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Would a socialist economy work?

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One of the perks of working in a university is getting to attend lectures on all sorts of topics which in no way concern the work I do and which in normal life I would never think about. It is one of the natural by products of having a large population who are free to follow their own passions, of course, within reasonable limit. It is with a certain level of curiosity about the topic that I went along to a lecture title “Does socialist planning work?” organised by the Socialist workers party in the University.

The talk was leaning so far towards socialism that it would have tipped over if they had tried to push the topic any more. It was an evening spent in capitalism bashing, claiming how all the ills of the world had their foundations in the greed and profit driven world of today and how if it weren’t for capitalism, we could have been living full, contented and enjoyable lives. The speaker then went on to describe the structure of a socialist economy, based on the “need” and not the “greed” of people and how it would yield a more balanced, just and successful society. He also sort of glazed over examples of how public transport and food would benefit from socialist planning. While they sounded pretty good to start with, a little thought on the matter has left me less convinced of the merit in the ideas.

Free Transport

One of the ideas bantered around during the talk was that socialist planning of the economy would do a better job of public transport than the current capitalistic models do. According to the speaker, public transport should be publicly owned, paid for by taxation and made free. Having free transport will make a few people scuttle around on the network to start with, but then things will settle down and people will make only the journeys they require.

Being an ardent environmentalist, I would welcome any system that provides efficient public transport, but I seriously doubt the feasibility of a system paid for by taxation and which is free to the users. The public transport system of the nation is a huge and complex beast affected by a multitude of factors, which may require swift reactions in the event on any change. A good example is the oil price roller coaster we had in the recent past. As the price of oil (or other energy source) goes up, so does the cost of running a transport network. When privately owned and priced, the price hikes can be passed on to consumers, who in all fairness are benefiting from the service and should pay the cost of it. But a system paid by with taxation and which is free at the point of use will have only a limited amount of money to work with since tax rates are fixed and taxes collected annually. The public transport firms with therefore have to be bailed out by the government, or will have to cut corners by reducing services, laying off workers or doing something of that sort. In order to cushion such a system from these vagaries of the economy, the government will probably have to introduce a “real time” tax rate, which varies on any given day of the year, depending on the global conditions and the cost of providing services. Such a system would be hideously complicated, unworkable and unproductive as no one will really know what sort of money they are going to take home at the end of the pay day. A market structure gives the most nimble way to react to such changes in costs. I agree that the profit motive may not be the optimal solution, but the free transport one does not convince me either.

A second problem with a centralised, publicly owned transport system is the lack of competition and therefore the desire/need to innovate and improve services. If every member of the company feels secure in his job, then he will not take the pains to improve himself and make sure he stays at the top of his game. Some people may strive to improve, out of pure interest, but most would not bother, seeing that they will get no monetary, social or any other benefit from their efforts. Those who are not ambitious would also throttle those who are. Since a transport network would need a very dedicated, committed and motivated team to run it, the lack of motivation by the large percentage of employees is bound to drag the whole firm down.

Food Distribution

The socialist solution to solving the food problem was to serve out food vouchers with which people could buy a certain amount and kind of food. I guess the only way this is different from the capitalistic way is that everyone would get the same amount of food coupons and therefore the ability to buy food will be decoupled from each person’s earnings. That is again an ideal situation, but one that requires the people in charge to be completely non-corruptible. The distribution of food coupons concentrates power in the hands of the few and there will always be people who will offer bribes to get additional food coupons from those in power. When something as fundamental as food supply is left in the hands of the few, there are myriad ways of sniffing out the ones with the weak morals and then corrupting them to an advantage for oneself. I don’t think it is too difficult to create artificial shortages and black markets in such a scenario. While the capitalistic model has multiple agents competing for people’s custom, the socialist one has people competing for the government’s attention and the feeling is not a comfortable one.

My conclusions

The lecture on socialist planning was enlightening in that it gave me an alternative viewpoint to think about, but failed to convince me about the merits and the practicality of socialism. It should work in an ideal world, where people are not corruptible, not very selfish and they are willing to sacrifice their luxuries for the “needs” of others. In my view, the single biggest flaw with socialism is that it fails to take into account the fact that a majority of people will act out of selfish reasons, at least to some degree. The capitalistic model on the other hand embraces this idea and uses it as a foundation, which is why capitalism has outlived its rival. The altruistic(or at least non-selfish) attitude needed for socialism cannot be imposed by the government, but has to develop within each person and impel him/her to act in the non-selfish way. It is already happening to a small section of society in the developed world and maybe in the future we may land up living in a world that appears socialist, but will in reality still be capitalist as it will depend on people making a certain choice and the markets reacting to them.


Written by clueso

October 30, 2008 at 11:48 pm

Posted in Uncategorized

Tagged with ,

2 Responses

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  1. This is a great explanation for why socialism wouldn’t work and why, although it sounds ideal, it would inevitably fail because of human greed. Good work!


    February 15, 2009 at 2:31 am

  2. Программа похудения лучшая диетологическая программа для похудания и лечения избыточного веса.
    Обсуждать диеты мало, важно их попробовать и узнать, какая диета эффективна, а какая нет. Виды диет для борьбы с лишним весом – проверяем каждую на себе.
    Диета и питание – главная тема статей на этой страничке «Сезона» – лучшего женского журнала в Казахстане. Мы предоставим нашим читательницам много полезной
    Длительность диеты составляет 10 дней, в течение которых вы не только почистите свой кишечник, но и улучшите все обменные процессы организма,
    23 фев 2010 Как специалистами, так и увлекающимися диетами дамами, гречневая диета признана.


    July 15, 2011 at 9:33 pm

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