By Andy Duncan, Vice Chairman of Mises UK
If someone gave me a gold sovereign for every time in my life I had heard a variation on the following phrase, then in the words of Private James Frazer, from Dad’s Army, I would now be an extremely wealthy man. Here’s the general phrase that you may have heard too:
“Socialism is a great idea, but human nature is so perverse, selfish, and horrible, that nobody has figured out how to do it right yet.”
There are so many misconceptions buried within that simple sentence that there are few single books that can refute them with justice. One that springs immediately to mind is Socialism, written by Ludwig von Mises in 1922; unfortunately this is an immense, distilled work that requires perhaps weeks, months, or even years of study to fully appreciate.
However, I may have just stumbled across another excellent book that uses a different approach to tackle the same misconceptions. In contrast to Socialism, the main beauty of this alternative is that it hits all of its targets in just three or so short hours of delightful reading.
We’ll get to the book shortly, but first let us examine the misconceptions.
The first one is that socialism is a great idea. In Socialism, Mises contends that even if you were to give the socialists their fully-incentivized New Socialist Man, who would happily take out the garbage in Sunderland while his identical twin brother gets to be appointed by the central state planning committee as a leading Hollywood actor, socialism is actually a terrible idea because it makes economic calculation impossible.
This is a subtle argument, also well explained in Mises’s Economic Calculation In The Socialist Commonwealth. Suffice it to say that if you lack a free market in which people can express their consumption preferences by buying more of what they like and buying less of what they dislike, then you can never use fluctuating money prices to work out what are the best things to do with scarce resources, within a consequent capital production structure, to satisfy a people’s needs to the best possible effect.
Money prices are in many ways a poor tool. They concentrate all of humanity’s multi-faceted complexity into a single precious metallic measuring stick. But they are the best that we can aspire to, says Mises, because they become automatically effective across the board and distribute knowledge in a wonderfully Hayekian way to knit together the international division of labor into an ever-evolving complex mesh of unlimited local feedback loops. This web of free-market prices can then use the economic laws of supply and demand, based upon ever-changing consumer preferences, to ensure that scarce resources are continually treated in the least wasteful way, on a transaction-by-transaction basis.
Setting your entire capital-production structure instead upon a whims-and-fancies montage of bureaucrats and politicians, based upon central planning diktat rather than local voluntary money prices, quickly leads to economic chaos. It becomes impossible to know what is the best thing you can do with scarce resources. Thus, the more forced socialism you have, the more unbalanced economic chaos you create.
A small-state government may get away with small islands of socialism within a free-market society, because its petty bureaucrats can use the prices generated by the external free market to work out vaguely rational action plans. However, the bigger these islands of economic chaos become, as socialism expands, the worse things get, as witnessed with the crumbling premiership of the dreadful Gordon Brown.
We can also see this general effect quite clearly with organizations such as the National Health Service and the BBC. The NHS can exist because it sits like a bloated consumptive tumor supported entirely within the productive body of the British free market (or what’s left of it).
However, the NHS has grown into a serious economic drain that is increasingly bleeding the country dry of wealth, particularly in the areas of monopoly pricing in which it engages, such as the scandalous prices it sets and pays for its drugs — never mind the huge legions of overpaid bureaucrats that staff its leafy management centers.
The BBC, on the other hand, sits within the private media world, distorting it in the same way that a giant black hole distorts a local region of space or a giant gorilla distorts a local area of jungle. It gives out ridiculous salaries to untalented “stars” like Graham Norton and yet more phalanxes of empire-building bureaucrats, all cozily ensconced within the snug confines of the huge amount of wealth extracted menacingly from the rest of the population.
If the BBC were privatized tomorrow, it is easy to imagine that its “stars” would take half or even less of the money that they receive now and that at least half of its bureaucrats would be sacked immediately, with the rest receiving 50% pay cuts — and all of those billions of pounds of taxpayers’ filthy lucre taken out of the game. But given the obvious waste at the BBC, they can still sail viably along because they can use prices generated initially within the rest of the media market. This is despite their perverse distortion of the market, paying people like Jonathan Ross £18 million over three years to run a mediocre chat show copied from David Letterman.
It was Mises’s early economic-calculation realization — of socialism’s intrinsic inability to calculate — that finally brought down the Soviet Union, rather than any vague military threat from the West. You may say it took fully 70 years for it to completely deform its surroundings into complete stagnation, but the Communist empire, which started from a fairly low agrarian base, was still surrounded by a relatively free-market world from which it could extract price information.
It could not do so efficiently, of course, or with sufficient distributed locality, but it had enough of a price framework to get by, supported by the threat of the Gulag, along with Western subsidies and the regular import of Western technology ideas. Yes, the Soviet Union may have filled one train in Leningrad with timber and sent it to Vladivostok, and filled another train in Vladivostok with the same kind of timber and sent it to Leningrad, both trains passing halfway at Omsk in a mighty celebration of socialist waste, but at least the Soviets knew what price the timber should be exchanged for at either end. This enabled them to get by, admittedly at a subsistence level.
Alas, what tiny amount of wealth they did generate from their enormous natural resources then got wasted on massive military consumption, with their only successful factory product being the Kalashnikov rifle.
Thank you, then, socialism, for providing us with one of the world’s best killing machines. But was it worth the Gulag to do it?
Going beyond the Soviet empire, if the entire world turned socialist, on some glorious day in the future, there would then be no freely adjusting prices left at all to organize anything with. The resulting total chaos would quickly send us back to a world of agrarian subsistence (with a much smaller global population). The only way out of this decimation and mobocracy would be the reinvention of the free market, which is a concept covered wonderfully in a futuristic novel by Austrian journalist and economist Henry Hazlitt, Time Will Run Back.
The second misconception in our original phrase is that human nature is perverse, selfish, and horrible. I will ignore for the moment the idea that socialism is itself based full-square upon envy, the most destructive human urge of all. I will counter this second misconception instead with the idea that evolution gave us our human nature for a reason. It is that nature which saw us fight and scrabble our way up through the detritus of the dinosaur age, through fifty million years in the trees locating and consuming fruit, and then down through the plains of Africa, over several million years, to an age of relative plenty in the modern age.
Without this unbelievably complex and evolutionarily successful human nature we would still be in the ground with the dinosaurs, while some other creature — perhaps a land-walking descendant of the dolphins, a giant feathered rook, or some kind of well dressed bipedal cat — walked in dominion over the Earth, in our place, with perhaps a behavioral nature entirely similar to our current one anyway.
We are the way we are for a reason. That reason is continuing survival in a world of scarce resources.
To try to fight over four billion years of evolution with the ill conceived social engineering of an angry, envious mob — perhaps best symbolized by the squashed unhappy face of John Prescott — may have been a little ambitious, maybe even vain, though I’ll be generous and stick with saying simply that it was foolhardy.
Whatever the case, you would have to engage in some serious eugenics to get us to change our ways. We are biological procreating survival machines living in a world of scarce, untransformed resources. We need to find and transform these resources, and we need to consume complex high-energy resources on a daily basis, in order to survive.
That we do so now with billions of people working together in relative harmony due to the extension of the international division of labor, coordinated within a Hayekian framework of distributed knowledge and spontaneously ordered pricing systems, is quite simply a miracle of evolution and intelligence. We should therefore celebrate our human nature and the intelligence it has provided us with, rather than pour scorn upon it as the socialists do, usually in the disingenuous tones supplied by the envious, greedy, and arrogant parts of this self-same human nature.
The third misconception is that nobody has figured out how to do socialism right yet. The frightening assumption behind that being that they will keep trying in Robert-the-Bruce fashion until they do get it right, no matter what the destructive consequences of this impossible obsession may be.
This continuing failure of socialism, from the mercifully assassinated Pol Pot through to the thankfully disappeared Gordon Brown, arises because it is impossible to make involuntary socialism work. This is mainly because of the economic-calculation problem but also partially because the core of socialism rests upon the hideously destructive basis of envy, which prefers self-immolation and self-righteous aggression to the terrible potential sight of ever seeing anyone succeed in life (as witnessed most clearly in the Tall Poppy syndrome and as described so beautifully in the book by Erik von Kuehnelt-Leddihn, The Menace of the Herd).
In short, socialism has always been and will always be a complete disaster any time it is tried outside of a small voluntary commune, which itself must exist within a free market matrix if it too is to survive above an agrarian subsistence level.
Even the small, voluntary socialist groups of the family and the monastery need money prices to transmit economic information to distant unknown people, plus voluntary participation. Otherwise they quickly waste more and more of their resources on force to make people comply with the whims and wishes of the omniscient and omnipotent tyrants who appoint themselves as the demigod decision-makers at the center.
Economic tyrants always fail in the end, regardless, usually running out of everyone else’s money or being defeated in the wars that they make. But we should try to avoid letting these people get hold of our lives in the first place, rather than having to keep relearning the lesson, every generation for the past 150 years, that socialism is a synonym for failure.
Even within the confines of the loving family or within the cellular habits of the God-loving monastery, once you go beyond the size of a typical Stone-Age tribe (about 250 people), as happened in the early American religious colonies, starvation and abject failure are usually the results of even voluntary socialism. Once you go beyond reciprocation and barter between people who know and trust each other well, you need prices to coordinate such subsystems with the unknown world beyond the colony’s horizon. Once you stop being able to look someone physically in the eye, and once you have no voluntary unconditional love for them, you have reached the outer limits of voluntary socialism.
Add impossible-to-escape compulsion into the mix, at any stage, even within a small commune, and the whole thing immediately collapses without the imposition of threatened violence, minefields, and occasional executions pour encourager les autres. This violent attitude then strangles the society until the entire thing first degenerates and then evaporates before the pampered eyes of the elite controllers, as it will do in North Korea, and as it already has done in East Germany.
Imposed socialism always leads to myriad people immediately trying to escape it, some of whom are then shot to death for daring to try by those who are ostensibly trying to bring them brotherly love at the end of a dum-dum bullet. Some love!
In the softer West, where the socialists lacked the courage to shoot people dead for daring to leave, capital controls were imposed instead as a sort of death-policy-lite. In Britain, you could therefore leave for Australia in the clothes you were standing up in, if Australia would have you, which I suppose is still better than not being able to leave at all. Thankfully, these life-restricting capital controls were removed later by the likes of Margaret Thatcher, though no doubt we will see their return once the second part of the Keynesians’ greatest recession really starts to renew its initial grip when the first bout of quantitative easing fades completely away.
But who could have foreseen all of this socialist evil in the 19th century, when socialism was still young enough to be dismissed as a dark childish fantasy? If only they had strangled this monster at birth, goes the wish, we may perhaps have escaped all the socialist horrors of the 20th century — including the deaths of perhaps hundreds of millions of people, all sacrificed on the blood-spattered altar of Karl Marx’s Highgate grave.
In the last century we witnessed the National Socialist concentration camps, the International Socialist Gulag labor camps, and the killing fields of Cambodia, so we have little excuse to keep apologizing for socialism. We also have a library of books to turn to, to protect ourselves intellectually, starting with Socialism by Mises.
Fortunately for us, too, when Lenin’s Russia got going, Ayn Rand could write the seminal Anthem to warn us about its direction. When Hitler’s National Socialism took hold, F.A. Hayek could foresee our potential apocalypse with The Road to Serfdom. And when Atlee’s postwar Britain got going, George Orwell could write the dystopian Nineteen Eighty-Four to predict its eventual outcome when the men from the ministry really got hold of our nation.
Yes, each new generation still seems to take hold of socialism with fervor, especially in its teenage years. But when they learn the bloody history of the 20th century and then read the books above, many people disavow this rebellious teenage angst and come back to the light of liberty and freedom. Many lucky people never even go down the road of socialism in the first place, especially if they read these books early enough.
Yet were the mundane horrors of socialism so impossible to predict? Why is it that each socialist project always starts out with such apparent idealism and a glad confident morning, and always ends up surrounding itself with a wall and with guns pointing inward at a simmering prison population?
Lord Acton thought that this ongoing failure was a case of true idealism being corrupted by achieved power. Hayek thought that it was bad people in society latching onto the successful true idealists when they had achieved power and then subverting them.
One earlier man, however, possessed a different idea. As a radical member for Hagen in the German Imperial Parliament in the 19th-century Reichstag, Eugen Richter saw the early socialists and associates of Karl Marx up close and personal. For him there were no true idealists who were then subverted later by power or bad people. For Richter, all the socialists he met in Berlin were bad people from the beginning, and the true idealist mantle they all wore was simply a cultivated cover to hide their inner evil from closer inspection.
Socialism started off bad, says Richter, with bad people who got worse as their powers multiplied.
The terrible shame is that Richter’s prescience failed to spread very far outside the German-speaking world. His predictions and analysis of what a socialist society would become if left to its own devices are so uncannily accurate, you get the impression that he is writing from a vantage point of the 1960s, after the construction of the Berlin Wall , rather than in 1891, when his book was first published in that same Berlin.
Fortunately, you can now get hold of a republished copy of his book translated into English, in case you missed it the first time around: Pictures of the Socialistic Future
Richter gets virtually all of his major predictions right: the mass exodus after socialism is introduced, the subsequent emigration ban coupled with a death penalty for transgression, rationing and the increase of police state powers, the breakup of the family through welfare imposition, larger standing armies, allocated compulsory work duties, internal passports, and all of the other usual miserable flotsam and jetsam of a typical full-blooded socialist regime, with all of the initial ideals forgotten and certainly never achieved, as the worst elements of society scramble to be King of the Prison Steps to control everyone else from the top.
So much then for a Workers’ Paradise on Earth.
The book itself is written in the form of a father’s diary, with the diarist at first enthusiastic for the new socialist regime controlling a late 19th-century Germany. As conditions quickly deteriorate, the narrator tries to explain away each deviation from the “ideal” socialist path — in the same way that the monstrous Stalin later claimed he needed to break a few eggs (stolen from other people) to make an omelet (for himself).
Gradually, the narrator sees that something terrible has gone wrong with the socialist utopian dream, but he struggles to square this with the circle of his socialist roots, until eventually he cracks apart into open disillusionment.
The book has many ups and downs, some of them painful, others bittersweet, so I won’t reveal too much more since you really need to read this book yourself.
However, I will walk through one of the many threads that works itself through the book, covering the police.
On the first glorious day of the socialist revolution, in 1890s Germany, it all seems too wonderful to be true: “After dinner we all took a stroll unter den Linden. My stars! what a crowd there was! And what endless rejoicing! Not one single discordant tone to mar the harmony of the great celebration day. The police is disbanded, the people themselves maintaining order in the most exemplary manner.”
Obviously, we start to need some police, to control the bad elements that socialism failed to immediately exorcise:
I may here mention that after the tumult in front of the palace, the Ministry deemed it prudent to re-introduce a body of police, which is to be four thousand strong, and to station them in part at the arsenal, and in part at the neighboring barracks. With a view to avoiding all unpleasant reminiscences, the blue uniform will now be discontinued, and a brown one substituted for it. In place of a helmet the police are to wear large Rembrandt hats with red feathers.
Soon however, the brownshirt police need more than pretty red feathers to control an increasingly ungrateful and hostile population:
There were loud cries of indignation from the gallery, and these spread to the street outside. The police, however, soon managed to clear the space about the House, and they arrested various noisy persons, amongst whom were a good many women. It is said that several members who had voted against the bank monies being refunded to the owners were shamefully insulted in the streets. The police are stated to have made merciless use of their new weapons, the so-called “killers,” a weapon on the English pattern which has just been introduced.
Such a pleasant turn of phrase. But the growth phase of the police marches onward remorselessly:
Upon entering the dining-room an official detaches the dinner coupon from your book of money certificates, and hands you a number which indicates your turn. In the course of time others get up and go away, and your turn comes, and you fetch your plate of victuals from the serving tables. The strictest order is maintained by a strong body of police present. The police today — their number has now been augmented here to 12,000 — rather gave themselves airs of importance in the State cookshops, but the fact is, the crowd was a very big one. It seems to me that Berlin proves itself to be on too small a scale for the vast undertakings of Socialism.
Soon, the revolutionary leaders begin to feel the wrath of the people and start using the police as a buffer between themselves and the unwashed proletarians:
The unveiling of the new allegorical monument in commemoration of the great deeds of the Paris Commune of 1871, took place yesterday in the square, which was formerly Palace Square. Since then the square has been continually beset by crowds anxious to view this magnificent monument. Returning from a carriage-drive, the Chancellor had to pass the square. He had almost reached the entrance to the Treasury, when all at once, from the neighbourhood of the Arsenal, hissing, shouts, and general tumult ensued. In all probability the mounted police (which is now re-instated), had shown rather too great a zeal in procuring a passage for the Chancellor’s carriage. The tumult increased in fury, and there were cries: “Down with the aristocrat; down with the proud upstart; pitch the carriage into the canal!” The crowd evidently felt greatly irritated at the now rare spectacle of a private carriage.
Herr Richter then presciently anticipates the severity of police border guards on the 1960s Berlin wall:
From all parts of the country reports are constantly coming in, detailing violent collisions between civilians and the troops which were sent out to establish Socialism. The Government is not even quite sure of the troops. This is the reason why Berlin, in spite of the great augmentation of the army, has not received any garrison. But our police force, on the other hand, which has been picked from the ranks of perfectly reliable Socialists throughout the whole country, has been increased to 30,000 men. In addition to mounted police, the police force is now further strengthened by the addition of artillery and pioneers.
At this point in the story, the narrator is beginning to doubt the glories of socialism, especially when the police fully mutate into the 1960s East Berlin border guard squads:
The Chancellor — “I need scarcely remind the Member for Hagen that in order to establish Socialism in the country, we have been under the necessity of increasing the police force more than tenfold. In addition to this, we have seen the expediency of doubling the strength of the navy, and of the standing army, so that these forces might be in a position to render adequate support to the police in their work of maintaining order and preventing emigration, and might also constitute a sufficient bulwark against dangers from abroad.”
The police then go on to become tools of active oppression against the very same workers whom they were supposed to be protecting:
The various shops and places in question are closely watched by strong detachments of police. By these means it is hoped that those on strike will, in a very short time, be starved into submission, inasmuch as the few crumbs and parings which their wives and friends will be able to give them from their rations will be of very little avail.
Finally, the brutalized police become openly savage towards the workers:
Presently fresh detachments of the rioters attempted from Heligoland quay to make a breach in the walls surrounding the magazine. In the meantime, however, and quite unperceived, police reinforcements had been promptly brought up through the grounds of Bellevue Castle. These reinforcements took possession of the foot-bridge, which is almost concealed by the railway bridge, and from this position opened a murderous fire upon the mass of mostly unarmed persons on Heligoland quay. Uttering wild cries of vengeance, and leaving great numbers of killed and wounded behind them, the mob dispersed in all directions. It is said that artillery has been sent for to cannonade Luneburg Street from the other side of the Spree.
The full socialist state has thus arrived.
All in all, Pictures of a Socialistic Future, by Eugen Richter, is a fascinating book and if you like books such as Nineteen Eighty-Four, then I thoroughly recommend that you get hold of a copy.
How he managed to get so much so right from where he was in time, I have no idea. I suspect the use of a time machine. Socialists themselves may like to make this excuse, to refute Herr Richter’s inexorable logic as to the dangers of their religion.
This review originally appeared on CobdenCentre.org.