Socialim is Dead, Long Live Socialism!
45 Pages Posted: 10 Mar 2014
Date Written: March 9, 2014
Utopian socialists believed that socialism is inevitable because it is a more rational system to organize production and life, a system more in line with the "good" nature of human beings. Marxism rejected this reasoning replacing it with what is known as historical materialism: social systems, it argued, emerge, develop and die not because they correspond more or less to the "natural" aspirations of the people, but because they become more or less competitive in the process of historical evolution – a version of social Darwinism applied not to individuals, but to communities and countries. In particular, Marxism stated that capitalism develops productive forces up to the point when they can no longer be managed efficiently in societies with markets and private property; at this point social property of the means of production and centrally planned economy (CPE) become a more efficient way of managing productive forces, whose social nature has outgrown the narrow capitalist limits. This prediction did not come true – in the XX century socialism came to being not in most advanced capitalist countries, but in the periphery and semi-periphery (USSR, Eastern Europe, China, North Korea, Cuba), and only in North Korea and Cuba it survived into the XXI century.
This paper explains why capitalism was competitive in recent 500 years, and why an attempt in the XX century to replace it by socialist CPEs did not succeed. But it argues that there are other reasons, not associated with "social nature of productive forces", which are finally going to make socialism competitive: the costs of numerous negative consequences of high income inequalities, like greater social tensions, high crime and poor institutional capacity of the state, become larger than the benefits of high savings and investment rate that were making capitalism competitive for 500 years. This "new socialism" will not be necessarily mean a total elimination of markets and private property, but is likely to limit both substantially for the sake of achieving lower income inequality.
Keywords: Socialism, capitalism, inequalities, savings, growth, economic history
JEL Classification: N0, O1, P0, P1, P2
Suggested Citation: Suggested Citation