Socialism Achieves Precisely What Its Advocates Desire
One often hears the line, ‘Socialism sounds great in theory, but it just can’t work in practice.’ I contend that it is an awful, immoral both conceptually, and every time it is implemented. But, on whether it ‘works’ or not, consider that every time it is tried, to the extent that it is tried, it works very well in making the majority of people equal: equally poor, equally hopeless, and equally oppressed.
According to the 2020-2021 National Survey of Living Conditions (ENCOVI), conducted by researchers at Andres Bello Catholic University (UCAB), around 75% of Venezuelans now live in extreme poverty. To the extent that they have implemented socialism, their leaders have, over the last decades, now succeeded in forcibly making more citizens ‘equal’ – note that the various ideologies which aim at equality in all things necessarily need to use numerous forms of state force to attain their perfect utopia.
The regimes of Presidents Hugo Chavez and Nicolás Maduro respectively implemented the idea and policies of the Bolivarian revolution. To gain control over the economy, then President Chavez implemented a massive nationalisation spree in the 2000s – all with the goal of bringing about free healthcare, free education, free housing, etc., for all citizens. Increased taxes and the redistribution of land were also key features of the revolution – when pursuing a new ideal through government force, one cannot risk citizens having the agency and autonomy that come with secure private property rights. Private enterprise was steadily suffocated, people with business and technical expertise left the country, and government-controlled institutions took charge of ever more aspects of economic, social, and daily life.
As more investment and people were leaving the country, the regime implemented both exchange rate and price controls. If the President, a panel of bureaucrats, or a government department decided that a product cost ‘too much,’ they simply intervened in the forces of supply and demand that are crucial for the daily, functioning of a market economy. Of course, for the socialist revolutionary few things are as morally reprehensible as a company making a profit (by catering to consumers’ needs and wants) – therefore the added ‘need’ for the state to have the power of strict price controls.
For all the promises of complete employment and jobs for all – as always tends to be the case with pro-big government politicians throughout history – the fact that Venezuelan businesses (of all sizes) closed down, and foreign investors left and chose to not come back – unemployment increased. With ever more government involvement in the economy came more red tape, more corruption, and ever less incentive to take a risk to invest and build entrepreneurial enterprises. And no matter how fervently politicians demanded that it was people’s duty to build and work, new businesses would never form in such a hostile environment:
“In 2011, Latin America received over $150 billion in foreign investment; Venezuela only accounted for $5 billion of this amount, while neighboring Brazil received $67 billion. Investment has only declined further since then; in 2019, Brazil received $72 billion, Colombia $14 billion, and Chile $11 billion, while Venezuela received less than $1 billion.”
There is no doubt that rising inflation played a big role in the Venezuelan decline. But it was the government’s own policies that produced such an inflation storm in the country. Through stifling private enterprise and organic economic growth and attempting to salvage something out of the mess by printing more and more money (which could not match the negligible level of economic activity) the regimes effectively hollowed out their own currency and stripped it of all real-world worth.
Whether a given economic and political system ‘works’ or not does not determine whether it is moral. Throughout the last century, the data support the argument that those countries that pursue more free market policies (as opposed to centralisation and state intervention) have experienced better quality of life metrics for most citizens. But what differentiates capitalism morally from other ideologies is the fact that it is the only system underpinned by recognising – and actualising – the value and potential of the individual. If our main motivation is attaining a just, moral society, we should pursue ideas and policies that are motivated by recognising the agency of each individual, and understanding that, through allowing people to engage and trade with each other voluntarily, everyone benefits (morally and concretely).
Venezuela’s leaders tried to control and redistribute citizens into prosperity; if grinding poverty for the majority can be consider ‘prosperity,’ they absolutely succeeded. Perhaps South Africa’s current 44% unemployment rate isn’t enough. Perhaps more government control and intervention will grow the economy. Perhaps giving politicians and bureaucrats more power over economic and social life won’t result in only the politically connected living good lives, and having access to an ever-smaller, fixed wealth cake. Or just maybe, South Africa going down the same ideological and policy path as Venezuela, will result in precisely the same outcomes. If we desire government-enforced, perfect equality, then our current trajectory of lower economic freedom could not be more appropriate.