Socialism is one of the hottest issues in our culture. From politicians to teachers to social media influencers, everybody wants to tell us how great it is, and everybody seems to want more of it.
But most people have no idea what it really is or what it can do to a nation.
This article will review the basics of socialism by defining it, outlining its weaknesses, and discussing its effects.
An Introduction to Socialism
What is socialism?
To understand socialism, you must first understand what it is not: It is not a political system. It is not a form of government, a political party, or a political institution. At its heart, it is an economic system.
An economic system is the way a nation goes about using its limited resources (labor, capital, and natural resources [1]) to satisfy its unlimited wants.
Living in a place like America, we may think we have unlimited resources, but we don’t. If we all got as much of everything as we desired, we would be out of everything in a matter of weeks. The economic system we adopt determines how we use those resources, how long they last, and how much good we receive from them.
The four questions an economic system answers
An economic system answers the following four questions:
Who owns the resources? Who controls the workers, the equipment, and the land, and who receives the profit from their use?
Who decides what to make and how much? Who chooses between making shoes and making cars? How many blue cars will be made? How many red?
Who determines the price? Who sets the price for the purchase of goods and services? How is that price determined?
Who gets what and how much? Who can buy a car? How much bread does each family receive?
The two economic systems
There are only two ways these questions can be answered, through a socialist system or through a free market system.
In a socialist system, the government is the “who” in each question. A government minister or department makes these decisions for the people. In a free market system (also referred to as a capitalist system), individuals make these decisions.
While there are only two systems, it is important to note that no nation is fully one or the other. Even the staunchest free market economy has economic decisions made by the government, and even the most extreme socialist economy has elements that are controlled by individuals. In this sense, all economies are “mixed economies,” having elements of both.
Think of them as existing on a spectrum, with free market on one side and socialist on the other (see the illustration later in this article). As a nation moves more towards one or the other, it will experience the benefits or drawbacks of that system. In the case of socialism and free markets, these benefits and drawbacks are profound.
The Weaknesses of Socialism
Socialism has three distinct weaknesses: (1) It does not produce enough information to efficiently meet the needs of its citizens, (2) it eliminates individual incentives to create and produce, and (3) it leads to oppressive governmental power. Let's examine each of these in turn.
Weakness 1: Socialism does not produce enough information.
Running an economy takes tons of information. The tastes, preferences, and needs of people change every day. If the people making economic decisions do not have as much information as possible, resources can be used very inefficiently and wasted. This causes people's needs to go unmet.
Imagine you are tasked with knowing what kinds of shoes every person in America (over 325 million people) will want to buy next year. To do that, you’d need to know what colors, styles, sizes, options, and price points they would all want for each season of the year in each regional market.
Now, what are the chances you could get that right, even for a small percentage of the population? And how could you possibly know enough to make everybody happy? There is just no way a single person or group of people could know enough to do that. And therein lies one of the central problems with socialism.
As a nation progresses toward one end of the economic spectrum or the other, it either receives the benefits or curses of the system it moves toward. Free markets provide infinitely more benefits than socialist markets. For a listing of the economic freedom of nations, see the Index of Economic Freedom produced by the Heritage Foundation.
This is why people in socialist economies end up with products they don’t want. Kevin Williamson, in his book The Politically Incorrect Guide to Socialism, quotes James Dorn on shoe problems in the former Soviet Union (a large socialist nation in the twentieth century) due to this very issue[2]:
The odd thing is that shortages appeared in product lines of which the Soviet Union was the largest producer in the world. In the late 1980s, the USSR produced more than three pairs of shoes for each citizen, but people had to wait to buy shoes.
The problem was that the available shoes did not reflect consumers’ tastes: the shoes were made to fulfill a government plan, not to satisfy market demand.
A free market economy is far superior to a socialist economy on this point. Why? Because people in a government department are not making these kinds of decisions for the entire nation. Individual buyers and sellers are. Tens of thousands of producers and millions of consumers are interacting every day, exchanging information about what is desired and what can be produced, to determine how resources will be used.
That’s why we, as Americans, have so many options for everything we want. Our free market system produces a tremendous amount of information, an amount that far exceeds any socialist system.
Weakness 2: Socialism eliminates individual incentives.
Incentives in an economic system are the motivations individuals have to create new businesses, new products, and new ideas. It is why people launch companies (like Amazon, Boeing, or Apple), risking their savings, reputations, and careers in the process.
In economic terms, the incentive to do this is personal gain, the ability to profit from your labor, skill, and effort. Without this, why take the risk and do all the work?
So how does socialism take incentives away?
Socialism’s goal is to distribute the nation’s resources evenly to everyone (hence the root word "social," meaning "people"). The instrument for doing this, as stated earlier, is government control.
Giving everyone the same portion of the nation's resources requires doing several things:
No one is allowed to own anything. Buildings, factories, and businesses are owned or controlled by the government.
No one is allowed to make a wage significantly higher than anyone else. A doctor makes the same as a janitor.
No one is allowed to earn a profit. No one can own a business, and therefore, no one can receive the profits of that business.
Now, think about what these three things do to incentives. When you can’t own anything, make any more than anyone else, or earn a profit, what incentive do you have to create and produce? None.
When government discourages business activity through taxes, regulation, price controls, and other means, the result can only be lower income for everyone and eventual poverty for the nation.
As a result, as a nation moves toward socialism, it has fewer inventions, fewer businesses, and fewer jobs. This means less income and wealth for individuals, and less tax revenue for the government.
When you eliminate incentive, therefore, you guarantee poverty. (See the image above for a step-by-step explanation of how this happens.)
Weakness 3: Socialism leads to oppression.
Given what we have learned so far, let us reflect on the power government must obtain to manage a socialist economy.
It must own all the resources; every building, every factory, and every business must fall under its grasp. It must make all the economic decisions; wages for every worker, prices for every product, and manufacturing schedules for every factory are its sole domain.
Its power would extend to everything in the nation. It would have total control over its people, and no one could do a thing about it.
Some of the most oppressive governments on earth exist in socialist countries. Cuba, North Korea, and Russia [3] are clear examples of the final end of socialist ideas—totalitarian rule.
If there is anything we have learned about human beings, from both history and the Bible, it is that if you give them that much power, they will abuse it. There is no situation in which that would not eventually be the outcome.
Ronald Reagan, the 40th president of the United States, recognized this danger. In a speech in 1964 called "A Time for Choosing," he said,
A government can’t control the economy without controlling people. And [America’s Founding Fathers] knew when a government sets out to do that, it must use force and coercion to achieve its purpose.[4]
Both Reagan and the Founding Fathers were right. Believing you can give the government total power over the economy and they will use it benevolently and fairly is absolute foolishness.
What do we conclude from all of this?
Despite the claims of supporters, adopting socialism is one of the worst things a nation could do. It devastates economies, reducing the number of businesses, the number of jobs, and ability to produce wealth. It creates abject poverty, stripping the people of incentive to produce and create. And it drives tyranny, giving government total, unrestrained power over the people.
In an article on National Review, Magatte Wade, an African woman who received the Julian L. Simon Memorial Award from the Competitive Enterprise Institute for her entrepreneurial activity, discussed why her home continent is “still the poorest in the world."[5]
The article summarized her comments as follows:
Wade says this is largely the consequence of overregulation.[6] She gave a TED talk in 2017 about tariffs, laws, and regulations that make it nearly impossible for African entrepreneurs to start businesses. Because there are no businesses, there are no jobs, and because there are no jobs, Africans risk their lives to flee to Europe or the U.S., she said.
Government by far-off colonial powers was replaced in most African countries by socialism. The socialism was learned from the West and then passed off by intellectuals as authentically African.
Wade has been talking to several African governments about what they need to escape poverty. She summarizes it in a simple formula: “Poverty is solved by prosperity. Prosperity is built by entrepreneurs. Entrepreneurs need a business environment where they can succeed.” [emphasis added]
Every step toward socialism is a step toward the poverty Wade speaks of in Africa. When we hear politicians talking about capping the price of prescription drugs, regulating the emissions of gas-powered cars, or suing a company for what it charges its customers, we come one step closer to living the horrors Africans and many others around the world endure every day.
For this reason, as Christians, we cannot see socialism as a side issue. As bearers of salt and light, and those called to protect our neighbors from oppression, we must fight it with everything we have.
OTHER RESOURCES:
*Please use these in your preaching and teaching ministry.
NOTES:
[1] Labor is the effort of workers (people), capital is the equipment and buildings used to make things (computers, saws, lights), and resources are the things that come from the earth (metal, rock, timber).
[2] The Politically Incorrect Guide to Socialism, by Kevin D. Williamson, 2011. Amazon.
[3] Russia is no longer a purely socialist state as it was in the time of the Soviet Union. Today, Russia supposedly implements a "state-capitalist" system. However, while many industries have been privatized, the Russian government still owns or controls the oil, gas, and electricity markets; banks; the defense industry; and transportation. This gives the government direct or indirect control over most of the economy. Furthermore, the government has retained much of its totalitarian power from the Soviet era under the rule of Vladimir Putin. On the socialist/free market spectrum, Russia would well into the socialist portion, with North Korea and Cuba at the very leftmost edge. https://www.wilsoncenter.org/sites/default/files/media/documents/event/KI_AslundPresentation100112.pdf.
[4] "A Time for Choosing," by Ronald Reagan, Oct. 27, 1964. https://www.reaganlibrary.gov/reagans/ronald-reagan/time-choosing-speech-october-27-1964
[5] "'Free Enterprise Is My Birthright as an African," by Dominic Pino, Sept. 19, 2024. https://www.nationalreview.com/2024/09/free-enterprise-is-my-birthright-as-an-african/
[6] Regulations are rules the government uses to control businesses. The government need not "own" every business if it controls their every move through regulation. This is what we are seeing in the U.S., government not taking over businesses, per se, but regulating them to the point they may as well be the owners.