[119135] in Cypherpunks
H-WEB: V Postrel on Socialism & anti-Liberalism
daemon@ATHENA.MIT.EDU (Robert Hettinga)
Sun Oct 17 00:02:41 1999
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From: Robert Hettinga <rah@shipwright.com>
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Date: Fri, 15 Oct 1999 19:58:15 -0700
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Subject: H-WEB: V Postrel on Socialism & anti-Liberalism
To: HAYEK-L@MAELSTROM.STJOHNS.EDU
>> Hayek On The Web << -- Socialism / anti-Liberalism
"After Socialism" by Virginia Postrel, on the web at:
http://www.reason.com/9911/fe.vp.after.html
>From the article:
"In 1947, a small group of classical liberal intellectuals gathered in
the Swiss Alps to form an international society whose purpose was
"to work out the principles which would secure the preservation of
a free society." Named for their meeting place, the Mont Pelerin
Society was the brainchild of Friedrich Hayek, the economist and
social philosopher whose popular book _The Road to Serfdom_ had
been a sensation only a few years earlier. The 39 founding members
included future Nobel laureate economists Milton Friedman,
George Stigler, and Maurice Allais (and Hayek himself) as well as
such luminaries as philosophers Karl Popper and Michael Polanyi
and Hayek's mentor Ludwig von Mises. Through intellectual
camaraderie and rigorous discussion, they sought to achieve "the
rebirth of a liberal movement in Europe" and, by implication, the
rest of the world.
Fifty-two years later, both the society and the world have changed.
Liberal ideals of free minds and free markets have indeed enjoyed a
rebirth, not only in Europe but throughout the world. And Mont
Pelerin now boasts a membership of nearly 500, including scholars,
journalists, think tank researchers, and business people. In late
August, those from the Americas met in Vancouver to take up the
question, "Are we experiencing 'creeping socialism?'" In 1947,
socialism's growth was obvious. In 1999, it was a matter of much
debate. In one of the opening talks, _REASON_ Editor Virginia Postrel
argued that "socialism" is no longer the major challenge to markets
and economic freedom and that classical liberal ideals face
opponents with new arguments and different values. The following
is a slightly adapted version of her speech:
The theme of this conference is "Are we experiencing 'creeping
socialism,'" and I am supposed to provide the optimistic answer to
that question. The format presumes, however, that it is the right
question, which I don't believe it is.
But I'll start with the official question. It immediately raises the issue
of what we mean by socialism, creeping or otherwise. As a good
journalist, I'll begin with an anecdote: The week of our graduation
from college in 1982, my husband (who was then my boyfriend)
participated in a debate between two teams of graduating seniors.
The resolution was something like, "Resolved: Socialism is better
than capitalism," and Steve, not surprisingly, was on the
anti-socialism side.
One of the critical terms of that debate was the definition of socialism.
Steve's team argued that socialism was the Soviet Union, and
therefore guilty of the terrors of the Soviet system, while the
opposing side argued that socialism was Sweden, and therefore
innocent of eroding political freedom. Seventeen years later, we are
gathered to examine whether socialism is expanding--and I would
argue that the terms of that debate suggest quite clearly that it is not.
Neither the Soviet system nor the Swedish system is on the march.
That does not mean we don't have to worry about threats to liberty.
It just means we don't have to worry very much about socialism. The
issues that define our political, intellectual, and cultural coalitions
are changing, and we ignore those changes to our peril.
Socialism is not simply a synonym for a large state or for
government regulation of the economy. In both the nasty Soviet
model and the nice Swedish one, it is particularly concerned with
some issues and less concerned with others. It may be a fuzzy term,
but, like an electron's quantum field, the fuzz forms around some
places and not around others. The goal of socialism is a fairer
allocation of economic resources, which its advocates often claim will
also be a less wasteful one. Socialism is about who gets the goods
and how. Socialism objects to markets because markets allocate
resources in ways socialists believe to be unfair on both counts: both
the who and the how.
In its pure form -- what Hayek in _The Road to Serfdom_ called "hot
socialism" -- socialism essentially turns the economy into a
government monopoly, either through direct state ownership of the
means of production or through complete state direction of
economic life. Socialist governments nationalize industries. They set
up boards governing wages and prices. They direct supply and
demand.
Until the mid-1980s, this sort of socialism was common, not only in
communist countries but throughout the free world--which is why it
made for a good debate topic in 1982. During my teenage years, the
American economy itself was marked by wage and price controls
and complex schemes to allocate energy supplies; in the 1970s, you
could call for the U.S. government to nationalize the oil industry and
not be dismissed as a nut. (I would argue, and do in _The Future and
Its Enemies_, that the U.S. regulatory system is better understood as
technocracy, which substitutes the judgments of supposedly
efficient experts for diffuse market decisions, than as socialism. But
from time to time, the U.S. government did adopt both the methods
and the goals of socialism.) Today, the remnants of hot socialism
exist in the very few countries with deliberately socialist regimes, of
which North Korea is the purest example, and in a few industries
within otherwise nonsocialist countries. But few remnants remain.
Hot socialism disappeared so quickly, both as a policy and as an
ideal, that we have forgotten how utterly common its assumptions
used to be. That's one reason we can seriously debate whether our
contemporary situation represents "creeping socialism," a term that
dates back to the 1950s, when socialism really was on the march.
The other sort of "socialism" is what I, like Steve's debating team,
would more properly call "social democracy," or the redistributive
state. This is the Swedish model, which uses massive redistribution
through taxation and subsidies to rearrange economic outcomes.
The goal is the same as for hot socialism--a fairer allocation of
resources--and the animating ideology is economic egalitarianism.
Having spent some time recently in Sweden, I find it hard to
imagine that Swedish socialism is creeping anywhere, except
possibly under a rock to hide. The Swedish system is in serious
trouble. The Swedish economy is no longer creating jobs -- private
sector employment has been shrinking for decades, and the public
sector can no longer absorb more workers. The country is facing a
brain drain. A backlash is developing against refugees and
immigrants, who once represented Sweden's commitment to human
rights and now are increasingly seen as outsiders consuming a fixed
welfare pie. Many Swedes are pessimistic about the future, in large
measure because they cannot imagine how their system can survive,
yet cannot overcome the political obstacles to changing it.
The "social democracy" form of socialism is difficult to maintain
because it runs head on into the political pressure of
democracy--which replaces abstract issues of "fairness" with the
practical calculations of interest-group politics -- and the economic
pressure of open markets. The Western democracies, Sweden
among them, have not been willing to sacrifice their political
freedom or their general prosperity to maintain ever-expanding
socialism. They haven't, for instance, kept their people from leaving
the country or even, in most cases, from sending their money
abroad. That freedom has maintained the political legitimacy of
social democracies, but it has undermined their ability to stay
socialist.
As Hayek noted in _The Road to Serfdom_, "Many kinds of economic
planning are indeed practicable only if the planning authority can
effectively shut out all extraneous influences; the result of such
planning is therefore inevitably the piling-up of restrictions on the
movements of men and goods." The flip side of Hayek's observation
is that countries that allow the more or less free movement of
products, people, and financial capital will find that socialism
cannot be sustained. A socialist regime depends on monopoly
power that cannot survive the pressures of competition from
outside. In the postwar period, a combination of liberal idealism,
economic pragmatism, and Cold War calculation led not to Hayek's
"piling-up of restrictions" but to increasingly free international
markets, greater freedom of movement, and, most recently, ever
freer capital flows -- all enhanced by advances in communications
and transportation.
We are not experiencing "creeping socialism." That is not the
challenge we face. If you are used to fighting socialism, and have
developed your arguments, tactics, and alliances accordingly, it's
tempting to define any form of redistribution or regulation as
creeping socialism and therefore to declare the expansion of any and
all government programs to be socialism. But that sweeping
definition leads to political and economic confusion: It destroys the
ability to detect threats early, to form alliances and perceive
enemies, and to hone arguments.
We must keep in mind what socialism is, and therefore what it is
not. Socialism, creeping or galloping, is an ideological concept with
a particular sense of what is important. What distinguishes
socialism is its appeal to economic fairness. It declares that markets
do not allocate wealth and power fairly, and that political processes
will do a better job. Socialism is not simply about moving money
from the powerless to the powerful -- a goal as old as politics -- but
about flattening the distribution of income and wealth. Pork-barrel
spending is not socialism. Farm subsidies are not socialism.
"Corporate welfare" is not socialism. These programs are not
ideological in nature. They are about competing interest groups.
Socialism is about claims of justice, and it is also about money:
about wealth, income, physical and financial capital. It is an
ideology based on allocating economic resources. It may try to
achieve that goal by nationalizing assets, by command-and-control
regulation, or by taxation and redistribution. But the goal is the
same: to rearrange society's wealth, generally from the "haves" to the
"have nots." Rearranging wealth (or income) is not the only possible
ideological goal of economic regulation. It is merely the goal we
have become accustomed to since the late 19th century.
Market processes do more than determine who winds up with
which resources. That means that socialism is not the only
conceivable ideology that might launch an attack on markets and,
conversely, that anti-socialist conservatives are not the only possible
allies for classical liberals in defense of economic freedom.
Markets have many characteristics. They serve and express the
individual pursuit of happiness. They spread ideas. They foment
change in the ways people live and work, and in what character
traits are valued. They dissolve and recombine existing categories,
from artistic genres to occupations. They encourage the constant
search for improvements, and they subject new ideas to ruthless,
unsentimental testing. Markets evolve through trial and error,
experimentation and feedback. They are out of anyone's control, and
their results are unpredictable. It is this dynamism of markets--their
nature as open-ended, decentralized discovery processes--that
attracts the greatest ideological opposition today.
The most potent challenge to markets today, and to liberal ideals
more generally, is not about fairness. It is about stability and
control -- not as choice in our lives as individuals, but as a policy for
society as a whole. It is the argument that markets are disruptive
and chaotic, that they make the future unpredictable, and that they
serve too many diverse values rather than "one best way." The most
important challenge to markets today is not the ideology of
socialism but the ideology of stasis, the notion that the good society
is one of stability, predictability, and control. The role of the state, in
this view, therefore, is not so much to reallocate wealth as it is to
curb, direct, or end unpredictable market evolution ....
.... The good news is that just as the breakdown of socialism has
created new alliances against markets, it has also created new
alliances in support of them. The idea that markets produce not
chaos and disruption but positive, emergent order has become
common in the same circles where a generation ago socialism, or at
least technocratic planning, was all the rage. Some of you may have
seen, for instance, this endorsement of market dynamism from a
noted economist: "What's the single most important thing to learn
from an economics course today? What I tried to leave my students
with is the view that the invisible hand is more powerful than the
hidden hand. Things will happen in well-organized efforts without
direction, controls, plans. That's the consensus among economists.
That's the Hayek legacy." The source of that upbeat assessment of
markets was Larry Summers, now U.S. secretary of the treasury and
the epitome of a Cambridge economist.
If Schlesinger's hysteria exemplifies the attitudes of centrist stasists,
Summers' optimism represents a new centrist coalition on the side
of dynamism. That does not mean that Summers is a classical
liberal, of course. It simply makes him, and other centrist dynamists,
the sort of ally on behalf of markets that anti-socialist conservatives
were in an earlier time. The American center (and, I suspect, Britain's
New Labour) is full of chastened technocrats who have come to
accept the practical limitations of state action and the practical
advantages of economic freedom ...
... On the old political spectrum, socialism defined the left. That meant
that the more you opposed socialism, for whatever reason, the
further right you were. On the old spectrum, therefore, classical
liberals were on the right, which makes us the right wing of the
dynamist coalition.
It matters a lot whether we define our central challenge today as
opposing socialism or as protecting dynamism. If we declare "the
left" our enemies and "the right" our allies, based on anti-socialist
assumptions, we will ignore the emerging left-right alliance against
markets. We will miss the symbolic and practical importance of
such cutting-edge issues as biotechnology, popular culture,
international trade, and Internet governance. We will sacrifice whole
areas of research and innovation to stay friendly with people who'll
agree to cut taxes just a little bit, and only for families with children.
We will miss the chance to deepen the appreciation for market
processes among people who lack the proper political pedigree. We
will sacrifice the future of freedom in order to preserve the habits of
the past.
So, yes, I am an optimist about creeping socialism. We must always
be vigilant, of course, and we still have many socialist legacies with
which to deal -- legacies that can provide powerful tools for the
partisans of stasis. But socialism is dead as an ideal and dying as a
policy. The challenges of the 21st century will be different: They will
be to defend the virtues of dynamism and to rally a new coalition on
its behalf. How we rise to those challenges will determine whether
the next century will mark a new flourishing of liberalism, or yet
another long era of twilight struggle."
Virginia Postrel, "After Socialism". _Reason_. (Nov).
Virginia Postrel is editor of _Reason_ magazine
and author of _The Future and Its Enemies: The Growing
Conflict Over Creativity, Enterprise, and Progress_.
"Hayek On The Web" is a regular feature of the Hayek-L list.
Hayek-L Archive: http://maelstrom.stjohns.edu/archives/hayek-l.html
Hayek Scholars Page: http://www.hayekcenter.org/friedrichhayek/hayek.html
>> END <<
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-----------------
Robert A. Hettinga <mailto: rah@ibuc.com>
The Internet Bearer Underwriting Corporation <http://www.ibuc.com/>
44 Farquhar Street, Boston, MA 02131 USA
"... however it may deserve respect for its usefulness and antiquity,
[predicting the end of the world] has not been found agreeable to
experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire'
