Zohran Mamdani, who recently won the Democratic Party primary for Mayor of New York City, describes himself as a democratic socialist. People on both sides of the aisle seem to have lost their minds. Why?
Some people regard “socialist” as a synonym for “communist”. Other people regard socialism as being on a slippery slope to communism. And yet another group strongly supports Democrats over Republicans, and fears that a socialist candidate on the Democratic ticket will lose enough votes to swing the election to a Republican.
To sort this out, we need to understand the differences and similarities between socialism and communism. The major comparisons are along two dimensions: economic and political.
Communism asserts that all wealth and property is owned, and should be controlled, by the society as a whole. Since that is impractical, economic control is delegated to a central committee, and in practice, typically to the leader of that committee.
Socialism asserts that each society decides on a collection of public goods (lists of examples provided below) that will be supported by the society as a whole. This support often comes from taxes, but some societies have other ways of raising money to support public goods. For example, Alaska and Mexico both earn a lot of income from oil and gas resources.
Communism asserts that all political decisions should also be made by the society as a whole. As with economic control, political control is also delegated to a central committee (typically the same one), and in practice, to its leadership.
Socialism, especially democratic socialism, asserts that political decisions are made in distributed ways, often democratically and often through free market mechanisms.
Our local, state, and federal governments in the United States provide social support for a wide variety of public goods that contribute to our quality of life:
Many other countries around the world provide collective support for a longer list of public goods, including:
I have defined “communism” as the ownership and control of all wealth and property by the society as a whole. In theory, the intention is that the means and results of production will be used for the benefit of all the people in the society. In practice, society’s resources are owned and controlled by the state, which in turn is controlled by a relatively small Central Committee and its leaders. [Note 1]
Small groups with unchecked power are especially vulnerable to using over-simplified models of complex reality to make critical plans and decisions. It is difficult, in practice, for central planners to cope with the diversity and complexity of a large society.
Soviet Communism collapsed because it was a centrally planned command economy. Critical economic decisions, including long-range plans, were made by a small Central Committee, and then enforced on a large, diverse country. This approach turns out to be vulnerable to failures due to overly simple models. It’s easy for a small committee to fixate on a simple model that overlooks the complexity of the overall country, population, and economy.
Chinese Communism adopted some limited forms of free market capitalism, which have made their economy more robust. However, they have retained centrally controlled politics in most ways. Because of central control, the Chinese government is capable of making and enforcing long-term investments and economic decisions. When those decisions are wise, this gives them an advantage over the slower-moving decision process in the USA. However, they are still vulnerable to bad decisions made from overly simple models. (Chairman Mao’s “Great Leap Forward” is an extreme example.) Furthermore, the centralized hierarchical political system is still vulnerable to local government corruption.
Communism starts from the position that the state (on behalf of the people) owns and controls all the wealth and property in the society. While it’s not strictly impossible for a small controlling committee to respond appropriately to the diversity and complexity of their society, all the evidence suggests that they treat the society as relatively simple and uniform. This often leads to bad, even catastrophic, results. Soviet Five-Year Plans were often dramatic failures due to lack of understanding of diverse circumstances across the Soviet Union. The Great Leap Forward in China was catastrophic.
Socialism starts from the recognition that a large complex society contains a diversity of mechanisms and institutions, and then selects some of those for support and regulation, relying on distributed mechanisms such as free markets for other aspects of regulation.
Supporting public goods cost money. Governments pay for public benefits with money raised in a variety of ways. Some governments, like Alaska, Texas, Mexico, and Saudi Arabia, have major deposits of natural resources that provide income to support public goods. Most governments raise money through taxes on assets or economic activity. [Note 2]
In our current US economy, public goods on the second list above, as well as other public and private uses of money in our society, are privately supported by individuals and families using money received as wages from jobs.
However, automation via AI and robotics is predicted to have two distinct effects:
As these trends take place, our society will face a structural crisis. With less work to be done, large parts of the society’s population will have less private income to pay for the pubic and private goods that support their lives. Furthermore, our market-based economy depends on many individuals across the society making purchasing decisions.
We can support an expanded list of public goods, starting with the list provided above, but going beyond it. The quality of life in our society will improve.
We know that there are many kinds of work across our society that people would find meaningful. Some of these may be created by for-profit enterprises, but others may require subsidy as public goods to be sustainable.
The increasing wealth of our society means we will be able to pay for them, if we choose. Some of that wealth comes from scientific and technological innovation, making new enterprises possible and making existing enterprises more effective and efficient. Some of the wealth comes from developing access to new resources such as renewable energy and space exploration. (For example, the minerals available on the Moon and in the Asteroid Belt dwarf the results of mining over all of human history.)
There are plenty of practical problems to be solved, as well as objections to be answered.
In addition to earning wages to support oneself and one’s family, meaningful work is important to the quality of life of individuals and families. Modeling work simply as an input to production is a huge over-simplification. It treats work only as a cost, to be minimized in pursuit to greater profits, rather than also as a benefit, providing meaning to the worker. [E. F. Schumacher, Good Work, 1979].
Q: Can we devise ways to apply the strengths of the free market to the problem of providing meaningful work to everyone in society?
A major concern raised about proposals like this one is that people will choose a life of unproductive sloth and other vices. In many countries, a national service requirement helps educate young people in important virtues.
Q: Can we devise systems to teach these virtues?
Some people, perhaps a small minority, would be willing to live on a small stipend in order to pursue an idiosyncratic goal of their own. Some people may regard “starving artists” as unproductive and slothful, even while they produce works of art that transform our culture. Freedom of choice in the cultural marketplace allows individuals to make life choices according to their own individual visions. This should be possible, and should not require permission from a higher authority.
Socialism is not communism. Just as we need the flexibility and adaptability of the free market to have a thriving economy, we need the flexility and adaptability to provide more public goods for everyone in our society.
With appropriate choices, we can have steadily increasing resources. People need and want meaningful work. There are many kinds of work that the society can benefit from, and that people wanting meaningful work can do.
The existing portfolio of public goods in the United States has provided security for individuals and families, supporting unmatched creativity and entrepreneurship [Note 3]. Expanding that portfolio provides more security, and is likely to unleash further prosperity and well-being [Robinson, 2020].
“In theory, there’s no difference between theory and practice. But in practice, there is.”
“Tax and spend” should properly be considered the slogan for responsible government. The irresponsible alternative is “borrow and spend”. There are times, like taking out a mortgage to buy a house, when borrowing can be a responsible way to pay in the future for something needed now. But in general, the “borrow and spend” strategy should require careful justification and planning, which we often don’t see in government today. See my essay, “Taxes: It’s Your Money, Right?”.
In the current political situation, this portfolio of public goods is under serious attack. To the extent it is eroded, our society will be damaged.