Democracy extends the sphere of individual freedom, socialism restricts it. Democracy attaches all possible value to each man; socialism makes each man a mere agent, a mere number. Democracy and socialism have nothing in common but one word: equality. But notice the difference: while democracy seeks equality in liberty, socialism seeks equality in restraint and servitude.
-- Alexis de Tocqueville, 1848
Lots of labels are tossed about the political landscape. People are accused of being Nazis and Fascists, as well as the opposite accusation of being called a Communist. Not too far behind is the charge of being a Socialist. So if it is fair to ask whether a person is a Nazi or a Fascist, it is reasonable to evaluate whether a person is a Socialist.
FA Hayek’s book, The Road the Serfdom, is a critique of socialism. He spends a great deal of time discussing the dangers and the effects of socialism on individual liberty. This offends a lot of people because they see aspects of socialism as beneficial. Many people see the free market as the cause of poverty and inequality, and see nothing noble about an income distribution that destines millions to living paycheck to paycheck while a small percentage at the top enjoy immeasurable wealth. Their solution is to tax the rich to pay for subsidies for the poor. The avenue by which money flows from the rich to the poor is the government. Within that government emerges a class of citizenry that has its own interests in mind, and the implementation of power to advance those interests. The equation of income redistribution is not a simple process of addition and subtraction, but a multi-factor regression that pulls within the process non-economic elements, aspects of social policy that are designed to coerce people to think or act in a certain way.
In economics we divide the field between micro and macro. Micro-economics pertains to one individual, one corporation, one market or one industry. Macro-economics focuses on an entire economy, whether it be that of a city, state, nation, global region or the entire planet. Most of us relate to micro-economics because we experience it every day. But when we hear GNP, GDP, the Fed, unemployment rates and such, we can easily get confused because the numbers are abstract representations. Some things, like inflation rates, make sense because we see the increase of food prices or the rise of gasoline at the pump. But it does not always explain the cause.
When discussing socialism, there is a micro aspect to it as well as a macro aspect. Many of us participate in socialism at the micro level, whether it be owning things in common (like a farmer’s cooperative) or sharing representation in common (like a labor union). We are often members of churches or social organizations where we contribute a portion of our personal wealth to support others. It is interesting to note that insurance companies evolved from the desire to obtain personal security through the individual contributions of many others. We see collective economics amongst the Amish and Mennonites. All of this to point out that socialism wasn’t “invented.” Socialist economics has been practiced for centuries amongst small, independent groups.
This changes dramatically, however, when you translate a form of economics amongst consenting peers to that of an entire society. If you were a Mennonite and lived in a commune, you may be perfectly content with the arrangement. But if you assert that everybody else needs to live that way, it is reshaped considerably.
It is macro-socialism that Hayek addresses and it is macro-socialism that stirs up controversy and has manifested itself in various ways in the past two hundred years. It is interesting, in my lifetime, how often I encounter people who say they are not socialist, but still endorse coercive action like I described above. Many Americans find aspects of socialism as necessary. We have Social Security. We have Medicare and Medicaid. The native community in Alaska has an extensive health care system. Republicans in Alaska administer state-owned ferry and rail systems. Maybe you do not see Social Security and Medicare as coercive, but 17% of your payroll check is directed to support those programs. Yet does endorsing any of those programs mean you are a socialist? If not, can it at least be admitted that some of these programs have merit?
Hayek was not out to purge the world of socialism. Throughout his writings he concedes that socialism has a place on the debate platform. He knows this because the history of socialism closely parallels that of the free market. It emerged because there were issues not addressed adequately by the free market. If anything, these issues emerged because of the free market. The industrial age was a remarkable period in the history of mankind, but it was not a pleasant experience for millions. In the end, after three generations, the standard of living of the average person had risen dramatically, all due to free enterprise. But that was not good enough. Not all people are “average” and not all average people want to remain “average.” It is in human nature that one person can be content in their economic condition, while a peer can be deeply dissatisfied. One person can view their circumstances as a blessing of God, while a person in the same situation could be racked with bitterness and despair toward “the rich.”
It must be repeated that what is being discussed below pertains to macro-socialism, an economic system that applies to an entire society.
Most of us equate socialism with Marxism, probably due to the intense Cold War propaganda and the tensions with the Soviet Union and China. But socialism predated Marxism by over a generation. Some would argue that socialism had its roots in the 18th century philosopher Jacques Rousseau, with his musing over the Social Contract. Thomas Jefferson and others saw a lot of value in Rousseau’s political theory, but Rousseau never formulated a grandiose scheme of governance. He was basically explaining why societies form governments. It would be left to Henri Saint-Simon to formulate socialist theory. Like Marx, who would follow him a generation later, he saw society as being divided in classes. He saw serious issues emerging from the beginnings of the industrial revolution. People did suffer terribly. Saint-Simon would be the first to propose that human beings, at least a few of them, had the capacity to organize society equitably, mitigating if not removing all the maladies besetting the working class. And the elite would be empowered to coerce society to conform to the plan. Hayek would find this quote by Saint-Simon, “Every man who fails to obey this commandment will be regarded and treated by others as an animal.”1
Saint-Simon would die in 1825. Tensions were rising in western Europe during his lifetime. While the voting franchise was extended to almost every white man in America, the working class in Europe was yet to be included. Visionaries like Saint-Simon were struggling with the question of how to bring some level of economic justice to the working class while much of the governing elite were reluctant to give them any political role. Saint-Simon would also be that first wave of theorists who would expand scientific thinking from the laboratory to society at large. Some would call it Utopian, the idea that people could be managed and directed. It was an expansion of Rousseau’s concept of the malleability of the human mind. What we would be seeing in Saint-Simon would be elements of modern socialist theory: class conflict, governance by an elite, managed society, coercion.
In the interregnum between Saint-Simon and Marx would be Alexis de Tocqueville’s critique of Saint-Simon. He saw dangers in socialism. We need to note that Saint-Simon and de Tocqueville were touched by the horrific experience of the French Revolution. Saint-Simon would live through it and de Tocqueville would live through the post-Napoleonic reaction. De Tocqueville, who had a lot of positive things to say about the American political and social experiment, realized that Europe had a ways to go. But the path to equality would not be through governance by an elite. Society could not be “managed.” Coercion would be inevitable. He would brand it as “Utopian.” He feared another Reign of Terror.
Hayek cites de Tocqueville in drawing a clear line between democracy and socialism.
Democracy extends the sphere of individual freedom, socialism restricts it. Democracy attaches all possible value to each man; socialism makes each man a mere agent, a mere number. Democracy and socialism have nothing in common but one word: equality. But notice the difference: while democracy seeks equality in liberty, socialism seeks equality in restraint and servitude.2
Karl Marx would come along to publish The Communist Manifesto in 1848. He was to socialism what John Calvin was to Protestantism. Saint-Simon, like Luther, had started a progression of ideas. But it would be Marx and Friedrich Engels who would turn his ideas into systematic theory. While Saint-Simon saw a world where industrialist and worker could exist side-by-side, Marx believed that the working class should seize the means of production. Without control of the assets of production, the working class would never reach parity with the industrialists. For Saint-Simon, the working class would always be with us. It was a matter of people being fully employed and productive. For Marx, it was a matter of ownership. It was clearly a matter of power.
Yet, to his credit, Marx was not altogether a totalitarian monster. His theory asserted that the progression from a capitalist to a socialist society would be an evolutionary process. Yet throughout his lifetime he would see two moments in history when the working class could have seized the reigns of power and fail. Something was missing. There was no question that to change society the socialists would need to control the State. The 19th century in much of Europe would prove that taking over the State through violence would not be easy, if ever possible.
Thus would emerge democratic socialism.
Democratic Socialism comes in many shapes. By coincidence, as I write this essay, the people of Chile rejected a new constitution that would have institutionalized one of the most left-leaning governments in the world. Alas, this is democracy at work. Yet when you look at the proposed constitution you see a government that is providing protection from cradle to grave. If it had been approved, the concept of “democratic” would be built on a foundation of socialism, not individualism. At this time there are examples of democratically elected socialist leaders that essentially transformed their countries into socialist dictatorships, giving birth to the rather facetious statement “One man, one vote, one time.” Cesar Chavez of Venezuela was democratically elected and molded before his death a socialist state. Daniel Ortega of Nicaragua was elected twice. The first time he wasted little time establishing a socialist totalitarian state. That fomented a counter-revolution. Driven from power, he would return years later and be elected president again. This time he was much more patient, taking years before eventually arriving at the same point.
Yet democratically elected socialists have integrated into several countries around the world without resorting to totalitarian techniques to control their economies and their societies. Socialist programs are introduced through the rule of law and are regularly subjected to questioning, debate and re-evaluation. Some societies are actually run quite well by socialist regimes albeit with some qualification. In all cases, populations are small. Singapore, for example, has implemented several social programs that benefit the highly concentrated urban society, providing stability and economic security. Yet Singapore is a center of enterprise, demonstrating that control of production is not the objective of socialism in their state. It is in some respects more of a Saint-Simon type of socialism, ruled by the same political party since 1965, accused by many as authoritarian. It ranks considerably down the freedom index for journalists. Some have labeled their government a technocracy, where engineers and economists have built one of the most advanced cities in the world.
The United Kingdom and Sweden embarked on socialist experiments controlling and owning many industries, almost all of which failed. The dynamics of the free marketplace changes too quickly for the bureaucratic plodding of socialist firms. The United States has had a lot of success, albeit with some adjustment, of using regulatory agencies to rationalize the distribution of critical infrastructure such as power, telephone and Internet services, without owning the means of production.
The concern about individual liberty remains. Fundamentally, socialism means control, implemented by the State. No matter how well intended, no matter how intelligent and objective the administrators, the consequences can be dire. In the West socialism has sprung outside the orbit of economics into social engineering. “Social justice” is the determination of what is equitable, who benefits, who pays, what you say and how you are to think. While many critics call it Marxism, it is actually the classic socialism of Saint-Simon, where an elite can direct society as it thinks best. This elite will determine who excels in colleges, who is hired to teach, who is hired by large corporations, and who is fired. The crusade for “inclusion” leads to the cancel culture.
So the ultimate question is how do you democratically disengage socialism? It can be done. It was done in Sweden and in the United Kingdom. But as a rule, in most circumstances, once a socialist policy is institutionalized, it is very difficult to disengage it. As noted above, socialism picks winners and losers. The winners gain a vested interest in the continuing operation of the socialist state. For the United States, it is obviously the bureaucrats, which almost overwhelmingly vote Democrat. The same applies to public school teachers. As the role of the State increases, the portion of the population that works for the State increases. It is a very large voting block to overcome.
What usually disengages socialism is often the very same thing that makes it attractive – economic catastrophe. As will be explained, socialism can be quite appealing to people who feel “out of the loop.” One only has to look at unions to understand this process. Unionization is almost always an issue somewhere. The appeal of the union is usually a function of the stress of the workforce, whether it be inadequate wages and benefits, or work conditions. At some point the workforce finds joint action a reasonable option. For society at large, health care is a frequent stress point. When Franklin Roosevelt was president, stress points were doing any kind of work, retirement security and providing electricity to all Americans.
Yet catastrophes, or stress points, can work in the opposite direction. The union-heavy industries in the United States struggled mightily to compete against domestic and foreign competition that had evolved outside that model because unions insisted on molding the world to its vision. Union membership has declined considerably. Economic catastrophe beleaguered the United Kingdom and Sweden, and the people, through the democratic process, chose leaders who promised to discard socialist interference in the economy. Nationalized firms were privatized. Resources, once directed by political fiat, were now redirected through economic rationalization. Unproductive firms were reduced or closed. Capital was reallocated toward investment in new ideas, new industries arose and the results were a strong rebound in their economies.
George Orwell would indirectly introduce into the English language the term doublespeak through his novel Nineteen Eighty-Four. Doublespeak is using a word that seems to mean one thing, but actually means something else. What Orwell wrote was not new. It was the core of propaganda for the Soviet Union and all the Axis powers. But use of the technique first developed in the latter half of the 19th century. The failure of the Marxists to seize power in 1848 and to maintain its hold on power in 1872 in France forced theorists to rethink their strategy. If you can’t beat them, why not join them. Thus democratic socialism. But just as importantly, what was communicated to win popular support was crucial. Thus would evolve “the new freedom.” In Hayek’s words,
It was to bring ‘economic freedom,’ without which the political freedom already gained was ‘not worth having.’ Only socialism was capable of affecting the consummation of the age-long struggle for freedom, in which the attainment of political freedom was but a first step.3
The new freedom promised, however, was to be freedom from necessity, release from the compulsion of the circumstances which inevitably limit the range of choice of all of us, although for some very much more than for others. Before man could be truly free, the ‘despotism of physical want’ had to be broken, the ‘restraint of the economic system’ relaxed.4
Hayek would conclude, “Freedom in this sense is, of course, merely another name for power …”5
This concept of freedom is understandably quite appealing to a lot of people. “Free from want.” Who would not want that?
And it is an illusion. Hayek was joined by others throughout the 1930’s and 1940’s who saw an ugly pattern evolving. For some odd reason socialism seemed to eventually evolve to totalitarianism. The promise of bread in Russia in 1917 culminated in Stalinism. The National Socialists of Germany promised many things to the working class, but in the end subjected them to the most systematically efficient totalitarian state known to man. Granted, Germany was blessed with a stable economy and full employment. It was the wonder of the world! Yet at a steep price. No dissent. Only conformity. All undesirable elements were conveniently locked away and eventually eliminated in silence. Benito Mussolini set the template a decade before Hitler, emerging from a socialist foundation toward a new form of state control called Fascism. Hayek would sum it up, “there can be no compromise between them and those who really believe in individual freedom.”6
And all these systems of socialism promised the same thing – freedom from want!
The most recent example we have had of “freedom from want” is the populist socialism of Cesar Chavez. Grocery stores were charging market prices for food, which many of the poor found unaffordable. He simply pointed to the item and declared a price. Months later, Venezuela had fewer grocery stores. Under his successor, Maduro, Venezuela, once one of the wealthiest states in Latin America, is experiencing famine.
Much of the content in this essay is associated to what FA Hayek observed about socialism. You may have other thoughts and questions in your head about socialism based on your experience. I have often seen people object to a proposed policy because it is “socialist,” yet that very same person may need to look into the mirror. Maybe to answer this question is to agree that what we are hoping to arrive at is not a clear cut yes/no answer, but a recognition that all of us rest on a scale. Where are you on that scale?
One place to begin is to see what it is you like about your government. Do you think Social Security is a good idea? Do you see any merit in Medicare (health care for the elderly), or in some measure of Medicaid (health care for the poor)? In Alaska, where I live, you have to ask whether the state ferry system is justified. Some may ask the question of public education. What about state and national parks? What all these questions have in common are market interference. The State is involved in some measure. And many of these programs involve a transfer of income from the middle-to-upper class toward the lower-to-middle class.
My guess is that I have many so-called conservatives, Republicans and libertarians conceding that not all State enterprises are bad. Not all State enterprises are necessarily oppressive. The rural electrification campaign of the 1930’s through this very day delivers electricity and communication to the rural communities, at taxpayer expense to some degree. And that is not a bad thing. No one is knocking on the farmers door mandating they speak in a certain fashion or else lose access to power and telecommunications. This is socialism in aspects of our society and economy specifically targeted to address a problem with the marketplace.
Do you think the State needs to hold ownership of part or all of a company? Most people forget, but when the US government bailed out Chrysler and GM in 2008 they actually owned part of these companies. In the long-term, this was smart business strategy. As the economy rebounded, the government made a handsome profit. But note the objective. The objective was not ownership and control as a matter of principle, but as a strategic, temporary measure to avoid a much greater economic disaster. The City of Columbia, where I grew up, owned a power plant. So did the University of Missouri. Today, neither operate a power plant. While their participation in the power production industry covered several generations, seemingly a lifetime and permanent thing, it wasn’t ever meant to be a permanent solution. State ownership resolved specific requirements that the marketplace appeared to not meet at the time.
If you believe the State needs to control industry, or own production assets, as a matter of principle, then you are a socialist. But if you see such measures as temporary to address serious economic issues, you are a socialist to some degree, albeit as a pragmatist.
Next, how do you perceive yourself in the larger community? Americans are generally individualists. Even the leftists I know would go into a hissy-fit if their personal choices were second-guessed. From the beginning of its history, socialism has placed the interests of the larger community over the rights of the individual. We see this dramatically demonstrated today. President Biden threatened to withhold free lunch funding for school children if school districts did not conform to federal guidelines on transgender children. Medicare and Medicaid funding has also been used to pressure hospitals and states to conform to social policies. We saw at several levels how government used COVID funding to coerce conformity to government policies as as well as viewpoints. COVID vaccine policy was used to force people from employment and military service. The common thread in all of these situations are two things. First, there is an elite that defines policy. It is interesting to note how many of these controversies are not generated from Congress, but from the bureaucracy. Second, these are all examples where the specific effect is the subjection of individual rights to that of the State.
We come full circle in this discussion. It began with a self-evaluation and it ends there. How many of us voluntarily submit our personal interest to a particular group? Ever pay union dues? Ever tithe the local church? How many hold licenses and professional certificates that have non-professional conditions applying? You will see that many of us cede our personal liberty to that of a group. We do so, for the most part, voluntarily. When you look at the Amish, Mennonite communities, and other Christian communities you will see micro-socialism in action. The key difference between this micro-level socialism and that of the State is that there is universal consensus. If you don’t agree with what the community decides, you leave it. If you don’t like what the labor union is doing, you can leave it. In a closed-shop, it means you lose your job. But you can at least leave. When a policy is implemented by the State, however, there is no leaving. To not conform risks economic security, individual liberty and possibly your freedom.
As I began this discussion, it was my intent not to demonize socialism. It is prevalent at many different levels. It is a part of life. I am a member of church. It is not a social club to me. It is a community. I give a part of my individual liberty for that community. The benefits are pervasive, from helping people during medical emergencies to supporting people with food. Our church even provided space for a public school when a water main broke.
I also see, as a pragmatist, the necessity of state-owned operations such as the power plant in Columbia, Missouri, or the Alaska Marine Highway. I see the value of public schools. It is not all black and white. There is a lot of gray.
Yet I fully concur with Hayek that we are equally pragmatic when we account for the risks. It is in the nature of man to use power, and to use it arbitrarily. The Founding Fathers constructed a government with that concern in the forefront. Socialism has a tendency, a powerful tendency, to be coercive.
“Voters In Chile Reject Attempt To Adopt New Far-Left Constitution,” The Daily Wire, by Ryan Saavedra, September 4, 2022
1The Road to Serfdom, FA Hayek, University of Chicago Press, 2007, p. 76, cited from Henri Saint-Simon, “Letters from an Inhabitant of Geneva to his Contemporaries.” Refer to footnote #2.
2Hayek, p. 77
3Hayek, p. 77
4Hayek, p. 77
5Hayek, p. 78
6Hayek, p. 81
By Eric Niewoehner
© Copyright 2022 to Eric Niewoehner.
Want to leave comments? Please link to my Substack page, subscribe (currently at no cost) and leave your comment. You can also connect through Locals. Become a member of the Locals community (subscription required) and comment.
Learn more about Substack and Locals, as well as my other links. There is a method to the madness.
If you find something that piques your interest, feel free to select the Contact Me menu item to send a non-spammable message.