I am a firm believer in understanding all sides of an argument for two big reasons. One, this allows you to poke holes in your opponent’s theory, and two, it allows you to make a well-informed position for yourself. This also means that you need to understand the shortfalls of your own theory. Don’t fall into dogma, especially if you agree with it. This is why I am writing a post about the advantages of socialism. Personally, I am against it, I am a free-market capitalism kind of guy. However, it has been rather interesting to see the arguments for socialism because some of the caveats they give are similar to those of arguments for free-market capitalism, just without a consistent line of logic (in my opinion). That could be due to the writer, or the theory and it can be said for both sides. That is why we constantly study and try to poke holes in our own beliefs. Everything between this intro and my final thoughts will be my attempt to make an argument for socialism and be as objective as possible.
What is Socialism?
Before we can talk about the advantages of socialism, we need to know what it is. According to Investopedia, socialism is a populist political and economic system based on public ownership of the means of production. This means that all legal production and distribution decisions are made by central planners who oversee the entire state. Therefore, individual citizens must rely on the state for almost everything. This can manifest in government price control over goods and services amongst other things. It is possible for countries to have characteristics of both capitalism and socialism, just look at China. Economically, they were capitalist, which is how they were able to grow so fast, but politically they are socialist.
People tend to use communist and socialist interchangeably, however, there is a difference. One difference is that socialism allows for the existence of capitalism in some parts of the economy. Now, this discussion can be rather nuanced, so I will link an Investopedia article at the bottom of the post if you want to go further in depth.
Advantages of Socialism
Social Equality
One of the political advantages of socialism is social equality. In a socialist state, disparity in wealth (the “Wealth Gap”), unemployment and inflation are all reduced. In socialism, wealth is distributed fairly amongst the citizens of the state. Keep in mind that it is “fairly” distributed, not necessarily “equally” distributed. Essentially, the government controls the economy through price controls. By controlling the price of goods and services, the government can avoid excess or insufficient production of a particular good or service. Since the price is set, there are no market forces to cause the price of a good or service to plummet or sky-rocket unless the government deems it necessary to increase the amount of employment for the people. Also, by controlling the price of goods, inflation can be significantly reduced as the prices won’t increase, keeping those goods affordable for the working people.
Economic Planning
Controlling and planning the economy is another advantage of socialism. Since the economy is centrally planned, it is much more efficient across the entire state. This allows for the efficient use of land, labor, and resources. In terms of the efficient use of land, the government can decide what that particular piece of land can be best used for. What resources does it have? Is there some commercial use that is best suited for this location? Since the decision for the use of that particular piece of land is centralized to one entity, the government, the decision can be made to maximize the benefit to the state in regard to that piece of land. The above reason is the same for the efficient use of labor and resources. This is another way, besides price controls, that the government can ensure that enough goods and services are produced.
Nationalization of key industries
In a socialist state, key industries to the economy are nationalized so that they can be used in a way to maximize their benefit to the state. When an industry is nationalized, the state directly invests into the industry, causing it to grow to its optimal capacity. Also, any profits that are made within the industry can be distributed for the overall national good. Since these profits go back to the state, they can be reinvested or allocated to different industries to allow for the growth of the overall economy. Finally, the producers of these goods and services are able to focus on goals for the social good, rather than those for a market. Essentially, they can focus on improving the quality of life for the people of the state, rather than just those who participate in that specific market.
Redistribution of wealth
The wealth gap will not be wide in a socialist society because wealth will be redistributed in a fair and just manner to the society as a whole. This manifests in an increase in the quality of life of the society as a whole. Through progressive tax policies, wealth is transferred to the government so that it can be distributed fairly to the overall society, reaching the working class through either public services or the investment and therefore growth of their industries. Through this tax policy, public services such as education and health care are available to even the impoverished. Also, the government is able to subsidize housing and utilities, making those areas affordable for everyone.
Employment protection
A direct benefit to the working class, protection of employment is yet another one of the advantages of socialism. With a minimum wage, people are able to remain in their jobs because they are paid a living wage, and therefore can afford to live a decent life. Also, workers are free to unionize and are granted recognition of their union by their particular employer. Jobs can also be preserved through how the government regulates the economy (price controls and other arguments from above).
Final Thoughts on the advantages of socialism
Now, it’s time for some of the thoughts that came to mind as I wrote this. A characteristic of socialism is the “fair” distribution of wealth. That is the reason for the tax policies and other factors. But who exactly defines “fair”? I bet you the doctor who works 16 hours a day saving lives has a different idea of what a fair distribution of wealth means than a single mother who works at a fast-food restaurant. I’m not saying either of them is right or wrong, just that they probably have a different idea of what fair would be.
One of the biggest arguments I noticed when doing research for this post is about how price controls will do wonders for society. So, let’s use some common sense. Say the price of bread is fixed at $5, well, if it costs $3 for the business to source the ingredients, make the bread, pay the workers, transport it to the store etc., then that business makes $2 in profit, before taxes at least. But what if it costs the business $6 to make each loaf of bread, well, now they are losing money with each loaf of bread they make. In response to this the government can subsidize them by giving them money to continue making the bread, but at this point the government would probably just own the bakery or business. Alright cool, problem solved right? However, what if a drought or other natural disaster comes along and destroys over half of the wheat the government can use for bread. Well, now they can make a lot less bread. So, if the price of bread is fixed at $5, people are still going to buy bread like they normally do, even though there will be half as much. This means there will be a shortage of bread because the government prints money, but it CAN’T PRINT BREAD. Sure, they can buy it from other countries, but will those other countries give it to them for $5 or less. Maybe. My point is that price controls lead to shortages. If you allow the free market to determine the price of bread, yeah it will skyrocket when the disaster happens, but people will not buy as much bread because it is too expensive. Since the price is high, businesses can profit more from selling bread, so they will make more and invest in growing more wheat for next year to make a higher profit. So, businesses are making more bread while people are buying less. This causes the price of bread to come down since there is more of it, it isn’t scarce. Simple supply and demand. Wow, it’s almost like people will solve problems on their own and not need big brother to spoon feed them.
I did my best to not allow my bias to show up in my writing. Also, please feel free to comment if you think I should add to the advantages of socialism.
To your wealth and future,
James Forsythe
For a YouTube video of my explaining my thought more in depth
Learn about Stakeholder Capitalism as well!
https://jamesdforsythe.com/stakeholder-theory/
Interested in other Major theories?
https://jamesdforsythe.com/category/major-theories/
Link to differences between communism and socialism Investopedia
https://www.investopedia.com/ask/answers/100214/what-difference-between-communism-and-socialism.asp
