SOCIALISM: A Primer

Socialism as an economic model and also as a political movement has come to the forefront recently.

It seems appropriate to examine some of the idea's structure and history.

SOCIALIST ECONOMIC MODEL

The economic model of socialism is conceptually very simple: the people as represented by the state own all the productive resources in the country. Since all enterprises are publicly owned, there is no profit motive and instead enterprises are organized to provide the maximum amount of well being to the entire population in the form of goods and services delivered at cost with no profit.

CAPITALIST ECONOMIC MODEL

This idea directly contradicts the capitalist model wherein all the productive resources in the country are owned by private individuals and organized to maximize profits for the owners. In this model, individuals supposedly are benefited with the concept that competition in the marketplace will force efficiency on all privately owned companies, resulting in the greatest amount of good delivered to the greatest number of people.

Capitalist Imbalances

However, it is obvious that private owners of capital will, and do, consider customers and employees as adversaries. After all, capitalists want to hire resources and labor at the lowest price and sell products at the highest price: that is how businesses maximize profits.

When there is an imbalance of power between business owners and customers or employees, capitalist theory suggests that the power imbalances will even out over time. But, it happens that national governments can become impatient of the imbalances and create regulations to even the scales; or, governments can be co-opted by wealthy business owners and prevent market forces from balancing the scales. These instances are called 'market failures'.

BOTH MODELS CO-EXIST

In the real world there are usually mixtures of differing structures in all countries wherein some enterprises are owned publicly and some are owned privately. For example, in the United States, private for-profit businesses provide the majority of goods and services. But, there are some exceptions where the enterprise is owned publicly and designed to provide goods and services at cost without making a profit. Good examples include municipal public water systems and sewer systems.

Fear of Socialism

The Socialist model has negative publicity since the model was imposed violently in numerous societies, as in Russia in 1918 and China in 1949. In these cases, the popular armed forces rounded up all the private property owners and shot them.

So, when the idea of socialism is raised as an evil idea, it is largely because of those experiences.

Some commentators may suggest that Socialist or public enterprises are inherently corrupt while such corruption is eliminated from privately owned companies by competition. This argument fails to hold when considering the many criminal and corrupt examples in privately owned enterprises. It simply may be that there is an equal likelihood of criminal behavior in any organization regardless of its ownership structure.

RE-EXAMINING THE MODELS FOR THE 21ST CENTURY

Perhaps a better method of examining the idea of socialism and public ownership and control in general is to examine any enterprise to see if the goal of the enterprise is to make a profit for its owners; or, whether the goal is simply to recover costs and provide goods and services for the benefit of the employees and customers.

Thus, a 'socialist' enterprise may be either a state owned and managed entity, or a privately owned entity, both with the goal of simply recovering costs in a 'non-profit' organization.

In the United States today there are both private, for profit banks and there are non-profit credit unions. Both types of organizations provide the same range of services, and, arguably, non-profit credit unions do so better for their customers and employees.