been expanded, because there is not the discipline of the profit and loss element".<ref>. 31 July 1991. Stanford, CA {{webarchive|url=https://web.archive.org/web/20070216012207/http://www.achievement.org/autodoc/printmember/fri0int-1|date=16 February 2007}}</ref>
All forms of socialism advocate a very ] distribution of wealth. A few argue for complete economic equality, while most socialists wish to create a society in which differences of wealth are small, but not necessarily zero.


Proponents of ] argue that it is impossible to make accurate long-term predictions for highly complex systems such as an economy.<ref>{{cite web|url=http://www.phil.uu.nl/~janb/phloofin/eclog.html|title=Archived copy|access-date=3 April 2007|url-status=dead|archive-url=https://web.archive.org/web/20070105024440/http://www.phil.uu.nl/~janb/phloofin/eclog.html|archive-date=5 January 2007}}</ref>
Critics of those forms of socialism which advocate complete economic equality have argued that in any society where everyone holds equal wealth there can be no material incentive to work, because one does not receive rewards for a work well done. They further argue that incentives increase productivity for all people and that the loss of those effects would lead to stagnation. ] in ''The Principles of Political Economy'' (1848) said: "It is the common error of Socialists to overlook the natural indolence of mankind; their tendency to be passive, to be the slaves of habit, to persist indefinitely in a course once chosen. Let them once attain any state of existence which they consider tolerable, and the danger to be apprehended is that they will thenceforth stagnate; will not exert themselves to improve, and by letting their faculties rust, will lose even the energy required to preserve them from deterioration. Competition may not be the best conceivable stimulus, but it is at present a necessary one, and no one can foresee the time when it will not be indispensable to progress."<ref>Mill, John Stuart. ''The Principles of Political Economy'', Book IV, Chapter 7</ref>


] raises similar calculational issues in his '']'', but he also proposes certain voluntary arrangements which would also require economic calculation.<ref>Proudhon, Pierre J. ''General Idea of the Revolution in the 19th Century'', third study.</ref> ], a fierce proponent of ], argued that centralized economic planning would be "insoluble without the daily experience of millions, without their critical review of their own collective experience, without their expression of their needs and demands and could not be carried out within the confines of the official sanctums" and "ven if the Politburo consisted of seven universal geniuses, of seven Marxes, or seven Lenins, it will still be unable, all on its own, with all its creative imagination, to assert command over the economy of 170 million people".<ref>''Writings, 1932–33'' p. 96, Leon Trotsky.</ref> In contrast to the lack of a marketplace, ] can be viewed as an alternative to the traditional socialist model. Theoretically, the fundamental difference between a traditional socialist economy and a market socialist economy is the existence of a market for the means of production and capital goods.<ref>{{cite book|last=O'Hara|first=Phillip|title=Encyclopedia of Political Economy, Volume 2|publisher=]|year=2000|isbn=978-0415241878|page=71|quote=Market socialism is the general designation for a number of models of economic systems. On the one hand, the market mechanism is utilized to distribute economic output, to organize production and to allocate factor inputs. On the other hand, the economic surplus accrues to society at large rather than to a class of private (capitalist) owners, through some form of collective, public or social ownership of capital.}}</ref><ref>Buchanan, Alan E. (1985). ''Ethics, Efficiency and the Market''. Oxford University Press US. . {{ISBN|978-0-8476-7396-4}}.</ref><ref>Gregory, Paul R.; Stuart, Robert C. (2003) . ''Comparing Economic Systems in the Twenty-First Century''. Cengage Learning. p. 142. "It is an economic system that combines social ownership of capital with market allocation of capital. ... The state owns the means of production, and returns accrue to society at large". {{ISBN|0-618-26181-8}}.</ref> Socialist ] reply that while advocates of capitalism and the Austrian School in particular recognize ]s do not exist, they nonetheless claim that these prices can be used as a rational basis when this is not the case, hence markets are not efficient.<ref>{{cite book|editor-last=McKay|editor-first=Iain|title=An Anarchist FAQ|section=Is libertarian communism impossible?|publisher=]|location=Stirling|year=2008|isbn=978-1-902593-90-6|oclc=182529204}}</ref><ref>{{cite book|editor-last=McKay|editor-first=Iain|title=An Anarchist FAQ|section=Does capitalism efficiently allocate resources?|publisher=]|location=Stirling|year=2008|isbn=978-1-902593-90-6|oclc=182529204}}</ref> According to market abolitionists socialists, decentralized planning allows for a spontaneously self-regulating system of stock control (relying solely on ]) to come about and that in turn decisively overcomes the objections raised by the economic calculation argument that any large scale economy must necessarily resort to a system of market prices.<ref>Cox, Robin (2 March 2020) . . ''Socialism or Your Money Back''. Socialist Party of Great Britain. Retrieved 17 August 2020.</ref>
Those socialists who support absolute economic equality (specifically, some ] and some ]) have responded to this objection in various ways. A number of them argue for a society where high ] prevents laziness. Critics counter this with the argument that peer pressure might be effective in a small group with permanent interaction and where everybody knows each other, like among ], but see no evidence that it works well in larger, more complex societies with constantly changing groups.


=== Suppression of economic democracy and self-management ===
Peter Self critizes the traditional socialist planned economy and argues against pursuing "extreme equality" because he believes it requires "strong coercion" and does not allow for "reasonable recognition different individual needs, tastes (for work or leisure) and talents." He recommends ] instead.<ref name="Self">Self, Peter. ''Socialism''. A Companion to Contemporary Political Philosophy, editors Goodin, Robert E. and Pettit, Philip. Blackwell Publishing, 1995, p.339 "Extreme equality overlooks the diversity of individual talents, tastes and needs, and save in a utopian society of unselfish individuals would entail strong coercion; but even short of this goal, there is the problem of giving reasonable recognition to different individual needs, tastes (for work or leisure) and talents. It is true therefore that beyond some point the pursuit of equality runs into controversial or contradictory criteria of need or merit."</ref> The majority of socialists believe that a balance should be reached between equality, incentives and diversity, and feel confident that such a balance would still allow for a much greater degree of equality than capitalist societies currently have. Many socialists also argue that the importance of material incentives could be reduced, even if it is never fully eliminated.
Central planning is also criticized by elements of the radical left. Libertarian socialist economist ] notes that even if central planning overcame its inherent inhibitions of incentives and innovation, it would nevertheless be unable to maximize economic democracy and self-management, which he believes are concepts that are more intellectually coherent, consistent and just than mainstream notions of economic freedom.<ref name="Hahnel, Robin 2002">Hahnel, Robin. ''The ABC's of Political Economy'', Pluto Press, 2002, p. 262.</ref>


As Hahnel explains: "Combined with a more democratic political system, and redone to closer approximate a best-case version, centrally planned economies no doubt would have performed better. But they could never have delivered economic self-management, they would always have been slow to innovate as apathy and frustration took their inevitable toll, and they would always have been susceptible to growing inequities and inefficiencies as the effects of differential economic power grew. Under central planning neither planners, managers, nor workers had incentives to promote the social economic interest. Nor did impending markets for final goods to the planning system enfranchise consumers in meaningful ways. But central planning would have been incompatible with economic democracy even if it had overcome its information and incentive liabilities. And the truth is that it survived as long as it did only because it was propped up by unprecedented totalitarian political power".<ref name="Hahnel, Robin 2002"/>
All real-world societies that have called themselves "socialist" have preserved at least some small degree of economic inequality. Thus, the argument between socialists and their critics often becomes an argument on the ''extent'' of inequality that should exist, not an argument on the question of whether inequality should exist at all. Socialists argue for less inequality than their critics believe to be optimal. The critics of socialism often claim that introduction of measures for reducing inequality would also reduce incentives, and therefore productivity and total wealth would be reduced in turn.


== Critique of public enterprise ==
==Efficiency==
=== Slow or stagnant technological advance ===
] in 1976, member of the ] and a well-known opponent of socialism]]
Economist ] argued that socialism, by which he meant state ownership over the means of production, impedes technological progress due to competition being stifled. He noted that "we need only look to the United States to see where socialism fails" by observing that the "most technologically backward areas are those where government owns the means of production".<ref name="milton"/>


Friedman claimed that socialism advocated the abolition of a free markets and money- and risk-based reward systems, a claim disputed by some socialists. Friedman argues that without such a money- and risk-based reward system, many capitalist inventors, whom Friedman holds would nonetheless exist within socialism, would not risk time or capital for research. Friedman believed that this was one of the reasons for the United States patent system and ] law, arguing:
Critics of socialism insist that publicly owned organizations are less efficient than private companies (see ] for further discussion). A majority of socialists disagree with the notion that private companies serve the public interest. They argue that the profit/loss motive encourages companies to cut costs and raise profits in ways that do more harm than good to the public: a company will try to get the maximum work from its employees for the minimum amount of money, keeping wages as low as it can, and, as capitalists hold high concentrations of capital and may restrict access to vital resources, they claim that the workers are left with little bargaining power. Finally, since the rich have more money than the poor (and therefore there is more profit to be made in serving the rich rather than the poor), they claim capitalism encourages companies to cater to the interests of the rich and ignore the needs of the poor. They also point to ] companies that have little incentive to produce drugs to cure diseases such as ], which primarily affect poor countries that cannot afford to buy them, but those same companies devote huge resources to developing drugs for the relatively trivial complaints of the rich western consumers who can pay. Advocates of capitalism argue that most advances in the development of new drugs have been accomplished by capitalist economies.
<blockquote>Socialism has proved no more efficient at home than abroad. What are our most technologically backward areas? The delivery of first class mail, the schools, the judiciary, the legislative system—all mired in outdated technology. No doubt we need socialism for the judicial and legislative systems. We do not for mail or schools, as has been shown by Federal Express and others, and by the ability of many private schools to provide superior education to underprivileged youngsters at half the cost of government schooling. ...


We all justly complain about the waste, fraud and inefficiency of the military. Why? Because it is a socialist activity—one that there seems no feasible way to privatize. But why should we be any better at running socialist enterprises than the Russians or Chinese?
Supporters of capitalism argue that companies compete for workers and thus cannot give arbitrarily low wages. They also hold that companies that sell luxury products are few; most money is made by selling products to ordinary people in developed nations. However, socialists argue that since companies are also in competition with each other and thus attempt to cut costs in order to enhance their competitiveness there is an incentive to "downsize" the workforce and/or cut wages. Capitalists argue that competition is the driving force in improving the efficiency of the economy, which in turn leads to products and services being produced at increasingly lower costs, raising standards of living.


By extending socialism far beyond the area where it is unavoidable, we have ended up performing essential government functions far less well than is not only possible but than was attained earlier. In a poorer and less socialist era, we produced a nationwide network of roads and bridges and subway systems that were the envy of the world. Today we are unable even to maintain them.<ref name="milton" /></blockquote>
Regarding poor people in developing nations, capitalists assert that people in the democratic developed nations could vote to raise taxes in order to increase foreign aid or otherwise give much help voluntarily, almost everyone in developed nations being very wealthy in comparison to people in developing countries. They argue that the little interest among the public for such aid is not something capitalism can be blamed for. Furthermore, they argue that nations that are more capitalistic have less poverty (see ]). Socialists argue that the reduced poverty in developed countries is either due to ] of poorer nations, or to the extensive ]s that have been put in place in most of the developed countries.


=== Reduced incentives ===
==Prices==
]
''Main article: ]''
One criticism of socialism is that, in any society where everyone holds equal wealth, there can be no material incentive to work because one does not receive rewards for a work well done. They further argue that incentives increase productivity for all people and that the loss of those effects would lead to stagnation. Some critics of socialism argue that income sharing reduces individual incentives to work and therefore incomes should be individualized as much as possible.<ref>Zoltan J. Acs & Bernard Young. ''Small and Medium-Sized Enterprises in the Global Economy''. University of Michigan Press, p. 47, 1999.</ref>


In ''The Principles of Political Economy'' (1848), ] wrote:
Some forms of socialism propose to abolish markets entirely. All, or nearly all, advocate some form of governmental or other social interference with market prices. According to some of the critics of socialism, the ] in a market economy guides economic activity so flawlessly that most people don't appreciate its importance or see its effect. Free-market economists argue that a controlled or fixed price always transmits misleading information about relative scarcity and that inappropriate behavior results from a controlled price, because false information has been transmitted by an artificial price. For example, ] argued in 1977 that "prices are an instrument of communication and guidance which embody more information than we directly have", and therefore "the whole idea that you can bring about the same order based on the division of labor by simple direction falls to the ground". He further argued that "if you need prices, including the prices of labor, to direct people to go where they are needed, you cannot have another distribution except the one from the market principle."<ref>], . ] interviewed by ]</ref>
{{blockquote|It is the common error of Socialists to overlook the natural indolence of mankind; their tendency to be passive, to be the slaves of habit, to persist indefinitely in a course once chosen. Let them once attain any state of existence which they consider tolerable, and the danger to be apprehended is that they will thenceforth stagnate; will not exert themselves to improve, and by letting their faculties rust, will lose even the energy required to preserve them from deterioration. Competition may not be the best conceivable stimulus, but it is at present a necessary one, and no one can foresee the time when it will not be indispensable to progress.<ref>Mill, John Stuart. ''The Principles of Political Economy'', Book IV, Chapter 7.</ref>}}


Mill later altered his views and adopted a socialist perspective, adding chapters to his ''Principles of Political Economy'' in defense of a socialist outlook and defending some socialist causes.<ref>{{cite book|author1=Mill, John Stuart |author2=Benthem, Jeremy |editor=Ryan, Alan |title=Utilitarianism and Other Essays|publisher=Penguin Books|year=2004|location=London|isbn=978-0140432725|page=|url=https://archive.org/details/utilitarianismot00mill/page/11}}</ref> Within this revised work, he also made the radical proposal that the whole wage system be abolished in favour of a co-operative wage system. Nonetheless, some of his views on the idea of flat taxation remained, albeit in a slightly toned-down form.<ref name="stanford">{{cite encyclopedia|last=Wilson|first=Fred|title=John Stuart Mill: Political Economy|encyclopedia=Stanford Encyclopedia of Philosophy|publisher=]|year=2007|url=http://plato.stanford.edu/entries/mill/#PolEco|access-date=4 May 2009}}</ref>
In a market economy, business owners are constantly comparing costs to sales revenue. A business whose costs are higher than its revenues will go bankrupt, and the resources it was using will be re-allocated to other purposes (other businesses). In order to make economic decisions, business owners rely on the information provided by prices; millions of owners make millions of separate decisions, leading to decentralized resource allocation that, in the view of its supporters, is efficient. ] dubbed this effect the "invisible hand" of the market. Under socialism, it is the task of central planners to compare the costs and benefits of various kinds of economic activity. Critics of socialism hold that these central planners cannot see as much information or respond as rapidly as the more decentralized observations and decisions made by all people in a market economy.


== Reduced prosperity ==
Socialists opposed to the market generally argue that markets don't work nearly as well as thought. They point out that some people struggle to survive in capitalism while others have mansions, and that this itself is indicative of scarcity and evidence that free market pricing mechanisms are evidently not effective or equitable. Socialists also point out that many economists supporting capitalism acknowledge the existence of various ] that need to be regulated such as ] or ]. They also argue that the rules of the market may also be manipulated by those with more power.
] studies ].]]
Austrian school economist ] argued that countries where the means of production are nationalized are not as prosperous as those where the means of production are under private control ("prosperous" is defined in terms of GDP). However, not all socialists subscribe to the idea of nationalization, some preferring socialisation instead.<ref>Hans-Hermann Hoppe. . {{webarchive|url=https://web.archive.org/web/20081216212917/http://www.mises.org/etexts/Soc%26Cap.pdf|date=16 December 2008}}.</ref>


Another Austrian school economist, ], argued that aiming for more equal incomes through state intervention necessarily leads to a reduction in national income and therefore average income. Consequently, he says that the socialist chooses the objective of a more equal distribution of income on the assumption that the ] of income to a poor person is greater than that to a rich person. According to Mises, this mandates a preference for a lower average income over inequality of income at a higher average income. He sees no rational justification for this preference, and he also states that there is little evidence that the objective of greater income equality is achieved.<ref>], '']'', Indianapolis, IN: ] 1981, trans. J. Kahane, IV.30.21.</ref>
A planned economy tries to replace the invisible hand with a highly visible (and, according to socialists, more efficient) one. The claim is that a more rational result can be achieved by the efforts of economic coordinators rather than by market forces. While some socialists oppose a centrally planned economy, all advocate the overt inclusion of non-economic factors in determining economic decisions.


Mises also says: "The only certain fact about Russian affairs under the Soviet regime with regard to which all people agree is: that the standard of living of the Russian masses is much lower than that of the masses in the country which is universally considered as the paragon of capitalism, the United States of America. If we were to regard the Soviet regime as an experiment, we would have to say that the experiment has clearly demonstrated the superiority of capitalism and the inferiority of socialism".<ref>Von Mises, Ludwig (1947) . ''Socialism: An Economic and Sociological Analysis''. p. 76. "The only certain fact about Russian affairs under the Soviet regime with regard to which all people agree is: that the standard of living of the Russian masses is much lower than that of the masses in the country which is universally considered as the paragon of capitalism, the United States of America. If we were to regard the Soviet regime as an experiment, we would have to say that the experiment has clearly demonstrated the superiority of capitalism and the inferiority of socialism".</ref>
Socialists are sharply divided on the claim that market pricing produces allocative efficiency. There are ] who believe it is both possible and imperative that socialistic systems take this point into account. ], a ] professor in the US, has said that socialists must endorse the market because otherwise "everything in the economy is subject to political debate&mdash;every price, every product, every technology" and he says only two possible outcomes can result from this, "either ] or, more likely, the subtle or not so subtle shutting down of democratic input."


== Social and political effects ==
On the other hand, a ] economist, ], once a market socialist himself, modified his views subsequent to the fall of the Soviet system and its eastern European variants. Kornai has written that "the attempt to realize market socialism...produces an incoherent system, in which there are elements that repel each other: the dominance of public ownership and the operation of the market are not compatible."
], author of '']'']]
In '']'', ] argued that the more even distribution of wealth through the ] of the means of production cannot be achieved without a loss of political, economic, and human rights. He argued that to achieve control over means of production and distribution of wealth it is necessary for such socialists to acquire significant powers of ]. Hayek argued that the road to socialism leads society to ] and argued that ] and ] were the inevitable outcome of socialist trends in Italy and Germany during the preceding period. Thus, held Hayek, moving leftward from capitalism to socialism is actually moving rightward, from capitalism to fascism.<ref>Friedrich Hayek, ''The Road to Serfdom'', Routledge (2001), {{ISBN|0415255430}}.</ref> These ideas are encapsulated in the "]". A similar argument has been made by critics such as ], who hold that because the full German name of the German Nazi Party was ''Nationalsozialistische Deutsche Arbeiterpartei'', and because "Nationalsozialistische" translates to "National Socialism," fascism is actually a type of socialism, and so many socialists are Nazis.<ref>{{Cite web|url=https://www.theamericanconservative.com/articles/right-wing-celebrities-play-fast-and-loose-with-history/|title=Right-wing Celebrities Play Fast and Loose With History|last=Gottfried|first=Paul|authorlink=Paul Gottfried|website=]|date=27 December 2017 |language=en-US|access-date=27 September 2019}}</ref>


] criticizes the traditional socialist planned economy and argues against pursuing "extreme equality" because he believes it requires "strong coercion" and does not allow for "reasonable recognition different individual needs, tastes (for work or leisure) and talents". Self holds that while a socialist planned economy provides substantially greater freedom than is present in capitalism—under which the vast majority of people are coerced by the threat of starvation to work for the profit of a small capitalist class—adding markets to socialism improves freedom and efficiency. Accordingly, Self recommends ] instead of either capitalism or non-market socialism.<ref name="Self"/> Philosopher ] has described similar views.
A capitalist opponent of socialism would argue that both Schweickart and Kornai are right&mdash;that markets are both a necessity and an impossibility for a socialism that would be humane, sustainable, and allocatively efficient.


] of the conservative ] (AEI) argued that socialism means giving up freedom for more security. Perry also argued that "Socialism is the Big Lie of the twentieth century. While it promised prosperity, equality, and security, it delivered poverty, misery, and tyranny. Equality was achieved only in the sense that everyone was equal in his or her misery."<ref>{{Cite web |last=Perry |first=Mark |date=2016-03-22 |title=Why Socialism Always Fails |url=https://www.aei.org/carpe-diem/why-socialism-always-fails/ |access-date=2023-06-20 |website=American Enterprise Institute – AEI |language=en-US}}</ref>
On the other hand, socialists who do reject the market mechanism of pricing make the following claims:


Critics of socialism cite the Soviet Union and ] as examples of countries where socialism has failed.<ref name=":0">{{Cite web |date=7 October 2019 |title=Americans' Views of 'Socialism' and 'Capitalism' In Their Own Words |url=https://www.pewresearch.org/politics/2019/10/07/in-their-own-words-behind-americans-views-of-socialism-and-capitalism/ |access-date=26 March 2022 |website=Pew Research Center |language=en-US}}</ref><ref name=":1">{{Cite news |last=Robinson |first=Nathan J. |date=6 July 2018 |title=3 Arguments Against Socialism And Why They Fail |language=en |work=Current Affairs |url=https://www.currentaffairs.org/news/2018/07/3-arguments-against-socialism-and-why-they-fail |access-date=19 September 2022 |issn=2471-2647}}</ref>
* That capitalism has a natural tendency toward ] or ] in major industries, leading to a distortion of prices.<ref>As argued, for example, in the 2001 Program of the Communist Party of Canada </ref> Assuming monopoly to be inevitable, these socialists go on to argue that a public monopoly is better than a private one. Proponents of capitalism respond to this by saying that although private monopolies don't have any actual competition, there are many ] watching them, and if they were underperforming, investors would start a competing enterprise.<ref>, by ]</ref><ref>, by ]</ref>
* That market systems are distorted by the unequal power of the players in the markets. Globalissues.org editor, Anup Shah (a leftist, though not necessarily a socialist) makes this case, suggesting that the current neo-liberal order might be better called "]" and applying to it Adam Smith's critique of how military power distorted trade under ].
* That one or another socialist approach can mitigate the role of ] in pricing, producing results at least as efficient as those under capitalism. This was basically the argument put forward by ] and the ]s ; ''see also ]''.


==The tragedy of the commons== == Claims of leadership corruption ==
]
{{main|Tragedy of the commons}}
Some critics of socialism see socialism as a type of political state organization instead of as a type of socioeconomic structure (as is traditional). These thinkers generally criticize what they term "socialist states" rather than "socialism."


] argued that the absence of private economic activity would enable political leaders to grant themselves coercive powers, powers that, under a capitalist system, would instead be granted by a capitalist class, which Friedman found preferable.<ref name="Bellamy, Richard 2003 60"/> In his campaign against Labour candidate ] in the ], ] claimed that socialism requires totalitarian methods, including a political police, to achieve its goals.<ref>]. ''Friedrich Hayek: A Biography.'' (2003). University of Chicago Press. {{ISBN|0226181502}} p. 137.</ref>
The ], in its narrowest sense, refers to the situation of certain grazing lands communally owned by ] villages in the ]. These lands were made available for public use (or, more precisely, the use of those with rights in that common land). According to ] and others, because each individual had more of an incentive to maximize his (or her) own benefit from this common land than to be concerned for its sustainability, the land was eventually overgrazed and became worthless. (However, studies by ] and others have largely refuted the claim that any such tragedy actually occurred. Access to the commons in the 16th century was constrained by a variety of cultural protocols and was far from equal.)


== Mass killings ==
More generally, the line of argument is that when assets are owned in common, there are no incentives in place to encourage wise stewardship. While private property is said to create incentives for conservation and the responsible use of property, common property is said to encourage irresponsibility and waste. In other words, the argument is that if everyone owns an asset, people act as if no one owns it. And when no one owns it, no one really takes care of it. This is an argument directed at ] and other proposed forms of socialism where there is little or no central authority to act as a steward of public property. Planned economies avoid the tragedy of the commons by placing the state in charge of the use of resources owned in common.
{{Main|Mass killings under communist regimes}}{{multiple image
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| footer = ], ], and ] were nominal socialist leaders who committed mass killings during the 20th century.
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Many commentators on the political right point to the ] under communist regimes, claiming them as an indictment of socialism.<ref>{{Cite web|last=Piereson|first=James|title=Socialism as a hate crime|url=https://newcriterion.com/blogs/dispatch/socialism-as-a-hate-crime-9746|access-date=22 October 2021|website=newcriterion.com|language=en}}</ref><ref name="saed">{{Cite journal|first=Salvatore|last=Engel-DiMauro|date=2 January 2021|title=Anti-Communism and the Hundreds of Millions of Victims of Capitalism|url=https://doi.org/10.1080/10455752.2021.1875603|journal=Capitalism Nature Socialism|volume=32|issue=1|pages=1–17|doi=10.1080/10455752.2021.1875603|s2cid=233745505|issn=1045-5752}}</ref><ref>{{Cite news|last=Satter|first=David|date=6 November 2017|title=100 Years of Communism – and 100 Million Dead|language=en-US|work=Wall Street Journal|url=https://www.wsj.com/articles/100-years-of-communismand-100-million-dead-1510011810|access-date=22 October 2021|issn=0099-9660}}</ref> '']'' has been one of the most elaborate popular works to make this point.<ref name="Dennis_et.al_2003">{{cite book|author1=Ronit Lenṭin|author2=Mike Dennis|author3=Eva Kolinsky|title=Representing the Shoah for the Twenty-first Century|publisher= Berghahn Books|year=2003|isbn=978-1-57181-802-7|page=217}}</ref>


Defenders of socialism state that the mass killings under communist regimes were aberrations caused by specific authoritarian regimes and not caused by socialism itself.<ref name="saed" /><ref name="Bevins2020">{{cite book |last1=Bevins |first1=Vincent |title=] |date=2020 |publisher=] |isbn=978-1541742406 |pages=238–240 |authorlink=Vincent Bevins}}</ref> ], editor-in-chief of the left-wing progressive '']'' magazine, has defended socialism from criticism, arguing of "a ] tradition that has always been strongly opposed to the authoritarian 'socialism' that many governments have espoused".<ref name=":1" />
One libertarian socialist counterargument is that the tragedy of the commons is an inherently ] issue that can be resolved through proper education&mdash;that is, by creating a culture where people are respectful of common property and do not act as if no one owns it.


== See also ==
On a related note, many socialists point out that some things are almost inevitably commons, for example ] and ]. Paul Burkett makes a specifically Marxist case for socialism as being better able to address the issue of managing the environment in an article entitled "Ecology and Marx&#8217;s Vision of Communism" in ''Socialism and Democracy'', Vol. 17, No. 2 .
{{div col|colwidth=20em}}
* ]
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* ]
* ]
* ]
* ]
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* '']''
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== References ==
Critics respond that air and oceans are indeed commons and that problems such as overfishing and global warming due to pollution can be traced to this fact. In economic terms, air and sea pollution are cases of ] due to ] (market agents do not pay the full costs of their actions). While most ] propose to solve such problems through government regulations, there is also a theory of ], which argues that the most effective direction of reform is continued privatization of the commons . The United States, and some others nations, have experimented with market solutions in the form of ] in order to reduce air pollution. Such trading uses an artificially created market in which a government decides the number of emissions credits that will be in circulation and the rules under which they may be traded.
{{reflist}}


== Further reading ==
Lastly, there is a body of thought, often linked to ] and to modern ], that recognises that constraints must exist to prevent the private overuse of resources. However, this perspective contends that alternative institutions than private property might well be just as effective or more effective in meeting those goals and better suited to meeting social goals. This was the belief of many early Bolsheviks, particularly ], who evoked this idea to make his case that a socialist state would need regulations.
* {{cite book|last=Hayek|first=Friedrich|author-link=Friedrich Hayek|title=The Fatal Conceit: The Errors of Socialism|publisher=University of Chicago Press|year=1988|isbn=978-0226320687|url=https://archive.org/details/fatalconceiterro00haye}}
* {{cite book|last=Hayek|first=Friedrich|author-link=Friedrich Hayek|title=Socialism and War: Essays, Documents, Reviews|publisher=University of Chicago Press|year=1997|isbn=978-0226320588}}


* Minehan, Philip B. ''Anti-Leftist Politics in Modern World History: Avoiding "Socialism" at All Costs'' (Bloomsbury Academic, 2022)
==Central Planning==
Even anarchist socialists usually advocate some form of coordination so that different groups of workers function smoothly together (whether on a local or global scale). Critics of socialism argue that it is not possible to vote on everything, if for no other reason than that information gathering, discussion, and voting takes time; therefore, theoretically, some power must be given to leaders, at least temporarily.


{{socialism}}
Large scale central planning (and anarchist coordination) requires an understanding of trends and statistics. Critics argue that it is often impossible to make long term predictions (eg. ]) based on current trends and numbers. They further argue that a capitalist system solves this problem by simultaneously trying multiple solutions and letting economic competition find the best result. Central planning means that relatively fewer solutions will be chosen, and those that will will be based on numbers. Arguably, these solutions may be less effective due to a lack of variety in the number of options available.

==Historical Examples==
Due to the existence of several branches of the socialist movement, who advocate different kinds of social and economic systems they call "socialism", there is no consensus on what countries, if any, can be given as historical examples of socialism.

The two kinds of countries most commonly said to be "socialist" are ]s on the one hand and Northern European ]s (e.g. ]) on the other. Within the socialist movement, views are divided as follows:
*] argue that some or all of the historical Communist states were examples of socialism.
* ] argue that historical Communist states were not socialist, but ]s or examples of ].
*] argue that welfare states are examples of socialism.
*Some ] argue that short-lived political entities such as the ] or anarchist areas in Spain during the ] were examples of socialism.
*Other socialists argue that none of the above examples were socialist, and that socialism has never been applied in practice.

Different critics of socialism also hold different views on the subject. Some consider socialism to be a purely theoretical concept that should be criticized on theoretical grounds; others hold that certain historical examples exist and that they can be criticized on practical grounds.

Communist states are the object of a particularly virulent criticism, and there are numerous arguments over their historical records on standards of living, economic growth, and particularly human rights. Critics claim that Communist states provided low standards of living and committed numerous human rights violations, including millions of deaths caused directly or indirectly by the government. Estimates of the number of such deaths, in particular those that occurred in ] and the ], vary greatly depending on the source and methodology, with numbers ranging from under 30 million to 145 million worldwide over the course of the last ninety years. Proponets of socialism often focus on two aspects: first, the accuracy of the statistics themselves, and second, whether socialists or socialism can be blamed for the deaths in question. As indicated above, there is widespread disagreement amongst socialists as to whether Communist states can legitimately be described as socialist. Many victims of these states have themselves been socialists, for example during Stalin's ] of the 1930s. Critics of socialism, in turn, will often criticize the internal conflicts of the socialist movement as creating a sort of "responsibility void." Advocates of Communist states claim that their standards of living and human rights records were better (or no worse) than those of the regimes that preceded them, and that they achieved rapid industrialization and economic growth. Critics argue that the Soviet Union experienced a severe economic downturn in the 1970s and 80s which contributed to its collapse, and that China has been reforming since towards a more market-oriented economy.

For extensive coverage of the debates surrounding criticisms of communism and Communist states, see '']'' and '']''.

Some ] communes have also been criticized. For instance, the ] states that priests and other religious persons were killed by mobs or by order of the leaders of the ]. Others have accused ] fighting in the ], of atrocities committed in regions under their control.
<ref>In particular, {{cite book | first=Burnett | last=Bolloten | year=1991 | title=The Spanish Civil War: Revolution and Counterrevolution | publisher=University of North Carolina Press | location=Chapel Hill, NC | id= }}</ref>

==See also==
*]
*]
*]
*]

==Further reading==
*{{cite book|author=]|title=|publisher=Liberty Fund|year=1922| id=ISBN 0-913966-63-0}}
*{{cite book|author=]|title=]|publisher=University Of Chicago Press; 50th Anniversary edition |year=1944|id=ISBN 0-226-32061-8}}
*{{cite book|author=]|title=]|publisher=University Of Chicago Press |year=1988|id=ISBN 0-226-32068-5}}
*{{cite book|author=]|title=]|publisher=University Of Chicago Press |year=1997|id=ISBN 0-226-32058-8}}
*{{cite book|author=]|title= ("Socialism, Economic Calculation, and Entrepreneurship")|publisher=Unión Editorial|year=1992| id=ISBN 84-7209-420-0}}
*{{cite book|author=]|title=]|year=2000}}

==References==
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<references/>

==External links==
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*
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* by ]
* ''Economic Policy'' 2nd Lecture, by ]
* by ]
* by Bruce Caldwell
*
* by Tom Palmer
* by ]
* by ]
* by ]


{{DEFAULTSORT:Criticisms Of Socialism}}
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Latest revision as of 16:19, 16 December 2024

"Anti-socialism" redirects here. For opposition to communism, see Anti-communism. For other uses, see Antisocial (disambiguation). This article is about criticism of socialist economic systems and political movements. For criticism of Communist states, see Criticism of Communist party rule. For criticism of Marxism, a branch of socialism, see Criticism of Marxism. For criticism of social democracy and welfare capitalism, see Criticism of welfare.
An 1850 painting by Horace Vernet titled Socialism and Cholera, depicting what Vernet thought were two ills that were plaguing France during the mid-19th century
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Criticism of socialism is any critique of socialist economics and socialist models of organization and their feasibility, as well as the political and social implications of adopting such a system. Some critiques are not necessarily directed toward socialism as a system but rather toward the socialist movement, parties, or existing states. Some critics consider socialism to be a purely theoretical concept that should be criticized on theoretical grounds, such as in the economic calculation problem and the socialist calculation debate, while others hold that certain historical examples exist and that they can be criticized on practical grounds. Because there are many types of socialism, most critiques are focused on a specific type of socialism, that of the command economy and the experience of Soviet-type economies that may not apply to all forms of socialism as different models of socialism conflict with each other over questions of property ownership, economic coordination and how socialism is to be achieved. Critics of specific models of socialism might be advocates of a different type of socialism.

According to the Austrian School economist Ludwig von Mises, an economic system (specifically centralized economic planning) that does not use money, financial calculation, and market pricing would be unable to effectively value capital goods and coordinate production, and therefore in his view socialism is impossible because it lacks the necessary information to perform economic calculation in the first place. Another central argument leveled against socialist systems based on economic planning is based on the use of dispersed knowledge. Socialism is unfeasible in this view because information cannot be aggregated by a central body and effectively used to formulate a plan for an entire economy, because doing so would result in distorted or absent price signals; this is known as the economic calculation problem. Other economists criticize models of socialism based on neoclassical economics for their reliance on the faulty and unrealistic assumptions of economic equilibrium and Pareto efficiency.

Some philosophers have criticized the aims of socialism, arguing that equality erodes away at individual diversities and that the establishment of an equal society would have to entail strong coercion. Many critics point to the mass killings under communist regimes as an indictment of socialism; some socialists respond that they were aberrations, point to mass deaths they argued were caused by capitalism and imperialism, and some say that they are not the socialist model they support. Economic liberals and right-libertarians view private ownership of the means of production and the market exchange as natural entities or moral rights which are central to their conceptions of freedom and liberty and view the economic dynamics of capitalism as immutable and absolute. As a result, they perceive public ownership of the means of production and economic planning as infringements upon liberty.

Critique of centralized planning

Distorted or absent price signals

Supply and demand chart: political intervention in the creation of prices on a free market through supply and demand leads to a deviation from the equilibrium price, according to socialism's critics, causing a multitude of undesirable side effects.

The economic calculation problem is a criticism of central economic planning which exists in some forms of socialism. It was first proposed in 1854 by the Prussian economist Hermann Heinrich Gossen. It was subsequently expounded in 1902 by the Dutch economist Nicolaas Pierson, in 1920 by Ludwig von Mises and later by Friedrich Hayek. The problem referred to is that of how to distribute resources rationally in an economy. The free market relies on the price mechanism, wherein people individually have the ability to decide how resources should be distributed based on their willingness to give money for specific goods or services. The price conveys embedded information about the abundance of resources as well as their desirability (supply and demand) which in turn allows—on the basis of individual consensual decisions—corrections that prevent shortages and surpluses. Mises and Hayek argued that this is the only possible solution and without the information provided by market prices socialism lacks a method to rationally allocate resources. Those who agree with this criticism argue it is a refutation of socialism and that it shows that a socialist planned economy could never work. The debate raged in the 1920s and 1930s and that specific period of the debate has come to be known by economic historians as "the Socialist Calculation Debate".

Mises argued in a famous 1920 article "Economic Calculation in the Socialist Commonwealth" that the pricing systems in socialist economies were necessarily deficient because if government owned the means of production, then no prices could be obtained for capital goods as they were merely internal transfers of goods in a socialist system and not "objects of exchange", unlike final goods, therefore they were unpriced and hence the system would be necessarily inefficient since the central planners would not know how to allocate the available resources efficiently. This led him to declare "that rational economic activity is impossible in a socialist commonwealth". Mises developed his critique of socialism more completely in his 1922 book Socialism, An Economic and Sociological Analysis.

Mises argued that a socialist system based upon a planned economy would not be able to allocate resources effectively due to the lack of price signals. Because the means of production would be controlled by a single entity, approximating prices for capital goods in a planned economy would be impossible. His argument was that socialism must fail economically because of the economic calculation problem—the impossibility of a socialist government being able to make the economic calculations required to organize a complex economy. Mises projected that without a market economy there would be no functional price system which he held essential for achieving rational and efficient allocation of capital goods to their most productive uses. According to Mises, socialism would fail as demand cannot be known without prices. These arguments were elaborated by subsequent Austrian economists such as Hayek and students such as Hans Sennholz. In 1977, Hayek argued that "prices are an instrument of communication and guidance which embody more information than we directly have" and "the whole idea that you can bring about the same order based on the division of labor by simple direction falls to the ground. ... f you need prices, including the prices of labor, to direct people to go where they are needed, you cannot have another distribution except the one from the market principle".

Hungarian economist János Kornai has written that "the attempt to realize market socialism ... produces an incoherent system, in which there are elements that repel each other: the dominance of public ownership and the operation of the market are not compatible".

Proponents of laissez-faire capitalism argue that although private monopolies do not have any actual competition, there are many potential competitors watching them and if they were delivering inadequate service, or charging an excessive amount for a good or service, investors would start a competing enterprise. The anarcho-capitalist economist Hans-Hermann Hoppe argues that in the absence of prices for the means of production, there is no cost-accounting which would direct labor and resources to the most valuable uses. According to Tibor Machan, "ithout a market in which allocations can be made in obedience to the law of supply and demand, it is difficult or impossible to funnel resources with respect to actual human preferences and goals".

According to economist Milton Friedman: "The loss part is just as important as the profit part. What distinguishes the private system from a government socialist system is the loss part. If an entrepreneur's project doesn't work, he closes it down. If it had been a government project, it would have been expanded, because there is not the discipline of the profit and loss element".

Proponents of chaos theory argue that it is impossible to make accurate long-term predictions for highly complex systems such as an economy.

Pierre-Joseph Proudhon raises similar calculational issues in his General Idea of the Revolution in the 19th Century, but he also proposes certain voluntary arrangements which would also require economic calculation. Leon Trotsky, a fierce proponent of decentralized economic planning, argued that centralized economic planning would be "insoluble without the daily experience of millions, without their critical review of their own collective experience, without their expression of their needs and demands and could not be carried out within the confines of the official sanctums" and "ven if the Politburo consisted of seven universal geniuses, of seven Marxes, or seven Lenins, it will still be unable, all on its own, with all its creative imagination, to assert command over the economy of 170 million people". In contrast to the lack of a marketplace, market socialism can be viewed as an alternative to the traditional socialist model. Theoretically, the fundamental difference between a traditional socialist economy and a market socialist economy is the existence of a market for the means of production and capital goods. Socialist market abolitionists reply that while advocates of capitalism and the Austrian School in particular recognize equilibrium prices do not exist, they nonetheless claim that these prices can be used as a rational basis when this is not the case, hence markets are not efficient. According to market abolitionists socialists, decentralized planning allows for a spontaneously self-regulating system of stock control (relying solely on calculation in kind) to come about and that in turn decisively overcomes the objections raised by the economic calculation argument that any large scale economy must necessarily resort to a system of market prices.

Suppression of economic democracy and self-management

Central planning is also criticized by elements of the radical left. Libertarian socialist economist Robin Hahnel notes that even if central planning overcame its inherent inhibitions of incentives and innovation, it would nevertheless be unable to maximize economic democracy and self-management, which he believes are concepts that are more intellectually coherent, consistent and just than mainstream notions of economic freedom.

As Hahnel explains: "Combined with a more democratic political system, and redone to closer approximate a best-case version, centrally planned economies no doubt would have performed better. But they could never have delivered economic self-management, they would always have been slow to innovate as apathy and frustration took their inevitable toll, and they would always have been susceptible to growing inequities and inefficiencies as the effects of differential economic power grew. Under central planning neither planners, managers, nor workers had incentives to promote the social economic interest. Nor did impending markets for final goods to the planning system enfranchise consumers in meaningful ways. But central planning would have been incompatible with economic democracy even if it had overcome its information and incentive liabilities. And the truth is that it survived as long as it did only because it was propped up by unprecedented totalitarian political power".

Critique of public enterprise

Slow or stagnant technological advance

Milton Friedman, winner of the Nobel Memorial Prize in Economic Sciences in 1976, member of the Chicago school of economics and a well-known opponent of socialism

Economist Milton Friedman argued that socialism, by which he meant state ownership over the means of production, impedes technological progress due to competition being stifled. He noted that "we need only look to the United States to see where socialism fails" by observing that the "most technologically backward areas are those where government owns the means of production".

Friedman claimed that socialism advocated the abolition of a free markets and money- and risk-based reward systems, a claim disputed by some socialists. Friedman argues that without such a money- and risk-based reward system, many capitalist inventors, whom Friedman holds would nonetheless exist within socialism, would not risk time or capital for research. Friedman believed that this was one of the reasons for the United States patent system and copyright law, arguing:

Socialism has proved no more efficient at home than abroad. What are our most technologically backward areas? The delivery of first class mail, the schools, the judiciary, the legislative system—all mired in outdated technology. No doubt we need socialism for the judicial and legislative systems. We do not for mail or schools, as has been shown by Federal Express and others, and by the ability of many private schools to provide superior education to underprivileged youngsters at half the cost of government schooling. ...

We all justly complain about the waste, fraud and inefficiency of the military. Why? Because it is a socialist activity—one that there seems no feasible way to privatize. But why should we be any better at running socialist enterprises than the Russians or Chinese?

By extending socialism far beyond the area where it is unavoidable, we have ended up performing essential government functions far less well than is not only possible but than was attained earlier. In a poorer and less socialist era, we produced a nationwide network of roads and bridges and subway systems that were the envy of the world. Today we are unable even to maintain them.

Reduced incentives

First edition cover to The Principles of Political Economy by John Stuart Mill

One criticism of socialism is that, in any society where everyone holds equal wealth, there can be no material incentive to work because one does not receive rewards for a work well done. They further argue that incentives increase productivity for all people and that the loss of those effects would lead to stagnation. Some critics of socialism argue that income sharing reduces individual incentives to work and therefore incomes should be individualized as much as possible.

In The Principles of Political Economy (1848), John Stuart Mill wrote:

It is the common error of Socialists to overlook the natural indolence of mankind; their tendency to be passive, to be the slaves of habit, to persist indefinitely in a course once chosen. Let them once attain any state of existence which they consider tolerable, and the danger to be apprehended is that they will thenceforth stagnate; will not exert themselves to improve, and by letting their faculties rust, will lose even the energy required to preserve them from deterioration. Competition may not be the best conceivable stimulus, but it is at present a necessary one, and no one can foresee the time when it will not be indispensable to progress.

Mill later altered his views and adopted a socialist perspective, adding chapters to his Principles of Political Economy in defense of a socialist outlook and defending some socialist causes. Within this revised work, he also made the radical proposal that the whole wage system be abolished in favour of a co-operative wage system. Nonetheless, some of his views on the idea of flat taxation remained, albeit in a slightly toned-down form.

Reduced prosperity

Ludwig von Mises is best known for his work on praxeology studies comparing communism and capitalism.

Austrian school economist Hans-Hermann Hoppe argued that countries where the means of production are nationalized are not as prosperous as those where the means of production are under private control ("prosperous" is defined in terms of GDP). However, not all socialists subscribe to the idea of nationalization, some preferring socialisation instead.

Another Austrian school economist, Ludwig von Mises, argued that aiming for more equal incomes through state intervention necessarily leads to a reduction in national income and therefore average income. Consequently, he says that the socialist chooses the objective of a more equal distribution of income on the assumption that the marginal utility of income to a poor person is greater than that to a rich person. According to Mises, this mandates a preference for a lower average income over inequality of income at a higher average income. He sees no rational justification for this preference, and he also states that there is little evidence that the objective of greater income equality is achieved.

Mises also says: "The only certain fact about Russian affairs under the Soviet regime with regard to which all people agree is: that the standard of living of the Russian masses is much lower than that of the masses in the country which is universally considered as the paragon of capitalism, the United States of America. If we were to regard the Soviet regime as an experiment, we would have to say that the experiment has clearly demonstrated the superiority of capitalism and the inferiority of socialism".

Social and political effects

Friedrich Hayek, author of The Road to Serfdom

In The Road to Serfdom, Friedrich Hayek argued that the more even distribution of wealth through the nationalization of the means of production cannot be achieved without a loss of political, economic, and human rights. He argued that to achieve control over means of production and distribution of wealth it is necessary for such socialists to acquire significant powers of coercion. Hayek argued that the road to socialism leads society to totalitarianism and argued that fascism and Nazism were the inevitable outcome of socialist trends in Italy and Germany during the preceding period. Thus, held Hayek, moving leftward from capitalism to socialism is actually moving rightward, from capitalism to fascism. These ideas are encapsulated in the "horseshoe theory". A similar argument has been made by critics such as Dinesh D'Souza, who hold that because the full German name of the German Nazi Party was Nationalsozialistische Deutsche Arbeiterpartei, and because "Nationalsozialistische" translates to "National Socialism," fascism is actually a type of socialism, and so many socialists are Nazis.

Peter Self criticizes the traditional socialist planned economy and argues against pursuing "extreme equality" because he believes it requires "strong coercion" and does not allow for "reasonable recognition different individual needs, tastes (for work or leisure) and talents". Self holds that while a socialist planned economy provides substantially greater freedom than is present in capitalism—under which the vast majority of people are coerced by the threat of starvation to work for the profit of a small capitalist class—adding markets to socialism improves freedom and efficiency. Accordingly, Self recommends market socialism instead of either capitalism or non-market socialism. Philosopher David Schweickart has described similar views.

Mark J. Perry of the conservative American Enterprise Institute (AEI) argued that socialism means giving up freedom for more security. Perry also argued that "Socialism is the Big Lie of the twentieth century. While it promised prosperity, equality, and security, it delivered poverty, misery, and tyranny. Equality was achieved only in the sense that everyone was equal in his or her misery."

Critics of socialism cite the Soviet Union and Venezuela as examples of countries where socialism has failed.

Claims of leadership corruption

World Map of countries that were ruled by Socialist Regimes

Some critics of socialism see socialism as a type of political state organization instead of as a type of socioeconomic structure (as is traditional). These thinkers generally criticize what they term "socialist states" rather than "socialism."

Milton Friedman argued that the absence of private economic activity would enable political leaders to grant themselves coercive powers, powers that, under a capitalist system, would instead be granted by a capitalist class, which Friedman found preferable. In his campaign against Labour candidate Clement Attlee in the 1945 general election, Winston Churchill claimed that socialism requires totalitarian methods, including a political police, to achieve its goals.

Mass killings

Main article: Mass killings under communist regimesMao Zedong, Joseph Stalin, and Kim Il Sung were nominal socialist leaders who committed mass killings during the 20th century.

Many commentators on the political right point to the mass killings under communist regimes, claiming them as an indictment of socialism. The Black Book of Communism has been one of the most elaborate popular works to make this point.

Defenders of socialism state that the mass killings under communist regimes were aberrations caused by specific authoritarian regimes and not caused by socialism itself. Nathan J. Robinson, editor-in-chief of the left-wing progressive Current Affairs magazine, has defended socialism from criticism, arguing of "a libertarian socialist tradition that has always been strongly opposed to the authoritarian 'socialism' that many governments have espoused".

See also

References

  1. Von Mises, Ludwig (1936) . Socialism: An Economic and Sociological Analysis (English ed.). p. 119.
  2. ^ Von Mises, Ludwig (1990). Economic Calculation in the Socialist Commonwealth (PDF). Mises Institute. Retrieved 8 September 2008.
  3. ^ F. A. Hayek, (1935), "The Nature and History of the Problem" and "The Present State of the Debate," in F.A. Hayek, ed. Collectivist Economic Planning, pp. 1–40, 201–243.
  4. Stiglitz, Joseph (1996). Whither Socialism. MIT Press. ISBN 978-0262691826.
  5. ^ Self, Peter. Socialism. A Companion to Contemporary Political Philosophy, editors Goodin, Robert E. and Pettit, Philip. Blackwell Publishing, 1995, p. 339 "Extreme equality overlooks the diversity of individual talents, tastes and needs, and save in a utopian society of unselfish individuals would entail strong coercion; but even short of this goal, there is the problem of giving reasonable recognition to different individual needs, tastes (for work or leisure) and talents. It is true therefore that beyond some point the pursuit of equality runs into controversial or contradictory criteria of need or merit".
  6. ^ "On Milton Friedman, MGR & Annaism". Sangam.org. Retrieved 30 October 2011.
  7. ^ Bellamy, Richard (2003). The Cambridge History of Twentieth-Century Political Thought. Cambridge University Press. p. 60. ISBN 978-0521563543.
  8. Gossen, Hermann Heinrich (1854). Entwickelung der Gesetze des menschlichen Verkehrs, und der daraus fließenden Regeln für menschliches Handeln [Development of the laws of human intercourse, and the rules following therefrom for human action] (in German). Braunschweig, (Germany): Friedrich Vieweg und Sohn. p. 231. "... nur durch Feststellung des Privateigenthums ... deren Lösung die Kräfte einzelner Menschen weit übersteigt." ("... only through the establishment of private property is to be found the measure for determining the quantity of each commodity which it would be best to produce under given conditions. Therefore, the central authority proposed by the communists for the distribution of the various tasks and their reward, would very soon find that it had undertaken a task the solution of which far exceeds the abilities of individual men.")
  9. Gossen, Hermann Heinrich; Blitz, Rudolph C., trans. (1983). The Laws of Human Relations and the Rules of Human Action Derived Therefrom. Cambridge, Massachusetts, USA: MIT Press.{{cite book}}: CS1 maint: multiple names: authors list (link)
  10. ^ Mises, Ludwig von; Kahane, J., trans. (1981). Socialism: An Economic and Sociological Analysis. Indianapolis, Indiana: Liberty Fund. p. 117.{{cite book}}: CS1 maint: multiple names: authors list (link)
  11. Pierson, Nicolaas (June 1902). "Het waarde-probleem in een socialistische maatschappij" [The problem of value in a socialist society]. De Economist (in Dutch). 51: 421–456. doi:10.1007/BF02286704. S2CID 154882112.
  12. Pierson, Nicolaas (1963). "The problem of value in the socialist society". In Hayek, Friedrich (ed.). Collectivist Economic Planning. London, England: Routledge & Paul Kegan. pp. 41–85.
  13. F.A. Hayek, (1935), "The Nature and History of the Problem" and "The Present State of the Debate," in F.A. Hayek, ed. Collectivist Economic Planning, pp. 1–40, 201–243.
  14. ^ Fonseca, Gonçalo L. (2000s). "The socialist calculation debate". HET. Archived from the original on 18 February 2009. Retrieved 3 April 2007. The information here has not been reviewed independently for accuracy, relevance and/or balance and thus deserves a considerable amount of caution. As a result, I would prefer not to be cited as reliable authorities on anything. However, I do not mind being listed as a general internet resource.
  15. Von Mises, Ludwig (1936). Socialism: An Economic and Sociological Analysis (English ed.). London: Jonathan Cape. OCLC 72357479.
  16. The Road to Serfdom, Foreseeing the Fall. Friedrich Hayek interviewed by Thomas W. Hazlett for Reason.
  17. Ollman, Bertell; David Schweickart (1998). Market Socialism: The Debate Among Socialists. Routledge. p. 7. ISBN 978-0415919661.
  18. "The Myth of Natural Monopoly" by Thomas DiLorenzo
  19. "The Development Of The Theory Of Monopoly Price" by Joseph Salerno.
  20. Hans-Hermann Hoppe. A Theory of Socialism and Capitalism Archived 16 December 2008 at the Wayback Machine. Kluwer Academic Publishers. p. 46 in PDF.
  21. Machan, R. Tibor, Some Skeptical Reflections on Research and Development, Hoover Press.
  22. Interview with Milton Friedman. 31 July 1991. Stanford, CA Archived 16 February 2007 at the Wayback Machine
  23. "Archived copy". Archived from the original on 5 January 2007. Retrieved 3 April 2007.{{cite web}}: CS1 maint: archived copy as title (link)
  24. Proudhon, Pierre J. General Idea of the Revolution in the 19th Century, third study.
  25. Writings, 1932–33 p. 96, Leon Trotsky.
  26. O'Hara, Phillip (2000). Encyclopedia of Political Economy, Volume 2. Routledge. p. 71. ISBN 978-0415241878. Market socialism is the general designation for a number of models of economic systems. On the one hand, the market mechanism is utilized to distribute economic output, to organize production and to allocate factor inputs. On the other hand, the economic surplus accrues to society at large rather than to a class of private (capitalist) owners, through some form of collective, public or social ownership of capital.
  27. Buchanan, Alan E. (1985). Ethics, Efficiency and the Market. Oxford University Press US. pp. 104–105. ISBN 978-0-8476-7396-4.
  28. Gregory, Paul R.; Stuart, Robert C. (2003) . Comparing Economic Systems in the Twenty-First Century. Cengage Learning. p. 142. "It is an economic system that combines social ownership of capital with market allocation of capital. ... The state owns the means of production, and returns accrue to society at large". ISBN 0-618-26181-8.
  29. McKay, Iain, ed. (2008). "Is libertarian communism impossible?". An Anarchist FAQ. Stirling: AK Press. ISBN 978-1-902593-90-6. OCLC 182529204.
  30. McKay, Iain, ed. (2008). "Does capitalism efficiently allocate resources?". An Anarchist FAQ. Stirling: AK Press. ISBN 978-1-902593-90-6. OCLC 182529204.
  31. Cox, Robin (2 March 2020) . "The 'Economic Calculation' Controversy: Unravelling of a Myth". Socialism or Your Money Back. Socialist Party of Great Britain. Retrieved 17 August 2020.
  32. ^ Hahnel, Robin. The ABC's of Political Economy, Pluto Press, 2002, p. 262.
  33. Zoltan J. Acs & Bernard Young. Small and Medium-Sized Enterprises in the Global Economy. University of Michigan Press, p. 47, 1999.
  34. Mill, John Stuart. The Principles of Political Economy, Book IV, Chapter 7.
  35. Mill, John Stuart; Benthem, Jeremy (2004). Ryan, Alan (ed.). Utilitarianism and Other Essays. London: Penguin Books. p. 11. ISBN 978-0140432725.
  36. Wilson, Fred (2007). "John Stuart Mill: Political Economy". Stanford Encyclopedia of Philosophy. Stanford University. Retrieved 4 May 2009.
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  38. Ludwig von Mises, Socialism: An Economic and Sociological Analysis, Indianapolis, IN: Liberty Fund, Inc. 1981, trans. J. Kahane, IV.30.21.
  39. Von Mises, Ludwig (1947) . Socialism: An Economic and Sociological Analysis. p. 76. "The only certain fact about Russian affairs under the Soviet regime with regard to which all people agree is: that the standard of living of the Russian masses is much lower than that of the masses in the country which is universally considered as the paragon of capitalism, the United States of America. If we were to regard the Soviet regime as an experiment, we would have to say that the experiment has clearly demonstrated the superiority of capitalism and the inferiority of socialism".
  40. Friedrich Hayek, The Road to Serfdom, Routledge (2001), ISBN 0415255430.
  41. Gottfried, Paul (27 December 2017). "Right-wing Celebrities Play Fast and Loose With History". The American Conservative. Retrieved 27 September 2019.
  42. Perry, Mark (2016-03-22). "Why Socialism Always Fails". American Enterprise Institute – AEI. Retrieved 2023-06-20.
  43. "Americans' Views of 'Socialism' and 'Capitalism' In Their Own Words". Pew Research Center. 7 October 2019. Retrieved 26 March 2022.
  44. ^ Robinson, Nathan J. (6 July 2018). "3 Arguments Against Socialism And Why They Fail". Current Affairs. ISSN 2471-2647. Retrieved 19 September 2022.
  45. Alan O. Ebenstein. Friedrich Hayek: A Biography. (2003). University of Chicago Press. ISBN 0226181502 p. 137.
  46. Piereson, James. "Socialism as a hate crime". newcriterion.com. Retrieved 22 October 2021.
  47. ^ Engel-DiMauro, Salvatore (2 January 2021). "Anti-Communism and the Hundreds of Millions of Victims of Capitalism". Capitalism Nature Socialism. 32 (1): 1–17. doi:10.1080/10455752.2021.1875603. ISSN 1045-5752. S2CID 233745505.
  48. Satter, David (6 November 2017). "100 Years of Communism – and 100 Million Dead". Wall Street Journal. ISSN 0099-9660. Retrieved 22 October 2021.
  49. Ronit Lenṭin; Mike Dennis; Eva Kolinsky (2003). Representing the Shoah for the Twenty-first Century. Berghahn Books. p. 217. ISBN 978-1-57181-802-7.
  50. Bevins, Vincent (2020). The Jakarta Method: Washington's Anticommunist Crusade and the Mass Murder Program that Shaped Our World. PublicAffairs. pp. 238–240. ISBN 978-1541742406.

Further reading

  • Minehan, Philip B. Anti-Leftist Politics in Modern World History: Avoiding "Socialism" at All Costs (Bloomsbury Academic, 2022) online scholarly review
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