What Is Socialism?

Economics is the study of human action. Using economics, we can understand how social orders can create different results based on how they allocate resources.

In a market economy, production is guided by enterprises seeking profit and innovation. In a crony economy, the government influences market outcomes by interference and intervention. A third economic system rejects markets entirely in favor of central planning.

This is socialism.

In this system, central planners set the stage and drive the economy while individuals serve less innovative roles in society in exchange for goods, services, and security. While a market economy rewards those who best serve customers, the promise of a socialist economy is that everyone's needs are taken care of equally.

This is a command economy, where central planners decide what is produced, in what quantity, and who should produce it. Instead of people being allowed to choose what goods and services they prefer to spend their money on, they are provided only with what goods and services the central planners have chosen for them.

Since some individuals prefer thinking for themselves and wish to pursue their own course of action and reject central planning, socialist countries tend to be politically authoritarian.

The economic consequences of central planning are just as bad.

For example, profits serve to reward and encourage innovation and efficiency. If you are the first to create a new product or find a cheaper way to provide a service, the individual that risks capital is financially rewarded. Under socialism, there is no incentive to innovate because the rewards go back to the planners.

Additionally, central planners only operate on their own knowledge and agenda, which is always less than the collective knowledge of society. Think of the difference between a published encyclopedia, which is static and unchanging, and a decentralized alternative—like Wikipedia, which is constantly evolving and growing.

One vital piece of knowledge is that markets coordinate prices.

Since many resources—such as steel—have a variety of different end uses, prices signal whether the use of a specific resource satisfies the top priority of the community. Should a factory produce car parts, or manufacture nails? In a market economy, prices indicate if there is a greater need for one product over another, that is for car parts or nails. In a command economy, it is the government that makes the decision.

The socialist goal of redistribution of wealth makes the basic mistake of not understanding how wealth is created. An economic system that does not reward innovation, savings, and production will see the quality of life for everyone decline.

For example, remember when everyone had a telephone in their home, but then the cell phone changed how we communicate. Without a profit incentive, why bother, and thus our lives are poorer. How many other such things might not have been developed without the incentive of profit?

Often, politicians today will not go so far as to call for the socialization of every part of the economy—only for certain sectors, like healthcare, transportation, and education, to name a few. While a mixed economy that includes a mixture of markets and socialist services can function better than a purely socialist economy, there are still problems that exist.

For example, a truly socialist healthcare system forces decisions about the use of scarce resources—like hospital beds, medical machines, and medicines—to be decided not by individuals, families, or doctors, but by government appointed central planners. While patients of socialist healthcare may not have to pay to visit the doctor, or for a hospital stay, or for a medical procedure, or prescriptions, they may face other critical obstacles like long wait times just to see a physician or to get an approved surgery, shortages of medicines, fewer doctors, centrally planned research, all resulting in a lack of medical freedom.

The case for socialism is not grounded in economics—but a sociological appeal to “equality.” Equality goes against basic human nature to better ourselves and is an artificial and forced condition that has to be centrally directed to function. In order to have choices and freedom over our lives socialism must be vigorously opposed in all ways.

Questions

In a command economy, the government controls labor—which means dictating what jobs individuals can have. If you were forced to work a job you didn't like, how would you respond?

Could a socialist government use punishment to overcome the knowledge and calculation problems featured in the video?

Additional Resources

[js]

Tell me that you never researched socialism outside of capitalism propaganda without telling that you never

[ascott]

I really would like to get a unbiased study view on Socialism! It seems still people in the comments are either far left or far right. I guess there’s things I agree with and things I disagreed with.🤷🏾‍♂️

[fosscraft]

"theyre provided with only goods and services the central planners have chosen for them"
completely incorrect... the people decide on what they want, they have lists of what they want produced for the year. central planning isnt some "we will produce one thing and you will be happy about it" thing, it is actually just the idea to not produce too much, but not too little, and to keep the economy stable. there is a central computer which calculates what resources are being produced and used, and what the people want.
edit: yep, all of this is horseshit, it isnt worth watching because this is just propoganda.

[Aldridge]

"The result of socialism is to make people equally poor." As opposed to capitalism, where only most of the people are poor Lol

[jakep]

Wait, socialism ultimately refers to social ownership of the means of production instead of private ownership. Whether there are markets or central planning is a different issue. I’m a big advocate of Austrian economics but I’m learning that socialism is mistakenly conflated with central planning. Socialism and capitalism are on the Y axis and markets and central planning are on the X

[yuehaiyang]

"under socialism there is no incentive to innovate"? What about personal fulfillment, the collective good, social recognition, and the intrinsic value of contributing to societal advancement? Why do students, postdocs and professors in the universities innovate, when there no drastic pay raise incentives? People who reap the most benefits of true innovation in capitalism are those who are good at doing marketization, which is unfair to begin with.

[Guisytoez._.]

love the dramatic horn music in the background

[joshuamorrison]

Socialism is roundly panned in this video as being 'bad' but, socialist healthcare systems in developed countries around the world score better then the U.S. in every conceivable way. I'm not suggesting that we completely replace our free market economy with a socialist economy, but, clearly in some areas socialism is superior. Sorry to pour vinegar in your coffee. I actually wish that the world was as simple as conservatives make it out to be. I think that is a major appeal of the GOP. People are overwhelmed by the complexity of globalism, modern economics, etc. and want to believe that things are actually very simple. So they vote for the party that tells them this even though it isn't remotely true.

[sirharmony]

Well that was pretty bad. Not only is the definition wrong, but your arguments nonsensical as well. How is it a better structure when already rising prices are a Signal of need rather than a well planned Analysis beforehand. Its not that you cant read a Market by spectating buy-/produce rates. I tried to educate myself for 5 min on YT and this is the result. Time to get back to books.

[iloatheyoutoo]

You know something is clearly one sided when it doesn't even throw one single criticism about the other side it's discussing, like, what garbage. The gall to even bring up the medical industry in capitalism without commenting at all about the price gouging and the middleman price fixers that are insurance companies and pharmaceutical companies is asinine.

[WalterMangandid]

Right on. You can't assure equality even among siblings in a household, let alone an entire country. There will be people who simply love making the extra effort and people who are happy with the bare minimun.

[yvuw]

DESINFORMATION AT IT'S BEST. trully

[dimitristripakis]

An "American version" of socialism could be the State participating in the free market. I mean if the market is free for all, why can't the State run supermarkets, solar farms, auto industries ?

[iamamaverick]

A lot of comments on here saying that this video is “wrong” about socialism, and yet aren’t giving a better explanation on what it is nor exactly defending it giving a good example on why it “works”.

[makhnothecossack]

1:26 Though central planning in USSR was always done together with local economic actors.

[AnonymousLion-xb]

Without any government regulation monopolies/trusts would artificially inflate prices of necessary items. This video is severely biased. Most people are somewhere in the middle when it comes to capitalism vs intervention however this video argues that any government regulation is harmful.

[drjones]

Most people who in a capitalistic society, creating new ideas are driven out by bigger companies which keep us with the poorer less developed ideas.

[infinagon]

This video clearly is created by a person/persons who are already biased against socialism. I'm not a socialist by any means, but wouldn't it be best to show what socialism is and allow people to come up with there own view of the topic.

[BettyToldyouuu]

Sounds like how poor people live. When you rely on govt assistance you do have a central planner that determines your needs and how much of it will be met by them.

[renerangel]

What about natural resources, should the profits be chear wit the people?