Socialism is not government control. The purpose of this article is to articulate the nature of socialism, capitalism, and markets. While a word can mean anything you want it to mean, there are advantages to using a common lexicon, including when discussing capitalism and socialism.
- Marxism is only one form of socialism out of many
- Socialism was founded by anarchists
- Socialism is not force, government, or coercion
- Socialism and capitalism can work together
- Capitalism is not greed
- Capitalism and markets are different
- Government, not socialism or capitalism is the problem
Socialism, Capitalism, and Markets
When I was younger, I honestly thought the same way as a lot of conservatives: socialism means government control and redistribution of wealth. I parroted the talking points and failed to read any material on the topic. Then I started trying to figure out exactly what socialism, capitalism, and markets are. I read numerous documents on the topic. I went back to the primary sources. I was fairly shocked, especially when it came on guild socialism, a form of socialism, which showed clear disappointment and distrust in government. Guild socialists took the idea of guilds, and wanted to bring them into the industrial age, through worker owned businesses, without the aid of the government. Economists do not use socialism to mean government control, nor do they define capitalism as a system of greed. Socialism was developed by anarchists and then later corrupted by statists like Marx. The anarchist forms of socialist thought remain. There are also many libertarian forms of socialism, including guild socialism, as discussed by authors like G.D.H. Cole in “Guild Socialism Restated.”
One reason there seems to be a lot of confusion is that Pierre-Joseph Proudhon, who was one of the core founders of socialist thought, the de facto father of modern anarchist thought, and the first self proclaimed anarchist, opposed private property. In “What Is Property?: An Inquiry into the Principle of Right and of Government,” Proudhon reasonably argues that unused property is not actually private property. I express the position in a similar fashion, based on the concept of rights that I have developed over the years. Private property, in an anarchist system, is a myth. Once something is no longer in one’s position, once it is no longer voluntarily enjoyed in the absence of others, that person loses the right to it. If a person lends something to another person, the other person has a contractual obligation to return it, but to take it back by force is a violation of that person’s right to the property that he or she is voluntarily enjoying in the absence of others.
What is Socialism?
Socialism is not government control. I cannot emphasize this point enough. Political talking heads use this view of socialism in order to discredit any discussion on the topic. Socialism is simply any economic system, in whole or in part, characterized by shared ownership or stewardship of the means of production. Credit unions are socialist institutions. Food cooperatives are socialist institutions. Even publicly traded corporations are socialist institutions. It is odd that socialism is characterized only by Marxism, who came after Pierre-Joseph Proudhon, and before G.D.H. Cole. Maybe it is because neither those who came before nor after cared for government, Marxists, who want government to bring about change, became the most loudly spoken group, and everyone recognizes them, and only them, as socialists. But they are not in any way the only socialists.
What is Capitalism?
Publicly traded corporations are also capitalist entities. While capitalism was actually a term coined by Marx, and he defined the concept with a negative connotation, modern economists do not use his definition. It is too narrow and too biased. Capitalism is generally defined as an economic system characterized by for profit ventures. A definition which is useful here is “any economic system, in whole or in part, characterized by the excess of production being returned to the system of production.” I used “in whole or in part” in both of these definitions because a common tactic is to use the straw man of demanding a dichotomous system, where either the economy is entirely socialist or entirely capitalist. That makes no sense. While small bands of families may be almost entirely socialist and even egalitarian, it would be odd to see a reasonably complicated system, with a large number of people, characterized by only one economic mode.
Capitalism is not greed. While profit is a primary motivator in a capitalist system, it is normal human behavior to expect something in return for your efforts, risks, and so on. While some corporations do try to maximize profit at all cost, those entities usually die, unless they get bailed out by the government. Wealth maximization is an alternative to profit maximization, which focuses on long term growth in the value of the operation.
One possible reason for the misunderstanding is that until recently, corporations were actually forbidden from acting in any way that would not be in the best interest of the shareholders. Some corporations tried to have other primary motivations, such as benefiting the public. However the courts decidedly ruled that such corporations had a fiduciary responsibility to think about the shareholders first, and everything else second. It was not until the development of a “Public Benefit Corporation” or B-Corp that for-profit corporations even could legally focus on anything other than their shareholders.
What is a Market?
Capitalism is not market economics and market economics is not capitalism. Credit unions are a good example. They are generally non-profit entities, which means that they are not capitalist in nature. However they are market entities. Credit unions charge for their goods and services, based on prices established through supply and demand in an open market. A market is any venue, whether physical or virtual, in which people get together to exchange resources with one another, and negotiate on a price of the exchange. That is all that a market is. Why people are in the market, whether it is simply to get what they need, to provide something that they think others should have, to make a profit, and so on, makes no difference.
Socialism is not government control, and capitalism is not excessive greed. So why do there seem to be so many issues with each one? We see massive institutional corporations destroying small business competition, polluting, and ignoring the desires of the customers. We see nations like Venezuela crumble under economic devastation. There is something that these two classes of situations have in common: government. Regulation, protection and support of one group at the expense of another, including through taxation, regulation which stifles innovation: all of these factors are destructive to socioeconomic conditions. The legal restrictions of for-profit corporations that tried to work for the benefit of more than just the shareholders is a prime example. It is government which is the destructive element, not socialism or capitalism, which often work hand in hand.