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Not feeling much bern.

The End of Socialism

By James R. Otteson

240 pp.; Cambridge University Press, 2014


In his 2009 book Why Not Socialism? (Princeton University Press), the late philosopher G.A. Cohen argued that socialism remains a noble ideal even if we can't reach it--after all, just because we can't reach a particular bunch of grapes doesn't mean they're sour. After surveying the economic, political, and moral arguments for and against socialism in his book, The End of Socialism, Wake Forest University professor James Otteson considers Cohen's quote and reaches a different conclusion:
   The socialist grapes, therefore, seem
   impossible to harvest, have nevertheless
   induced numerous but destructive
   attempts, and yet seem sour in their
   moral core. Perhaps it is time to give up
   on the socialist grapes.

The collapse of the Soviet bloc, Beijing's retreat from "socialism with Chinese characteristics," and the increasingly bizarre existence of North Korea all seem to support Otteson's thesis. Yet some people continue treating socialism as an ideal whose time may yet come. To them, he offers a devastating critique: even if we ignore its many practical failures over the past half-century, its deeper problems are moral: "it isn't clear the socialists have the moral high ground." He evaluates socialism and "socialist-inclined policy" (policy that "tends to prefer centralized over decentralized economic decisionmaking") by exposing several fallacies and problems in and emerging from arguments for socialism as an ideal.

Great chess-board / Otteson argues that the case for socialism commits two serious fallacies: the Totalizing Fallacy, which treats the concatenation of innumerable small problems in an economy as if they are one large problem, and the Great Mind Fallacy, which imagines that there is someone out there--a man of system, perhaps--who "can arrange the members of a great society with as much ease as the hand arranges the different pieces upon a chess-board," as Adam Smith wrote in The Theory of Moral Sentiments.

The Great Mind Fallacy is subject to what Otteson calls
   The Herding Cats Problem
   of centralized policy
   making: because human
   beings have their own
   ideas about what to do, a
   central planner wishing
   for them to conform to
   his plan, however beautiful
   and attractive it might
   be to him, is bound to be

Why? Because "in the great chess-board of human society, every single piece has a principle of motion of its own, altogether different from that which the legislature might chuse to impress upon it," again borrowing from Smith. To successfully organize society, socialist planners would need a staggering level of power and control.

The Social Problem, in short, is not one problem, but many complex, interacting, and perpetually changing problems that cannot be solved by a Great Mind with a large enough computer.

Arguments for socialism also must contend with the Day Two Problem, the Local Knowledge Argument, and the Economizer Argument. The Day Two Problem asks, "What do we do to address new inequalities that emerge after an original redistribution?" The problem emerges from a long tradition of treating production and distribution as separate problems, and while wealthy countries are able to accomplish these redistributions through various taxes and subsidies, there are legitimate questions about whether generous welfare states are sustainable in light of the political incentives that influence how the policies are implemented and the incentives created by the taxes collected in order to fund them.

Camping trip / Otteson attributes to Smith a Local Knowledge Argument that "does not assume that people are perfectly rational; it assumes only that they are relatively better positioned than others to make decisions about their own lives" because they have information and incentives outside observers lack. Related to this is the Economizer Argument: we have the strongest incentives to use our resources wisely because good choices increase our capacity to do what we want and bad choices decrease it. Planners with no skin in the game have weaker incentives to choose wisely on our behalf. Consider, for example, who has the strongest incentive to make a wise decision on the football field: a quarterback who might get a bonus if his team wins the game, the fans screaming at him from the stands, or the armchair quarterback screaming from the comfort of his living room? I might be disappointed if my team doesn't win the big game, but the loss's effect on my ability to feed my family ranges somewhere between nonexistent and trivial. Even if I am an expert on football with encyclopedic knowledge of the sport and its history (and I most certainly am not), I'm not as well-positioned to decide whether to run or pass as is the quarterback or the coaching staff.

Otteson invokes Smith's Invisible Hand Argument that we are compelled by our own interests to serve others. Cohen, in his book praising socialism, offers a "camping trip" thought experiment that the campers would all want everyone to have a good time and would, therefore, recoil at the idea of every interaction on the trip being mediated by prices and markets. From this he argues that people should embrace a society based on communal reciprocity whereby I do for you because you need me. It's an appealing thought experiment after all, parents don't charge their children for food, clothing, and shelter--but it falters once we start looking beyond very small groups.

We can know a lot about ourselves and a lot about those who are socially, morally, and genetically proximate (relatives and friends), but our capacity to know what strangers "need" is far weaker, likely to the point that "communal reciprocity" doesn't scale well. And yet, as Smith points out, the invisible hand leads us to take care of strangers in order to take care of ourselves and those closest to us. Does Cohen's case for socialism rule out market-mediated cooperation between strangers for the benefit of those with whom we are most intimately acquainted?

I wrote this review shortly before the annual festival of communal reciprocity that is Christmas. Am I allowed, in Cohen's socialist society, to cooperate with strangers for the benefit of those I love the most--to buy roses or Nerf guns, for example, from people who don't know me or care about my wife and kids the way I do, but who are simply looking to take care of themselves and the ones they love? One might object that roses and Nerf guns might be made in sweatshop conditions, but that would be changing the argument; Cohen's claim, as I read it, is that self-interested exchange as such is objectionable. Smith's Invisible Hand Argument, as Otteson points out, shows that when we are bound within a market economy to respect others' moral autonomy--their right to say "no"--we necessarily have to make their lives better if want the same from them.

The Local Knowledge Argument also shows why "luck egalitarianism" fares poorly as an argument for socialism. How do we define what it means to be "lucky"? Which aspects of luck deserve recompense? Who is luckier, the man with a knack for making money born into a good family, or the man born with an extraordinarily serene disposition that helps him navigate the world of Epictetus far more ably than the rest of us? If Harry Bailey was right that his big brother George was "the richest guy in town," is Mr. Potter entitled to relief because he was born with a sour disposition and a knack for finance? These aren't idle questions. Capitalism's critics argue that it encourages crass materialism and devotion to the trivial and the unimportant. Are not moral and dispositional inequalities at least as important?

Markets and morality / But why isn't socialism a moral ideal? For Otteson, it is because it fails to respect others' moral agency. Otteson defines the Man of System's moral mistake as "assuming that his fellow citizens are not his moral equal." Elsewhere, he writes, "If we decide we should ... prevent others from engaging in mutually voluntary cooperation, we presume for ourselves not an equal but a superior moral agency, and we hold the moral agency of those others to be inferior to ours."

But there is so much pain in the world! Why not yield to the temptation to use the government to dry every tear? Otteson comes back to moral agency. We all agree that we should help the needy, but what counts as "help" and what counts as "needy" will depend on contexts that outside authorities likely do not have the local knowledge to navigate. In many cases, letting others bear the costs of unwise actions helps them develop sound judgment. In other cases, it isn't at all clear that we make things better by getting involved. There are clear cases in which a parent will want to intervene--it's probably not a good idea to let a baby play with knives, for example--but the case for intervention in other cases is far less clear. Think, for example, about foreign aid programs and charitable endeavors that were supposed to "stop the bleeding" in low-income countries but that have ultimately made things worse. With respect to things of which many disapprove--selling tickets to a papal appearance, drug use, prostitution--Otteson writes: "Proposing to enact legal prohibitions from afar does not attempt to persuade people or change their minds.... It coerces them. Instead of engaging their moral agency, that disregards it."

There is more to the end of socialism than economic and philosophical arguments. Twentieth century experiments with socialism show that it is far more likely to produce the "camping trips" described by Alexandr Solzhenitsyn in The Gulag Archipelago than the ones in Cohen's thought experiment. Cohen refers to the market as "a casino from which it is difficult to escape," but the claim is better applied to socialism. As Otteson replies, "No one has ever built walls to keep citizens in capitalist countries." And that's a fact we shouldn't forget.

ART CARDEN is associate professor of economics at Samford University.
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Title Annotation:The End of Socialism
Author:Carden, Art
Article Type:Book review
Date:Mar 22, 2016
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