NIGHTMARE OF THE LIVING DEAD:

Why Isn't Socialism Dead? (Lee Harris, 05 May 2006, Tech Central Station)

The Peruvian economist, Hernando de Soto, has argued in his book, The Mystery of Capital, that the failure of the various socialist experiments of the twentieth century has left mankind with only one rational choice about which economic system to go with, namely, capitalism. Socialism, he maintained, has been so discredited that any further attempt to revive it would be sheer irrationality. But if this is the case, which I personally think it is, then why are we witnessing what certainly appears to be a revival of socialist rhetoric and even socialist pseudo-solutions, such as the nationalization of foreign companies?

It should be stressed that de Soto is not arguing that, after the many socialist failures of the twentieth century, capitalism has became historically inevitable and that its expansion would occur according to some imaginary iron clad laws without any need for active intervention. On the contrary, de Soto is fully aware of the enormous obstacles to the expansion of capitalism, especially in regions like South America, and his book is full of dismal statistics that demonstrate the uphill battle against bureaucratic red-tape that is involved in getting a business license or even buying a house in many third world countries. But, here again, the question arises, If capitalism is mankind's only rational alternative, why do so many of the governments of third world nations make it so extraordinarily difficult for ordinary people to take the first small steps on the path of free enterprise?

For de Soto, the solution lies in democratizing capital. Minimize state interference. Cut the red-tape. Make it simple to start up a business. Devise ways for the poor to capitalize on their modest assets. If a person in the USA can get a loan based on the value of his $200,000 home, why shouldn't a much poorer fellow get a loan based on the value of his $2,000 shack?

These are all sensible ideas; they are all based on de Soto's belief that the only way to help the poor in the third world is to get the bloated bureaucratic state off their backs, and permit them to use their own creative initiative to do what so many poor immigrants to the USA were able to do in our past -- to start out as micro-entrepreneurs, and to work their way up to wealth and often fabulous riches. But again, we come back to the same question, only in a different form, Why are the people in Bolivia and Venezuela responding so enthusiastically to the socialist siren-song of Evo Morales and Hugo Chavez, instead of heeding the eminently rational counsel of Hernando de Soto? Why are they clamoring to give even more power and control to the state, instead of seeking to free themselves from the very obstacle that stands in the way of any genuine economic progress?

When Hernando de Soto asserts that capitalism is the only rational alternative left to mankind, he is maintaining that capitalism is the alternative that human beings ought to take because it is the rational thing to do. But what human beings ought to do and what they actually do are often two quite different things. For human beings frequently act quite irrationally, and without the least consideration of what economist called their "enlightened self-interest." And it is in this light that we must approach the problem, Why isn't socialism dead? [...]

In light of the horrors brought about in the twentieth century by the revolutionary myth of socialism, it is easy to sympathize with those who believe mankind could not possibly be tempted to try the socialist experiment again. If the liberal rationalist Renan was surprised that "Socialists were beyond discouragement" at the beginning of the twentieth century, how much more surprised must his contemporary counterparts be to discover that socialism is also beyond discouragement at the beginning of the twenty-first century. Yet this is a lesson that Evo Morales and Hugo Chavez, under the guidance of their mentor, Fidel Castro, seem determined to impress upon us.

It may well be that socialism isn't dead because socialism cannot die. As Sorel argued, the revolutionary myth may, like religion, continue to thrive in "the profounder regions of our mental life," in those realms unreachable by mere reason and argument, where even a hundred proofs of failure are insufficient to wean us from those primordial illusions that we so badly wish to be true. Who doesn't want to see the wicked and the arrogant put in their place? Who among the downtrodden and the dispossessed can fail to be stirred by the promise of a world in which all men are equal, and each has what he needs?

Here we have the problem facing those who, like Hernando de Soto, believe that capitalism is the only rational alternative left after the disastrous collapse of so many socialist experiments. Yes, capitalism is the only rational method of proceeding; but is the mere appeal to reason sufficient to make the mass of men and women, especially among the poor and the rejected, shut their ears to those who promise them the socialist apocalypse, especially when the men who are making these promises possess charisma and glamour, and are willing to stand up, in revolutionary defiance, to their oppressors?

Why's this a problem? People can go right ahead and try socialism again, and will, but we all know that it's so self-destructive as to be a doomed experiment. What was truly a problem was that, as recently as the 80s, even conservative elites thought socialism, communism, etc. were viable alternatives (as some conservatives today have convinced themselves Islamicism is) to liberal democratic protestant capitalism that presented long term competition for us. Once you recognize them all as dead-ends there's little reason to fret, in geopolitical terms, if other folks are racing down them.

MORE:
Venezuela Seeks Top Oil Company Tax Rate of 50% (Bloomberg, 5/08/06)

Venezuela, the world's fifth-largest oil exporter, plans to raise oil taxes on companies including Exxon Mobil Corp. and ConocoPhillips as President Hugo Chavez demands a greater share of surging oil industry profit.

All oil companies operating in the country, including heavy oil joint ventures, will now face a uniform income tax rate of 50 percent and a royalty rate of 33.3 percent, Energy and Oil Minister Rafael Ramirez said in a television interview. The changes will be submitted for congressional approval tomorrow, Ramirez said. Chavez backers hold all 167 seats.

Chavez, 51, has already forced Total SA, and Eni SpA out of contracts to operate some oil fields when they refused to convert operations to joint ventures with the state oil company. Countries including Venezuela, Russia and Bolivia have been seeking a bigger share of profits after oil more than doubled over the past three years.

Posted by Orrin Judd at May 8, 2006 12:27 PM