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Is Barack Obama really a socialist?
Not exactly, but his 'socialist-lite' policies should still be cause for concern.
By Donald J. Boudreaux
from the October 30, 2008 edition

Fairfax, Va. - Since telling Joe the Plumber of his wish to "spread the wealth around," Barack Obama is being called a socialist. Is he one?

No. At least not in the classic sense of the term. "Socialism" originally meant government ownership of the major means of production and finance, such as land, coal mines, steel mills, automobile factories, and banks.

A principal promise of socialism was to replace the alleged uncertainty of markets with the comforting certainty of a central economic plan. No more guessing what consumers will buy next year and how suppliers and rival firms will behave: everyone will be led by government's visible hand to play his and her role in an all-encompassing central plan. The "wastes" of competition, cycles of booms and busts, and the "unfairness" of unequal incomes would be tossed into history's dustbin.

Of course, socialism utterly failed. But it wasn't just a failure of organization or efficiency. By making the state the arbiter of economic value and social justice, as well as the source of rights, it deprived individuals of their liberty – and tragically, often their lives.

The late Robert Heilbroner – a socialist for most of his life – admitted after the collapse of the Iron Curtain that socialism "was the tragic failure of the twentieth century. Born of a commitment to remedy the economic and moral defects of capitalism, it has far surpassed capitalism in both economic malfunction and moral cruelty."

This failure was unavoidable. It was predicted from the start by wise economists, such as F.A. Hayek, who understood that no government agency can gather and process all the knowledge necessary to plan the productive allocation of millions of different resources.

Likewise, socialism's requirement that each person behave in ways prescribed by government planners is a recipe for tyranny. A central plan, by its nature, denies to individuals the right to choose and to innovate. It replaces a multitude of individual plans – each of which can be relatively easily adjusted in light of competitive market feedback – with one gigantic, monopolistic, and politically favored plan.

A happy difference separating today from the 1930s is that, unlike back then, no serious thinkers or groups in America now push for this kind of full-throttle socialism.

But what about a milder form of socialism? If reckoned as an attitude rather than a set of guidelines for running an economy, socialism might well describe Senator Obama's economics. Anyone who speaks glibly of "spreading the wealth around" sees wealth not as resulting chiefly from individual effort, initiative, and risk-taking, but from great social forces beyond any private producer's control. If, say, the low cost of Dell computers comes mostly from government policies (such as government schooling for an educated workforce) and from culture (such as Americans' work ethic) then Michael Dell's wealth is due less to his own efforts and more to the features of the society that he luckily inhabits.

Wealth, in this view, is produced principally by society. So society's claim on it is at least as strong as that of any of the individuals in whose bank accounts it appears. More important, because wealth is produced mostly by society (rather than by individuals), taxing high-income earners more heavily will do little to reduce total wealth production.

This notion of wealth certainly warrants the name "socialism," for it gives the abstraction "society" pride of place over flesh-and-blood individuals. If taxes are reduced on Joe the Plumber's income, the rationale must be that Joe deserves a larger share of society's collectively baked pie and not that Joe earned his income or that lower taxes will inspire Joe to work harder.

This "socialism-lite," however, is as specious as is classic socialism. And its insidious nature makes it even more dangerous. Across Europe, this "mild" form of socialism acts as a parasitic ideology that has slowly drained entrepreneurial energy – and freedoms – from its free-market host.

Could it happen in America? Consider the words of longtime Socialist Party of America presidential candidate Norman Thomas: "The American people will never knowingly adopt socialism, but under the name of liberalism, they will adopt every fragment of the socialist program until one day America will be a socialist nation without ever knowing how it happened." In addition to Medicare, Social Security, and other entitlement programs, the gathering political momentum toward single-payer healthcare – which Obama has proclaimed is his ultimate goal – shows the prescience of Thomas's words.

The fact that each of us depends upon the efforts of millions of others does not mean that some "society" transcending individuals produces our prosperity. Rather, it means that the vast system of voluntary market exchange coordinates remarkably well the efforts of millions of individuals into a productive whole. For Obama to suggest that government interfere in this process more than it already does – to "spread" wealth from Joe to Bill, or vice versa – overlooks not only the voluntary and individual origins of wealth, but the dampening of the incentives for people to contribute energetically to wealth's continued production.

• Donald J. Boudreaux is professor of economics at George Mason University. He is the author of "Globalization."

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Harvey, in all honesty, I think the solution is not to raise taxes but to cut government spending.