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Saving Elephants How does a Conservative differ from a Socialist? Part 4 (Why Socialism Doesnt Work)

8/29/2020

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The conservative contends that socialism doesn’t work. It fails to provide for our material needs and desires as well as capitalism can. But why doesn’t socialism work? Let’s examine some of the weaknesses in socialism’s efficacy.

Incentives vs. Intentions

We are not born into a world of limitless abundance, but a world of scarcity and latent provisions. Scarcity is the fundamental problem of economics: our resources are quite limited while our needs and desires are seemingly limitless. How then do we best manage the limited resources we have? Certainly, the distribution of resources is an important consideration. But if humanity were reliant only on the distribution of the things the earth provided naturally, most of us would die of starvation.

“The root of all socialist economics is the separation of the distribution of wealth from the production of wealth,” wrote Irving Kristol. “Socialist economics assumes that there is no problem of production, only a problem of distribution.” But the problem of production and the problem of distribution cannot be separated. They are joined by incentives that induce human behavior. And it is incentives that compel the transformation of the raw materials the earth provides into the abundance we hope to enjoy. Distribution cannot generate this wealth—it can only allocate the resources our earth and our productivity has provided.

How do we best maximize these provisions? By matching their profits directly to those who are responsible for generating them. It would be ideal if those who were capable of this willingly shared their production with those who were most in need. But then, so would a world in which humans were incapable of malice, greed, corruption, and division. “Economic policies need to be analyzed in terms of the incentives they create, rather than the hopes that inspired them,” cautioned Thomas Sowell. When we craft our economics around how we would like for people to behave, rather than how they are incentivized to behave, we are crafting an economic system that only works in the imagination.

And while generosity is a character trait that any virtuous society will encourage, it is hardly sufficient for dealing with the very real problem that there simply isn’t enough stuff to distribute around in a manner that we’d find agreeable, let alone in a manner that would stave off rampant starvation. But an interesting phenomenon occurs when we allow those who are responsible for producing wealth to enjoy the fruit of their labor: they end up being generous with their wealth even when they had every intention of being selfish.

“People tend to do more for their own benefit than for the benefit of others,” Sowell says, stating the obvious. What’s not so obvious, however, is that “freely fluctuating prices can make that turn out to be beneficial to others.” As we explored in Part 3, a freely fluctuating price contains invaluable information about the unseen and often unknowable costs of a good or service. When each individual participates in the long and complex process of production in a manner that’s beneficial to them, they inadvertently end up benefiting everyone else involved. “The morals of the market do lead us to benefit others, not by our intending to do so, but by making us act in a manner which, nonetheless, will have just that effect”--echoes economist F. A. Hayek–“In a way that good intentions alone cannot do—and thereby does make our efforts altruistic in their effects.”

The Incomprehensible Complexity of the Free Market

We’ve examined the important role price plays in all this talk about economic efficiency and unintended generosity, but it would be difficult to overstate the importance of the information conveyed in price and how it works to our benefit. In fact, I’d go so far as to say I don’t know that humans are capable of comprehending the extent to which this is true, in the same sense our brains can comprehend the fact that there are fifty stars on the American flag but not that there are 100 billion stars in the Milky Way. Nevertheless, some illustrations may suffice to get the point across.

The YouTuber How To Make Everything demonstrates the importance of the free exchange between individuals by showing what it would be like to try to make things on one’s own. As such, there are videos ranging from how to make a T-shirt for only $5,000 in only three years to how to make a sandwich for only $1,500 in only six months! Thankfully, the complexities of modern society, which includes a highly efficient division of labor and distribution of goods, make these otherwise impossible tasks quite affordable. I may not know how to grow the cotton that goes into my t-shirts or the wheat that goes into my bread, but I do know how to make a living as an auditor, and I can take my earnings from the profession I specialize in and use them to pay the people who do know how to do these things so that I can wear t-shirts and eat sandwiches as I please.

But there’s another, infinitely more complex, component of the free market at work here. For it’s one thing to observe the benefits in the division of labor—benefits both capitalists and socialists are likely to find equally agreeable—but it’s quite another to then claim we understand how to direct this division of labor.

Just how is it that the person who grows the cotton or the farmer who harvests the wheat knows what to do with their tiny slice of the production process? How do they know how much to grow, who to send it to, and what price to charge such that I can walk into a retailer or restaurant and purchase these items at an affordable price? For that matter, how is it the complex web of individuals responsible for every level of the production process—from raw material to the finished product finding its way on a store shelf—each seem to know exactly how to play their part such that everything comes together at the right quantities and prices to keep store shelves adequately stocked with merchandize? Who is directing all this?!

I, Pencil

Leonard E. Read’s essay, I, Pencil, written over six decades ago, still provides the clearest explanation for this mystifying process I’ve ever encountered. The essay depicts a pencil sharing its origin story with the reader, which includes some a rather audacious claims:

“I am a lead pencil—the ordinary wooden pencil familiar to all boys and girls and adults who can read and write…You may wonder why I should write a genealogy. Well, to begin with, my story is interesting. And, next, I am a mystery—more so than a tree or a sunset or even a flash of lightning…I, Pencil, simple though I appear to be, merit your wonder and awe, a claim I shall attempt to prove. In fact, if you can understand me—no, that’s too much to ask of anyone—if you can become aware of the miraculousness which I symbolize, you can help save the freedom mankind is so unhappily losing. I have a profound lesson to teach. And I can teach this lesson better than can an automobile or an airplane or a mechanical dishwasher because—well, because I am seemingly so simple.
Simple? Yet, not a single person on the face of this earth knows how to make me.”

What follows this rather bold assertion are “innumerable antecedents” that describe the fascinating process of producing just one pencil, which involves raw materials from a multitude of places all over the earth and a seemingly endless stream of occupations involved in each step along the way. After this dizzying description the pencil asks, “Does anyone wish to challenge my earlier assertion that no single person on the face of this earth knows how to make me?” Indeed, it is evident no individual possesses the knowledge, resources, and equipment needed to produce the deceptively complicated pencil.

We are left with a rather startingly realization: if no individual knows how to make a pencil, how do pencils ever get made? Surely someone must be in charge of the production, orchestrating things from beginning to end! Not so, says our friend the pencil:

“I, Pencil, am a complex combination of miracles: a tree, zinc, copper, graphite, and so on. But to these miracles which manifest themselves in Nature an even more extraordinary miracle has been added: the configuration of creative human energies—millions of tiny know-hows configurating naturally and spontaneously in response to human necessity and desire and in the absence of any human masterminding! Since only God can make a tree, I insist that only God could make me. Man can no more direct these millions of know-hows to bring me into being than he can put molecules together to create a tree.”

Where’s the Master Mind?

Invoking God the creator here seems apropos. To the skeptically minded, the mysterious ability of the free market to somehow direct individuals—each of whom do not understand how to fully produce something like a pencil from beginning to end—to act in such a way that pencils are actually produced when no master mind is involved in the process seems…incredible at best and perhaps unbelievable. “Just as primitive peoples tended to attribute such things as the swaying of trees in the wind to some intentional action by an invisible spirit, rather than to such systemic causes as variations in atmospheric pressure,” explains Sowell, “so there is a tendency toward intentional explanations of systemic events in the economy, when people are unaware of basic economic principles.”

Yet it is precisely the information that gets conveyed in the freely fluctuating price that directs everyone to play their role perfectly such that pencils are manufactured and store shelves are adequately stocked. “To the naïve mind that can conceive of order only as the product of deliberate arrangement, it may seem absurd that in complex conditions order, and adaptation to the unknown, can be achieved more effectively by decentralizing decisions, and that a division of authority will actually extend the possibility of overall order,” adds Hayek, “Yet that decentralization actually leads to more information being taken into account.”

No one master mind is directing this process. No central committee of hyper-intelligent bureaucrats was in constant communication with each individual involved in each step of the process such that the store you just happened to walk into on a Tuesday evening after work would have a decent selection of pencils to choose from at prices you were willing to pay. To even imagine the cartoonish absurdity that would be involved in directing market forces on how best to meet the public’s demand for something as “simple” as a pencil is dizzying. No wonder political writer Lord Acton warned that centralization of economics means “apoplexy at the center and paralysis at the circumference.”

In lieu of an intelligent master mind with general knowledge directing the entire process, the free market instead relies upon the highly specific knowledge of each individual involved. For each individual involved in the production of something like pencils couldn’t possible understand how to direct the entire process, but they do understand how to play their part. “Specific knowledge is one of the scarcest of all resources,” contends Sowell, “regardless of how many people there may be who can talk in glib generalities. The net result of all this is that even countries which have long been food exporters often begin to have difficulty feeding themselves after the government has taken control of agriculture.”

Unintended Generosity and Generosity as a Virtue

All of this leads us back to the wild assertion that a system which relies upon the incentives inherent in each individual acting out of their own best interests somehow leads to unintentional generosity. As Hayek explains:

“In our economic activities we do not know the needs which we satisfy nor the sources of the things which we get. Almost all of us serve people whom we do not know, and even of whose existence we are ignorant; and we in turn constantly live on the services of other people of whom we know nothing. All this is possible because we stand in a great framework of institutions and traditions—economic, legal, and moral—into which we fit ourselves by obeying certain rules of conduct that we never made, and which we have never understood in the sense in which we understand how the things that we manufacture function.”

We’ll turn to Hayek’s idea of “rules of conduct” in a moment. But I do not want to confuse this unintended or accidental generosity with the actual virtue of generosity. Nor do I mean to imply that virtue is incidental to a functioning economy. On the contrary, it is absolutely essential. It was the philosopher and economist Adam Smith who first popularized the most self-evident aspect of economics: human behavior can often be explained as the rational pursuit of self-interest. But Smith was not saying we should only pursue what we believed to be in our self-interest. Irving Kristol, in surveying Smith’s work, wrote that Smith “assumed and asserted that there were natural and self-correcting limits to the pursuit of self-interest”. As such, Smith’s ideal world was not “liberated from the traditional moral virtues but was, in its own way, still rooted in them.”

Let’s think back to Kristol’s observations about the distribution of wealth. When it comes to distributing the wealth generated by producers we have three broad options: 1) individuals can be incentivized to produce by taking ownership of what they have produced (capitalism), 2) the government or community or some form of collective can distribute what has been produced on a basis they deem to be just and equitable (socialism), or 3) those who are strong simply take from those who are weak.

This third option was—sadly—precisely how most of the world prior to capitalism operated and far too much of the world still operates. Journalist and author Jonah Goldberg often illustrates this point by imagining how he might get an apple from you. There’s the simple, if somewhat primitive, method—“I hit you with a rock and take your apple. There is one apple-eating winner and there is one apple-less loser with a lump on his head.” But then there’s the method that’s far more mutually beneficial: trade. “Because the apple buyer needs an apple and the apple seller needs the buyer’s money for something else. Trade builds trust and encourages strangers to see each other as equals in a transaction.”

Them’s the Rules

“To operate beneficially, competition requires that those involved observe rules rather than resort to physical force,” argues F. A. Hayek. And just how did civilization manage to move from bashing each other over the head with rocks to get what they want to observing the sort of “rules” necessary for the complex trade relationships we witness in the free market today? Is it because we’re just better than the people who lived long ago? Don’t flatter yourself. To the extent we are more virtuous—that is, more civilized—it has nothing to do with some make-believe superiority we have over our ancestors. Humans are, after all, all the same carbon-based life forms capable of both nobility and savagery. Our superior virtues are not due to a superior nature but are instead the product of both religious and cultural tradition.

Precisely how tradition infused humanity with the sort of rules of fair play that allows for the free market to function is a lengthy subject for another day. What’s important for our purposes here, is that these rules and especially our willingness to observe these rules is not something that comes naturally to humans. It takes something like tradition to enforce a set of values upon us that we would not otherwise observe. And this distinction is important, for it tells us a great deal about the limitations of humans to devise an economic system that doesn’t evolve within our religious and cultural traditions.

Socialism is the attempt to circumvent this evolutionary process of rules based on tradition and instead to impose a set of values we have created and deemed worthwhile. This is evident in the moralistic tone socialist critics of capitalism often take. We are told that capitalism represents greed, that it is unfair in that it produces inequities. We are assured that it was built upon a repressive system of the strong taking from the weak (imperialists vs. the conquered, the patriarchy vs. feminism, white European males vs. minorities, slave owners vs. slave, the bourgeoisie vs. the proletariat, and so on). Socialists are interested in correcting this sad history of oppression and erecting in its place a new economic order operating on the values of justice, equality, and the recognition of positive rights to things like healthcare, housing, food, and education.

But are humans capable of swapping out our traditional moral order for updated alternatives? “Our moral traditions, like many other aspects of our culture, developed concurrently with our reason, not as its product,” continues Hayek. The hubris of social planners teach that we can utilize our reason to develop an economic system outside of the free exchange between individuals that’s just, equitable, and virtuous. But that is not how human behavior develops:

"Learning how to behave is more the source than the result of insight, reason, and understanding. Man is not born wise, rational, and good, but has to be taught to become so. It is not our intellect that created our morals; rather, human interactions governed by our morals make possible the growth of reason and those capabilities associated with it. Man became intelligent because there was tradition—that which lies between instinct and reason—for him to learn.”

Shorn of our traditions, humanity is not apt to behave in the moral sense socialists have in mind. For it is precisely because of our traditions that we have managed to claw our way out of the system where Jonah Goldberg has to bash you over the head with a rock to get your apple to a system where you each have been conditioned—by tradition—to follow the sort of “rules” that make mutually beneficial free trade possible.

The Temptation to Extend the Extended Order

The temptation and folly of socialism is to take something that is good at one level—the distribution of things such that no one lacks—and to scale it up to the point it is no longer feasible. This is the distinction Hayek makes between what he calls the “local order” and the “extended order”. The local order can only be experienced between you and those who are closest to you. The extended order includes everyone outside of that bubble. And it is tradition that helps us decipher what “rules” we are to follow in the context of each group. As Hayek explains:

“Part of our present difficulty is that we must constantly adjust our lives, our thoughts, and our emotions, in order to live simultaneously within different kinds of orders according to different rules. If we were to apply the unmodified, uncurbed, rules of the micro-cosmos (i.e., of the small band or troop, or of, say, our families) to the macro-cosmos (our wider civilization), as our instincts and sentimental yearning often make us wish to do, we would destroy it. Yet if we were always to apply the rules of the extended order to our more intimate groupings, we would crush them.”

Jonah Goldberg is also fond of explaining how, in the Goldberg household, he practices Marxism: From each according to his ability, to each according to his needs. He does not expect his daughter to contribute equally to the family’s finances. Nor does he have any qualms about limiting her freedom proportional to her maturity. In the “local order” these are good and desirable virtues. But applied to the “extended order” they become the tools of tyrants.

But what affection, what love, what acceptance is found in the group Hayek so superficially refers to as the “local order”! Wouldn’t it be nice IF we could—if you’ll pardon the pun—extend the local order into the extended order?

This desire—this longing for the extension of community—is precisely what makes socialism so appealing. In the end, no economic argument will dispel the appeal of socialism because socialism represents far more than an economic system. And this is precisely where we’ll turn in the fifth and final part of this series.


August 29, 2020 at 03:09PM - Josh Lewis



How does a Conservative differ from a Socialist? Part 4 (Why Socialism Doesn’t Work)

Click the headline to see the full report at Saving Elephants, with Josh Lewis
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Saving Elephants Episode 66 Monetary Mayhem with Joseph Sternberg

8/25/2020

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Stephanie Kelton’s book The Deficit Myth released in June was just the latest in a series of books, blogs, articles, podcasts, and videos extoling the virtue of Modern Monetary Theory (or “MMT”). We’re told that governments that have sovereignty over their currency can afford a wide array of social programs from entitlement expansion to generous welfare benefits to the Green New Deal. Leftist are ecstatic that they finally have an answer to the Right’s persistent question “how are you going to pay for all this stuff?”

But is MMT sound monetary policy? For that matter, what is monetary policy? What did famous economists like Milton Friedman and John Maynard Keynes have to say about monetary policy? Was it a mistake for America to get off the gold standard? What is the Federal Reserve, and why can’t they seem to leave the interest rate alone? Do deficits matter? If so, how?

For most, monetary policy may sound like a subject that’s dreadfully complicated or—far worse—boring. Yet this opaque subject matter is very important to our economic wellbeing. In fact, bad monetary policy greatly exacerbated economic downturns to the point of creating The Great Depression and The Great Recession. Sound monetary policy benefits us all, and it’s imperative we understand what sound—and not so sound—monetary policy looks like.

Returning guest and friend to the podcast Joseph Sternberg joins Josh in a discussion on monetary policy that’s both digestible and engaging. We last heard from Joseph in episode 35 when he dropped by to discuss his book The Theft of a Decade: How the Baby Boomers Stole the Millennials’ Economic Future.

About Joseph Sternberg

Joseph is a member of the editorial board of The Wall Street Journal, where he writes the Political Economics column. He joined the Journal in 2006 as an editorial writer in Hong Kong, where he also edited the Business Asia column. He currently lives in London. He graduated from The College of William and Mary in Williamsburg, Virginia with an economics major.


August 25, 2020 at 06:54AM - Josh Lewis



Episode 66 – Monetary Mayhem with Joseph Sternberg

Click the headline to see the full report at Saving Elephants, with Josh Lewis
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Saving Elephants How does a Conservative differ from a Socialist? Part 3 (Basic Economics)

8/21/2020

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In a lot of ways, capitalists and socialists look at the world very differently. Where capitalists celebrate profits as the lifeblood of a thriving economy that represent prosperity, socialists denounce profits as excesses lining the pockets of greedy business owners. Socialists primarily see value in the labor that went into a product, whereas capitalists look to other attributes to explain a product’s worth. Capitalists see private property as the cornerstone of a healthy society while socialists are either skeptical of such claims or even hostile to property rights altogether.

Both economic viewpoints have numerous assumptions baked in, making it difficult to truly judge between them without first examining these assumptions. To that end, we will spend the remainder of this post examining some of these core assumptions.

Toilet Paper Shortages and Price Gouging

The Youtuber Internet Historian hilariously depicted the great toilet paper mayhem that began in Australia and spread around the world during the beginning of the COVID-19 pandemic. Misinformed news reports and sensational rumors led to a nation-wide panic where shoppers bought all the toilet paper they could find which—unfortunately—actually did lead to a temporary shortage.

As is predictable in any crisis that generates shortages, angry accusations of price gouging ensued, leading to lawsuits against companies suspected of such selfish misdeeds. How could anyone be so avaricious that they would raise the prices on toilet paper just when the people—to say nothing of the poor—were in such dire straits? Many states have anti-gouging laws in place that freeze prices during an emergency for this very reason.

But however well intentioned these laws may be, when laws prevent prices from rising during a shortage, the problem is only exacerbated. With the sudden increase in demand for toilet paper, and no corresponding increase in the price to mitigate that demand, what might have been a temporary inconvenience for a handful of communities in Australia because an international bathroom quagmire.

While it is certainly true some business owners would happily profit at the misfortune of others, the surest way to prevent price gouging is to simply let the free market do its thing. If, in the middle of an international shortage of toilet paper, a store owner tripled the price of the toilet paper they had for sale while all the other stores in the community had only doubled the price, the savvy shopper would simply buy from those other stores. So long as there was a relatively stable quantity of toilet paper in all of the stores in the local community, the greedy store owner would be foolish to triple the price of the toilet paper they were selling because that would divert customers to their competitors.

Who Determines the Price?

But let’s back up a step. What exactly does it mean that our greedy store owner “raised” the price on toilet paper to three times what it had been selling for the day before? Does this imply he was watching the news one evening and, upon hearing of the shortage, rushed to the store shelves to triple the price? If so, how did he arrive at that amount? Do we imagine that the store owner first checked around all of the other stores in the community to see if they had raised their prices also? What if the other stores had actually quadrupled the price to adjust to the new demand, but our store owner had no knowledge of this when he tripled his price? Would that still make him greedy or just misinformed?

Charges of price gouging are hardly straightforward, once you peel below the actual accusation and begin to look for the supposed perpetrators. The actual price of toilet paper is determined by a multitude of factors—from the availability of the raw materials to the production process, to distribution, wholesale, retail, and consumer demand—each of which involve a complex web of individuals making estimates on the actual costs associated with their limited exposure to the entire process. Our store owner might put a price on the final product he’s made available to his customers, but he has no control on the various costs inherent in the rolls of toilet paper by the time they arrived at his store. And these are costs that don’t go away simply because an anti-gouging law holds the price down.

In a capitalist society—where the price is determined by the free exchange between individuals—the price is not some arbitrary value that can be increased or decreased by the whims of a greedy capitalist. Rather, price conveys information that shows the inherent cost imbedded in the goods or services. To demand “reasonable” prices is to misunderstand the role costs play. “It is completely unreasonable to expect reasonable prices,” charges economist Thomas Sowell explains:

“Free-market prices are not mere arbitrary obstacles to getting what people want. Prices are symptoms of an underlying reality that is not nearly as susceptible to political manipulation as the prices are. Prices are like thermometer readings—and a patient with a fever is not going to be helped by plunging the thermometer into ice water to lower the reading. On the contrary, if we were to take the new readings seriously and imagine that the patient’s fever was over, the dangers would be even greater, now that the underlying reality was being ignored.”

None of this is to suggest that shortages in goods and services—particularly during a crisis—isn’t a problem. But the nature of the problem is among the legions of factors that gets conveyed in the price of those goods and services that are in short supply. To effectively deal with a shortage we must first turn our attention to the real problem, not the make-believe problem of greedy store owners. If toilet paper was in short supply during the pandemic because most toilet paper is manufactured overseas, or because too many workers are sick and unable to manufacture more rolls, or—as was actually the case—mass panic led to people buying far more rolls than they needed such that manufacturers couldn’t keep up with demand, then those problems must be addressed if we want the inherent costs to come down. Forcing store owners to hold their price below the actual cost ignores the actual problems contributing to those costs and will likely make things worse.

Are Profits Evil?

Once we can grasp the relationship between cost and price we are in a better position to evaluate the socialist’s distain for profit. To the socialist, profit serves no purpose beyond the enrichment of the individual enjoying that profit and may, in fact, be evil as it represents the exploitation of workers. George Bernard Shaw called profits “overcharges” whereas Karl Marx referred to them as a “surplus of value”. But to the capitalist, profits represent invaluable information.

“The high-minded socialist slogan, ‘Production for use, not for profit’, which we find in one form or another from Aristotle to Bertrand Russell, from Albert Einstein to Archbishop Camara of Brazil…betrays ignorance of how productive capacity is multiplied by different individuals obtaining access to different knowledge whose total exceeds what any single one of them could muster,” argues economist and Nobel laureate F. A. Hayek. That store owner may not understand the current availability of the raw materials that go into the manufacturing of toilet paper, but he has some insider information—that is, the price he had to pay to acquire the toilet paper to stock his shelves—that accurately reflect the inherent costs in the product.

“Profitability works as a signal that guides selection towards what makes man more fruitful,” continues Hayek, “only what is more profitable will, as a rule, nourish more people, for it sacrifices less than it adds.” In other words, profit is what helps convey the price at which the consumer, retailer, wholesaler, manufacturer, and those who acquire the raw material are willing to pay for their contribution to the entire chain of events. And because each individual in this long line of participants see value in paying the price to participate, each individual is better off as a result.

Far from exploitative excess, profit is the natural, and positive, consequence of individuals forming mutually beneficial cooperative relationships. There is nothing sinister about private enterprise that produces greedy excess. In fact, says Thomas Sowell, “when a company makes a million dollars in profits, that does not mean that its output would cost a million dollars less if produced by a non-profit organization or by a government-run enterprise. Without the incentives and constraints created by the prospects of profit and the threat of losses, the same output might well cost millions of dollars more.” What makes private enterprise more efficient than non-private efforts is that they rely on the information conveyed in price rather than the good intentions and limited knowledge of individuals presuming they understand the price that works best at all levels of production for all involved.

How Do We Measure Value?

But the information conveyed in price does even more than generate a mutually beneficial series of exchanges between individuals. It also conveys the true value of a good or service. Human beings are hard wired to recognize the value inherent in a product when we can observe the process of transforming raw materials into the finished good. But we have a harder time apprehending the added value of information and processes that aren’t easily observed. Hayek elaborates on this point:

“The market process deals with material objects, but its shifting around of them does not seem to add (whatever might be claimed or really be so) to their perceptible quantities. The market transmits information about them rather than producing them, and the crucial function played by the conveying of information escapes the notice of persons guided by mechanistic or scientistic habits who take for granted factual information about physical objects and disregard the role played, in the determination of value, by the relative scarcity of different kinds of objects…An increase of value—crucial in exchange and trade—is indeed different from increases in quantity observable by our senses. Increase in value is something for which laws governing physical events, at least as understood within materialist and mechanistic models, do not account. Value indicates the potential capacities of an object or action to satisfy human needs.”

The true value of a good or service—in an economic sense—will always be relative to the individual. Toilet paper may be a hot commodity in the West, but it’s of little value in India where 95% of the population use water instead. Raw materials such as oil, uranium, or sulfur were of little value to armies in the ancient world but are a deciding factor in how wars are fought today. The value of everything from the clothes you wear to the food you eat to the place you live cannot be fully determined independent of your unique circumstances, knowledge, needs, and preferences.

No economic model has done a better job at providing goods and services to consumers at a price they are willing to pay than capitalism. That is because the free market price conveys information about both the cost and relative value of those goods and services. “It is not costs which create value,” explains Sowell, “it is value which causes purchasers to be willing to pay for the costs incurred in the production of what they want. Where costs have been incurred in excess of what the consumers are willing to pay, the business simply loses money, because those costs do not create value, whether they are labor costs or other costs.”

Marx and the Labor Theory of Value

Undeterred, the socialist is quick to decry prices under capitalism as undue obstacles to achieving material goods, and profits as greedy employers depriving their workers of the actual value of their labor. Why should the employer have a right to the value produced by their worker? Certainly, we can agree that the worker adds value by pouring their labor into a product. But is labor sufficient for determining value? Karl Marx argued that the economic value of a good or service could be reduced to its total necessary labor. In fact, he claimed this “hidden” value wasn’t a matter of opinion but scientific fact:

“Let us take two commodities, e.g. corn and iron. The proportions in which they are exchangeable, whatever these proportions may be, can always be represented by an equation, in which a given quantity of corn is equated to some quantity of iron, e.g. 1 quarter corn = x cwt of iron. What does this equation tell us? It tells us that in two different things—in one quarter of corn and x cwt of iron—there exists in equal quantities something common to both. The two things must therefore be equal to a third, which in itself is neither the one nor the other. Each of them, so far as it is exchange-value, must therefore be reducible to this third.”

Thus, Marx’s labor theory of value contends that the fact commodities such as corn and iron could be shown to be proportionally exchangeable via a simple equation, we could use a similar thought process to deduce that what gave each commodity its value can be reduced to the one thing they have in common: labor. While not all socialists are Marxists (as we discussed in Part 2), Marx’s assertion that it is labor that determines value provides the foundation to a lot of socialist teaching.

“While modern economists take price, empirically defined, as their explanandum, Marx tries to explain another, hidden variable, of which ‘price’ is the mere ‘phenomenal form’,” countered Sir Roger Scruton, “Not surprisingly, such ‘phenomenal’ entities as supply and demand (which explain price) cannot explain the hidden ‘essence’ of ‘value’, nor even provide us with reasonable grounds for its existence.” The path to Marx’s labor theory of value requires a suspension of disbelief and something akin to dogmatic faith. It is not something that is scientifically demonstrable to those who have not already accepted Marxism as “scientific fact”.

Scruton’s reference to “modern economists” is not a chiefly partisan statement. Outside of those who accept Marxism on faith, you would be hard-pressed to find economists who still ascribe to the labor theory of value. “By the late nineteenth century,” Thomas Sowell contends, “economists had given up the notion that it is primarily labor which determines the value of goods, since capital, management, and natural resources all contribute to output, if these inputs into the production process are to continue to be supplied. More fundamentally, labor, like all other sources of production costs, was no longer seen as a source of value. On the contrary, it was the value of the goods to the consumers which made it worthwhile to incur the costs required to produce those goods…If labor were in fact the crucial source of output and prosperity, then we should expect to see countries where great masses of people toil long hours end up richer than countries where most people work shorter hours, in a more leisurely fashion, and under more pleasant conditions, often including air-conditioning, for example. In reality, we find just the opposite.”

Labor vs. Ability

But if labor is not the primary determinant in the relative value of a product or service, what is? “Ability,” answers Russell Kirk. “Labor without Ability is simply the primitive effort of natural man to obtain subsistence. Recognizing that mankind cannot prosper by mere labor, society hitherto has endeavored to encourage Ability by protecting its incentives.” Two laborers taking the same amount of time producing toilet paper will only produce the same value if they possess the same ability. But what if one of those laborers had either the natural or developed ability to produce toilet paper at twice the rate or at a much higher quality as the other laborer? Better yet, what about a good or service where the relative value is even less transmittable in the production process? Say, for instance, artwork or music or writing. Is the inherent value that’s produced by artwork or music or writing primarily (or even remotely) dependent upon the amount of labor exerted, or by the ability the laborer brings?

It is easy to imagine why the socialist would be fixated on the labor component of value: labor is more easily manipulated and transferable. If what produced value—and the wealth of nations—was the mere labor that goes into goods and services, government compulsion could induce even more labor or, at least, provide for full employment where everyone was laboring and thereby generate wealth. But this has the opposite effect, says Kirk: “Under compulsion, Ability sinks to the level of mere Labor; no man will exert unusual talents if he is to get no reward.”

Yet ability is a doggedly stubborn value-driving-commodity. Try as the socialist might, you cannot distribute or induce or transfer ability between person to person nearly as easily as you can labor. Education, training, and experience can go a long way in bolstering ability, but there is no guarantee of success and—worse still—there persists an absolute guarantee individuals will not develop equally in ability. This is because a certain component of ability is innate and cannot be reproduced by human effort or especially legislation. This does not mean labor is not an important factor in the overall value of a product or service. But it is far less of a factor than the ability of the laborer—which cannot be manipulated by the whims of socialist central planners.

Privatizing Property

Both labor and ability are necessary ingredients of the relative value found in goods and services. But for most goods and services, there is another important ingredient: property. It wouldn’t matter that two laborers had different abilities in the manufacturing process of toilet paper if they were denied access to the raw materials and manufacturing equipment utilized in the production process. While the capitalist and socialist are in agreement on this point, they differ on the question of whether such property should belong to individuals or to the community as a whole.

It was the French Enlightenment philosopher Jean-Jacques Rousseau who first called into question the efficacy and morality of private property:

“The first person who, having enclosed a plot of land, took it into his head to say this is mine and found people simple enough to believe him, was the true founder of civil society. What crimes, wars, murders, what miseries and horrors would the human race have been spared, had someone pulled up the stakes or filled in the ditch and cried out to his fellow men: ‘Do not listen to this imposter. You are lost if you forget that the fruits of the earth belong to all and the earth to no one!’”

At first glance, this would appear to be a powerfully compelling argument against private property rights. Indeed, the history of any nation is littered with sad tales of “crimes, wars, murders, miseries, and horrors” involving disagreements and fights over lands and property desired by competing individuals. But it doesn’t follow that humans behave much differently before the advent of private property. Are we to assume hunter-gather societies where no one in the tribe claimed ownership of the land were free from such miseries? Are the few remaining places on earth where such primitive practices still exist noteworthy for their relative peace and serenity? Would you want to live in that condition?

The truth is, private property marked a major advance in the human condition. It was the necessary condition to establishing civil society in the first place. Thomas Sowell surveyed the nation-states that attempted to achieve some sense of “community” ownership and warned it impeded prosperity: “In a country without property rights, or with the food being owned ‘by the people,’ there was no given individual with sufficient incentives to ensure that this food did not spoil needlessly before it reached the consumers.” Nor was this tendency limited to products humans produce: “The only animals threatened with extinction are animals not owned by anybody…likewise, it is inanimate things not owned by anybody—air and water, for example—which are polluted.”

From the question of whether private property marks an advancement in the human condition or the beginning of our societal ills, to the role price plays in communicating the true costs of goods and services, to how the value of those goods and services are determined and what is most responsible for producing that value, capitalists and socialists start with different economic assumptions.And it is precisely because of mistaken assumptions that socialism cannot compete with capitalism.Socialism doesn’t work.Precisely why it doesn’t work is where we’ll pick things up in Part 4.


August 21, 2020 at 11:13PM - Josh Lewis



How does a Conservative differ from a Socialist? Part 3 (Basic Economics)

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Saving Elephants Episode 65 POTUS Pontifications with Sarah Isgur

8/18/2020

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With everything else going on, it’s easy to forget 2020 is still a presidential election year. To help us navigate the coming election, Josh welcomes Sarah Isgur to talk about national elections, money in politics, how much gender and race is a factor in elections, and how much influence campaigns really have in determining the outcome of an election.

About Sarah Isgur

Sarah Isgur is a writer and podcast host at The Dispatch where she specializes in legal and political matters.

Sarah graduated from Harvard University with a degree in law. She has extensive experience in political campaigns, including working in both John Corbyn and Ted Cruz’s campaigns for U.S. Senate and Mitt Romney’s presidential race in 2012. In 2013 and 2014 she served as Deputy Communications Director to the Republican National Committee. In 2016 Sarah was Deputy Campaign Manager in Carly Fiorina’s presidential campaign. During Jeff Session’s stint as Attorney General she served as his Senior Counsel as well as Director of the Office of Public Affairs for the Department of Justice. Prior to joining The Dispatch, Sarah worked for CNN as a political editor.

You can follow Sarah on Twitter @whignewtons


August 18, 2020 at 07:10AM - Josh Lewis



Episode 65 – POTUS Pontifications with Sarah Isgur

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Saving Elephants How does a Conservative differ from a Socialist? Part 2 (What is Socialism?)

8/14/2020

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Ask a random young American whether they prefer capitalism or socialism and--according to Gallup—the odds are 50-50 they’d say either one. Ask them how they define their preferred economic system and the results become much less binary.

What then is capitalism, and what is socialism? While it is doubtful we could find definitions that would satisfy everyone, it is at least possible to describe them in a general sense so that we can further examine their merits and weaknesses.

What is Capitalism?

Let’s begin with capitalism which is, in my view, the easier of the two to define. Capitalism is an economic system in which trade and industry are controlled by private individuals. In a capitalist society, the price of goods or services are determined by the precarious balance between how much the consumer is willing to pay and how much the producer/seller is willing to sell. No outside entity is “controlling” the price or setting it above or below the mutually agreed upon amount between the consumer and the producer/seller.

Of equal importance in a capitalist system is the recognition of private property. That is, the claim of ownership individuals possess over the things they have earned and inherited. These are things that belong to the individual and they cannot be justifiably taken from them without due process of law. These “things” include more than material goods as they extend to intangibles (such as having ownership of our ideas) and even include the notion that we own ourselves. A corollary to this idea is that self-ownership means we have the liberty to work for whom we want, employ who we want, buy what we want, and sell what we want without outside coercion.

Capitalists contend that capitalism is an economic system that works precisely because it relies upon natural human incentives and not the good intentions of others, and that it maximizes liberty for the individual. But, socialists may argue, are the individuals living under capitalism really free? What difference does it make if you have the freedom to work for employer X or Y if they’re both part of the same unjust system where all employers exploit their employees for profit? And all this lofty talk about the freedom of the individual ignores the very real need for things like healthcare, education, housing, and food. Are we really free if we’re imprisoned in a system that forces us to work for meager wages for the benefit of those who own the factories, farms, and companies just to earn enough to survive? To the socialist, capitalism is merely a prison where workers are deceived into believing they are free because of the few, mostly meaningless choices they do have.

What is Socialism?

In place of this economic “prison”, socialists advocate the means of production—that is, the stuff that makes stuff from factories on down to raw materials—and the price of goods and services should be owned and regulated not by private individuals but by the community as a whole. To the extent that profits are realized, they should be enjoyed equally by the community, or at least by the workers themselves, and not selfishly horded by the individuals and special interest groups who just happens to own the means of production. Individual ownership enables capitalists to exploit their workers. The economy should be for the good of the people, not for the greed of the wealthy few.

In his book Authoritarian Socialism in America, Dr. Arthur Lipow praises novelist Edward Bellamy’s depiction of capitalist society and the cut-throat competition it encourages as a coach, jolting along a rutted road:

“Those who ride on top of the coach serenely observe the scenery, and their position protects them from the mud and the dust. Below are the straining masses of men who are driven by Hunger to pull at the coach and to serve the needs and whims of the passengers on top. When the coach must be pulled over a rough stretch, or up a steep hill, those on the top shout encouragement to the men straining at the ropes below, offering the consolation of a better life in the hereafter to the toiling masses as compensation for their poor, bitter lot in this world. In time, the distance between those on top and those below increases because the former imagine they are of a ‘finer clay’ and that their position, therefore, is the consequence of some inherently superior quality…The riders are purely parasitical. The characteristics they believe mark them off from the common herd are not the product of their inherent worth as individuals, but merely pass into their possession as the result of the suffering of the masses, whose labor makes it possible for them to devote themselves to self-cultivation.”

While not all socialists take such a hostile view of the wealthy few, and may even acknowledge capitalism represented an advancement in human society, they would content that socialism offers a superior way to organize the economy so that everyone may benefit.

Now, these woefully simplified definitions of incredibly complex economic systems are given in what we might call their purest form. In reality, each of the systems described above have never existed, nor could they exist, in totality. As Sir Roger Scruton put it, “The word ‘capitalism’ is still used to describe any economy based on private property and free exchange. And the term ‘socialism’ is still used to denote the various attempts to limit, control, or replace some aspect of capitalism, so understood. In all its appearances, therefore, capitalism, like socialism, is a matter of degree.” The most laissez faire societies in history have still placed some limitations on the free exchange of goods and services. The most restrictive Communist regimes have still allowed for certain sectors of the economy to exist independent of the demands of central planners and, even when that was not allowed, there still existed a black market where goods and services were exchanged outside of the watchful eye of the State.

Why Capitalists Don’t Like the Term “Capitalism”

None of this is to suggest that the distinctions between these systems are meaningless. But it would suggest that the lived experiences under these systems are complex and hotly debated. Even the language used to describe these systems is disputed. I have been using the term “capitalism” to describe the economic system advocated by conservatives. But this term wasn’t commonly used until the early 1900s, meaning both Adam Smith (capitalism’s greatest advocate) and Karl Marx (capitalism’s greatest critic) never used the term as they wrote long before this time. What’s more, this term may be misleading as it puts the focus on those who own capital—i.e. the means of production—instead of the free exchange between individuals.

As such, capitalists themselves have long recognized this wording would seem to favor a socialist mindset and have sought out a more agreeable alternative. Economist F. A. Hayek described this system as “the extended order of human cooperation” and offered “catallaxy” or “catallactics” as his preferred term. This was derived from the classic Greek word katalattein or katalassein which holds multiple meanings suitable to Hayek’s views: “to exchange”, “to receive into the community”, and “to turn from enemy into friend”. In my personal view, both “catallaxy” and “catallactics” don’t exactly roll off the tongue and I’m willing to concede socialists are just better at popularizing economic terms.

A more common alternative is the “free market” or “free enterprise” which would at least take the focus off greedy owners of capital and instead emphasis freedom. But here too we run into trouble as this term tends to depersonalize the process of individuals exchanging goods and services. As economist Thomas Sowell explains, “We tend to think of a market as a thing when in fact it is people engaging in economic transactions among themselves on whatever terms their mutual accommodations lead to.” For the sake of simplicity, I will simply refer to the whole affair as “capitalism” and clarify the potential misunderstandings it produces as they arise.

But whatever complications our language produces for capitalists, I am confident socialism is actually the more challenging system to truly understand. I said above that the socialist advocates a system owned and regulated not by private individuals but by the community as a whole. That may sound straightforward enough until you begin to ask yourself what is meant by the community as a whole? If people are simply left to their own devices, wouldn’t we naturally end up with a system not at all unlike capitalism? This would seem to imply socialism advocates we do something about this natural inclination. So how exactly does one encourage, enforce, or produce “community” ownership?

And to this question socialists have historically given two rather different responses: authoritarian collectivism or democratic socialism.

Authoritarian Collectivism: Socialism with an Iron Fist

One possible means of creating a socialist system would be coercion and enforcement by an all-powerful state. How do we prevent individuals from freely exchanging goods and services and possessing property? Simple: make it illegal. We might call this socialism from above where a socialist order is imposed on the population at large for “their benefit”.

Capitalists and conservatives are most likely to ridicule this form of socialism, and for good reason; everywhere we look throughout history and around the world, this form of socialism hasn’t led to a workers’ paradise but to economic stagnation, starvation, genocide, human rights abuses, thought-policing, mass imprisonment, torture, and totalitarianism. The power to exert control over each citizen’s ability to trade and to take ownership of their property is about as totalizing a power as the state can possess. And those who seek to rule over such a state are not benevolent, altruistic leaders but megalomaniac psychopaths. For even if a truly decent and genuine leader were put in charge, that level of centralization of state power allows for the most ruthless to simply kill them and take their place as absolute dictator.

This top down form of state control was advocated by Edward Bellamy who, though he did not consider himself to be a socialist, nevertheless excited socialist followers who saw the potential for anti-democratic state control to bring about their desired economic system. “In Bellamy’s collectivist theory,” writes Arthur Lipow, “while the state owns the means of production and exchange, and exercises complete authority over its citizens, the people do not in turn ‘own’ the state.” Here we see at once both the appeal and chief objection to authoritarian collectivism: it provides a short-cut to socialism in bypassing the protests of others and simply enforces an economic order where a select few can ensure those pesky capitalists aren’t exploiting workers. To all capitalists—and to many socialists as well!—this cure appears worse than the disease.

“In Bellamy’s utopian view, human nature itself had to be altered first in order for political and social changes to take place,” Lipow continues, “Whether at the level of biology or of character, an external force had to be brought to bear upon the recalcitrant human material.” Lipow instead offers the democratic alternative view of socialism, which does not call for collectivist totalitarianism but an ownership of the people. “The sine qua non of socialism is political democracy combined with public ownership of the means of production, under the most extensive possible system of democratic workers’ control, including trade unions free of state intervention.”

Democratic Socialism: Socialism with a Smiley Face

Unlike the top down approach of the authoritarian collectivist, democratic socialists argue for a bottom up change to the economic system. This change should come about via democratic means. That is, it should not be forced on a hapless population but brought about by popular demand. Before we move on, it should at once be acknowledged that this is the far more humane and—dare I say--moral approach of the two broad alternatives. If the conservative finds fault with socialism on the grounds it does not provide for the liberty allowed under a capitalist system, would socialism be justifiable providing the people chose it for themselves?

But we can’t answer such a question without first understanding precisely what it is the people are choosing. For the choice to limit choice—to take away the ability of both yourself and others to freely trade or own property, to say nothing of the ability of future generations to do so—is hardly freedom.

If the democratic socialist isn’t advocating state-ownership but public-ownership over the means of production, what exactly does that mean? If we take, as an example, a factory that makes products for common consumption, what does public-ownership suggest? Does it mean no individual or group of partners can own the factory? If not them, and if not the state, what does it mean for the workers to own the factory? Does it mean they make management decisions equally, or that they only have a say in certain key decisions? And, if so, who decides what decisions are key?

And would this mean that the owner of said factory would need to voluntarily give up their property because a certain percentage of the population voted for socialism? What if they did not choose socialism themselves? Does the state then seize their property and give it to the workers? Do the workers take it upon themselves to force the owner out? Does the state pay the original owner the fair market value of the property they have seized? And would they then be legally prohibited from using that money to own and operate another factory?

What if the owner of the factory just happened to be the only person in the country with the skills and knowledge to make the products the factory sold, or if they were the only person at the factory who had developed the personal connections needed to move the product? If they were no longer the owner, what incentive would they have to continue sharing this knowledge with the other workers?

And what about those workers? Could they freely choose to not participate in a workers’ cooperative or trade union? What if they hadn’t chosen socialism and preferred the way things were under the previous owner and strongly felt that key decisions and responsibilities were not being spread in a manner that was beneficial or even just? Who could they appeal to? If they could appeal to the state, exactly how much authority should the state have in restructuring the ownership and responsibilities of the workers at the factory without jeopardizing “democracy”?

What if the factory needs a cash infusion for necessary retooling or upgrades? Are the workers responsible for raising those funds? What if the workers don’t—or can’t—contribute equally to cash infusions? Does that lead to some workers gaining more control over the factory than others? If so, what’s to stop them from eventually becoming the new “capitalists”? If not, what incentive would they have to contribute more than anyone else? For that matter, wouldn’t we run into the same problem if we looked outside of the factory for financing?

And what prevents socialist reforms imposed democratically from scaling back to capitalism? It’s not as if those who advocate capitalism, or those who hold significant assets in the free market, are going to just sit on their hands as the means of production are given to their employees. Does the democratic approach to socialism mean that we would allow the people to vote against socialist reforms if popular sentiment turned against socialism? Would this represent the true voice of the people or should we just assume the people were being misled by their dastardly capitalist overlords? In other words, should we allow democracy to work to vote socialism in, but prevent it from voting socialism out?

I don’t mean to suggest, in asking these questions, that democratic socialists do not have answers. What I am suggesting is that their answers would undoubtedly differ. Some socialists may claim to hold the most benign views on democracy, allowing the people free choice to participate in workers’ cooperatives or to revert back to capitalistic models at will. But it doesn’t follow all—or most—who claim democratic socialism are equally magnanimous. Nor should it just be assumed that democratic socialists won’t appeal to state control where they perceive market forces are not acting for the true benefit of the people.

If socialism is intended, as it usually is, to cover the economy as a whole, sooner or later some coercion via the state or union or some collective will be necessary to deal with those unwilling to play by the new rules. If by socialism we mean the means of production and trade should be owned or regulated by the community as a whole, we must settle what is to be done with those who refuse to join the community.

Utopian Socialism

Now, there is a form of socialism that is compatible with capitalism and—so far as I’m aware—unobjectionable to most conservatives. This form of socialism was practiced by the early Christian church in the 1st century. The Book of Acts tells of a community of believers who held all things in common:

“And all that believed were together, and had all things common; and sold their possessions and goods, and parted them to all men, as every man had need. And they, continuing daily with one accord in the temple, and breaking bread from house to house, did eat their meat with gladness and singleness of heart, praising God, and having favor with all the people. And the Lord added to the church daily such as should be saved…And the multitude of them that believed were of one heart and of one soul: neither said any of them that ought of the things which he possessed was his own; but they had all things common. And with great power gave the apostles witness of the resurrection of the Lord Jesus: and great grace was upon them all. Neither was there any among them that lacked: for as many as were possessors of lands or houses sold them, and brought the prices of the things that were sold, and laid them down at the apostles' feet: and distribution was made unto every man according as he had need.”

I’m going to sidestep the interesting yet digressive debate on whether this text means Christians should hold their belongings in common. What’s more relevant to our discussion here is that this form of socialism is compatible with liberty. Those who participated in this system were first members of the same community of believers who then voluntarily sold their possessions (that is, their private property) and freely gave it to the leaders of this community to disburse to meet the needs of everyone. These were not socialists who happened to be Christians, but a close community of Christians who practiced socialism.

This form of socialism is what Irving Kristol referred to as “utopian socialism”—to be distinguished from “scientific socialism” advocated today. As Kristol explains, “being community-oriented rather than individual-oriented, utopian socialism saw no merit in the constant excitation of individual appetites, which would inevitably place sever strains on the bonds of community…Scientific socialism, in contrast, denounced capitalism for failing to produce the society of abundance made possible by modern technology, and mocked at utopian socialism for wishing to curb ‘needs’ rather than satisfying them copiously.”

The problem with utopian socialism—as evidenced by history—is that it’s incredibly short-lived and appears to only be possible among a very small and extremely tight community. The simple act of a husband buying a gift for his wife would undermine the system. Those Christians in the early church in Jerusalem had devotees on religious sojourns far from home. In order to join the community, many had to leave behind their friends, family, possessions, and livelihoods back home. The socialism practiced among the believers may have been as much an effort to support the new members within the community who temporarily had no way of supporting themselves as much as it was an act of incredible generosity.

This is hardly what socialists today appear to have in mind when they speak of the evils of capitalism, the need for equality, the history of class struggle, exploitation of the workers, or—above all—the promise of material prosperity. Socialists today speak of an economic system to rival and replace capitalism, not a small sub-set of the population that’s content to dwell within the system.

Marxist/Communist Socialism

Before we leave off, I’d like to briefly touch on socialism’s most famous advocate: Karl Marx. While it’s difficult to even conceive of socialism as we know it today without understanding Marxism, the focus of this series is on socialism and not Marxism. The two are related, but not identical. All Marxists are socialists, but not all socialists are Marxists in the same sense all Baptists are Christians but not all Christians are Baptists.

Marx advocated Communism, and while Marxism and Communism are not exactly identical, they’re a heck of a lot closer than Marxism and socialism so I’ll just be using them interchangeably for this series. Marxism goes well beyond believing that socialism is a pretty good idea that’s worth a shot. Marx prophesied that it was inevitable and that history was destined to lead to the rise of the proletariat (the working class) as they revolted against capitalism. This was because history—according to Marx—is governed by immutable “scientific” laws that will eventually take us to a global, classless society.

Marxism added a powerful, purpose-driven—dare I say, religious—inducement for a socialist system. In fact, much of the success of Marxism is that it instills a sense of meaning in the life of the socialist that stretch far beyond economics and reach into politics, morality, history, law, and form a powerfully cohesive worldview.

There are socialists in both the authoritarian collectivist and democratic socialist camps who claim they are the true disciples of Marx. While it is easy to find examples from the authoritarian collectivist camp—Lenin, Stalin, Mao, Castro—Some democratic socialists pride themselves on their allegiance to Marx’s original ideas. Take, as an example, Arthur Lipow, the democratic socialists we heard from above: “Only in a mass struggle from below is it possible to form a truly democratic social order. This conception of socialism is at the heart of Marx’s idea of revolutionary socialism.”

One of the challenges in untangling socialism is it can be difficult to determine how far the socialist is aiming or willing to go. Are democratic socialists simply advocating we put both capitalism and socialism to a vote within the nation, or do they truly believe in the eventual global, classless society advocated by Marx. Do we get off this train once everyone has universal healthcare, or are we waiting for the abolition of all inequalities and varieties enjoyed in a capitalist society?

Even in its most benign form, conservatives do not ascribe to the economic model of socialism. Not only do they not agree with where socialism is going, they disagree with the underlying assumptions it is built upon. That is, the socialist’s understanding of economics. And that is where we’ll pick things up in Part 3.


August 14, 2020 at 07:16AM - Josh Lewis



How does a Conservative differ from a Socialist? Part 2 (What is Socialism?)

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Saving Elephants How does a Conservative differ from a Socialist? Part 1

8/7/2020

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It’s hardly news that socialism is gaining in popularity among younger Americans. Millennials in particular are evenly split on whether they prefer socialism to capitalism, with an astounding 7 out of 10 reporting they’d be willing to vote for a socialist political candidate.

Yet it’s more difficult to ascertain what Millennials have in mind when they express support for socialism or socialist candidates. Do they mean Marxism or the numerous varieties of Communist authoritarian regimes tried over the past century, European-style “socialism”, democratic socialism, having the state seize the means of production and abolish private property, bolstering labor unions, or some complex web of worker-ownership cooperatives? Or do they simply mean “whatever we have now, I don’t like that” with some vague idea that “the rich are not paying their fair share” thrown in for good measure?

I’d be willing to wager a significant portion—if not the majority—are in that latter group. They’re not reading Das Kapital on the weekends and plotting the proletarian revolution. They are, however, rather discontent with what they perceive to be “capitalism” and more than willing to give socialism—what they, somewhat mistakenly, perceive to be the opposite of what we have now—a go. The 2008 housing market collapse and the ensuing Great Recession have colored most of our generation’s lives as we’ve attempted to enter the labor market and various professions with an economy that hasn’t been responsive to the efforts we made in bettering ourselves by going to college.

Worse still, the growing debt at all levels of government are likely to leave us with fewer choices than our parents and grandparents enjoyed. “The precarious job market, the student debt crisis, our Boomer parents’ exploding health care budgets—leaves us Millennials with only one other financial option. We’re going to have to work forever,” writes Joseph Sternberg in his book The Theft of a Decade: How the Baby Boomers Stole the Millennials' Economic Future. While the Millennials’ revolt against capitalism is misdirected, the anger is certainly understandable. “Millennials may never be able to accumulate enough assets to support a comfortable retirement, and we’re starting to realize it.”

But to the extent this anger is the driving motivation, Millennial support of socialism would have less to do with an embrace of socialist arguments than it would a frustrated search for answers. Socialism is winning by default, not persuasion, in much the same manner some candidates win elections not because they are liked, but because they are less hated than their opponent. “It’s a mistake to think Millennials are uniformly on the political Left or the Right,” continues Sternberg, “It’s probably more accurate to argue we’re all contrarians. The biggest clue is that whatever else we say about our political views, we consistently tell pollsters that we’re less likely to affiliate with a particular party than previous generations were—or even than our younger selves.”

I don’t want to come down too hard on my generation as if we’re a thoughtless, angry mob simply revolting against a caricature of “capitalism” and advocating an economic system we don’t understand. Attempting to define economic systems such as capitalism and socialism isn’t easy. Nor have older generations—in my view—taken our complaints seriously and attempted to offer adult-like defenses of our free market system. And—if there’s one thing the election of Donald Trump has shown—it’s that the tendency to behave as a thoughtless, angry mob isn’t limited to any one generation.

Just as it’s hardly news that younger Americans are becoming increasingly supportive of “socialism”—however defined—it also goes without saying that American conservatives have—generally speaking—opposed socialism and supported capitalism (or, more accurately, the free market). And while most conservatives will tell you this is for the sufficient reason capitalism “works” and socialism doesn’t, if pressed further they are likely to give additional moral reasons the former is superior to the latter. And that moral reason would be that capitalism allows for a flourishing of liberties that socialism impairs or, in some cases, obliterates.

But I’m getting ahead of myself.Before we can untangle the merits of capitalism and how it is superior to socialism, both economically and ethically, we have to first come closer to understanding what we mean by the terms “capitalism” and “socialism”.And that is where we’ll kick things off next week in Part 2.


August 07, 2020 at 07:55AM - Josh Lewis



How does a Conservative differ from a Socialist? Part 1

Click the headline to see the full report at Saving Elephants, with Josh Lewis
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Saving Elephants Episode 64 School Choice under COVID-19 with Brooke Medina

8/4/2020

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School districts across America are faced with unprecedented challenges as they weigh their options in reopening classrooms in the midst of a global pandemic. But could these challenges point the way to interesting opportunities to find innovative ways to educate and even allow for a healthy debate on the purpose of education in the first place?

Perennial optimist and returning guest Brooke Medina believes this is the case and she shares how empowering parents and local governments to make their own choices is not only the best way to deal with the lasting effects of COVID-19, it also happens to be the best policy for educating our kids overall. Brooke joined Josh earlier this year in

About Brooke Medina

Brooke Medina is a homeschool mother of four and the Director of Communications at

Brooke is a graduate of Regent University, holding a B.A. in Government and a minor in English. She has also completed several programs with the Charles Koch Institute, including the Koch Leaders Program and Koch Communications Fellowship, focusing on the philosophical underpinnings of market-based management and classical liberalism. She also sits on the board of directors for ReCity Network, a Durham-based non-profit committed to empowering civil society in combating poverty-related problems. Brooke’s writings have been published in outlets such as The Hill, Entrepreneur, Washington Examiner, Daily Signal, FEE, and Intellectual Takeout.

But most importantly, Brooke’s hot takes, insights, and shenanigans on social media are worth following so be sure and check her out on Twitter @Brooke_Medina_


August 04, 2020 at 07:14AM - Josh Lewis



Episode 64 – School Choice under COVID-19 with Brooke Medina

Click the headline to see the full report at Saving Elephants, with Josh Lewis
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    ​Saving elephants

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