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The revival of socialist dreams

Lesedauer: 26 Minuten

(Contribution to the Regional meeting of Mont Pèlerin Society in Hamburg, April 4th, 2004
Robert Nef, Director of Liberales Institut, Zurich)

Deutsche Version

“Socialism is not based merely on a different system of ultimate values from that of liberalism, which one would have to respect even if one disagreed; it is based on an intellectual error which makes its adherents blind to its consequences.” (Friedrich August von Hayek, “Law, Legislation and Liberty,” 3 vols.; London 1976; Vol. 2, p. 136)

I had a dream. I dreamt that one could explain in 20 minutes just why socialism, one of the most persistent collective illusions of the last two hundred years, is still so attractive in Europe, despite the fact that in all its many variants it has failed to pass the tests of success and feasibility. But I awoke from my dream, and shall content myself with using my 20 minutes to show why the attempt to definitively push the socialist dream to an absurd extent has failed time and again, and always comes up against a number of obstacles.

During the period of the Cold War, public debate may have oversimplified matters by delineating a socialist East Bloc in opposition to the market-oriented, capitalist “Free World.” What was studiously overlooked at that time was that, partly as a consequence of centrally managed wartime economies which could not find their way back to free-market normality in the postwar years, a kind of mixed-economy “soft socialism” had developed in most of the nations of Western Europe, with as much as 50 percent government expenditure rate. Even Switzerland was among them. The so-called social market economy would be “social” only if “socialistic” and “social” meant the same thing. But to me “socialistic” means “economically inefficient,” and that which is inefficient cannot be social in the long run1. Friedrich Hayek provided a profound analysis of the fatal misunderstandings about the terms “social,” “socialistic” and “statist” (“étatiste”)2. In reality, we here in Europe are heading for a crisis of unsustainable financing of our systems of redistribution. The acute need to clean up this situation is being masked by the collective flight to the centralism of the European Union. There is a desire to continue practising the misguided concept of the national-statist welfare state at the level of an EU supra-national state for a few more years or decades.

I shall keep avoid here the historically loaded and thus misunderstood term “national-socialist,” although taken literally, it precisely characterises what I mean. At any rate, the victims will be those who may awaken not-so-softly from this dream of “soft socialism”: the coming generation, or the one after that3.

This brings me to my first two theses:

1. The variant of socialism current today has gained a certain reality content thanks to a limited introduction of private property and the essentials of a market economy. It has evolved into a kind of “soft socialism” largely immunised against capitalist criticism.

Thanks to its lack of clarity, socialism appears to have the capacity to rise like a phoenix from the ashes of failed experimentation. Its proponents constantly find new excuses for its failures and new arguments for its revival under slightly modified conditions. When a mixture of principles is used, it is relatively easy to ascribe failure to too much of the opposing principle and too little of one’s own, so that definitive proof of the reason for failure or partial failure cannot be adduced. But comparisons are possible, and the best opportunity for critiques of socialism lies in empirical comparative studies.

2. All ideologies are characterised by a subtle mixture of dreams and facts. Socialism contains an especially fatal combination of dream and reality.

The dream of humanity developing on the basis of a free exchange of sympathy stands in at least partial conflict with the reality that many people maximise their own benefit at the cost of others. People operate out of a highly complex mixture of instinct, reason and emotion. They are oriented towards their own best interests, but are not in a position to see their own motives and those of their fellows with complete clarity. At least since Adam Smith, we have known that “the welfare of nations” is somehow linked with “the theory of moral sentiments.” But there is unlikely to ever be broad agreement about how those two approaches are connected.

“El sueño de la razón produce monstruos.”

Hayek used that quote from Goya’s Capriccios as the superscription to his essay “The Arrogance of Knowledge.” Nowadays you can find on the Internet more than 700 entries about the paradoxical nature of that aphorism. I hesitate to digress, but some thoughts about the term “dream” would seem to be in order in that context. There is an old admonitory German proverb that says: “Träume sind Schäume” – that is, “Dreams are but foam.” The German poet Hölderlin wrote that “Man is a god when he dreams, a beggar when he thinks”4 and since people prefer to be gods rather than beggars, dreaming is more popular than thinking5. One argument more for the revival of socialist dreams? In Spanish, sueño means both “sleep” and “dream.” Calderon wrote that all of life is a dream, and at the same time clearly expressed the indefinability of it all with the words: “Sueños suenos son” – “Dreams are [just] dreams.” Hayek regarded Goya’s aphorism as a warning against a blind faith in humanity’s dream that reason could solve all problems – a central message running through all of Hayek’s work, incidentally. “The sleep of reason brings forth monsters.” (But Hayek admits that Goya might originally have meant the opposite6). The German political scientist Wilhelm Hennis also underscores the Romantic, anti-Enlightenment component and comes to the conclusion that the Reason which ‘thinks up’ things gives birth to monsters: “The dream of a universal Reason which hatches projects gives birth to monsters7.

Getting back to Goya: In his commentary to Plate No. 43 of the Capriccios there is an indication that he was quite aware of the ambiguity of his statement: “Imagination abandoned by Reason produces impossible monsters; united with her, she is the mother of the arts and the source of their wonders.” In other words: Give unto Reason that which is Reason’s, and leave the belief in creativity and the miracles of spontaneity to Imagination. That is a statement with which I can identify completely. Goya was trying neither to defame nor to glorify Reason; his was an appeal to assign it the value it should reasonably be given. With Hayek, I am of the opinion that no one can lay claim to being guided entirely by reason, especially not the “experts” who make that claim8. Everyone carries his own personal blend of reason, emotion and illusion around with him, and it is typical of a “spontaneous order” that it refrains from the attempt to constructivistically order those islands of reason and to hierarchically link them to the risk of major error and fatal collective illusion.

Which brings me to theses three and four:

3. The socialist dream starts from the dangerous assumption, highly attractive to intellectuals, that reason may be hierarchically and centrally organised with the tools of knowledge, giving rise to a society progressively free of conflict.

With blind faith that people can be conditioned by schooling, the state-run educational system is expected to make soft-socialist “statism” people’s second nature. Thus, remote from the realities of economics, intelligence is supposed to become the mistress of an governmental-educative-media complex9 10 11. Those who believe they know the “right answer” arrogate to themselves, at least temporarily, the right to impose that answer on others and to propagate their truth as official government doctrine12. However, centralism coupled with enforced “do-goodism” is not unique to Socialists. In the 19th century, for example, Liberals in Switzerland and Germany also advocated centralism. As a majority coalition, they felt entitled to impose their progressive views on a minority mired in conservative error “for their own good.”

The same arrogance is characteristic of all hierarchical, centralised organisations which have functionaries or “grand inquisitors”13 who believe they know what is best for others. Personally, I am inclined to the opinion that, especially in the realm of economics, a pluralistic competition among autonomous regions and authorities would have more quickly and thoroughly done away with inefficiencies based upon protectionism, mistaken beliefs and superstition than was achieved by centrally decreed and imposed dogma and the ban on local regulation in favor of central “harmonisation.” What pays off economically in the medium or long term need not be imposed by force. Whether we can rely upon competition between systems even in the face of crass violations of human rights is, I think, an open question. But there is highly relevant evidence that compulsion hampers positive development rather than accelerating it, and that moral codes of behaviour tend to degenerate rather than flourish under pressure from central authority14.

4. The dangerous thing about socialism is its insistence on its universal validity and its tendency towards centralisation. These two attributes provoke a division of mankind into believers, nonbelievers and sectarians, and prevent a timely learning process.

“Soft socialism” is not only a fatal mixture of dream and reason. It could also be compared with the hydra from the Hercules saga. This hydra was a serpent with nine heads (one of which was reputedly immortal). As soon as one head was lopped off, two new ones grew in its place. While Hercules wielded his club against the monster’s multiplying heads, his charioteer Iolaus (or his chauffeur, as one would put it today) helped him by cauterising with red-hot brands the stump of each head that had been knocked off. The immortal head was severed from the hydra’s body and buried alive. Hercules then soaked his arrows in the monster’s blood, making them poisonous and deadly15.

But back to our immediate subject: What are “socialist dreams” really? Is the phrase not a paradox? At least originally, the doctrine of socialism declared itself to be not a dream nor an expression of faith, but a body of scientific knowledge. It lay claim to being a child of rationalism and the Enlightenment – and there is no denying that, in terms of intellectual history, there is a line running from Hegel to Feuerbach and on to Karl Marx. Socialism’s basic philosophical assumption is that material existence determines consciousness and ideas and that history is determined by the observable evolution of the conditions of property and governance. Thus socialism is really the counterpart of German idealism, which was infused with the belief that ideas determine the world and can change it.

This takes me to my fifth thesis, which deals with the difference between “social” and “socialist”16.

5. The equating of “social” with “state-run” or “government-run” and the association between “social” and “socialist” is one of the most freedom-undermining linguistic manipulations of the past two hundred years, and one of those most fraught with consequences.

What is generally left behind after the failure of socialist experiments is not only an economic and ecological desert, but also a shattered social structure and a chaos of mistrust and the crassest egoism. What is being manifested today by way of asocial and unethical behaviour in former socialist countries is certainly not the “price” of new freedoms and the side-effects of a nascent capitalism, but the heavy old burden of a doctrine which began with the objective of making people more prosperous and more empathetic and “social” through compulsion and central planning. State-imposed socialism makes people asocial.

Despite this backlog of experience – about which there have been surprisingly few empirical studies to date – the link between “socialism” and “social” remains strongly anchored in the popular consciousness. Many classical liberal advocates of the market economy feel it necessary to emphasise that they are still “social-minded” despite their liberalism. But the statement should be: “I am social-minded because I am a liberal”17.

6. The desire to delegate as many social programmes as possible to the state stems from the dangerously mistaken assumption that the good will be made better, and the “social” will become “more social,” by decreeing them and thus making them compulsory on the general public, or at least having them encouraged and promoted by the state.

7. Redistribution and affirmative action on behalf of a selected group leads to the destruction of prosperity and discrimination against all those not so selected. Both those methods, favourites of soft socialism, therefore destroy more than they facilitate.

“The revival of socialist dreams” is not exclusively a European phenomenon. Wherever in the world there are governments based on majorities which expect above all else a redistribution of wealth in their favour, there is great opportunity for socialism as a political programme. Behind that fact there is, alas, even a certain politico-economic rationality and internal logic18. Ostensibly “scientific” definitions of poverty ensure that the relatively rich are a minority compared with the relatively poor. Under the principle of majority rule, there is a great temptation for majorities to try to improve their lot not through personal effort and a willingness to take risks, but by way of demands upon the government through an imposed system of egalitarianism.

In the medium and long term, you can only redistribute that which has been previously produced and earned. Every redistribution hampers productivity. But which politicians are really interested in economic and logical arguments, especially the kind based upon long-term thinking?

8. In a consumer society with social welfare structures and influenced by the mass media, the partisan policy most capable of winning a majority is a combination of soft socialism and national egotism. All parties tend towards national-statism and every democracy oscillates between left-wing and right-wing populism.

In reality, the term “national soft socialism” would be more precise. But as I said earlier, I shall avoid using the historically loaded label of “national socialism.” The real, existing political parties advocating national statism use much better-sounding names. The close ideological relationship between international socialism and national socialism is taboo in today’s history of ideas, something which has been taken up only by a few courageous souls19.

Is there such a thing as a collective learning process in which negative experiences of the past are dealt with? The Swiss historian Jakob Burckhardt, a liberal-conservative cultural pessimist who was sceptical about democracy, contributed a surprisingly optimistic aphorism in this regard: “We want experience to make us not shrewder (for next time) but wiser (forever)”20.

For the East European countries scheduled to become members of the EU in May, it is my fervent wish that they will bring to this Continent’s learning process their own bitter experiences with unproductive, centrally administered systems of redistribution. But my hopes in this respect are limited21. For those new members are to be ushered into a new state of dependency – not to say addiction – by the sweet gift of redistribution from the EU’s Structural Fund. The worst thing about it is that all the difficulties which will arise as a consequence will be ascribed not to the soft socialism of the “Old Europe” but to the negative consequences of so-called liberalisation in the “New Europe.”

If we could definitively explain why socialism, despite its blatant failures, remains so popular, especially among intellectuals, we would also have the key to finally demonstrating its wrong-headedness and perhaps also a strategy for eliminating it once and for all. Hayek’s brilliant article Der Sozialismus und die Intellektuellen22 – “Socialism and the Intellectuals” – has lost nothing of its timeliness. Recently, Erich Weede23 has added some important observations to it.

Despite the fact that to date there has been more empirical evidence than theoretical studies, the burden of proof that all possible variants and combinations of socialist economic, governmental and social orders have failed is heavy indeed. Socialism was the “great white hope” for all those social scientists who dream of acquiring definitive knowledge about “the better man” and “the better society” and who wish to translate their knowledge into action in collaboration with politicians and the so-called “primacy of politics.” The assertion that such theoretical knowledge is not even possible, or must always be regarded as temporary until proof to the contrary comes along, as well as the insistence on measuring political and social experiments by their successes and failures, constitute a permanent humiliation for the social scientists, since in the worst case it would make them superfluous, or else their only use would be to repeatedly uncover the mistakes of their predecessors and to invent new errors of their own24. In brief, they would become what has been said of diplomats: that is, condemned to solve problems which would not exist if there were no diplomats. A similar observation could be made about politicians.

That is why politicians and social scientists often are in league with one another, and it is hardly surprising that a kind of complicity is widespread among them – as it was among the augurers of ancient Rome. Those oracles, who made their predictions by reading animal entrails, knew perfectly well that their predictions were dubious, but they upheld the appearance of credibility, both inwardly and outwardly, in order not to spoil their business. Something similar went on among enlightened social scientists in the former East Bloc – except that their soft-socialist colleagues in the West really still believed in dialectical materialism and in the superiority of the centrally planned economy.

As far as I know, there has been very little research done on the failure of the kibbutz movement in Israel, although it was a diverse, highly interesting, decades-long experiment in small-scale collectivism (an experiment which gives little grounds for its continuation or emulation). During my university days, kibbutzim were still considered the epitome of hope for a new form of society.

The costs and benefits of interpersonal and interregional redistribution similarly have been relatively poorly researched so far, and the same applies to so-called development aid. In connection with a philippic against interpersonal redistribution, it was once pointed out to me by Michael Walker of the Frazer Institute in Vancouver that, while it creates false incentives and disincentives between persons, interpersonal redistribution is relatively harmless because individuals, along with their interventionist privileges or discriminations, eventually die a natural death. The truly harmful redistribution is interregional (e.g., the EU Structural Fund), because it sets new directions within systems and thus does lasting damage which is very difficult to correct. That is Michael Walker’s theory, which I find quite illuminating. But when I say something of the sort in lectures or write it in articles, I generally am greeted mostly by head-shaking, even by fellow advocates of the market economy. After all, “equalisation” – that is, taking something from the haves and giving it to the have-nots – is the very essence of “social justice.” And affirmative action, so goes the argument, is also a good thing, being considered “intervention in conformity with the market.” The fact that the majority of those who do not benefit from affirmative action are being seriously discriminated against does not appear to trouble those activists who are otherwise so egalitarian in their thinking26.

Interregional redistribution – aid to structurally weak regions and industries – enjoys an astonishingly good reputation in the European Union, even among those who are market-oriented. In reality, the degree to which such assistance actually increases prosperity should be verified or disproven by empirical investigation. But with most of Europe’s (and all of Switzerland’s) universities being state-run, what academic or department or institute would be interested in taking on such politically unattractive projects?

Another global interventionist-socialistic undertaking, which has been ongoing for decades, is development aid. How great are its benefits, how much harm does it do? Has there been too much development, or too little, or development in the wrong direction thanks to one-sided encouragement of certain kinds of projects? The following working hypothesis cries out for verification or disproof: “Less is better.” In Bhutan there is an alternative development project aimed at minimising the damage caused by official development policy. There, good people want to eliminate the consequences of what has been done by other well-meaning people – an endless regressive process.

9. Soft socialism and democracy (in the sense of majority rule) intensify one another in a kind of vicious cycle. To people who think in the long term, socialism is unreasonable; to those who feel spontaneously and for the short term, socialism is attractive – and it is easy to guess which group is larger.

The most dubious thing about socialist and soft-socialist experiments is not their mistaken basic assumptions. Other political concepts are likewise not free of error. Every political programme includes mistaken assumptions and predictions. In Western Europe, however, soft socialism has combined with the principle of majority rule. That makes it neither more sympathetic nor less harmful. On the contrary. From a liberal standpoint, no group of people should be forbidden from living in accord with socialist ideas under an autonomous social order based on collective property, egalitarian income distribution and democratic decision-making, so long as the participants and those affected all agree and have an exit option. But social democrats, as long as they are in power in a majority coalition, want to declare socialism to be also generally binding on non-socialist minorities. In doing so, they establish state welfare institutions and long-term redistribution systems which are often irreversible. Moreover, based on current experience in Western Europe (here again, not excluding Switzerland), the established welfare state is not sustainable in the long term. It is a nightmare, a long-term injustice against outvoted minorities and future generations, the asocial perfidy of which has been given far too little attention.

Still advocating soft socialism, most aging social scientists who experienced 1968 in “Old Europe” show little interest in exploring the reasons for the failure of socialist policies. Repressing the truth and insisting that “we had it right” have always been more popular than self-criticism. So they expend their efforts in gleefully analysing the alleged failure of the alternative systems (which as a rule have to struggle with the mess left behind by socialism) and working out excuses for why, although it did not work, socialism had lots of good things about it27.

The cynical justification of the orderly retreat from failed socialist structures, and of the preparation of new moves towards soft socialism, may be summed up as follows:

Advocates of soft socialism admit that “real existing socialism” under Soviet domination did not work. The ideal before their eyes is a dream, an utopia, the antithesis to “real existing people” with their untamable drive towards self-interest. To ignore this is dangerous, even for soft socialists. They also admit that competition and the market are necessary to generate productivity and economic growth. The soft socialists need both these things if they want to reach their main goal, state-controlled redistribution in the service of “social justice.” From their viewpoint, the market is a necessary evil which is accepted within limits, but which must be channeled, tamed and restrained by enforced political means. The “wicked and often brutalising market” must be collectively given moral backbone through the “primacy of politics,” by force if need be. To formulate this soft-socialist programme calls for economic ethicists who can use policy to turn egoistic consumers into “responsible economic citizens”28.

Since soft socialists think that the long-term motivation for altruistic solidarity is fundamentally weak, they want to help the system along a bit by using government pressure to put those who do not voluntarily demonstrate solidarity on the right path. Instead of “Und willst Du nicht mein Bruder sein, so schlag ich Dir den Schädel ein”, heisst es “…so greif ich in Deine Tasche rein”. “If you don’t want to be my brother, I’ll bash your skull in,” is substituted by “…I’ll dip my hand into your pocket”29.

With the statist assimilation or corruption of the anti-authoritarian left in the course of the past 30 years, the close relation between socialism and statism has become a reality in Europe. There are hardly any anti-statist socialists left these days, and even the Greens have largely become statist red-greens. Those who rose up against the Establishment back in 1968 constitute a structurally conservative network in today’s sciences, media and bureaucracy. Sometimes under other labels, soft socialism has become infused with the statist and Marxist-Leninist hope that mankind’s extrinsic motivation will gradually become an intrinsic one. The basic idea is “Through compulsion to voluntarism” – but it has never worked to date.

10. After the Enlightenment, the French revolution and secularisation had profoundly shaken the belief in an almighty God, the belief in science, faith in technical and social progress and trust in the nation-state came together in the 19th century to form a new trinity. The nation-state replaced God and socialism became an ersatz religion, a substitute for religion.

The socialism of the intellectuals has always been internationally orientated. As members of a minority, intellectuals seek solidarity among their like-minded fellows in international bodies. Something similar is happening to the international “political class,” which is increasingly losing touch with its grass-roots political base and taking flight into higher levels of organisation. But the “real existing socialism” of the working class has always been national in tone. It is no coincidence that both Mussolini and Hitler emerged from the socialist ranks, and Hitler formulated the familiar dictum: “Today the true socialism must be national, and the true nationalism must be socialistic.” Stalin’s brand of socialism was mixed with the Greater Russian imperialism of the Tsarist empire. In my view, these are not anomalies in the history of ideas, but rather developments which follow an inner logic and reflect the fact that every kind of solidarity – and most certainly that which is imposed – creates an interior zone and isolates itself against the outside world.

Soft socialism is based on an inventory of attributes which may possibly be part of the ineradicable socio-cultural or socio-biological equipment of Homo sapiens. The combination of those attributes makes up a many-headed monster, with envy probably serving as the immortal head of soft socialism30. Personally, I do not hesitate to categorise all the attributes to be subsequently described as vices and fatal errors, but I know that this is just my own personal view and cannot be finally proven. As Hayek shows in his essay on Mandeville’s fable of the bees31, the question of which private vices can become public virtues cannot be answered clearly.

The most persuasive explanation for the “immortality” of socialist dreams is that they can be combined with Reason in a form that is both attractive to intellectuals and popular with the masses. Socialism is a political religion which cleverly masks itself as a social science and draws a broad range of disciples. As a many-facetted mixture of utopia and reality, it hooks into widespread longings and frustrations, and offers a broad palette of excuses for its own temporary failures32.

This takes me to my 11th thesis, the first three points of which only summarise what Bastiat, von Mises and Hayek have already formulated about the roots of anti-capitalism33. Socialism, in this view, involves an intellectual justification and “dogmatisation” of envy, egalitarianism and centralism.

Only the fourth point in the 11th thesis, marked with the letter “d,” is my own addition, and it too is probably not very original.

11. Soft socialism is a political doctrine which subtly, and one by one, exploits in a populist fashion all the vices listed below, in order to create advantages for its own elites and their favoured clients:

a) Envy, a characteristic of majorities which, aware of their own mediocrity or below-average qualities, develop resentments as a result, and prefer to take something away from those more greatly endowed by fate or by their own achievements, even if they (the majorities) do not thereby improve their own lot.

b) Conformity, a latent willingness to discriminate against or eliminate successful minorities, nourished by a diffuse drive for egalitarianism which manifests itself as a demand that government guarantee “social justice.”

c) Centralism, an aesthetic need for hierarchy and symmetry, which is to be recognised as right and good and is to be imposed by an empowered political center, in the majority’s hope of placing itself in a favourable position vis-à-vis that center.

Benjamin Constant termed that aesthetic need “the spirit of system … that was first entranced by symmetry”34 35.

d) Socialism successfully propagates itself as a counter-force to all manner of conspiracies. It exploits a diffuse mistrust of an imprecisely defined and only partly identified group of profiteers (exploiters, the big banks, speculators, globalisers, multinational corporations, secret societies, and national, religious or racially defined elites).

In the socialist view, these “enemies of the people” are responsible for most of the world’s ills. They are “the Others,” or “the Powers-that-be,” which must be fought in “solidarity” until they are destroyed.

From the soft-socialist standpoint, the striving for profit is unavoidable yet destructive, while socialism, as a secularised religion and “socio-economic ethic”36, is the idealistic antidote to the real existing profit motive: the market as thesis, socialism as antithesis, and the “Third Way,” EU interventionism, as synthesis. “Decent people” like the soft socialists aim at a new mixture of capitalist realism and socialist idealism. To them, “socialism” is no longer the historical principle of dialectical materialism, but the “principle of hope”37. Soft socialism is the humanistic dream of “the better humanity,” of people who, even when they are awake (at least partially), prefer to continue daydreaming, because soft socialism accommodates their idea of the feasibility of a better future.

Since 1989 Europe, a continent of both constructive and destructive contrasts38, has been facing a new paradox. While the countries of the former East Bloc have gradually been able to distance themselves from socialism – though not without slipping back – “Old Europe” is beset by a strange mixture of market economics and socialist interventionism. Traditional agriculture survives in Europe thanks only to protectionism and interventionism. Social security for the aged is at least partially nationalised through the pay-as-you-go system, such crucial areas as education, health care and communications are largely centrally administered as “public services” and must therefore be limited, rationed, tax-financed and price-controlled. These facts enjoy a high level of acceptance, all the way to the ranks of the ostensibly pro-market centrist parties. The rationale is as follows: Because these areas are vital to the life of a society, are indeed the veritable “prerequisites of liberty,” even from the liberal vantage point it is necessary to advocate mixed-economic or centrally planned approaches.

It is truly paradoxical. Even social scientists and politicians who admit that the centrally planned economy does not work in the long run – especially because it is incapable of generating innovation and translating it into action – advocate maintaining state or quasi-state approaches in those areas that are particularly crucial for the future. For all those who are convinced that the centrally planned economy cannot provide long-term solutions to society’s problems, the gradual decoupling of education and health care systems from the fetters of the planned economy, a consistent transition to user-financing in combination with individual assistance as needed, and the separation of health and education policies from redistributive social policy, should enjoy the highest priority. How can central planning be expected to function in these areas, which are so in need of innovation and so profoundly affected by social and personal preferences, when it cannot even satisfactorily produce and distribute ordinary consumer goods and services such as transportation and telecommunications?

Redistribution – i.e., taking from the rich to distribute to the poor, at the same time sustaining a distribution system – is in itself a dubious undertaking39. But no political system can relinquish it entirely, since it is the foundation for at least part of its legitimacy. But if we must have redistribution, the discussion of the issue should be open and transparent, not inextricably tied to ill-managed, statist wealth and education systems. The extent and modalities of redistribution motivated by social policy constitute the domestic political subject par excellence. It should be discussed in conjunction with the level of taxation, and subjected to local competition over taxation rates in combination with redistributive social services and assistance. The price of more redistribution must inevitably be higher taxes40.

I am aware that a rational political and economic decision on these issues is hampered or faked by progressive taxation. Countries with flat taxes – i.e., with only moderate tax progression or none – have a better chance of pursuing a transparent and rational decision-making process, because in such cases a majority of low-tax-paying citizens cannot outvote a minority of higher-taxed individuals. As is the case in Switzerland, taxpayers should be able to vote on the level of their taxation. In a system of competing small jurisdictions, those who pay high taxes should have the opportunity to react to excessive taxation by changing their place of residence. The flatter the tax progression, the more rational will be the decision on the split between taxation and redistribution.

12. In the 19th century, the separation of church and state was a liberal cause; in the best interests of each, the two institutions were to be separated and protected from one another. In the 21st century, the same should apply to the areas of education, health care, communications and culture. The existing soft-socialist, governmental-educative-media complex must be decoupled. 41

Earlier on, I compared the fight against the monster which brings forth the socialist dream to Hercules’ battle against the many-headed hydra42. But the struggle against a monster that embodies a mixture of rationalism and emotionality cannot be won by the sharp blade of Reason alone. Hercules accomplished all his other labours himself; it was only against the hydra that he needed an assistant, his charioteer Iolaus, who cauterised each stump of a head with a glowing brand to prevent two new heads from growing in its place.

And if you come away with the impression that I have tended to use the glowing brand of emotion rather than the shining blade of Reason in my 12 theses aimed against the hydra of soft socialism, I admit it. I concede that my knowledge is limited, and I stand in firm opposition to all the fantasies of omnipotence cultivated by intellectuals, bureaucrats and politicians of every stripe.


1 Mises, Ludwig von: “The Anti-Capitalist Mentality” (New York, 1956), passim, and particularly p.7: “Many people, and especially intellectuals, passionately loathe capitalism. In a society based on caste and status, the individual can ascribe adverse fate to conditions beyond his control. It is quite another thing under capitalism. Here, everybody’s station in life depends on his doing. The profit system makes those men prosper who have succeeded in filling the wants of the people in the best way.”

2 Hayek, Friedrich August: “The Fatal Conceit,” Collected Works, Vol. I (Chicago, 1988), passim.

3 Mises, Ludwig von: “Socialism” (London, 1936), p.52: “The idea of socialism is at once grandiose and simple. … We may say, in fact, that it is one of the most ambitious creations of the human spirit … so magnificent, so daring, that it has rightly aroused the greatest admiration. If we wish to save the world from barbarism we have to refute Socialism, but we cannot thrust it carelessly aside.”

4 Hölderlin, Friedrich: “Hyperion” (1797-1799), Book I, Chapt. 1.

5 Bloch, Ernst: Das Prinzip Hoffnung (“The Principle of Hope”), 3 vols. (Frankfurt am Main, 1959); Vol. I, p. 368: “Thus, this identity of all waking dreams, hopes, utopias, itself lies in the dark recesses, which are also the golden ground upon which concrete utopias are carried out. Every solid daydream believes that its home is this double ground; it is the still-unfound, the perceived not-yet-experienced in every experience gained so far.”

6 Hayek, Friedrich August von: Die Irrtümer des Konstruktivismus; published version (Tübingen, 1975; p.2) of an address delivered at the start of a guest professorship at Paris-Lodron University, Salzburg, on 27th January 1970. Transl. into English as “The Errors of Constructivism,” in “New Studies in Philosophy, Politics, Economics and the History of Ideas”; Univ. of Chicago Press; Chicago, 1978.

7 Hennis, Wilhelm: Die Vernuft Goyas – Das Projekt der Moderne, Ein Versuch zum Verständnis des “Traums der Vernuft,” Cappricio Nr. 43 (“Goya’s Reason – The Project of Modernity, an Attempt to Understand ‘The Dream of Reason,’ Plate No. 43 of Goya’s Capriccios); a lecture delivered in Freiburg im Breisgau, 1998.

8 F. A. Hayek: “The Fatal Conceit,” op. cit., p. 8: “By ‘reason properly used’ I mean reason that recognises its own limitations and, itself taught by reason, faces the implications of the astonishing fact, revealed by economics and biology, that order generated without design can far outstrip plans men consciously contrive.”

9 Bastiat, Frédéric: “The Law” (publ. Foundation for Education, New York, 1996) p. 51f.: “This is … the fatal desire … that our writers on public affairs have in common: They desire to set themselves above mankind in order to arrange, organize, and regulate it according to their fancy.”

10 Nef, Robert: Der medial-edukativ-gouvernmentale Komplex in der Schweiz (“The Educational-Governnmental-Media Complex in Switzerland”); printed in epd medien, No. 87, 5 November 2003, and on the homepage

11 Bischof, Norbert: Das Kraftfeld der Mythen (“The Force Field of Myths”); 2nd ed., Munich, 2000; p. 682: “Those on the far left are convinced that humanity has the opportunity, and at the same time also the duty, to create progress. What is left behind is ‘history,’ and if any attention is paid to it, that is only for purposes of ‘critical reflection’ in order to ‘elevate’ it into a better future.”

12 Baumberger, Jörg: Staat und Wahrheit, Wahrheitsgarantie “ex officio” als Anmassung und Illusion (“The State and Truth, The Guarantee of “Ex Officio” Truth as Presumption and Illusion”); in Schweizer Monatshefte, No. 2, 2004.

13 “We have corrected Thy work,” says the Grand Inquisitor to the reappeared Christ. “… And men rejoiced that they were again led like sheep, and that the terrible gift [i.e., freedom] that had brought them such suffering, was, at last, lifted from their hearts.” Dostoevsky, Fyodor: “The Brothers Karamazov,” (New York: W.W. Norton, 1976), Book V, Chapt. 5, ‘The Grand Inquisitor’ p. 237.

14 Leoni, Bruno: “Freedom and the Law” (3rd ed., Indianapolis, 1991): “…the compatibility between individual freedom and legislation is a precarious one because of the potential contradiction between the ideal of the spontaneous formation of a common will and that of a statement about the latter arrived at by way of a coercive procedure, such as usually happens in legislation.”

15 Rose, Herbert Jennings: Griechische Mythologie (“Greek Mythology); 2nd ed.; Munich, 1961; p. 216.

16 The adjective “social” was originally used, value-neutral, as a synonym for “involving society” or “with respect to society.” Later it was enriched with a positive valence meaning roughly “humanitarian” or “concerned” or “altruistic.” Its common usage (at least in the German language) has been taken over by statist-inspired socialists, bringing with it the suggestion that “socialistic” or “statist-socialistic” is identical with “social” in its older senses. Cf. Nef, Robert: Politische Grundbegriffe (“Basic Political Terms”); Zurich, 2002; p.72.

17 Schwarz, Gerhard: Die Soziale Kälte des Liberalismus (“The Social Coldness of Liberalism”); publ. by the Liberal Institute of the Friedrich Naumann Foundation; St. Augustin, 1997.

18 Jouvenel, Bertrand de: “The Ethics of Redistribution”; Indianapolis, 1990; passim.

19 Mises, Ludwig von: an Internet posting, dated 25 Feb. 2004; an excerpt from “Omnipotent Government: The Rise of Total State and Total War”; orig. publ. by Yale University (1944) as the first full-scale examination of German-style National Socialism as a species of socialism in general.

20 Burckhardt, Jacob: “Reflections on History” (Weltgeschichtliche Betrachtungen); Indianapolis, 1979; p.39.

21 De Jasay, Antony: “The Cart Before the Horse: On Emergent and Constructed Orders and Their Wherewithal,” in Frei, Christoph & Nef, Robert: “Contending with Hayek”; p. 49 ff.

22 Hayek, Friedrich August von: Der Sozialismus und die Intellektuellen (“Socialism and the Intellectuals”); first publ. in Schweizer Monatshefte, Vol. 29, Aug. 1949, p. 273 ff.

23 Weede, Erich: Mensch, Markt und Staat (“Man, Markets and the State”); Stuttgart, 2003; p. 44.

24 Novak, Michael: “The Spirit of Democratic Socialism,” Simon and Schuster, New York 1982, Cf. Weede (23) “Socialists who are intellectuals frequently desire the democratization of the economic system, offended both by the existence of economic elites and by the aesthetics and moral mediocrity of free market consumers. Socialism is a neat solution to both grievances. It raises up a new elite to a position empowering it to impose a better way.”

25 Scheuch, Erwin: Muss Sozialismus misslingen? (“Must Socialism Fail?”); in Mut, Sept. 1991, p. 12: “Socialism now functions as the theology of the cultural professions. Why it in particular? Because it justifies domination. Domination of the misguided masses. Socialism is no longer “butter and Mallorca” for the general populace. The market economy can demonstrably do something like that better. It is a matter of school systems, provocative theatre, many social workers, all manner of movements opposed to nuclear power, animal experiments, the census, more official cars and fewer automobiles for ordinary citizens … It is a matter of the domination by a priestly caste, with the tools of the media and the institutions of subsidised culture.”

26 Habermann, Gerd: Der Wohlfahrtstaat, Geschichte eines Irrwegs (“The Welfare State: History of a Mistaken Path”); Frankfurt am Main, 1994; passim.

27 Draper, Hal: “Toward a New Beginning” (1971)’ at www.marxist.org: Draper sees the main mistake of American socialists as the fact that they chose “the road of the sect, that leads to getting lost.”

28 Ulrich, Peter: Der entzauberte Markt, Eine wirtschaftsethische Orientierung (“The Disenchanted Market: Orientation to an Economic Ethics”); Freiburg im Breisgau, etc., 2002; passim.

29 Bastiat, Frédéric (1848): cited in “The State. Journal des Débats,” : “The state is the great fiction through which everybody endeavors to live at the expense of everybody.”

30 Schwarz, Gerhard & Nef, Robert: Neidökonomie. Wirtschaftspolitische Aspekte eines Lasters (“The Economy of Envy: Economic Policy Aspects of a Vice”); Zurich, 2000.

31 Mandeville, Bernard de: Die Bienenfabel oder private Laster öffentliche Vorteile (“The Fable of the Bees, or the Private Vices of Public Advantage”); Frankfurt am Main, 1998; also cf. Hayek, Friedrich August von: “Dr. Bernard Mandeville,” Chicago 1978; reprinted in: “The Essence of Hayek,” ed. Chiaki Nishiyama and Kurt R. Leube; Hoover Institution, Stanford University, 1984; p. 176.

32 Tamm, Sascha (ed.): Kleines Lesebuch der liberalen Sozialpolitik (“The Little Handbook of Liberal Social Policy”); cf. especially Rothbard, Murray: Wohlfahrt und der Wohlfahrtsstaat (“Welfare and the Welfare State”), 1973, from “For a New Liberty.”

33 Nef, Robert: “On the Survival of Socialism in the Welfare State,” from the “English Window” of the Website of the Neue Zürcher Zeitung, Sept. 4, 1998; www.nzz.ch/english/background: “A third reason for the survival of socialism in the welfare state resides in Europe’s economic history … We all have evolved from farmers and artisans to blue collar workers, white collar workers, government officials and pensioners. Our concept of ‘labor’ has been molded by the mentality of blue-collar factory workers organized into trade unions, of loyal, life-long office employees with normative careers.”

34 Constant, Benjamin: “On Uniformity” (1814), in: “The Spirit of Conquest: Political Writings”; Cambridge University Press, 1989; pp. 73-74: “It is somewhat remarkable that uniformity should never have encountered greater favour than in a revolution made in the name of the rights and the liberty of men. The spirit of system was first entranced by symmetry. The love of power soon discovered what immense advantages symmetry could procure for it. … The interests and memories that arise from local customs contain a germ of resistance … It can deal more successfully with individuals; it rolls its heavy body effortlessly over them as if they were sand.”

35 Gasser, Adolf, in: Nef, Robert, Lob des Non-Zentralismus (“In Praise of Non-Centralism”); Vol. 8 of the series Argumente der Freiheit (“Arguments for Freedom”), p. 66f; Friedrich Naumann Foundation; St. Augustin, 2002: “Europe can become a world of general and true democracy only if it also becomes one of ‘communalism,’ of vital self-government, if it liberates the centrally governed states from the system of bureaucratic hierarchy and hence from the principle of administrative fiat and subordination, and rebuilds them anew from the bottom up.”
Also see: Nef, Robert: ibid., p. 75: “With respect to the content of freedom and the ability to learn, a variety of small, non-centralised mistakes competing against one another is in the long term more efficient than highly centralised systems, as well as less dangerous internally and externally.”

36 Ulrich, see note 28 above.

37 Bloch, see note 5 above.

38 Jones, Eric Lionel: “The European Miracle,” 1986.

39 Baader, Roland: Fauler Zauber, Schein und Wirklichkeit des Sozialstaats (“The Bogus Magic, Appearance and Reality of the Welfare State”); Gräfelfing, 1997; p. 159: “We have only the choice between a free capitalist society, in which every individual can become rich, to everyone else’s advantage, or an unfree society in which only the political caste can become rich, at everyone else’s expense. Redistribution is a mechanism by which the prosperity of the many is destroyed and the power of the few is nourished.”

40 Blankart, Beat: Öffentliche Finanzen in der Demokratie. Eine Einführung in die Finanzwissenschaft (“Public Finances in a Democracy: An Introduction to Public Finances”); 5th ed., Munich, 2003; pp. 571 ff.

41 Nef, see note 35 above.

42 Rose, see note 15 above.

Die Sammlung des Morat-Instituts, Freiburg

Francisco de Goya (1746 – 1828)
‘Der Schlaf (Traum) der Vernunft bringt Ungeheuer hervor’
Aus: Los capriccios, Blatt 43, Radierung und Aquatinta
Morat-Institut für Kunst und Kunstwissenschaft, Freiburg


Ein Gedanke zu „The revival of socialist dreams“

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