I saw an article today entitled “Barack Obama’s Stealth Socialism”, syndicated by many blogs including this one. It seems that many are concerned that our nation’s foundations of capitalism might crumble and be replaced by socialism, including John McCain, who called his opponent a socialist at a Saturday, October 18 rally.
Proponents of socialism say that disparity in incomes leads to the exploitation of workers, oppression of minorities, and imperialism. Instead of maximizing profit for a minority, there is a blueprint for the economy so that profits are routed to meet the needs of the people – health care, childcare, housing subsidies, transportation, and so on. There are many socialist elements in place in the U.S. right now, including welfare and public schools.
This led me to ask: why is socialism bad? The campaign promises that resemble socialist aims – and they exist on both sides of the ticket – might seem pretty good to some people. So what’s the catch? Before you read any further, note that I’m not attempting to advocate one position over another – just to ask a difficult question that others might be asking, and see if concepts from technology management and quality management can provide some insight. With this in mind, we consider that “government”, from the perspective of technology management, is all about two things:
- setting and enforcing standards (which includes laws, regulations and policies), and
- providing a structure for decision making.
Both of these aspects play a fundamental role in setting up and operating quality systems, which are a form of government (on a smaller scale)! Government is different than a production system like capitalism, socialism or communism though. There are, however, often links between the two: for example, government can set the standards that influence both the means of production and how a country interacts with other countries through its economy. The difference between government and the production system is, loosely, analogous to the difference between strategy and tactics.
- Government: Democracy is government by the people where decision-making occurs on the basis of a vote. The voting majority wins. A republic is a government in which the people delegate representatives to represent them – and make the decisions for them. The U.S. is a republic, not a democracy (ie. your vote doesn’t really count if the electoral votes that come from your state ultimately go to “the other guy”.) Democracies and republics are both systems for decision making. Fascism is also a system for decision making – but all of the decisions are unilateral, and made by a dictator (or under some sort of dictatorial control). The process of reaching a decision depends in a large part on the standards you are using to judge the context of a problem – and the opportunities available for a solution!
- Production: Capitalism is characterized by an economy where investment and ownership in the production and distribution of goods is primarily private – through individuals and corporations. In a capitalist economy, you can start your own business and have the potential to grow without bounds. In a socialist economy, you can’t grow too much, or your excess profit is siphoned off to support social causes. Some feel this isn’t fair, and that it hinders achievement, leads to low quality products and services, and higher levels of unemployment. (The socialist agenda could be considered a reaction to inequalities in income distribution, such as those observed by Pareto’s study of the wealth distribution in Italy, from which the famous 80/20 principle was first observed – for a summary, see Levy 2001.
So why are people scared of socialism? In addition to taking the “powerball” potential out of capitalism, it also seems to be perceived as a “gateway drug” to communism (and then on to dictatorial decision-making) for the ruling parties. Previous nations that have attempted to blend socialism with dictatorships (e.g. Cuba, Russia) are held up as examples of certain doom. Other examples, such as the European socialism that’s in place today, are criticized because tax rates are oppressive at 50-60%, even though those countries blend socialism with democratic decision making. No one has “gotten socialism right,” balancing public services with reasonable costs, and doing so without eventually losing sight of fundamental human rights.
Does this mean that socialism can’t be an effective production system? No; it just means that there are no historical examples of resounding success to draw from, and the risks are palpable – which can be frightening to people. (Maybe the design of socialism in our country is just suboptimal.)
Levy, M. (2001). Market efficiency, the Pareto wealth distribution, and the Levy distribution of stock returns. Unpublished manuscript, Jerusalem School of Business Administration, Hebrew University of Jerusalem. Available here.