Criticisms of socialism: Wikis




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Criticisms of socialism range from disagreements over the efficiency of socialist economic and political models, to condemnation of socialist states. Many economic liberals dispute that the egalitarian distribution of wealth and the nationalization of industries advocated by some socialists can be achieved without loss of political or economic freedoms or reduced prosperity for a populace. Some critics consider socialism to be a purely theoretical concept that should be criticized on theoretical grounds; others hold that certain historical examples exist and that they can be criticized on practical grounds.

Critics often argue that socialist policies reduce work incentives and economic efficiency through the elimination of buying and selling of means of production, eliminating the profit and loss mechanism, lacking a free price system and relying on central planning. They also argue that socialism stagnates technology. They further argue implementing socialist policies reduces prosperity of the populace. Critics of socialism often criticize the internal conflicts of the socialist movement as creating a sort of "responsibility void."

The Catholic Encyclopedia states that priests and other religious persons were killed by mobs or by order of the leaders of the Paris Commune.[1] Others have accused social anarchists fighting in the Spanish Civil War of atrocities committed in regions under their control. [2] Critics of Israeli kibbutzim have accused them of economic mismanagement, leading to a $17 billion government bailout and declining populations.[3] Critics also find fault with the early communities of utopian socialism, such as Robert Owen's New Harmony, Indiana, Charles Fourier's North American Phalanx, and many other similar attempts, which were short-lived.[4]

The criticisms presented below may not apply to all forms of socialism (for example, many of the economic criticisms are directed at a Soviet-style command economy). Some forms of socialism advocate state ownership of capital in a mixed or market economy, while other forms advocate economic planning and state-ownership of capital. Some forms of socialism, such as social democracy, advocate a mixed system where state and private firms co-exist alongside tax-funded welfare programs, while other strands of socialist thought reject state ownership altogether and instead argue for participatory planning and non-governmental cooperative ownership.


Effect on individual freedom

Friedrich Hayek in The Road to Serfdom, argued that the more even distribution of wealth through the nationalization of the means of production advocated by certain socialists cannot be achieved without a loss of political, economic, and human rights. According to Hayek, to achieve control over means of production and distribution of wealth it is necessary for such socialists to acquire significant powers of coercion. Hayek argued that the road to socialism leads society to totalitarianism, and argued that fascism and Nazism were the inevitable outcome of socialist trends in Italy and Germany during the preceding period.[5]

Hayek was critical of the bias shown by university teachers and intellectuals towards socialist ideals. He argued that socialism is not a working class movement as socialists contend, but rather "the construction of theorists, deriving from certain tendencies of abstract thought with which for a long time only the intellectuals were familiar; and it required long efforts by the intellectuals before the working classes could be persuaded to adopt it as their program."[6]

Winston Churchill criticized socialism claiming it inevitably evolved into a totalitarian regime:

a socialist policy is abhorrent to the British ideas of freedom. Socialism is inseparably interwoven with totalitarianism and the object worship of the state. It will prescribe for every one where they are to work, what they are to work at, where they may go and what they may say. Socialism is an attack on the right to breathe freely. No socialist system can be established without a political police. They would have to fall back on some form of Gestapo, no doubt very humanely directed in the first instance.[7]

Peter Self criticizes the traditional socialist planned economy and argues against pursuing "extreme equality" because he believes it requires "strong coercion" and does not allow for "reasonable recognition [for] different individual needs, tastes (for work or leisure) and talents." He recommends market socialism instead.[8]

Objectivists criticize socialism as devaluing the individual, and making people incapable of choosing their own values, as decisions are made centrally. They also reject socialism's indifference to property rights.[9]

Distorted or absent price signals

This criticism is directed towards centralized economic planning.

According to some of the critics of socialism, the free price system in a market economy guides economic activity so flawlessly that most people don't appreciate its importance or see its effect. Free-market economists argue that a controlled or fixed price always transmits misleading information about relative scarcity and that inappropriate behavior results from a controlled price, because false information has been transmitted by an artificial price. For example, Friedrich Hayek argued in 1977 that "prices are an instrument of communication and guidance which embody more information than we directly have", and therefore "the whole idea that you can bring about the same order based on the division of labor by simple direction falls to the ground". He further argued that "if you need prices, including the prices of labor, to direct people to go where they are needed, you cannot have another distribution except the one from the market principle."[10]

In a market economy, business owners are constantly comparing costs to sales revenue. A business whose costs are higher than its revenues will eventually go bankrupt and the resources it was using will be re-allocated to other purposes (other businesses). In order to make economic decisions, business owners rely on the information provided by prices; millions of owners make millions of separate decisions, leading to decentralized resource allocation that, in the view of its supporters, is the most efficient. Adam Smith dubbed this effect the "invisible hand" of the market.

Ludwig von Mises argued that a socialist system based upon a planned economy would not be able to allocate resources effectively due to the lack of price signals. Because the means of production would be controlled by a single entity, approximating prices for capital goods in a planned economy would be impossible. His argument was that socialism must fail economically because of the economic calculation problem – the impossibility of a socialist government being able to make the economic calculations required to organize a complex economy. Mises projected that without a market economy there would be no functional price system, which he held essential for achieving rational and efficient allocation of capital goods to their most productive uses. Socialism would fail as demand cannot be known without prices, according to Mises. He said:


These arguments were elaborated by subsequent Austrian economists such as Friedrich Hayek[12] and students such as Hans Sennholz.

The anarcho-capitalist economist Hans-Hermann Hoppe argues that, in the absence of prices for the means of production, there is no cost-accounting which would direct labor and resources to the most valuable uses.[13]. Hungarian economist Jonas Kornai, a former market socialist, modified his views subsequent to the fall of the Soviet system and its eastern European variants. Kornai has written that "the attempt to realize market socialism ... produces an incoherent system, in which there are elements that repel each other: the dominance of public ownership and the operation of the market are not compatible."[14]

Proponents of capitalism argue that although private monopolies don't have any actual competition, there are many potential competitors watching them, and if they were delivering inadequate service, or charging an excessive amount for a good or service, investors would start a competing enterprise.[15][16]

In her book How We Survived Communism & Even Laughed,[17] Slavenka Drakulić claims that a major contributor to the fall of socialist planned economies in the former Soviet bloc was the failure to produce the basic consumer goods that its people desired. She argues that, because of the makeup of the leadership of these regimes, the concerns of women got particularly short shrift. She illustrates this, in particular, by the system's failure to produce washing machines. If a state-owned industry is able to keep operating with losses, it may continue operating indefinitely producing things that are not in high consumer demand. If consumer demand is too low to sustain the industry with voluntary payments by consumers then it is tax-subsidized. This prevents resources (capital and labor) from being applied to satisfying more urgent consumer demands. According to economist Milton Friedman "The loss part is just as important as the profit part. What distinguishes the private system from a government socialist system is the loss part. If an entrepreneur's project doesn't work, he closes it down. If it had been a government project, it would have been expanded, because there is not the discipline of the profit and loss element."[18]

Proponents of Chaos theory argue that it is impossible to make accurate long-term predictions for highly complex systems such as an economy.[19]

Pierre-Joseph Proudhon raises similar calculational issues in his General Idea of the Revolution in the 19th Century but also proposes certain voluntary arrangements, which would also require economic calculation.[20]

Reduced incentives for workers

Critics of socialism argue that income sharing reduces individual incentives to work, and therefore incomes should be individualized as much as possible.[21] Critics of socialism have argued that in any society where everyone holds equal wealth there can be no material incentive to work, because one does not receive rewards for a work well done. They further argue that incentives increase productivity for all people and that the loss of those effects would lead to stagnation. John Stuart Mill in The Principles of Political Economy (1848) said:

It is the common error of Socialists to overlook the natural indolence of mankind; their tendency to be passive, to be the slaves of habit, to persist indefinitely in a course once chosen. Let them once attain any state of existence which they consider tolerable, and the danger to be apprehended is that they will thenceforth stagnate; will not exert themselves to improve, and by letting their faculties rust, will lose even the energy required to preserve them from deterioration. Competition may not be the best conceivable stimulus, but it is at present a necessary one, and no one can foresee the time when it will not be indispensable to progress."[22]

The economist John Kenneth Galbraith has criticized radical egalitarian socialism as unrealistic in its assumptions about human motivation:

This hope [that egalitarian reward would lead to a higher level of motivation], one that spread far beyond Marx, has been shown by both history and human experience to be irrelevant. For better or worse, human beings do not rise to such heights. Generations of socialists and socially oriented leaders have learned this to their disappointment and more often to their sorrow. The basic fact is clear: the good society must accept men and women as they are.[23]

Reduced prosperity

According to economist Hans-Hermann Hoppe, countries where the means of production are socialized are not as prosperous as those where the means of production are under private control.[24] Ludwig von Mises, a classical liberal economist, argued that aiming for more equal incomes through state intervention necessarily leads to a reduction in national income and therefore average income. Consequently, the socialist chooses a more equal distribution of income, on the assumption that the marginal utility of income to a poor person is greater than that to a rich person. According to Mises, this mandates a preference for a lower average income over inequality of income at a higher average income. He sees no rational justification for this preference.[25]

Slow or stagnant technological advance

Milton Friedman, an economist, argued that socialism, by which he meant state ownership over the means of production, impedes technological progress due to competition being stifled. As evidence, he said that we need only look to the U.S. to see where socialism fails, by observing that the most technologically backward areas are those where government owns the means of production.[26] Without a reward system, it is argued, many inventors or investors would not risk time or capital for research. This was one of the reasons for the United States Patent system and copyright law.

Other criticisms

Socialism was strongly criticized in the 1878 papal encyclical Quod Apostolici Muneris by Pope Leo XIII. It was again strongly criticized in the 1931 letter Quadragesimo Anno.

Fascism fundamentally opposes Marxian socialism because of its emphasis on class struggle above nationalism, ethnic purity and the struggle of nations. Fascism views the nation to be more important than class, and favored a corporatist mixed economy that encouraged class collaboration as opposed to class struggle. Furthermore, the goals of fascism differ from most socialist philosophies.

Sociobiologist Edward O. Wilson said: "Karl Marx was right, socialism works, it is just that he had the wrong species",[27] arguing that while ants and other social insects appear to live in communist-like societies, they only do so because they are compelled to do so as a result of their basic biology. Since they lack reproductive independence, worker ants, being sterile, need their ant-queen to survive as a colony and a species and individual ants cannot reproduce without a queen, thus being forced to live in centralized societies. Humans, however, do possess reproductive independence so they can give birth to offspring without the need of a "queen", and in fact humans enjoy their maximum level of Darwinian fitness only when they look after themselves and their families, while finding innovative ways to use the societies they live in for their own benefit.[28]

See also

Further reading

  • Friedrich Hayek (1988). The Fatal Conceit: The Errors of Socialism. University Of Chicago Press. ISBN 0-226-32068-5.  
  • Friedrich Hayek (1997). Socialism and War: Essays, Documents, Reviews. University Of Chicago Press. ISBN 0-226-32058-8.  


  1. ^
  2. ^ In particular, Bolloten, Burnett (1991). The Spanish Civil War: Revolution and Counterrevolution. Chapel Hill, NC: University of North Carolina Press.  
  3. ^ Kibbutz ideal collapses as Israel shifts to capitalism Joshua Mitnick THE WASHINGTON TIMES March 5, 2007
  4. ^ The Rise and Fall of Socialism Joshua Muravchik SPEECHES AEI Bradley Lecture Series Publication Date: February 8, 1999
  5. ^ Friedrich Hayek, The Road to Serfdom, Routledge (2001), ISBN 0415255430.
  6. ^ F.A. Hayek. The Intellectuals and Socialism. (1949).
  7. ^ Alan O. Ebenstein. Friedrich Hayek: A Biography. (2003). University of Chicago Press. ISBN 0226181502 p.137
  8. ^ Self, Peter. Socialism. A Companion to Contemporary Political Philosophy, editors Goodin, Robert E. and Pettit, Philip. Blackwell Publishing, 1995, p.339 "Extreme equality overlooks the diversity of individual talents, tastes and needs, and save in a utopian society of unselfish individuals would entail strong coercion; but even short of this goal, there is the problem of giving reasonable recognition to different individual needs, tastes (for work or leisure) and talents. It is true therefore that beyond some point the pursuit of equality runs into controversial or contradictory criteria of need or merit."
  9. ^ Socialism
  10. ^ Reason Magazine, The Road to Serfdom, Foreseeing the Fall. Friedrich Hayek interviewed by Thomas W. Hazlett
  11. ^ Socialism: An Economic and Sociological Analysis by Ludwig von Mises.
  13. ^ Hans-Hermann Hoppe. A Theory of Socialism and Capitalism [1]. Kluwer Academic Publishers. page 46 in PDF.
  14. ^ Ollman, Bertell; David Schweickart, (1998). Market Socialism: The Debate Among Socialists. Routledge. p. 7. ISBN 0415919665.  
  15. ^ "The Myth of Natural Monopoly", by Thomas DiLorenzo
  16. ^ "The Development Of The Theory Of Monopoly Price", by Joseph Salerno
  17. ^ ISBN 0-06-097540-7
  18. ^ Interview with Milton Friedman. July 31, 1991 Stanford California
  19. ^
  20. ^ Proudhon, Pierre J. General Idea of the Revolution in the 19th Century, third study.
  21. ^ Zoltan J. Acs & Bernard Young. Small and Medium-Sized Enterprises in the Global Economy. University of Michigan Press, page 47, 1999.
  22. ^ Mill, John Stuart. The Principles of Political Economy, Book IV, Chapter 7.
  23. ^ John Kenneth Galbraith, The Good Society: The Humane Agenda, (Boston, MA: Houghton Mifflin Co., 1996), 59-60."
  24. ^ Hans-Hermann Hoppe. A Theory of Socialism and Capitalism [2].
  25. ^ Ludwig von Mises, Socialism: An Economic and Sociological Analysis, Indianapolis, IN: Liberty Fund, Inc.. 1981, trans. J. Kahane, IV.30.21
  26. ^ Milton Friedman. We have Socialism Q.E.D., Op-Ed in New York Times December 31, 1989 [3]
  27. ^ [4]
  28. ^ [5]

External links

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