The Misery of Democratic Socialism

Socialism is on the rise again, both among American youth and among leadership in the Democratic party and the progressive political movement. But instead of hearkening back to twentieth-century socialism, which was an unmitigated economic disaster and was always accompanied by political oppression and mass civilian casualties, today’s advocates for socialism have a new, refurbished, and flashy economic idea: democratic socialism.

For Democrat Presidential hopeful Bernie Sanders, “democratic socialism” is a form of economic justice. As he sees it, the world is a zero-sum game split between the rich and oppressive 1 percent, whose wealth and success are driven by “unfettered capitalism,” and the rest of us—the 99 percent who own little wealth, who struggle to make ends meet, and who are one medical or unemployment disaster away from being evicted from our homes or unable to pay the bills. In other words, Sanders is an old-school Marxist who continues to milk the class war rhetoric for all it is worth. He has simply dropped the jargon of the “proletariat,” “bourgeoisie,” and “dictatorship of the proletariat.”

The Vermont senator claims that government should play a more active and intimate role in wealth redistribution, and that until that happens, equality in America will remain a mirage.

Replicating Roosevelt’s Errors

Sanders claims that his democratic socialism would be the fulfillment of Franklin Delano Roosevelt’s New Deal—a set of economic and political policies that, Sanders insists, has made America fairer, more prosperous, and more free. Sanders clearly takes an admiring view of FDR, but some scholars, economic historians, and economists have argued that FDR’s New Deal did more harm than good. Not only did FDR run roughshod over the Constitution and try to pack the Supreme Court, but he used the strong arm of government to coerce civilians, destroy private property, and waste precious scarce resources. Both FDR and Hoover’s economic policies prolonged the Great Depression—hardly a legacy we should aspire to emulate.

Even still, Sanders attempts to ground his calls for FDR-style “economic justice” by claiming that each of us has a right to certain goods and services: a decent job that pays a minimum wage, health care, education, affordable housing, a clean environment, and a secure retirement. Modeling his program after FDR’s “Four Freedoms” speech (1941) and his Second Bill of Rights (1944), Sanders displays the same economic misconceptions and philosophical confusion as Roosevelt.

Human needs don’t create natural rights. We can’t manufacture rights out of thin air, and calling something a right doesn’t automatically confer a duty on others to provide it for us. All of Sanders’s economic “rights” are examples of positive, not negative, rights: they are not God-given or naturally occurring, but are only obtained through certain relationships and social contracts such as employment or rental agreements. Economic rights and duties that come through contract law are part of the core of capitalist economies; they help establish civil order and the rule of law, which provide economic stability and opportunity to those who need them most. Yet Sanders hopes that by mere fiat he can turn positive economic rights into negative economic rights, in order to move them from the sphere of social contract to the level of inalienable rights that are moral imperatives.

This kind of social engineering usually requires dubious philosophical justifications and destructive economic policies. These include government confiscation of wealth from wealth creators that is transferred to those deemed worthy; price floors and ceilings; subsidies; cheap goods; delayed production and distribution; wasted financial and natural resources; debt spending; quantitative easing; and inflation. All of this is made possible, for a time, by the great wealth and opportunity that capitalism creates; but this kind of state welfarism—or socialism lite—always leads toward economic decline, as F.A. Hayek predicted, and as Europe can currently attest. It requires the strong arm of government threat and compulsion, the destruction of property rights, the violation of human freedoms, and the ruin of livelihoods.

In other words, the democratic socialism that Sanders champions requires the political despotism and oppression that he publicly eschews. The fact that he does not grasp this demonstrates the depth of his misunderstanding of what socialism is and does.

Millennial Socialism

Of course, Sanders is not the only one calling for the advent of democratic socialism. Among many others, Nathan A. Robinson at Current Affairs and Bhaskar Sunkara (The ABCs of Socialism) have both made a pitch for a softer and kinder democratic socialism. Neither one demonstrates a serious understanding of the history, philosophy, economics, and social outcomes of socialism, as Jay W. Richards recently demonstrated in his debate with Sunkara. Still, Robinson is more sophisticated than Sunkara, and it’s worth explaining why his argument fails.

In a nod to the good life that Socrates, Plato, and Aristotle sought, Robinson proclaims his lofty vision: that every person should be meaningfully free to have the most fulfilling life possible. He argues that this cannot be accomplished until basic physical and economic needs are met and the world is secure and at peace, allowing the radically autonomous individual to shape his or her own destiny. Thus, he concludes, democratic government must take an active role in fulfilling each person’s basic needs.

Sidestepping the fact that Robinson gets human freedom completely wrong (philosophically, libertarian freedom requires agent causation in an indeterministic world, and political freedom requires knowledge of the Good and the will to choose it for the purpose of becoming virtuous), Robinson believes that democratic socialism can accomplish his version of human flourishing because democracy gives people the right to have decision-making power over the things that affect them—in this case, economic things. So, according to Robinson, if we were to democratize the American economy and give everyone a say over everyday economic affairs through their political representatives, then we would have democratic socialism and everyone would have a fulfilling and meaningfully free life.

The Trouble with Democracy

Robinson’s vision is a high-minded and principled approach. Unfortunately, like many aspirational theories, it breaks down in real life.

Etymologically, dēmokratia is “rule by the people,” yet there is ambiguity as to what this looks like. While the principle of the consent of the governed is necessary for legitimate political rule, the mere fact that a people rule themselves is not an untrammeled good. If the people are ignorant, depraved, or malicious, their self-rule will reflect these traits to the detriment of all; if the people are wise, virtuous, and just, then their rule will more likely lead to prosperity and human flourishing. This is why the American Founders emphasized public virtue, personal morality, and religious devotion as critical prerequisites for our constitutional republic to succeed.

Democracy, then, is a doubled-edged sword. In the fourth and fifth centuries B.C., the city of Athens practiced a form of direct democracy in which eligible individuals (i.e., male citizens) had to show up in person to speak and vote on issues. The American Founders opposed this form of pure democracy, calling it turbulent and contentious, a type of government that destroys personal security and the rights of property, and that always dies a violent death after a short life (see The Federalist, No. 10, by James Madison). They preferred a republic, or what some have called an indirect democracy, in which the people are represented by elected officials who dedicate themselves to being informed of the issues on which they must debate and vote. This was set within the context of constitutionalism and a natural law political philosophy that worked to restrain some of the excesses and dangers of democracies.

It is not clear that Sanders’s and Robinson’s appeals to democracy would actually be helpful. In a direct democracy, would the public be in charge of directly voting on the price of gas? Or on how many dairy products and fresh fruits are to be produced or grown each year? Or to what stores these goods are to be delivered to and in what quantity? Is it really any better to outsource these decisions to elected officials in a representative democracy? Robinson gives the example of someone who has lived in an apartment for thirty years, but because he is not the owner he has no decision-making power over whether the complex will be sold and the tenants evicted. Such a scenario is anti-democratic, he claims.

Yet the ideal picture he paints is just what home ownership is! It’s not as if the tenants were forced to sign a rental agreement they objected to, or were deceived into thinking they would eventually become joint owners of the rental complex. Democratic and capitalistic societies give you the option of renting an apartment or a home, of buying a townhouse or a house with property, or of living by yourself or with family or housemates. Capitalism provides people with stable, middle-class jobs and disposable incomes, and financial markets create liquidity so average persons can borrow large sums of money at low interest rates in order to purchase their own homes. These options are notably absent in socialist societies.

In short, the democratic element in democratic socialism as envisioned by Sanders and Robinson is untenable, and a more stable form has already been realized in democratic capitalist societies.

The Nature of Ownership

Socialism has long been defined as “government ownership of the means of production.” Advocates of democratic socialism may not want the government to legally own American businesses (i.e., nationalize industries) and abolish private property, but they do seem to want the government to be able to call the economic shots regarding production, distribution, and pricing in the hopes that goods and services will become more widely available. If the government pledges to do this on behalf of the people in a representative way, they reason, then this counts as democratic socialism because now the economy will “work for everybody.”

The problem with these two kinds of socialism—the classic twentieth-century socialism that killed millions, and the tame, beneficial, and representative “democratic socialism”—is that they are species of the same thing.

Metaphysically speaking, to own something is the power to decide how it will be used. Even if the government does not legally own or nationalize businesses and corporations, if government officials are able to dictate who produces what and how much, to whom it is delivered and when, and at a federally determined price, then this is equivalent to ownership (which is why some scholars substitute “control” for “ownership” in defining socialism). Except, in this case, those with the relevant technical and economic knowledge of each industry end up being crowded out and overruled by distant government bureaucrats who are listening to the people they are representing, not the producers of society’s goods.

Three Insuperable Problems

Due to this equivalence, democratic socialism falls prey to the same three ills that condemned twentieth-century socialism to abject failure: the incentive problem, the calculation problem, and the knowledge problem.

The incentive problem is that in socialist economies where property, production, and distribution are collectivized, the responsible use of property breaks down. This is known as the tragedy of the commons. In addition, effort and innovation stall without the promise of just remuneration or the profit incentive. As discussed by Thomas J. DiLorenzo and Thomas G. West, this is what almost destroyed the first American colonies of Jamestown and Massachusetts Bay.

The calculation problem, first advanced by Ludwig von Mises in 1920 (and expanded in 1951), is that in socialist economies, central planners have no way of knowing if scarce resources are being produced and allocated in an economically efficient way. Without market prices, economic planners are driving blind.

While von Mises assumed, for the sake of his calculation argument, that socialist planners had at their disposal all the knowledge necessary to produce goods and services, F.A. Hayek did not. Hayek’s objection, which is known as the knowledge problem, was most clearly articulated in his brilliant 1945 essay, “The Use of Knowledge in Society” (and was masterfully discussed and expanded in James R. Otteson’s recent book, The End of Socialism). Hayek claimed that the economic knowledge needed to power a society cannot be centrally organized. Rather, it is local and dispersed among millions of economic actors and their billions of decisions; it changes constantly (which gives rise to the Day Two Problem); and it is what creates supply and demand, which then generate prices accordingly. Democratic socialism is incapable of overcoming each of these problems, whether it is Sanders’s version of heavy government regulation and economic intervention, or Robinson’s version of the economic decision-making power of the collective.

Democratic socialism and twentieth-century socialism create the same results: inept decision-making, incompetent production, resource waste, and inaccurate prices that do not reflect scarcity, supply, and demand. Consequently, the high quality but low-priced goods and services that people desperately need in order to sustain a flourishing life simply aren’t available. In an attempt to achieve the socialist vision of equality of economic outcomes, the democratic component is squeezed out until all that’s left are distant and all-powerful despotic bureaucrats who control our economic destinies.

If followed to its logical end, democratic socialism will yield the same fruits as the Soviet Union’s Five-Year Plans, Mao Zedong’s Great Leap Forward, or Cuba and Venezuela’s socialism: deprivation, desperation, violence, and eventually death.

Democratic socialism is a façade. It looks sweet and sounds tempting. It seems kind and gentle and fair. But it is really just plain old socialism. That socialism is incompatible with our constitutional and democratic republic, with human freedom, and with economic prosperity. That socialism always leads to political authoritarianism, oppression, and the death of civilization. That socialism has been tried, and it failed the millions of people who were unlucky enough to have been its victims.

Let’s not be so foolish as to try it again.