Thursday, September 17, 2009

Socialism, Virtue, Ethics, and What Works

In my Foundations of Economics class this semester, we are talking a bit about one of the fundamental differences between socialism and capitalism --- namely, ownership of private property, or more broadly, ownership of natural resources. The stakes are high because individuals definitely tend to be richer or poorer due to their greater or lesser ownership of scarce resources.

Given the evident "change" in America (change that we can believe in, we are told) toward more socialistic modes of using scarce resources --- most notably for health care --- close examination and careful thinking about privately owned property ought to be front and center in the debate.

To a person, all individuals are quite certain that they own themselves privately, which means they also take themselves to own their own labor. I observe that most individuals, if not all, will agree that the creators of capital (machines, tools, equipment, technology --- the produced means of production) usually do, and usually should own the capital goods they create.

But what about ownership of natural resources, the scarce resource called "land" in economics? Who does and who should own natural resources, the first category of scarce resources in the trio --- land, labor, and capital --- that are the foundation for production of the consumer goods and services that we all want?

In a socialist society, property is said to be owned communally. In a capitalist society, property is said to be owned privately by individuals. As it happens, Aristotle wrote about the good, the bad, and the ugly related to these two radically different forms of social organization and interaction. I offer here a quick read that touches many of the major arguments offered by Aristotle.

Putting aside the legal definitions of what it means to "own" property, I will offer that whoever controls the property and thereby benefits from using the property can be meaningfully said to own the property. This definition of "own" highlights the fact that regardless of legal definitions, some "one" always owns scarce resources.

I emphasize the oneness of ownership to draw attention to the fact that only individuals make choices; social choice is impossible, since there is no social mind to make the choice. Individuals certainly may choose in a social context --- that's what voting is, but that's also what buying a loaf of bread at the supermarket is, too.

So, even if property or other scarce resources are said to be owned communally, they are not controlled communally, nor are the benefits of using natural resources shared equally, just as a matter of observational fact. Communal ownership of property typically obscures information about the true owner. For example, who is it that really owns all the "public" land out in the western United States?

Communal or social ownership of resources has consequences. Aristotle recognized that simple truth and wrote about it sometime around 350 BC. Read his thoughts here. Control of (that is to say, ownership of) resources through political institutions, such as Congress and the bureaucracy, definitely has important consequences. Those consequences center on whether resources will be used in ways that promote virtue, ethical outcomes, and efficiency.

If we look around the world, through both time and location, history shows us clearly and abundantly the consequences of socialism and other hybrids that embrace socialistic principles. It really isn't difficult to figure out what to expect from a single-payer health care system. It also isn't difficult to figure out what to expect from financial markets controlled by political institutions, such as Congress and bureaucrats.

Are the people clamoring for socialized health care and financial markets controlled ever more tightly by the Federal Reserve (the most opaque and secretive organization in the government)? BHO and his supporters seem to think so. If they are right, then we shall have both. But if and when we do have them, they will have us. Read Aristotle; he was a smart guy.

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