Thursday, June 16, 2011

Socialism and the Pathology of Resentment

Well a good man pays his debt
But you ain't paid yours yet

There are two general ways of economic organizing. Capitalism (a.k.a. free or unhampered markets) puts ownership and control of production in private hands. Producers take signals from the market to determine the best approach for converting inputs into outputs.

The other way is socialism (also known as central planning or planned economy). In this system, ownership and control of production is in public hands (it is 'socialized'). A group of people, the 'central planners,' draw from their own resources (knowledge, experience, special interests, etc) to determine what should be produced, how much should be produced, and for whom.

When socialism began attracting serious attention in the mid-late 1800s, proponents claimed that this approach to economic organizing would elevate standard of living beyond the capacity of capitalism. Not only would resources be distributed more evenly (a.k.a. 'social justice' in today's parlance), but on average all would be better off.

During the next few decades, serious thinkers, particularly those of the Austrian economic school, tossed that theory onto the intellectual scrap head of history. A critical problem with socialism is that there are no price signals by which producers can effectively allocate resources. Moreover, bureaucratic planners are unlikely to match the speed with which capitalist systems, with its myriad actors each acting in their own self interest, correct for error and adapt to environmental change.

Socialism, concluded the thinkers, is more likely to result in squalor because economic resources would be grossly and persistently misallocated. Mises concluded that achieving the socialist ideal would not even be possible before the system dissolved into chaos. Empirical observations drawn from actual socialist systems (e.g., USSR, North Korea) provide confirmatory evidence in this direction.

Proponents of socialism have thus had to change their tune. Perhaps standard of living w.r.t. material goods will not be higher under socialism, they admit. But because those on the lower end of economic pyramid will be elevated and those at the higher end will be lowerd, then the system is justified. Besides, when people realize that they are no better off than their neighbors, then demand for economic goods will likely decline anyway.

Such claims, of course, do not square with basic axioms of human behavior.

Mises also suggested that proponents of the socialist argument may suffer from a pathological mental attitude of resentment. They resent, and perhaps envy, those who are better off. Socialism provides a mechanism for pathological resenters to obtain emotional satisfaction as they observe the rich suffer in an outsized fashion.

Mises may have a point. After all, it is easy to amass a mountain of 'journalistic' evidence that paints wealthier people as enjoying excessive or unfair advantage. I found these three examples (here, here, here) in about 30 seconds. The tone/one sidedness of the commentary is consistent with a resentful, envious tone.

As sagely observed by Mises, the reason why such resentment and envy may be pathological is that the socialist's prescribed solution for those who are less well off is to worsen the position of better situated people. A well reasoned person is more likely to conclude that the most effective way to deal with this situation is not to worsen the position of those better off, but to proactively improve one's own position.

On the other hand, because people are naturally attracted toward getting something for nothing, there may be no pathology in wanting to the soak the rich. Instead, it is perhaps a sensible approach for getting more wealth at the expense of less effort.

Of course, those who take this path are condoning the use of force to acquire the wealth of others. Justifying (rationalizing) such action once again suggests the possibility of a resentment-oriented pathology.

1 comment:

dgeorge12358 said...

Debates about capitalism and socialism sometimes proceed as if we are choosing between two equally viable economic systems.

As Ludwig von Mises, Friedrich von Hayek, and other economists writing in the Austrian tradition have shown, rational economic calculation requires prices.

Prices can only emerge through exchange, and exchange can only take place if private property rights are secure.
~Art Carden