Thursday, July 6, 2023

Modern Socialism is a Forced Socialization

My article “The Education of the Modern Socialist” deserves a follow up. That first part showed that a change has occurred in the definition of "socialism"; a necessary one in view of the failures of this ideology during the last century. Socialism today is based on the ideology of "Statism" that is, the conviction that the State must play a fundamental role in society. This is Ludwig von Mises’ wider definition of Socialism as State intervention; a modern social State that is involved in most if not all the activities of society, whether commercial or not.

Unlike "classical" socialism, with this new definition, very few people are not socialists. There are no political parties then that are not socialist, although many would never accept that moniker. This widespread Statist belief largely explains many of the difficulties that Western Europe has been going through; a mostly self-inflicted political, economic and social period of stagnation.

Thus, before addressing would-be negative effects of globalization on local communities, it is important to recognize the social consequences of the advent of the modern State. Education in the ideas of liberalism, as per the article quoted above, must therefore consider this very strong support that modern socialism enjoys today.

Forced Socialization

In fact, socialism seen as Statism is arguably even a better definition than the classical one according to which all means of production belong to the State. This "old socialism" is so contrary to human nature, notwithstanding the existence of the USSR, that it could only be at most temporary episode in a developed capitalist society.

When historical socialism advocated an Orwellian society in which "equality of outcome" should be perfect among individuals, today's socialism desires perfect "equality of opportunities." But both types of equality imply serious violations of individual freedom. Modern socialism is more insidious; it does not prohibit private property and does not strangle the economy completely, but it restricts its development often severely.

Today's socialism is aptly named, because it means – and presupposes – "socialization." But this socialization is artificial; indeed, Statism is a system of forced socialization, over and above the already underlying natural social relationships that exist in a free society. At the individual economic level, this forced socialization can be progressive (income taxes), regressive (VAT), and generally redistributive.

Societal Tensions Due to Socialism

When a significant portion of wealth is redistributed, a polarization of society is inevitable, even in contemporary societies that widely support modern socialism. By absorbing and reallocating much of the wealth produced by the market, the State and its dependent financial system create social tensions. This goes counter to the economic "harmonies" of the free market, which Frédéric Bastiat described.

These tensions are linked to the fundamental injustice of redistribution and the obvious impediments to wealth creation under a Statist regime. These tensions are also connected to the unjustified growth of a privileged but under-performing class of civil servants, hindering the private sector and depriving it of human resources.

But the impact of modern socialism goes far beyond the financial and economic impact. This forced socialization transforms the natural social relations that are inherent to each society. Statism creates a new social reality compared to the organically evolving free society. In "The Ethics of Money Production, Professor Hulsmann described the harmful cultural and social consequences of State money production, i.e. inflation, which is another, hidden, form of confiscation of private property.

Attitudes towards savings are transformed by the devaluation of money in fiat money system with fractional reserve banking, forcing members of society to spend more and sooner than in a free society. Such a socialist policy changes the time preference, which, when aggregated, form the natural interest rates in a free market. Society under the yoke of Statism thus becomes more present-oriented and less future-oriented, as Professor H-H Hoppe explained in his major work, "Democracy, the God that failed” .

Inflation (i.e. the money increase) increases tensions in society through the regressive nature of the Cantillon effect . The artificially inflationary monetary policy of modern States has allowed wars as destructive as they are costly, destabilizing and harming a large part of the world.

This increased importance of the present, coupled with strong fiscal and regulatory pressures, discourages business investment and the individual motivation. The State is responsible for artificial unemployment and thus contributes doubly to the general feeling of stagnation. The idea of a "generous" welfare State drives immigration, with all the difficulties this generates in terms of cultural integration and social divisions.

Thus, Statism forces society into a vicious circle of forced socialization, in which the various economic and social failures reinforce each other, to the point where a rupture or crisis becomes inevitable. This is the current situation in many Western countries, as must be obvious to any keen observer of current affairs. The solution is of course libertarianism, which lets society benefit from the virtuous circle of true capitalism, not the crony sort, where investment and innovation constantly improve quality of life.

The current political, economic and cultural decline in the West is to a large degree explained by the phenomena described above. Until Western populations start grasping the principles and benefits of freedom, not so much for the Western “nations" but first and foremost for each individual, it is not possible to hope for a change of direction. The education in political and economic liberty must therefore continue.

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