Minnesota Governor Tim Walz, the Democratic vice presidential nominee, recently he urged his supporters to “not hinder our progressive values. One man’s socialism is another man’s neighbor.” Socialism is sharing a cup of sugar with the family across the street, and who can argue with that?
Walz’s identification of socialism with the neighborhood is reminiscent of Bernie Sanders’ comment that, “tFor me, Socialism does not mean the ownership of the state of everything, in any way, it means creating a nation, and a world, where all people have a decent standard of living.” Here Sanders equates socialism not with any particular set of economic institutions, but rather with the uncontroversial idea that we must build a world where everyone has a decent standard of living.
Even socialist philosophers and writers are guilty of this kind of sleight of hand. GA Cohen and it was argued that Voluntarily sharing food and equipment with your friends on a camping trip is an expression of social values. Again according to George Orwellsocialism is the idea that “every man does his due part of the work and receives his due share of provisions; he says that the benefits of socialism thus described are “plainly obvious.”
I agree with Orwell—to a point. It is something it is obvious that must they want an economic system that properly distributes burdens and benefits. But it does not appear that socialism is this system. Simply identifying socialism with a just economic system is no more a defense of satisfactory socialism than mere identification. capitalism with a fair economic system it is a satisfactory defense of capitalism. This is like someone arguing that the paleo diet is the healthiest diet because they will simply label any diet that is extremely healthy as “paleo.” Therefore, in order to compare capitalism and socialism, we need to understand the specific economic institutions that characterize capitalism and capitalism.
At a general level, social economies are those that allow for the accumulation of productive assets. That is, they allow you to privately own “personal property” like your shoes, but not “productive property” like a shoe factory. Collection can be done in different ways. For example, old school socialists would like state ownership of the shoe industry. But that style of social economy is less popular today given the overwhelming evidence that it is not prosperous, unkind, or wrong.see Venezuela for a recent example).
So modern socialists have taken to promoting democracy in the workplace: virtually, the workers as a whole own the firms and make decisions democratically. This system allows for market competition—employee-owned firms may compete freely—and thus avoids the Hayekian critique of socialism.
However, it is not clear to me that this style of socialism is compatible with the neighborhood. Of course, some people may prefer to own a democratically managed firm, just as some people may prefer to work remotely rather than in an office. But some would choose a venture capitalist—again those people are out of luck under socialism. Like philosopher Robert Nozick he pointscapitalism allows socialist-minded people to pool their resources together to form democratic labor unions if they choose, but socialism does. not let capitalist thinkers create capitalist firms.
And there are many good reasons why people would choose venture capital firms. For example, as Don Lavoie notesemployees “may not want to take on the risk, expense, and responsibility involved in running a company.” He goes on to say, “Well, there are many potential benefits for employees who choose to specialize in getting a salary to protect themselves from competitive market conditions.” It is often beneficial to allow someone else to be the manager and thus reduce one’s concern over the fulfillment of the wage contract, letting managers worry about the company’s profit and loss statements.”
To illustrate this point, let’s say Lance wants to start his own landscaping business and needs to hire an employee. Moe wants a stable job and a steady income; he doesn’t want a piece of the business and the heads that go with it. So Lance hires Moe to mow the lawns of some customers.
Because of the salary contract, both Lance and Moe get what they want. However, as Nozick would say, this is one of those acts of “capitalism among consenting adults” that must be denied by the social welfare state in order to remain human. The welfare state will force Lance to give Moe a share of the business if he is hired even though both parties would be worse off as a result. But forcing people into workplaces they would prefer to avoid is neither benevolent nor friendly; rather, it sounds unfair.
Christopher Freiman is Professor of General Business at the John Chambers College of Business and Economics at West Virginia University.
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