Response to Critics of Socialism

In the following blog post, I respond directly to a comment, which was written in response to my post on democratic socialism:

I would think the main reason self-proclaimed liberals don’t go as far as they dream, is because they deep down know it doesn’t work. Take the very first settlers of our country. They did try the socialist/commune idea of everyone gets an equal share, shares the rewards and labor of everyone else. At first it did work. But just as then as it is today, you forget the human element of “why do the work when someone else can do it for me?” Soon, groups of people didn’t do as much, or any at all work as the others yet still got the same benefits. Only after people were given their own parcels of land to reap what the sowed, did the colony flourish. The same can be seen today. The less regulations and red tape a business, individual, or group of people have, the more productive they are.

Unions for example were there for a need in a certain time and place. But they are not needed anymore today. Do you really think if certain regulations, the minimum wage taken away for example, that people would be forced to work for $!/hr again? I don’t think so. In this age of information and the power of the media bias, no company would ever dare to do such a thing again. Plus, if you don’t want the job, don’t work there. If anything, it would just be funny to watch these types of businesses pretty much commit suicide.

Is capitalism bad in some ways? Of course. When in anything the human element is injected to the equation, things like self-satisfaction and greed to come to be, but not rampantly. Compared to the other alternatives, it is the best option we have. As long as you have people with a sense of entitlement, resentment, and demand for equality by robbing others that are willing to put the work forth, you are never going to achieve the utopia of socialism that is desired. Jealousy: the mane fuel for leftist ideals.

In the first paragraph, the commentator states that only when people own the land or the means of production that they will begin to work hard and produce wealth. It is certainly true that the Soviet Union and the other forms of really existing socialism, where the government owned all of the means of production, were less than ideal circumstances to develop the enthusiasm of the workers to contribute to the wealth of the society. But it is equally wrong to presume that our current capitalist society allows ordinary workers to own the means of production. They are owned by holders of private property- the very wealthy- who constantly have to look for ways to force other people- working people- to contribute their labor, maximize productivity and reap as much private profits as possible.

The capitalist utopia is always predicated on the assumption that everyone, whether a worker or a capitalist, have the same degree of freedom. The capitalist has the freedom to make investments and dispose of his machinery and labor as he sees fit, while the workers have the choice to find the kind of employment that fits their needs and interests. But behind this apparent freedom lurks a great power imbalance between the workers and the capitalists. Adam Smith correctly pointed out that while workers barely have enough savings to subsist even for a week, many capitalists have enough wealth to survive for more than a year. In a capitalist system, alienation of the workers is a design of the system, and is no more greater than under state-dominated, authoritarian socialism. If we want to create a better society, we need to acknowledge the weaknesses and problems with both and discuss better solutions.

The mantra of “less regulation and red tape” becomes then not a means to achieve greater freedom for everybody, but merely greater freedom for the capitalist class to advance the exploitation of the working people. Regulation and red tape, as expressed in environmental and labor regulation as well as social welfare benefits for the public, are designed to protect workers from the worst kinds of abuses from their employers, who want to hold the reservation wage (the wage at which workers begin to sell their labor services) as low as possible, such that workers are desperate enough to look for low-income jobs.

This description is a good segway into the point that the commentator made in the second paragraph, where he is skeptical that workers can be living in dire poverty if regulations like the minimum wage are lifted. I would like to share the optimism of the commentator, but I think that he/she fundamentally underestimates the power of the capitalist to lower workers’ reservation wages. Why is that? Let us think about it this way: there are about 4.7% of workers who earned the minimum wage of $7.25 or less per hour in 2012. This sounds like a small percentage, and the percentages naturally increase as we go up the income ladder. The median hourly wage is $17.09 as of May 2014.

But what is revealing here is that there are quite a substantial number of people, who are not really far away from the minimum wage, and if we took that minimum wage away, employers would exploit the situation by reducing their base wages, which could have a ripple effect on higher paid employees, whose employers now know that they will not have to fear losing workers to other industries, when the base level wages are substantially lowered.

The capitalists and the right-wing media try to convince the public that we all can only be paid as much as we are worth, but the reality is that workers can, and in many cases, are paid less than they are worth, otherwise we should not really have anybody who earns at, below or slightly above the minimum wage.

The commentator’s remark that the worker has the freedom to not work with an exploitative employer is emblematic of the false sense of freedom that he ascribes to the workers. My question hereby is, if workers had so much freedom to choose another job, then why is this not happening? Workers don’t have all the available information, and the job search is made complicated not only by the fact that workers are not educated enough to search for it, but by the lack of availability of good jobs. The evidence are the many very well educated people, who are still unable to find good jobs.

To make my point even clearer, we should now imagine an economy, where most jobs are paying very highly, where there is a significant labor shortage. In such an economy, it is then easier for people to reject current job offers, and take on another job, where they can earn more income. The fact that this does not happen is a reflection of the inner workings of a capitalist economy, which relies on a continuous labor surplus to function.

Under communism, there was a permanent shortage of goods, because the administrators set the prices below marginal cost, which made the production of goods uneconomic. But at the same time, the economy suffered from a constant labor shortage as well, because plan targets kept on increasing, while the level of technology remained obsolete because of low levels of innovation. So hire as many workers as possible to fulfill the plan target. On the other hand, capitalism is an economy of surpluses, which is good for consumers, who can often find ten different types of chips and twenty different types of cereals on the supermarket shelves, but it is potentially bad for workers too, because the phases of greatest capital accumulation and profit are those where wages are low, unions are weak, and unemployment is high (all three correlated, of course).

Paying attention to the aggregate employment picture requires quite some leap of thinking, and is not as straightforward as the belief that everyone is free to make his/her choices of investments or job search, but for workers, who know that they tend to be on the weaker side of the bargaining table, it is absolutely essential to grasp the aggregate employment situation.

The commentator’s final point is that communism is all about stealing money from the real producers, but we know that is precisely the essence of capitalism, not communism. The essence of capitalism is the generation of surplus value from the workforce, and paying off the capitalist class, which puts some of the money in their own pocket, and the rest is reinvested to create more profits in the next cycle. To the extent, that the commentator does not want one person to exploit the next person, I absolutely agree with his/her sentiment, and would welcome a struggle for a non-exploitative world, where workers can produce what they need to produce, and then find ways to share the fruits of their labor.

Do I believe in perfect equality? Yes, in the ideal world, but I will concede on one point, where I appreciate the reality of human psychology. Of course, if all workers are paid the same amount of money, then all workers want to crowd in the least strenuous and socially useless jobs, while nobody will do the strenuous and socially useful jobs. So, we would have many janitors (easy) and few doctors (difficult). That would be a social disaster. What would we do with all the sick people?

I, therefore, do not advocate for the equal payment of wages for all people, but agree that we need to increase incentives for more difficult jobs that require extensive training and expertise. But the regulation of payment for different workers is different compared to the regulation of payment for investors, landlords and capitalists, who gobble up the society’s wealth via rents. The commentator confuses the (unearned) rents with (earned) wages, and by fatally lumping both together, he/she can claim that perfect equality must be bad, so we should allow inequality in both the spheres of wages and rents, while moderate socialists might agree with inequality in the former, but certainly not in the latter.

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4 Responses to Response to Critics of Socialism

  1. buckman21 says:

    You are right when I said “he/she can claim that perfect equality must be bad, so we should allow inequality in both the spheres of wages and rents.” There is no such thing as true equality. So the best thing to do is let those that can work do work, and those that are not willing to, suffer. And at the same time, care for those that ACTUALLY need help.

    I’ve heard the argument of the not ever worker is free, due to location, education, information, etc. Then my response to that is, get more information, education, move if you have to. Why do you think South Dakota is in such an economic boom? People moved there for the work. Why did so many pack up everything and leave the Mid West during the Dust Bowl? For work. The excuse of it being too hard, is not a good excuse. If you really did have the pride and drive to find work, you would find it. I worked during my college years, I worked two jobs after college. Why? Because I refused to not not earn my way, regardless of how little I was paid.

    My point on the minimum wage is that any laborer, regardless of title, education or position, should be paid what they are worth. A burger flipper does not “deserve” 15.00/hr just because they feel entitled to it. Look at the situation in Seattle. They voluntarily raised the city’s minimum wage to 15 an hour. What happened? Those that made more money then voluntarily worked less so they could keep the subsidies they were getting beforehand! It has nothing to do with getting out of poverty. On top of that, businesses are adding an additional charge or tax to compensate for the higher wage. It doesn’t work.

    “They are owned by holders of private property- the very wealthy- who constantly have to look for ways to force other people- working people- to contribute their labor, maximize productivity and reap as much private profits as possible.”

    And since when is the motivation of profit a bad thing? That is how businesses live and thrive. That is the drive to do more, make more, and succeed. It is the very reason government entities are terrible at customer service, speed and efficiency. They don’t have the incentive that profit gives, so their services are terrible! Take just the US Postal service vs UPS or Fed Ex. Their service are exceeds the government.

    “But the regulation of payment for different workers is different compared to the regulation of payment for investors, landlords and capitalists, who gobble up the society’s wealth via rents.”

    It’s not your money after that fact. These people didn’t just one day become rich. They did it their way, and maybe with a little luck. Jealousy and “unfairness” seem to be the motives behind wanting to take from the rich and give to the poor. Why would it matter to you? It’s not yours. Who cares if they buy 8 planes for the sake of having 8 planes. Be content with what you have. Evil, greed, and injustice will always exist in the world. Demanding those that have more to give to those that don’t, isn’t justice. It’s theft and pity. That solves nothing.

    • Larry Liu says:

      “There is no such thing as true equality. So the best thing to do is let those that can work do work, and those that are not willing to, suffer. ”
      These are two unrelated subjects. One is people who do the work, while others don’t, which is what your statement captures. And the one that I talked about are people who do all the work and get paid almost nothing (low-wage workers), and those who don’t do any work, but get paid the most (rentiers, capitalist, landlords, CEOs etc.)

      “Then my response to that is, get more information, education, move if you have to.”
      I quite frankly do not see how an advice to an individual can address structural injustice. The structural injustice is that if the job market is bad for most workers, it has to mean that more people are unemployed and underemployed. Why are there more temp workers than ever before? Because the bargaining power has shifted in favor of employers, because of government deregulation, technological advancement (deskilling and automation), and offshoring to low-wage countries. These are structural factors, which your advice to individuals (“work harder”) does not address at all.

      “Look at the situation in Seattle. They voluntarily raised the city’s minimum wage to 15 an hour. What happened? Those that made more money then voluntarily worked less so they could keep the subsidies they were getting beforehand! It has nothing to do with getting out of poverty. On top of that, businesses are adding an additional charge or tax to compensate for the higher wage. It doesn’t work.”
      The minimum wage is a sensible topic, though I should remark that you underestimate the positive impact of increased purchasing power, worker productivity and lower turnover. As far as the work reduction is concerned, I can’t speak to that, but this tells me about the design flaw of the public benefit system and not the high minimum wage. The problem is that public benefits are phased out too quickly, and if it were phased out more gradually with a somewhat higher cost to the treasury, we would reduce such work disincentive effects.

      “They don’t have the incentive that profit gives, so their services are terrible! Take just the US Postal service vs UPS or Fed Ex.”
      There is some tradeoff between the public and private sectors, but other people would say that without the postal service small rural locations would receive no mail at all. FedEx and UPS would charge exorbitant rates to reach remote locations, so they bypass these peripheral markets altogether. For every incompetent public sector, I can name you an incompetent private sector: e.g. the private prison lobby that finances judges re-election campaigns such that jail cells are filled with prisoners that do almost unpaid slave labor; Comcast and Verizon, whose market power allows them to charge very high rates to customers, while providing ultra-slow internet services compared to other countries; private war contractors who milk the public treasury with little oversight or accountability etc.

      “Demanding those that have more to give to those that don’t, isn’t justice. It’s theft and pity. ”
      Your statement assumes that the rich have earned what they got, and this assumption is plainly wrong. I agree that theft is not justice, and that is why I am opposed to rentiers and capitalists stealing from the wages of their underpaid workers. Your hypocrisy lies in your criticism of after-the-fact redistribution (i.e. tax the rich to give to the poor), but your ignorance of before-the-fact redistribution (i.e. capitalists stealing from their workers by underpaying them).

      • Buckman21 says:

        “capitalists stealing from their workers by underpaying them”

        You ignore my point of paying the person what they are worth, not by what you or society THINK they are worth.

        “For every incompetent public sector, I can name you an incompetent private sector: e.g. the private prison lobby that finances judges re-election campaigns such that jail cells are filled with prisoners that do almost unpaid slave labor; Comcast and Verizon, whose market power allows them to charge very high rates to customers, while providing ultra-slow internet services compared to other countries; private war contractors who milk the public treasury with little oversight or accountability etc.”

        Jails are for people that broke the law. They are being punished for a reason. It’s not a resort. For the judges part, I’m not a supporter of any type of cronyism or kickbacks via the government to corporations or otherwise in any type of business. If it were true about Comcast and Verizon, then there would be only 1 cable company and phone company. People don’t “need” cable or that particular phone company. There are plenty of pay by month disposable phones. You get what you pay for, whether that be in a monopoly or the choice not to. Vote with your wallet if you want to make a difference. I can’t comment on the war contractors part, since that would be pointless since you are just against war period.

        ” I should remark that you underestimate the positive impact of increased purchasing power, worker productivity and lower turnover.”

        This is only optimism on your part. The evidence against it I already stated. Raising wages raises the cost, i.e. the businesses charging a fee or tax for the increased labor cost. Then you are right back to where you started. When you pay people more, costs of goods go up across the board. And when those that are paid less get paid more all a sudden, those that were paid that new amount before, want a raise too. Its a snowball effect.

        “The structural injustice is that if the job market is bad for most workers, it has to mean that more people are unemployed and underemployed. Why are there more temp workers than ever before?”

        Blame the ACA for that. Businesses cannot afford to pay more if they can’t. Companies that do? Good for them. Not everyone can. If they have to cut hours and such to compensate for new regulations, that isn’t the businesses fault. And asking for the higher ups to just fork over more, doesn’t work that way.

        “And the one that I talked about are people who do all the work and get paid almost nothing (low-wage workers), and those who don’t do any work, but get paid the most (rentiers, capitalist, landlords, CEOs etc.)”

        So there shouldn’t be anyone in charge? Those in charge shouldn’t get paid more for their leadership and experience? And if they should, why do you care what they are paid? Is there some wage cap you think there should be? And why? That would kill the desire to make more if there is a cap to how much you are worth.

      • Buckman21 says:

        Also you keep labeling rentiers and landlords as evil greedy people. I assume you mean like companies that own property that their workers then live on. This isn’t west Virginia via 1910 in coal country. This is 2015 where media and social networks expose such evils. I hope to one day pay off my condo that I live in now, and rent it out while owning a larger house later. If that makes me evil, then wow. If investing for ones betterment is evil, whats the point?

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