Posts tagged socialism

Column on Consequences of Mixed Systems

Some Consequences of Mixed Systems

Tibor R. Machan

China is what political economists call a market socialist country, with political socialism at a virtual dictatorial level (as distinct from, say, democratic socialist and liberal democratic countries) and is thus very precarious when it comes to its political stability, kind of like Chile was under General Pinochet. The rulers will keep trying to square the circle, having a largely free, capitalist economy and a one party socialist political regime. But everyone knows this is very vulnerable to upheavals, especially once the economic side of the equation makes enough ordinary people wealthy so they no longer look to the government to sustain their way of life.

When a country is politically socialist, this means that officially what is most important is the well being of society as a whole. Karl Marx referred to a socialist society as an organic whole or body and this implies that the different elements of it, the limbs, organs, cells, etc., are all subordinate to the whole society. This is why such a country is also called collectivist–it is the collection of everything, including people, land, natural resources, culture and achievements, that is important. Certainly the individual citizens are not except as they contribute to the society as a whole. By such an understanding of a society or country, anyone who isn’t fully on board with where the society is headed–as determined by the rulers who are, officially, the head of the organic body–is deemed to be mentally ill. Sometimes so much so that like some tumor in a human individual, such an individual might need to be cut out or otherwise pacified. Any idea that such an individual might simply be a legitimate dissident is officially alien in a bona fide socialist country.

Of course, there has never been a fully functioning socialist country–even in contemporary North Korea, which comes the closest to the idea, small segments of the population manage to function outside of the system. In the economy there is a sizable black market that operates without the full involvement of the government (which is the official policy). Indeed, in all the political economies around the globe referred to as “capitalist,” “socialist,” “fascist,” “communist,” or “welfare statist” the correspondence between what the theory requires and what exists in reality is rather loose.

Still, it is undeniable that when the legal system conforms mainly to socialist tenets–when the public sector is deemed to be far more important than the private sector–this will have practical consequences. In the official rhetoric of the rulers and their supporters there will be routine endorsements of the superior significance of the public versus the private interest in society. Non-profit endeavors will be favored, at least in official discussions. The idea that people are all a tiny part of the country–and that, for example, they ought not to ask what the country can do for them but ask what they can do for the country–will be embraced and seeking to advance one’s own agenda will be deemed objectionable, greedy, selfish, and narrowly individualist.

The welfare state, in turn, is indeed an explicit attempt to combine certain socialist and some capitalist political economic features. A more complicated mixed economy will have elements of most political economic systems combined in it, a kind of smorgasbord in which some of the items may not co-exist well with others and where if troubles arise it is difficult to tell which element made the greatest contribution to it. Nor will the successes be easily traced to their causes.

For example, the recent financial fiasco–some call it a meltdown–comes from a mixed system and not from the policies of one political economic arrangement and so to tell which of the various elements that have been in place for decades on end–or which combination of them–is responsible is very difficult to determine. This is one clear reason why when the likes of Paul Krugman point fingers at the free market elements, such as a bit of economic deregulation, as responsible for the mess, their claims can be seen as purely ideological, meaning indicative of their prior, unexamined commitment to anti-market economic policies. No one who is honest could tell from a quick examination that the meltdown or whatever one calls it was caused by one or another type of economic ingredient of the mixture that has been in operation for a very long time. It is possible to figure that out but it would take meticulous study since the different elements of the mixture do not operate in isolation from each other. It is as if one tried to determine why one caught food poisoning after a sumptuous smorgasbord. Any one or some combination of the items on the menu could have been responsible.

A statist will tend to blame the free market elements whereas a free market champion will look to statist elements to explain the mess. And this is not without good reason, since both have gained confidence in their ideas over time and do not consider it plausible that elements they champion would have produced havoc.

That is just one of the consequences of a mixed economic system.

Column on Obama is a Socialist—A Crazy Thought?

Obama is a Socialist—A Crazy Thought?

Tibor R. Machan

Right after President Obama’s state of the union address several Republicans, mainly of the Tea Party faction stated that he is a socialist. This isn’t the first time the claim has been made. Indeed, based on his early schooling the idea that he may well be one simply cannot be dismissed.

Not that all of us inherit our parents’ political views, quite far from it. I myself had a father who was an avid champion of Hitler and a fierce Anti-Semite, whereas I grew up to embrace libertarianism in politics and a refined version of Objectivism in my general philosophy. A great many folks I know don’t at all think as their parents did. But there are those, also, who do and in the case of Obama it seems his socialist grandmother had considerable influence on him (judging by his own testimony).

When it comes to the allegation that Obama is a socialist CNN-TV anchor Soledad O’Brien quoted Webster’s Dictionary as evidence that he is not. The passage singled out the socialist view of property, namely, that everything important is to be collectively owned, that private property “in the means of production” must be abolished. (Which, by the way, for socialists means, human labor!) The Communist Manifesto makes this clear—Marx and Engels claimed the fist thing toward establishing socialism—the stage of history prior to reaching communism—is the abolition of private property. So it would seem that there is no way that Obama could be a socialist since he has said many nice things about the market place and hasn’t ever called for abolishing private property rights, only heavily regulating it and getting in bed with certain big businesses, which strictly speaking isn’t the same thing is collectivization.

However, looking a bit more closely, it needs also to be kept in mind that Mr. Obama has often declared his own pragmatism, which is a philosophical stance of not sticking by any firm principles. And such a policy could very well be deployed exactly when one wishes to disguise one’s actual political economic philosophy. And then there is this wonderfully instructive passage by Lenin himself, certainly a bona fide communist:

Only one thing is needed to lead us to march forward more surely and more firmly to victory: namely, the consciousness everywhere that all communists, in all countries, must display the maximum flexibility in their tactics…. [Lenin, "Left Wing Communism," 1920].

But this isn’t all. What is really central to socialism is the view that we all belong to society, that there are no genuine human individuals at all, that human beings are what Marx called specie beings somewhat on the order of termites or bees that exists as a collective, never individually. The collective ownership of everything that’s valuable and important is a derivative doctrine, not a primary one. This is one reason that some socialists are actually called “market” socialists. They recognize that as a matter of efficiency—or at times public relations—it is quite OK to give a nod to certain elements of capitalism.

It is not easy to tell what is in someone’s mind, especially not if that someone is convinced that the only way to advance his or her position is to keep its true nature obscure. Indeed, among neo-conservatives this is a prominent theme, learned from the political scientist the late Leo Strauss. He argued that it is only prudent for philosophers to keep their true views a secret, if only because it would scare ordinary folks to be told that brilliant philosophers have come o believe.

Surely this could apply in the case of Mr. Obama, as well: the American public would be very upset if he came right out and said, “Look, folks, I happen to believe that socialism is a sound political economic viewpoint and will do what I can to steer the country that way. I honestly think it is better than capitalism.” Not a way to win elections, so much better to keep it under wraps.

Column on Friends and Politics

Friends & Politics

Tibor R. Machan

Yes, most of my friends have similar political convictions to mine. Actually, not just political but also more general philosophical ones, bearing on the theory of being, knowledge, the human good and even the nature of art. But not all. I do have some genuine friends who disagree with me on important matters, including politics. How is that possible for someone who takes politics as seriously as I do?

Well, for lovers of human liberty an implication of their outlook is not to push people too heard about their convictions. Yes, one can try to argue them into holding different ideas from those they do hold, although it rarely pays off and even when it does, it takes years. Serious folks, which doesn’t mean morose or ornery ones, do hold on to their convictions more vigilantly than others, partly because they came about holding them through hard work, elaborate reflection, experimentation, study and so forth. To just change would be unlikely.

Even the few people I know of, both in the history of human thought and among ordinary folks, who have gone through major changes, there is something that remains pretty steadfast. I know one famous English thinker who moved politically from out and out classical liberal to radical Leftist. He would seem to contradict the idea of not changing one’s mind about important matters. And indeed at a certainly level of thinking he hasn’t changed, ever. He has always been a radical skeptic, someone who believed that people really cannot know the world well enough to be sure about it. So he has found it easier to change his mind on particular matters because what he believed didn’t amount to something he actually thought he knew to be true, only an opinion (and he thought everyone else, too, only had such rather flexible opinions even when they thought otherwise).

Anyway, I have some friends who actually believe of themselves that they are out and out socialists while I am of course a firm capitalist or libertarian. In certain cases the reason we can be friends is that on many other fronts we see eye to eye, like about raising children, being responsible in one’s personal affairs instead of dumping on others, keeping one’s word and so forth. But, yes, in matters of politics these friends reject what I embrace–and they vote that way, support politicians and legislation accordingly. We then tend to stay away from these topics or when we just no longer can do so, we deal with them gingerly, delicately, in very civil terms. But most of the time we agree to disagree and our friendship rests on other things, like our personalities, tastes and preferences in sports and our equal devotion to our families.

I have even maintained pretty solid ties with people who are deeply religious, while I am totally tone deaf to religion, cannot ultimately fathom what it is about. Yet life has so many facets to it that can be kept within their own compartments that our friendship, though wobbly at times, can continue.

About certain old friends, whom I have known and loved since we were teens, who call themselves socialists there is something else that makes it not too difficult to keep up our friendship. In my view they misunderstand socialism and think it means something like being kind and considerate toward those in dire straits, people who have been unlucky and need a helping hand. This attitude of kindness and compassion is often, in my view quite mistakenly, associated with the politics of the Left. But that is really a mistake.

The bulk of the political Left isn’t so much kind, generous, compassionate, and helpful but supports the kind of public policies we have been hearing about a lot lately, namely, coercive, state enforced wealth redistribution. Robbing Peter to help out Paul isn’t being generous, although it may appear so if one focuses only on motivation, since often the robbing comes initially from wanting to lend a hand. People then tend to overlook the robbery and concentrate only on the benign intentions, often forgetting that if anyone they knew actually went about committing burglaries or robberies in their neighborhoods with the excuse that they will give away the loot to the needy, they would probably not approve of this. (It is useful to remember here that even Robin Hood didn’t rob the rich but those who ripped off the poor, indeed, that tax takers!)

Still, the association of socialism with kindness will probably continue because it is so easy to judge things by appearances alone without going into the details. In this case the detail is that while one usually reaches out to help others from one’s own resources, including one’s time and skills, under socialism it is powerful politicians who forcibly dip into other people’s pockets to carry out their helpful policies.

Column on Sad Time in America

Sad Times in America

Tibor R. Machan

Graig Furgeson, the late late-night host on CBS-TV, makes a little remark each weekday night to the effect, “It’s a great day for America.” I don’t really get it, I confess, since if it were a great day for America each day, regardless of the details, it would be pretty meaningless to say so. But these days it is especially ridiculous to make such a claim. (I have taken the show off my automatic record instructions on my TiVo because of this, actually, and because I really don’t much like TV these days other than for a few shows and movies.)

As someone who immigrated here from a communist country where health care was deemed a free good, and a free entitlement and where the system went bankrupt eventually so no one had anything to show for all the promises made, I find it scandalous that this myth of health care as a right–as if health care professionals could all be drafted harmlessly into involuntary servitude to us all–has managed to survive and even grow. Yes, it might be a swell thing if what we want in life could be obtained free of charge, if everyone could work to produce all the goods and services wanted from them at no cost to anyone, if dreams and fantasies were reality but, come to think of it, I am not sure this is even a desirable fantasy. It has certainly been a horrible reality wherever it has been attempted since it means, in practice, that both goods and services promised at no charge to the vast numbers who apparently actually believe it could happen will in time run out for everyone except the most clever of us, the ones who can game the system for a little while.

Many moons ago, when I was going to graduate school in California, a new welfare measure was instituted with the announced intention of wanting to help out the poor and disadvantaged who wish to get a graduate degree. No sooner was the program announced and set into motion, it became evident that only the smart and already reasonably well healed will gain from it–means testing had been declared illegal, so there was no way to tell who really might need the help and could make good use of it versus all those who would just try to cash in on a new entitlement that they could obtain at other people’s expense. It was a clear case of socialism at work–promise to benefit all who had a need but put up with the fact that the resources will be squandered in a classic instance of the tragedy of the commons.

Of course, complaining about the forthcoming health care-health insurance entitlement system as if it were the first step on the way to socialism–which is how Utah’s Republican Senator Orin Hatch characterized it–is absurd. From its beginning America had various welfare measures which, however, hadn’t done immediate damage other than establish the precedence so objections to such measures could not be made on principle any longer. But the trend has been on the rise all along.

The realistic promise that America initially offered, in the terms sketched in the Declaration of Independence–namely, that everyone would be free to work hard for the values that make life possible and flourish–seems to be dying and along with it the optimistic outlook on the world’s future, which is slowly disappearing except in some spots where the principles America was founded upon are beginning to be taken seriously. Frankly, it won’t matter much to me directly now–I am getting a tad old–but my children and grandchildren will have to cope with the misery of it all.

What I am hoping is that they will be clever and prudent enough to deal with the mess that’s coming down the pike until things turn around again sometime but certainly many will not be able to do so and that’s going to be what all this phony socialist, “progressive” politicking will have wrought.

To Whom Is a Business Manager Morally Responsible?

Over the last several decades the field of business ethics has become very popular in colleges and universities, including business schools, around the world. Actually, other professional ethics courses have also gained entry into the medical, legal, engineering, and other curriculums. (Oddly, though, the ethics of education and scholarship have not joined this trend!)

In the field of business ethics the focus has tended to be on what has come to be called the theory of Corporate Social Responsibility (CSR). This view takes it as a given, not in need of a lot of argument, that what corporations ought to do, first and foremost, is to benefit society and not those who own the firm. One explanation of this focus is that in the field of economics, which is regarded a social science, it is widely accepted that what corporate managers will do—not so much what they ought to do—is to improve the company’s bottom line.

Back in 1970 the late Milton Friedman did write a widely reprinted article for The New York Times Magazine, “The Social Responsibility of Business Is to Increase its Profits,” insisting that the moral responsibility of corporate managers is to strive to make the company profitable. Up until that time it was simply taken for granted that this is what corporate mangers would be doing—this follows from the general assumption in economics that in the marketplace everyone embarks upon the maximization of utilities, which is pretty much the same thing as trying to make a profit. But Friedman changed the account somewhat by claiming that this is not only what corporate managers do but it is also what they are morally obliged to do. Why? Because that is what they promised to do to the company’s shareholders and investors.

In response to Friedman a great many people who came from the field of philosophical ethics began to write extensively about business ethics and insisted that, on the contrary, what corporate managers ought to do is to manage companies so they would benefit stakeholders. In other words, the moral responsibility of corporate managers is not to improve the bottom line but to help all those who could benefit from what the company is doing, all those who have a stake in the company’s fortunes. This became the CSR movement. And today there are journals, magazines, conferences, and many books that advance the idea that the moral responsibility of corporate managers is to benefit society, not the owners—shareholders, investors, stockholders—of the company.

This line of thinking is a not altogether subtle attack on the nature of the capitalist economy. In a capitalist system, companies are owned by those who buy shares and invest in them, and their managers’ purpose is to make them succeed in the marketplace. Such success is measured, naturally, by how profitable they are, how good a return they bring in from their owners’ investment. The details depend on the kind of firm in question, obviously, but this is the general understanding of capitalist business.

Of course, from the beginning the idea of capitalism—a term first used by critics!—has been demeaned by many people because it treated profit-making as a good thing. Going into the marketplace with the intention of bringing home a good return on one’s investment just appeared too greedy, too avaricious. Never mind that, in fact, once one makes a good return on one’s investment, it is an open question as to what one will do with the wealth one has accumulated. So the practical impact of rejecting the capitalist model is not so much a rejection of wealth but a rejection of the private allocation of wealth. Critics of capitalist business, in other words, do not want private individuals to be in charge of spending the profits made in business. They would like society or the public—which for practical purposes translates into government—to decide what happens to the wealth.

This used to be called socialism, but by now that grand experiment as a political economic system has had innumerable setbacks across the globe, so the term “socialism” has been dropped. Instead we have CSR or stakeholder theory. If such an idea can catch on, it will have the same impact that socialism does—to undermine the rights of individuals to allocate their own wealth and place this power into the hands of politicians and bureaucrats. All this without having to fess up to favoring socialism.

What needs to be debated in the field of business ethics is whether ownership confers the rightful authority to allocate resources. There should be no question-begging presumption that companies must serve society (all others in the realm)—after all, if they do their business well, they do that anyway while they are seeking to make profits. How profits should arguably be used should be left to those who earned them.


Tibor R. Machan, Ph.D., Professor of Business Ethics and Free Enterprise, gave a speech at Franklin College on June 6, 2007, entitled “Business Ethics and Corporate Responsibility: Shareholders versus Stakeholders.” Professor Emeritus of Philosophy at Auburn University, he also holds the R. C. Hoiles Chair in Business Ethics & Free Enterprise at the Argyros School of Business & Economics, Chapman University, in Orange, CA. He is the author, most recently, of The Morality of Business, A Profession for Human Wealthcare (Springer, 2007). He also co-authored, with James E. Chesher, The Business of Commerce: Examining an Honorable Profession (Hoover Institution Press, 1999). In the autumn of 1983 and again in 1985-1986 Dr. Machan was the Harwood Professor at Franklin College.