#116 The Resurgence of Socialism

Whole Foods founder John Mackey calls capitalism “The greatest thing humanity’s ever done.”  Then why do young people favor socialism?  This podcast explains five reasons, based on the work of Niall Ferguson.  

As the Christian Economist, sometimes I get caught between conflicting prescriptions.  Christians, and really, anyone who believes in a Higher Being, are concerned about the means.  We believe that God has prescribed a certain way for us to lead our lives, and our objective is to align with it.  Economists, on the other hand, tend to focus on the outcome of a transaction.  They almost always take the utilitarian view.  

Today’s topic: Socialism, fails on both the Christian worldview and the economic outcome.  As the means, Socialism uses power, of which Christians don’t approve.  And on the ends measure, Socialism has failed everywhere it has been tried. 

Then why do 65% of young Americans favor it?  My information source for this podcast comes from an article titled Capitalism, Socialism, and Nationalism: Lessons from History by Niall Ferguson, at the Hoover Institution at Stanford University.  After establishing Socialism’s awful historical record, he asks the question, “Why, then, has socialism come back into vogue in our time—and in America, of all places?”  He provides four answers, and I will add a fifth if time allows. 

Of course, it depends what is meant by “capitalism.” Which, by the way, Whole Foods founder John Mackey calls “The greatest thing humanity’s ever done.”  That’s not only worth repeating, it deserves an entire podcast, but for now, I will simply repeat: Whole Foods founder John Mackey calls capitalism “The greatest thing humanity’s ever done.”  But perhaps people don’t understand it very well.  According to a Gallup poll, just 56 percent of all Americans have a positive view of capitalism.  However, 92 percent have a positive view of small business,  86 percent have a positive view of “entrepreneurs,” and 79 percent have a positive view of “free enterprise.”  It also depends on what is meant by “socialism.” Asked by Gallup to define socialism, a quarter said it meant equality.  I’ll look into that idea in a few minutes, stay tuned. 

 

Creative Destruction

The first of our five concepts is creative destruction, and yes, free-market capitalism allows for it.  The horse and buggy were creatively destroyed by the automobile.  Typewriters were creatively destroyed by computers.  VHS tapes were creatively destroyed by youtube, the program on which you are watching this video.  Aren’t these creative destructions good?

The guy who invented the phrase “Creative destruction,” Joseph Schumpeter has an opinion on the subject.  in his book Capitalism, Socialism and Democracy from 1942, he predicted that free-market capitalism would fail and socialism would replace it.  Let’s hope he’s wrong. 

In the Christian worldview, creative destruction is part of creation, not the fall.  We believe that humans, made in the image of God use their creative nature to come up with new ways to redeem the earth back to God’s creational intent for it.  A couple of quotes from my little book Economics and the Christian Worldview apply here.  One is: As long as the fallen nature produces unlimited wants, and the creative nature has unlimited creativity, there will be unlimited employment.  Another is: There is a limited amount of land, and God is not making any more.   But He is making creative human beings who discover more efficient ways of using it. 

It’s always seemed strange to me that progressives ...