American Prosperity and the Means of Production
Socialism is gaining popularity in the United States, mostly among younger Americans. However, there is a misunderstanding of what socialism really is, and the Hoover Institution has worked to explore socialism and free market capitalism, understand the foundation of both economic philosophies, and to detail how each economic philosophy plays out when put into practice. The Hoover Institution is a think tank that works to craft public policy and better human life by promoting ideas that encourage human prosperity, economic opportunity, and peace and security all while adhering to the principles of freedom. The Human Prosperity Project is a series of essays published by the Hoover Institution that explore two different economic philosophies: socialism and free market capitalism. Three scholars’ work that will be included are John Yoo, Larry Diamond, and Peter Berkowitz. Yoo has authored several books and “is a visiting fellow at the Hoover Institution, Emanuel S. Heller Professor of Law at the University of California-Berkeley School of Law, and a Visiting scholar at the American Enterprise Institute.” Berkowitz is the Tad and Dianne Taube Senior Fellow at the Hoover Institution. His areas of interest include constitutional government, conservatism, liberal education, etc. Diamond is the William L. Clayton Senior Fellow at the Hoover Institution, and his area of interest is democracy. These three scholars explore decentralization of government, socialism, the rising popularity of socialism among younger Americans, and democracy and socialism’s foundation ideas.
In Yoo’s essay “Socialism vs. the American Constitutional Structure: The Advantages of Decentralization and Federalism,” Yoo defends the decentralization of government, explains the rise in socialism’s popularity, and explains how socialism took root in the federal government. Statistical evidence from a 2019 Gallup poll shows “that 43 percent of adults believed socialism to be “a good thing” and 47 percent even reported that they could vote for a socialist candidate for president.” There is reason to believe that the rise in socialism’s popularity can be contributed to younger Americans associating capitalism with corrupt corporations and “big business” since many young Americans witnessed the corporate bailouts that occurred during the Great Recession of 2008-2009. Yoo goes on to explain why the United States has been spared from enduring socialism, and he believes that it is because of our decentralized system and history that no other nation has. Federalism has protected the United States from socialism for the most part because “federalism allows for the tailoring of government programs to local conditions and different communities.” However, socialism began to take root in America with Franklin D. Roosevelt (FDR) as president. Congress during FDR’s presidency “enacted a series of laws – the Nations Industrial Recovery Act (NIRA) and the Agricultural Adjustment Act (AAA) chief among them – that granted the president extraordinary powers to manage the economy.” FDR’s New Deal allowed for regulatory agencies to be created; these agencies were positioned to govern industries. Even though states still maintain primary authority over matters that concern everyday life, there have been steps made towards socialism in the United States. From Yoo’s observations, there seems to be a misunderstanding of what socialism is. Most young Americans that are in favor of socialism are ignorant of the fact that socialism is not an innocent economic philosophy that promotes peace, justice, and equality. Socialism is dependent upon state power, and all power is allocated to the government, so the people will not have power. Therefore, socialism is antithetical to equality. Federalism is critical for protecting liberty and keeping the people in power, and the Framers recognized this fact.
In Berkowitz’s essay “Capitalism, Socialism, and Freedom,” he understands that most people that are fond of socialism or even slightly fond of it do not realize what socialism actually is, so he wants to get back to the basics and understand the philosophical thinkers that are foundational to capitalism and socialism. Most Americans that like socialism or think they like socialism do not like it because it is “state ownership of the means of production and government planning of the economy. Rather, they identify socialism with a progressive political agenda.” When most young Americans think of socialism, they think of Nordic countries. However, Nordic countries’ economic systems depend on capitalism, not socialism. Younger Americans never look to prime examples of socialism like the Soviet Union, North Korea, and Venezuela. Berkowitz explains that it is necessary to get back to the basics when understanding capitalism and socialism. John Locke was an Enlightenment thinker who is credited to be the “father of liberalism.” Berkowitz notes that “Locke examines human beings in a pre-political context not because he believes that persons can prosper outside of political society but to illuminate the pre-political core of individual rights.” Locke believes that all individuals are free and equal by nature, so he recognizes the natural law. Locke believes that we need government to secure our natural rights. Karl Marx was a German philosopher and the founder of Marxism. Berkowitz explains that “[t]he crux of Marx’s criticism is that political societies based on individual rights, the consent of the governed, and free markets enslave individuals to delusive ideas that provide popular justifications for unjust social and political arrangements that entrench gross inequality.” Marx wanted to eliminate class struggle by seizing the means of production and abolishing all private property. Liberal democracies empower the people and are built upon the natural law understanding of the human person. Unfortunately, young Americans are not receiving liberal educations anymore, so the foundational ideas behind these economic philosophies are not being taught. Liberal education must be recovered for Americans to be truly educated again, so people will not fall prey to predatory economic and political philosophies.
In Diamond’s essay “Political Freedom and Human Prosperity,” Diamond explores whether socialism or democracy can best deliver countries to human prosperity. Socialism expropriates private property and destroys productivity. Diamond argues that “expropriation of private property has disastrous consequences for productivity because it destroys incentives and misallocates resources.” He highlights a prime example of democratic South Korea versus authoritarian North Korea: “At the end of the Korean War, in the early 1950s, South Korea was only about 1.3 times as rich (in per-capita income) as North Korea. Four decades later, South Korean per-capita income was estimated to be about seven times that of the North, and the South’s economy (as measured by GDP) increased during those decades from three times that of the North to fourteen times.” Present day, it is estimated that South Korea is even wealthier than North Korea by a larger margin, and this is due to South Korea’s constitutional republic. Under socialism, private property is nonexistent because the economy is centrally planned. Diamond explains: “Private ownership of the means of production is a crucial bulwark against an overweening state and eventual political tyranny.” For a democracy to truly prosper and prosper for a sustained period, the quality of governance is crucial. Three measures that provide conditions for prosperity are rule of law, control of corruption, and regulatory quality. Crime needs to be under control, public power must not be exercised by the self-interested, and good policies that promote the flourishing of the private sector must be enacted. Countries that are democracies will most likely have positive economic growth while authoritarian regimes will most likely endure famine, mass murder, and other disasters. However, a democratic country will only prosper for a sustained period if there is high-quality governance.
Decentralization of government has proven to deliver countries to prosperity. When a government is in control of the means of production and the people do not own private property, the country will suffer in many ways. For a democratic country to truly thrive for a sustained period, good governance is needed. In addition to good governance, the people need to receive liberal educations. Academic institutions have significant influence over younger Americans, so it is crucial that what is being taught in schools teaches students about the foundational ideas behind philosophical theories and practices. In addition to education reform, regulations need to be cut to allow Americans to flourish.
1. John Yoo, Hoover Institution, https://www.hoover.org/profiles/john-yoo.2. John Yoo, “Socialism vs. the American Constitutional Structure: The Advantages of Decentralization and Federalism,” Hoover Institution, pp. 1, 2020.3. Ibid.4. Ibid, 3.5. Ibid, 6.6. Peter Berkowitz, “Capitalism, Socialism, and Freedom,” Hoover Institution, pp. 2, 2020.7. Ibid, 4.8. Ibid, 6.9. Larry Diamond, “Political Freedom and Human Prosperity,” Hoover Institution, pp. 1, 2020.10. Ibid.11. Ibid, 2.