Mr. Zohran Mamdani is running for the office of mayor of New York City. He won the Democratic party primary, advertising that his administration (if elected in November) would improve “affordability”, especially in housing and grocery prices. He proudly describes himself as a “Democratic Socialist”. That brings up two questions: a) what is the true nature of socialism; and b) is a socialist in New York beneficial, given that New York City is already beset by problems caused by other Democratic/socialist policies?
“Socialism”, or properly called “Marxism”, is a philosophy codified by Karl Marx in the 1850’s with his publication of his book “Das Capital”. It described human history as the contest between the “oppressors” and the “oppressed”, and blames all oppression in free enterprise, or what he called “capitalism”. That claim alone is fraudulent; “free enterprise” a.k.a. “capitalism” did not become prevalent until the end of the Middle Ages (~1550). How then could it have caused oppression before that? But Marx’s theory contains a worse fatal flaw: the operation of his system is contrary to human nature. He assumed that everyone will work just as hard for other people as they would for their own family. That is patently false, as any fifth-grader can see. That is why socialism is usually forced on societies. It is true that people have occasionally voted for a socialist regime but only out of ignorance of its true nature. The truth is: a socialist regime, no matter how it acquired power, requires coercion and brute force to stay in power simply because it ruins the society that it governs. It does so by consuming the existing assets of the society for political advantage to the socialist ruling elite. The assets of a society is its “capital”; i.e., everything of value, including your checkbook.
Here is an excerpt from my book [1]:
“A socialist or “progressive” system will fail because the allocation of existing capital is based on politics and not economics. Typically capital is wasted in a socialist nation because it is employed to meet some political or ideological objective rather than an increase in production and improvement in the standard of living for the population. But it just not the socialist nations that waste capital; it can occur in free enterprise nations as well. Capital can be wasted in many ways: a) on projects that are never completed (such as railroads, bridges, and tunnels); b) on projects that never turn a profit (high-speed rail); and c) on projects that are not necessary (some stadiums, convention centers, and airports in small towns). Another type of wasted capital is in the form of projects that are done too early before they are needed. For example, a 6-lane limited access highway through a town of 10,000 is not necessary to support the businesses there (in fact it may destroy those businesses). Even if there is no effect on the local businesses, the unnecessary highway represents money that could have been better spent elsewhere.
Some may argue that the destruction of capital and reduction of production occurred in the Soviet Union only because it was the first practical test of socialism, and of course, “mistakes were made”. They now claim to have corrected those errors, and are ready to usher in utopia. Such an assertion ignores the history of later socialist regimes. The socialists took over in Cuba 42 years after the Bolshevik Revolution in Russia, and capital was destroyed in Cuba just as quickly. The socialists came to power in Venezuela in 1998, 81 years after the Bolsheviks, and capital was destroyed there in a few years. What about China — doesn’t the prosperity of China prove that socialism can work? No, China is giving the illusion of prosperity. China appears to be prospering only because it is being given capital and technology through the idiotic policies of the Western nations. What isn’t given on a silver platter is stolen by the Chinese. The destruction of capital in socialist nations is not the result of mistakes, or accidents, or by some magic sabotage by unseen and unheard enemies: the destruction of capital, the decline in production, and the lowering of living standards are all “features” of socialism. It is worse than that: it also demoralizes labor.”
In the next essay, I will give concrete examples of the defects of socialist economics.
References:
1. Edward D. Duvall, The Control and Manipulation of Money, 2nd edition, Queen Creek, AZ: Fremont Valley Books, 2022, p. 36
