John Singleton with Bob HowardRip Van Australia (Stanmore: Cassell Australia, 1977), pp. 232-35, under the heading “Socialism”.

Private holdings in the U.S.S.R. constitute 1.5 per cent of total agricultural land, but they produce 30 per cent of the total output. The maximum private plot size is half a hectare.
A FACT

Nobody now believes that a Government run enterprise is necessarily a worker’s paradise. On the contrary it is more likely to be the opposite.
GOUGH WHITLAM1

As with communism, there are two main varieties of socialism — totalitarian and voluntary.

Any form of socialism that involves the State — that is, Democratic Socialism, Christian Socialism, National Socialism, and others — is, whether intended or not, totalitarian socialism. It involves the State controlling and running “industry, production, distribution and exchange”. This can be envisaged as all companies and enterprises in, for example, Australia, being State owned and controlled. Or, in other words, all companies and enterprises being run with the same efficiency, imagination, verve and genius as the Post Office. And that, we are told by the great Australian Labor Party, is the way to give to all Australians the highest possible standard of living and to bring about economic justice for all.

Socialism is an economic impossibility. When the market is destroyed, economic calculation, and all possibility of it, are destroyed with it. A free market is almost a living thing — it is constantly in movement, as money, investment, effort, production and resources, flow in response to the individual decisions of millions of people, all of whom are trying to maximise their own wellbeing, and whose activity is constantly directed by the mechanism of supply and demand with its barometer, prices.

Socialistic, or central government planning, destroys this. It freezes the market into a set pattern. Supply and demand no longer determine prices. Profit is no longer able to motivate people. The individual wishes of all people are replaced by the decisions of a few bureaucratic planners. No central planning department can monitor every market transaction, determine every price, or determine the supply of every service and commodity in accurate response to the true needs of the people. It can only lay down broad and general rules, and increasingly control what people do, both in buying and selling.

Under such a system variety must disappear — why choose among 100 different styles? That’s unnecessary duplication. One or two are enough (and easier to control and regulate). Luxury must disappear — one person can’t have a swimming pool while another is not yet well fed. Corruption and black markets must appear. Consider what would happen when the central planning authority sets the price of coal. Immediately, special interest groups would start up: one would want a special price because its coal was of poorer quality than others; another’s coal would be deeper and harder to extract: yet another would be further from the market, or have transportation problems. This would happen in every business, industry and enterprise.

In the 1960s it was conservatively estimated that there were some 9,000,000,000 different prices in the United States, for example.2 This meant that there were more than 40 trillion inter-relationships of these prices, and a change in any one price had repercussions on whole networks of other prices. The planning department, attempting to control such a huge network of prices, would hold everyone’s future in its hands, and would expand to enormous size. It would also become corrupt beyond belief, as the payoffs and deals started.

Decisions would have to be made by bureaucratic and/or legislative process, rather than by quick business procedures. The U.S. Post Office decision-making process, in 1970, involved twenty-two discrete steps and twenty-seven different loci of authority. A serious count once revealed that in Sydney a few years ago, there were some ninety-one different government boards, committees and commissions that might have had to be consulted in order to get permission to build a building in the city area.

For the socialists the only way out of this type of maze is increasing simplification of the planning process, which necessarily involves control of all individuals. Except, of course, the planners themselves. It is amazing that such a simplistic and dangerous idea has even been able to survive in our societies; and disgraceful that those who have most enthusiastically championed it have been the so-called intellectuals in our midst. The thought stimulated by reading novels such as George Orwell’s Animal Farm and 1984, and Ira Levin’s This Perfect Day should have been sufficient to expose the idea for the crass stupidity that it represents.3

People need incentive to act, and no matter what system is tried, they will find that incentive. That is the driving force behind the black markets and dissident movements in such places as the U.S.S.R. It also shows why the small private plots of ground farmers are allowed do more to keep Russians fed than the noble State farms. But the worst part about the incentives open to people under State socialism is that they encourage most of the power lusters, the wheelers and dealers, and the bureaucratic empire builders. Instead of work and production being rewards, political pull, favour swapping, and power bring the rewards.

It is no accident that such socialist States as the U.S.S.R. and Red China exercise rigid censorship and employ deadly secret police forces. What most socialists will not face up to, however, is that these countries, the U.S.S.R. and Red China, are inevitable end results of any socialist experiment. Under such a centrally planned system, the planning itself generates economic and social problems that require in turn more planning, which in turn generates more problems. The continuous and inevitable trend — as we see here in Australia, and overseas in the U.S.A., Great Britain and India — is for more and more and more controls, regulations, and State expansion. It is a system that feeds off itself, and, in the long run, the logical consequences of it can only be avoided by a reversion to its opposite — to a free society.

Within such a society, the other variety of socialism, voluntary socialism, can function — or at least can be tried. Because this socialism is based on voluntarism, it is entirely moral, and we certainly have no objection to it — no moral objection that is, but we would dispute its practicality. However, our entire philosophy is “each his own”, so if others want to try it, that’s their business. We’d rather be free market capitalists.

The problem with voluntary socialism is that while it is possible on a small scale, with like-minded people, on a large scale it runs up against human nature. Specifically, it doesn’t provide for the differing needs, abilities, tastes or incentives of individuals. Some people may be happy to play the part of the horse in Animal Farm, and do all the work for little material return (and, too often, for little spiritual return as well, as frequently the attitude creeps in that no thanks are necessary, and those with exceptional ability should feel sufficiently guilty about it to be grateful to be able to serve their less fortunate fellows). Most people, however, like it or not, won’t operate under those conditions — not in the long run. We believe that this attitude in people is not a bad thing picked up from our culture, but a good thing that is inherent in human nature. People need incentive. Those who do accept voluntary socialism and are happy within it have their incentives too, but not only do they frequently misread them, they generally want everyone else to be the same. Of all the possible incentives they could have, it is likely that the dominant one is a need for security — and far more than just economic security. Whatever their incentives are, however, we can be sure that they are there.

There is no reason why voluntary socialism and voluntary free enterprise cannot co-exist in a truly free society. Only one thing is certain: neither can co-exist with totalitarian socialism.

Footnotes
  1. Quoted from Gough Whitlam reported in The Sydney Morning Herald, 27 November 1976.
  2. Henry Hazlitt, What You Should Know About Inflation, Funk & Wagnalls, New York, N.Y., 1968, p. 13.
  3. The best serious refutation of socialism ever written is Socialism, by the great free market economist, Ludwig von Mises, published by Jonathan Cape, London, 1936.