The End of the Road to Serfdom

Future students of our age may well treat Friedrich Hayek’s The Road to Serfdom and James R. Otteson’s The End of Socialism as bookends on an era. Hayek raises the specter of state collectivism in his classic work from 1944. In this new book, Otteson charts socialism’s end, in both senses of that word: the goals it fails to realize as well as its inevitable collapse.

To my mind, The End of Socialism makes three distinct claims, all important. First, Otteson articulates what socialism is and isn’t by highlighting its differences with capitalism, its archrival. Second, he demonstrates socialism’s practical problems, its failure to deliver the promised goods. Finally, recognizing that something may be appealing in theory even if horrible in practice, he offers a sustained moral critique of socialism, showing it to be as unattractive on the philosophical drawing board as it is in a political regime.

We’ll take each point in turn, before ending with some concluding remarks.

First, consider the terms themselves. Someone may object to being called a socialist or, for that matter, a capitalist! In the face of these concerns, the author helpfully reminds us that few on either side approve of the terms—at least the term applied to their own position. Marx himself popularized the word “capitalism,” whereas so-called “capitalists” like Adam Smith used other descriptors for their system, such as “commercial society.” But Otteson, quoting Caesar, says the die is cast: “for better or for worse,” capitalism and socialism have become the “preferred terms.”

As a further concession, he generally speaks not of socialists simpliciter but “socialist-inclined” ideas or advocates. Such nuances are not inconsequential; they allow the labelling of people or ideas, but in an inoffensive and straightforward way.

Otteson’s discussion of the differences between socialism and capitalism is worth the price of the book. Quite frankly, it will be where I turn whenever anyone asks me to delineate the difference between the two. According to him, socialism and capitalism differ about human nature, values, and policies. First, human nature: whereas socialists see humans as altruistic and cosmopolitan, capitalists see people as self-interested and localized, connected to, and products of, specific times and places. Socialists begin with human nature but don’t end there; they have hopes for humanity that Otteson labels “unconstrained,” in contrast to the constrained view of capitalism that sees human nature as “more enduring and thus more immune from attempts at institutional engineering.”

It’s not just competing attitudes about human nature. Consider values: socialists value equality, community, and cooperation; capitalists favor liberty, the individual, and competition. Or policy: capitalists champion private property and free exchange; socialists focus on public or common property and regulated exchange.

These distinctions may make one think that socialism and capitalism both have something to offer humanity—differences in degree but not in kind. Not so, according to the author. Capitalism is superior both in what it produces and in the moral vision it offers.

Otteson gives specific, wide-ranging examples to demonstrate the failure of socialist or socialist-leaning policies. I’ll mention three. First, an example from history: Jamestown, Virginia was a colony “organized on a principle of equal distribution and communal ownership.” People starved to death, but not simply because the challenges of acquiring food in the New World were formidable: “It turned out that some settlers preferred to starve, even to death, rather than work if they thought that someone else would get what they produced.”

For a more contemporary example, he turns to Sweden. An economic powerhouse in the early 20th century as the result of free-market reforms in the 1860s, Sweden arrived at stagnation in the 1990s as the result of decades of increasing centralization and welfare spending (85–86). When Sweden began reversing its economics malaise in the 2000s by rejecting its previous socialist policies, the country began to flourish again—a result unsurprising from a capitalist viewpoint, but startling from a socialist one (86).

I’ll mention one final example in passing; it’s also the most eye-popping one. John W. Dawson and John J. Seater claim that federal regulations have prevented the economy from growing so much that, in Otteson’s words, “the median household in the United States could have been, instead of its actual $53,000, an incredible $330,000” in constant dollars. This claim is surely controversial. Nevertheless, given the obviousness of the Jamestown and Sweden cases, it’s plausible.

What does it all show? Put poetically, regardless of its highfalutin claims, socialism is an emperor without clothes, full of sound and fury, signifying nothing. Put simply, socialism is broke.

But the obviousness of socialism’s failures—or the failures of socialist-inclined policies—matters less than one would think. That’s because Otteson doesn’t simply tackle whether or not socialism works. He questions, as I said at the outset, whether or not socialism is as laudable as its admirers believe. This question is an important one: after all, if the only problem with socialism is that it doesn’t work, then its advocates can still reasonably hope that, in the right conditions—albeit conditions in the very distant future—socialism will flourish. (This hope seems especially likely to be entertained by socialists given that, as Otteson notes, they generally take a more elastic view of human nature.)

That’s why Otteson’s moral critique of socialism is so important, and so powerful. It turns out not to matter whether socialism can deliver the goods in practice. Even if it could—and it can’t!—it could only achieve its goals by eviscerating the moral character of the inhabitants of the society that implemented it.

To show why, he highlights autonomy and judgment as “two features of our moral personalities” that are “united by notions of dignity and hence respect.” Socialism is a moral failure because it attacks who we are as moral agents.

First, socialist-inclined theories and theorists ignore or marginalize individual autonomy in order to advance their agendas. Otteson offers specific examples, including this:

Sarah Conly argues that because people ‘don’t reason very well,’ ‘can’t really understand the facts they are presented with,’ and thus might ‘harm themselves,’ we need ‘simply to save people from themselves by making certain courses of action illegal.’

Otteson’s response:

The moral objection to Conly’s argument . . . is that its mandate to override people’s decentralized decisions and choices . . . cannot take place without authorizing some group of people a scope of agency that is denied to others.

By contrast, a capitalist trusts the man on the street—both his local knowledge (to which no centralized planner has access) as well as his gumption, his industrious drive to better his financial condition.

Second, socialist-inclined policies undermine judgment. In a capitalist-inclined economy, citizens regularly receive societal feedback from their actions. Giving and receiving feedback—from being underdressed for cold weather to telling an inappropriate joke at a dinner party—is crucial to one’s development as a person. We do people no harm when we let them see the consequences of their actions; on the contrary, we help them develop a proper judgment. But “when we do not, we do not.”

Robert Nozick’s slogan in Anarchy, State, and Utopia (1974) is “liberty upsets patterns.” Otteson’s is “uniqueness plus liberty results in diversity.” His jingle may not be as catchy as Nozick’s, but it’s just as true.

And Otteson’s slogan taps into something widely celebrated in our culture: diversity. Diversity in outcomes is the wonderful result of different hopes and dreams meeting specific opportunities and challenges. He puts the point elegantly: “Far from being the benchmark, then, substantive material equality among a population of unique moral agents should be the rare, even bizarre, exception.” When people receive the feedback other people want to give them—even when it’s negative—they can use that information to pursue their dreams. They are helped, even if they’re not encouraged, because they see what works, and they see what doesn’t. That’s a good thing, and capitalism can help people in this way. Socialism can’t.

As the above should make clear, I think The End of Socialism is exceptional, worthy of high praise and a wide readership. In fact, it’s my choice for the Intercollegiate Studies Institute’s Henry and Anne Paolucci Book AwardThe End of Socialism hits the rare, sweet spot for an academic book: it’s simultaneously accessible and thought-provoking.

In his conclusion, Otteson quotes from G. A. Cohen’s Why Not Socialism? (2009). Cohen disapprovingly writes, “The market, one might say, is a casino from which it is difficult to escape.” Otteson’s response? “And yet no one has ever built walls to keep citizens in capitalist countries.” Exactly.