ECON: Socialism as a viable form of organization (was Re: Extropy

Tim Hruby (
Wed, 20 Jan 1999 12:53:57 -0500

On Tue, 19 Jan 1999 09:59:12 -0500, "Michael S. Lorrey" <> wrote:

> wrote:
> > In a message dated 1/15/99 12:43:57 PM Central Standard Time,
> > writes:
> >
> > >
> > > But does socialism inherently involve advocating the use of force?
> > > Can't it be organized on a voluntary basis?
> >
> > I don't recall any instance where socialism hasn't involved force,
> > ultimately. Have there been actual examples?
> >
>I would say that with the sole exception of communes and kibbutzes, which
>still relied on significant amounts of peer pressure, no socialist
>organization with any political power has worked for very long without
>force. My opinion for this is that since communalism is so much of an
>anathema to human nature that force must be used to maintain a population
>in permanent residency. Note that communes and kibbutzes do have
>significant turnover levels, mostly of young adults coming and going once
>they got the socialist bug worked out of their systems. I admit that when I
>was a teenager that I considered myself a socialist for about two weeks...
>then I regained my sanity and actually thought things through. I once heard
>someone say that they would be worried about a person who had not been a
>socialist for at least 15 minutes in their lives....
> Mike Lorrey

Whether "socialism" can be a viable voluntary form of organization all depends on how you define the parameters. Certainly, if you define it as a form of "government" then ipso facto it involves coercion, as most people define a "government" as an institution that has monopolized the "legitimate" use of force.

However, even inside an unrestricted "free market," people form voluntary organizations _all of the time_ wherein "each contributes according to his ability and each takes according to his needs." The most common example is kinship and marriage based communities, i.e., "families," but business organizations, i.e., companies are also clear examples of economic organizations that are not internally governed by market principles. Families tend to lean more towards communism (as defined by the Marxist quote above), while business tend more toward socialism, in that they allow/tolerate a more uneven distribution of the fruits of the collective enterprise. Most people appear to make the calculation that it is economically efficient to participate in these kinds of organizations, and they generally do so free of the type of coercion we associate with government.

Explained from a more theoretical perspective, this is simply an application of Coase's Theory of the Firm. Quite simply, Coase's Theory of the Firm posits that, given the existence of transaction costs and differing utility curves, there are economic activities that are more efficiently performed inside the structure of a command economy (rather than being contracted out on the free market). Thus, in a "free market" (where people are free to organize their activities as they will) people will voluntarily form "command economies" around these bottlenecks to maximize economic efficiency. Depending on transaction costs, it can be a tremendous drag on efficiency to outsource your required inputs. This is why companies exist: rather than all economic interaction being a negotiated transaction between two individuals, sometimes it is more efficient to have a command economy. Thus, a small-business owner makes the calculation that it is more efficient to hire permanent help that she can order to do any task she needs help with, rather than attempting to hire temporary help for different individual projects; or a corporation that manufactures end-use products might also own factories to manufacture its primary inputs, perhaps because it cannot tolerate the uncertainty associated with acquiring those inputs on the open market.

To summarize, belief in the efficiency of the "laissez faire" free market does not require one to eliminate the socialist meme as an appropriate method of economic organization. Inefficiencies and differing utility curves will result in the creation of voluntary organizations in which each participant agrees to work towards maximizing the good of the whole rather than their individual good, often in exchange for some reduction of the risk of sub-par individual economic performance. Perhaps you are a risk-tolerant entrepreneur, but there are others who would prefer to join a corporation or partnership where they share the risks and rewards with others in exchange for a more predictable income. This too is "socialism," and it appears to work.

It is obviously different from the "Socialism" coercively imposed by a government, but that's what happens when you bandy about words loaded with ideological baggage, without stopping to think about what they really mean. If "voluntary socialism" is defined as "an organization run with an internal command economy to which the members voluntarily submit," then of course it has been an economically successful method of organizing vis-a-vis its competitors. Just look at Microsoft....

Now, if your ideological meme-set makes you want to define businesses and families as something other than "socialism" then we've got a whole 'nother semantic ball of wax around which to engage in a typical Extropian-list ideological flame-fest.... But many such disagreements, it is rooted in the fact that people attach different meanings to a meme-symbol like "socialism."