Socialism as seen by Millennials

“Seventy percent of millennials in a new poll say that they are somewhat or extremely likely to vote for a socialist candidate.” “70-percent-of-millennials-say-theyd-vote-for-a-socialist”  That, and the current lead of Bernie Sanders, a self-proclaimed Socialist, for the Presidential nomination of the Democratic Party, means that those of us who believe that capitalism is the foundation of our freedom and prosperity have a job to do to convince millennials that they are wrong about Socialism.  If Sanders wins the Democratic Party’s nomination, which I doubt, his long history of support for Soviet communism will be marched out by the Republicans. “Bernie Sanders support of communism is a moral failing”  As recently as a few days ago, Sanders was praising Fidel Castro. “Bernie-sanders-didnt-mention-the-dark-side-of-education-in-castros-cuba”  Sanders is not even a registered Democrat. But my concern is that so many millennials (born between 1981 and 1996) and Gen Z’s (born between 1995 and 2015) are attracted to Socialism. We need to convince them that it will not deliver the better society that they think it will.

We need to start with the recognition that these new generations, like all of their predecessors, want to do the “right thing.” “The-search-of-purpose”  They are searching for how best to address the deficiencies of life in America today. While dire poverty has been reduced from over 90% to less than 10% by capitalism, there is still that 10%.  Adult literacy has been at 99% for a few decades but the quality of public school education has been declining.  Only half of elementary school students in California are proficient in English (i.e., performed at grade level). “California-school-test-scores-2019”  And so on. The question is how to address these problems? What should we do to further improve our lives economically and culturally? Should we increase the role of government in directing resources and making our decisions or reduce it or adjust it? Do we need more Socialism or more Capitalism?

In 1919 the “Old Bolsheviks,” Nikolai Bukharin and Evgeny Preobrazhensky, wrote in the widely read The ABC of Communism, that the communist society is “an organized society,” based on a detailed, precisely calculated plan, which includes the “assignment” of labor to the various branches of production.  As for distribution, according to these eminent Bolshevik economists, all products will be delivered to communal warehouses, and the members of society will draw them out in accordance with their self-defined needs.  I urge my young friends to read the fuller account in Ralph Raico’s  “Marxist-dreams-and-soviet-realities”

The theoretical and historical/empirical cases against Socialism are overwhelming, at least to those of us who lived through the cold war and the decline and fall of the Soviet Union in the early 1990’s and the Israeli kibbutzim more gradually in the 1960s through 1980s.  Cuba, North Korea and Venezuela provide contemporary examples.  Sanders and many millennials reject these examples (sort of) as reflecting the bad luck of state capture by bad guys (I am not aware of any bad girl examples). But the centralization of the power to direct businesses and people that is the essence of Socialism, is a natural and powerful magnet for bad guys.  No socialist regime has escaped the opportunities and temptations to favor its friends and relatives with government contracts or protections from the horrors of competition. “Crony capitalism”  Venezuela is a particularly shocking example of the rapid deterioration of one of South America’s wealthiest countries.

Sanders often points to the Scandinavian countries as examples of the softer democratic Socialism he now says he has in mind.  But he is fifty years out of date. The experiment with “democratic socialism” by, for example, Sweden in the 1960s and 70s was a failure and abandoned in recent decades. “Bernie Sanders’s Scandinavian fantasy”

Socialism has failed historically because it lacks incentives (financial rewards) for hard work and the development of better mouse traps, provides incentives for corruption, and is really hard to “get right.”  National Socialism (Nazism) and other versions of socialism involved top down control over many aspects of society.  But the central allocation of resources and decisions about what we may and may not do–central planning–suffers from serious informational challenges even when made by smart and totally honest people. Friedrich Hayek had much to say about the importance of prices in a market economy for providing critical, decentralized information on people’s preferences and thus on the optimal allocation of resources. “The Road to Serfdom”

But we are not likely win over the younger generations to capitalism just on the bases that it has given us standards of material well-being and individual freedom unimaginable several hundred years ago.  We also need, I think, to defend its moral superiority while offering promising remedies to its remaining deficiencies.

The morality of capitalism rests, in my view, in its capacity to give us, and to protect, our ownership of the fruits of our own labor. This means also the freedom to decide how to live.  It is a system in which we bear the primary responsibility for our own decisions and actions and their consequences.  It is a system that flourishes in a culture of trust and mutual caring and thus encourages such values. It is a system that rewards and thus encourages virtuous behavior. The top down, central planning, central control of socialism tends to have the opposite effect.  A common saying in the Soviet Union (USSR), while it still existed, was that “They pretend to pay us, and we pretend to work.”

America was unique in its time (exceptional) in establishing a constitution and government in which the people gave up limited authority to their government to protect their property and liberty, rather than, as with the Magna Carta, the sovereign giving up some of its authority to the people.  See American Exceptionalism.  In the personal freedom this provided and the accompanying responsibilities it imposed, Americans flourished in every sense of the word more than most. Those who fall behind or floundered were not ignored.  It was a country of free and virtuous people and as Thomas Jefferson said at the end of his presidency in 1809: “the sole depository of the sacred fire of freedom and self-government.”[1]  Seymour Martin Lipset in the middle of the 1990s used the concept of this exceptionalism to explain “why the United States is the only industrialized country which does not have a significant socialist movement or Labor party.…”  I would hate to see that change.

Countries differ in the balance of personal freedom and security (safety net, police, army) they seek. But in the most successful ones the provision by the government of security is limited and well targeted to minimize its infringements on personal freedom.  Here are my earlier thoughts on improving the government’s role in and contribution to an orderly free market, capitalist system: “My-political-platform-for-the-nation-2017”

Let me end with a quote from Winston Churchill to drive my point home: “The inherent vice of capitalism is the unequal sharing of blessings; the inherent virtue of socialism is the equal sharing of miseries.”  Indeed, Capitalism has its flaws, but Socialism has no success stories that we should strive to emulate. The way to move forward is to repair the flaws in a Capitalistic free market society.

[1] Quoted in Tucker and Hendrickson, Empire of Liberty p 7; see John P. Foley, ed. The Jeffersonian cyclopedia (1900).

About wcoats

I specialize in advising central banks on monetary policy and the development of the capacity to formulate and implement monetary policy.  I joined the International Monetary Fund in 1975 from which I retired in 2003 as Assistant Director of the Monetary and Financial Systems Department. While at the IMF I led or participated in missions to the central banks of over twenty countries (including Afghanistan, Bosnia, Croatia, Egypt, Iraq, Israel, Kazakhstan, Kenya, Kosovo, Kyrgystan, Moldova, Serbia, Turkey, West Bank and Gaza Strip, and Zimbabwe) and was seconded as a visiting economist to the Board of Governors of the Federal Reserve System (1979-80), and to the World Bank's World Development Report team in 1989.  After retirement from the IMF I was a member of the Board of the Cayman Islands Monetary Authority from 2003-10 and of the editorial board of the Cayman Financial Review from 2010-2017.  Prior to joining the IMF I was Assistant Prof of Economics at UVa from 1970-75.  I am currently a fellow of Johns Hopkins Krieger School of Arts and Sciences, Institute for Applied Economics, Global Health, and the Study of Business Enterprise.  In March 2019 Central Banking Journal awarded me for my “Outstanding Contribution for Capacity Building.”  My most recent book is One Currency for Bosnia: Creating the Central Bank of Bosnia and Herzegovina. I have a BA in Economics from the UC Berkeley and a PhD in Economics from the University of Chicago. My dissertation committee was chaired by Milton Friedman and included Robert J. Gordon.
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3 Responses to Socialism as seen by Millennials

  1. Joe Cobb says:

    Thank you for adding the link to a classic essay by Ralph Raico.
    https://mises.org/library/marxist-dreams-and-soviet-realities

  2. Jim Roumasset says:

    Warren,
    Thanks for this timely and useful post. Sanders doesn’t even know that he is a social democrat, not a democratic socialist. The entry on Social Democracy in Wiki is instructive: “not to be confused with Democratic Socialism,” the latter being defined as an economic system, wherein “most property” is “held by the public through a democratically elected government, including most major industries, utilities, and transportation systems.” But as your cited essay by Fareed Zakaria explains, Bernie is fascinated with an anachronistic version of social democracy, not the economic systems of modern-day Sweden and Norway (see also https://hotair.com/archives/john-s-2/2020/02/27/fareed-zakaria-bernie-sanders-scandinavian-ideal-fantasy/ )
    As you and Adam Smith have explained, the virtue of capitalism is that it channels passions, sentiments, and even greed towards socially productive ends. Socialism channels greed towards the acquisition of power to limit individual freedom and special privileges.
    Jim

  3. Tibor Hledik says:

    Warren,

    You got it absolutely right! I fully agree with everything you say. We reached the same conclusion, despite our quite different life experience.

    You grown up in the US, getting known Eastern Europe and other Post-Communist countries later, me living in the Communist Czechoslovakia until 1989 and experiencing the birth of capitalism afterwards. Probably, I am one of the last generations grown up in the old regime (I was 23 in 1989) and being lucky enough to work on the transformation towards democracy and market economy. I still remember, how awful the communist regime was. The Millennials know nothing about that…or if they do, they tend to ignore it and they are cherry-picking the “positive” social aspects of it.

    The young generation in Europe seems to be the same as you describe it. Surprisingly, (or maybe not…) this is true even for Central Europe, where one would expect that the parents, who experienced the communist regime, would warn their kids not to get too enthusiastic about the old socialist ideas…

    I share your concern. If the young generation will not learn from the historic lessons, they might repeat the terrible mistakes that have resulted in so many ruined lives in all over the world.

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