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The Scale of Statism: A Framework for Ranking Socioeconomic Systems

This article was first published in the Journal of Libertarian Studies. The present is the updated/expanded version.

Abstract: This article presents the scale of statism, a framework for understanding and ranking socioeconomic systems, and demonstrates that, contrary to academic and popular consensus, today’s economies are not capitalist (i.e., market economies). Instead, existing economies are statist—including the United States, the stronghold of “capitalism.” The article is structured as follows: introduction; philosophical and analytical framework; explanation of the six socioeconomic systems on the scale (free-market capitalism, crony capitalism, mixed economy, economic fascism, democratic socialism, and Marxist-Leninist socialism); a diagram of the scale, with Angola as a case study; and a conclusion.

Keywords: moral standards, natural rights, social philosophy, economics, economic thought, social sciences, the state, interventionism, socioeconomic systems, statism 

INTRODUCTION

Ideologies and systems are many: capitalism, socialism, fascism, mercantilism, and more. One hears of the left, the right, center, center-left, and center-right. With many, and often misleading, ideologies around, clarity is much needed for a sounder and broader socioeconomic understanding. Despite the

many labels, socioeconomic systems can essentially be organized into two models: consent or coercion. Almost all countries have a mix of both models, but existing socioeconomic systems are considerably tilted toward the coercive model (i.e., control and command). Said differently, a socioeconomic system can be either a free-market economy or a statist economy. With statist economies varying notably in nature and composition. 

As a socioeconomic system, the free-market approach is ethical, peaceful, and universal in its offering: people are individuals who have natural rights to life, liberty, and (self and property) ownership. Thus, social and economic relations transpire voluntarily through free markets to not infringe on these fundamental rights. For this and other reasons, a free-market approach to socioeconomic systems is the most ethical and thus superior model as it offers a much greater degree of human liberty, dignity, justice, and prosperity.

The same cannot be said of socialist and other statist socioeconomic systems, however. Although there are different and overlapping versions of statist economies (more on this later), the common denominator in them is state control and command. In statist socioeconomic systems, as the name suggests, the economy is not market-driven, but rather state-driven. The state intervenes and manages social and economic affairs in a centralized and technocratic manner. This is the coercive approach to socioeconomic systems, and it is fundamentally tyrannical (thus unjust and unethical), as statist systems systematically repress/violate individual rights, albeit to varying degrees. 

In today’s context of many ideologies and economic miseducation, one socioeconomic system seems to unite most politicians, intellectuals, media outlets, and much of the public in repudiation of it: capitalism. In fact, “capitalism” remains so misunderstood and perhaps detested, that socialism is still considered a viable alternative and is popular in the West, including in the U.S. (James 2019).

However, contrary established academic and popular consensus, existing economies are not capitalist (i.e., market-driven economies). Existing economies are statist as they are government-driven and characterized by a significant—in most countries, excessive—degree of state control and interventionism. Therefore, the blame capitalism gets for historical injustices and present economic, social, and environmental woes are unfounded. 

For various reasons, capitalism is widely misunderstood and unappreciated even as the implementation of its principles have enormously improved humankind’s lot. One reason is that governments do control the education system, and consequently, most curricula tend to promote statist views while perpetuating a distorted view of markets and capitalism (Hackley 2019). The pro-government and anti-market bias reigning in the education system, especially in higher education, has helped create the generalized misunderstanding and antagonism of capitalism/market economies that is prevalent today. Statist indoctrination is, of course, more incisive in countries that have, or have had, authoritarian systems of government. 

Another reason is that Western countries self-branded as free-market capitalists while not practicing free-market capitalism either at home (where they practice dirigisme); or abroad, as colonial, and neocolonial powers. At home, Western governments centrally manage their economies, instead of letting markets direct economic activity, and embrace actual free trade. Abroad, imperialist Western regimes committed (statist) atrocities—and still do today, albeit to a lesser extent—while branded as capitalist. Consequently, staining the perception of capitalism across the board. Understandably, most intellectuals and much of the public mistakenly equate capitalism with injustice, exploitation or imperialism and therefore reject it. However, one fact must be clear: imperialism (colonialism and neocolonialism) is a statist model, not a capitalist one. Capitalism is incompatible with imperialism. 

This fact may come as a surprise: the United States, the world’s leading economy and stronghold of “capitalism,” is not a (free-market) capitalist economy. It never has been, let alone European and other economies. For example, Patrick Newman (2021, 13) introduces his book Cronyism: Liberty Versus Power in Early America, 1607–1849 as “an economic and political history of early America, describing government policies and their effects on marketplace activity. In particular, it is a history of cronyism: when the government passes policies to benefit special-interest politicians, bureaucrats, businesses, and other groups at the expense of the general public.“ Similarly, Richard Ebeling (2014) remarks that “the ideal and the principle of the free-market economy, of capitalism rightly understood were never fulfilled. What is called ‘capitalism’ today is a distorted, twisted, and deformed system of increasingly limited market relationships, as well as market processes hampered and repressed by state controls and regulations.”

Capitalism (i.e., market economy) does not exist. Some countries (e.g., the United States, and a few others) have indeed come closest to it, and hence achieved unprecedented economic development and prosperity. Still, the capitalist system has yet to be fully implemented. Therefore, past atrocities and present woes (e.g., inflation, housing, energy, geopolitical, financial, and other crises) are not by capitalism, but by statism

Societies and, thus, the world would benefit tremendously if influential people, especially teachers and scholars, stopped referring to present socioeconomic systems as capitalist and started referring to them as what they undoubtedly are: statist economies. Acknowledging the (heavily) statist nature of existing socioeconomic systems is an essential starting point if fundamentally ethical, structurally just, more prosperous, and peaceful societies are to be attained. To that end, this article presents the Scale of Statism, a framework for understanding and ranking socioeconomic systems.

PHILOSOPHICAL AND ANALYTICAL FRAMEWORK

The Scale of Statism is ordinal, a categorical ranking indicating the extent to which the state intervenes in the economy and controls (i.e., represses) a society. In other words, it is a framework for analyzing the degree and extent to which an economy is statist. The scale goes from stages 1 to 6, where 1 is a free society, a free-market economy (i.e., capitalism); 2 is crony capitalism (i.e., minimal state interventionism); 3 is a mixed economy, also known as a social market economy (i.e., considerable state control and interventionism); 4 is economic fascism (i.e., excessive state control and interventionism); 5 is democratic socialism; and, finally, 6 is the most oppressed society, a Marxist-socialist economy under a totalitarian dictatorship.

Notice that statist socioeconomic systems have overlapping features, and most of them can be quite a strange cocktail of economic concepts in and of themselves. For example, a mixed economy can have elements of mercantilism, protectionism, corporatism, and free-market capitalism. Some mixed economies may also contain elements of a police state (i.e., mass surveillance and censorship). This should be kept in mind going forward.

Individual Rights

Modern human societies are predicated on the fact that people are individuals who have natural rights and on the corresponding obligations of the nonaggression principle. Indeed, history has proven that individuality cannot be abolished, even under authoritarian or totalitarian governments maintaining collectivist systems (e.g., Stalin’s Soviet Union, Mao’s China, North Korea, and others). However, despite the remarkable progress made thus far regarding human rights, the world still has a long way to go in genuinely acknowledging and respecting individual rights.

The fundamental human rights are simply three: life, liberty, and (self and property) ownership. All other rights (e.g., freedoms of speech, association, and disassociation) are necessarily part of and emanate from these three natural rights. Which, in turn, emanate from God, natural-moral law, and reason.

The right to life is, of course, the first and most fundamental of individual rights. It is premised on the moral principle that one should not murder, as one would not wish to be murdered. Murder is objectively and universally wrong. That individuals have an inalienable right to life and that no one and no entity, not even the state, is permitted to commit murder is philosophically and legally established. It must, however, be noted that the state, in theory the protector of people’s rights, has, in practice, been the primary and greatest violator of individual rights in history. As, for instance, documented by Rudolph J. Rummel (1997) in his seminal book Death by Government: Genocide and Mass Murder Since 1900. Rummel (2017) points out that,

During this [twentieth] century’s wars, there were some 38 million battle deaths, but almost four times more people—at least 170 million—were killed by governments for ethnic, racial, tribal, religious, or political reasons. I call this phenomenon democide, meaning that authoritarian and totalitarian governments are more deadly than war.

Liberty is the second fundamental right. The fact that liberty is an inalienable right is well-documented. Perhaps what is not as well understood is the fact that liberty is indispensable for human dignity, justice, and economic prosperity. From the Magna Carta and the Bill of Rights to prevailing constitutions, the right to liberty is well established, universally acknowledged, and guaranteed (nominally, that is). For example, the United Nations’ (1948) “Universal Declaration of Human Rights” stipulates in Article 1, “All human beings are born free and equal in dignity and rights. They are endowed with reason and conscience [emphasis added] and should act towards one another in a spirit of brotherhood.” Furthermore, Article 3 asserts, “Everyone has the right to life, liberty [emphasis added] and security of person.”

The right to self and property ownership is the third and final of the natural and fundamental human rights. Regarding self-ownership, suffice it to pose the following question: who owns a person’s body—the person herself, the person’s parents, a tribal chief, a king, a government, or a dictator? If the reader’s answer is that a person’s body is unequivocally owned by the person him/herself and by no other person, group of persons, or artificial authority (e.g., the state) own a person’s body, then the reader is correct. For if parents, a tribal chief, a king, a government, or a dictator were the rightful owner of a person’s body, that would obviously mean the person is a slave.

Murray Rothbard (2011, 352-353) notes that,

Obviously, in this space I can only outline what I consider to be the correct theory of justice in property rights. This theory has two fundamental premises: (a) the absolute property right of each individual in his own person, his own body: this may be called the right of self-ownership; and (b) the absolute right in material property of the person who first finds an unused material resource and then in some way occupies or transforms that resource by the use of his personal energy. This might be called the homestead principle—the case in which someone, in the phrase of John Locke, has “mixed his labor” with an unused resource. Let Locke summarize these principles: “every man has a property in his own person. This nobody has any right to but himself. The labor of his body, and the work of his hands, we may say, are properly his. Whatsoever, then, he removes out of the state that nature hath provided and left it in, he hath mixed his labor with, and joined to it something that is his own [i.e., applied his/her time, effort, and means in transforming/improving it], and thereby makes it his property.”

The right to self-ownership is implicit and inherent to humankind. Individuality indicates self-ownership, and self-ownership is essential for the dignity, security, and prosperity of individuals. Self-ownership and the implications of respecting this natural, inalienable right are crucial for establishing truly civilized, just, and peaceful societies. For there is no structural justice, liberty, and dignity where a person’s right to self (and property) ownership is partially or fully repressed, as it is the case in statist systems. Moreover, if one acknowledges the rights to life and liberty, as they are acknowledged, one must necessarily acknowledge individual self-ownership as a natural and unalienable right, for they are inextricably linked.

Since each person is individually and incontestably the owner of his or her body, the fruits of a person’s labor and entrepreneurial ventures are logically that person’s property. For example, if a one finds himself stranded in an isolated and uninhabited place, the priority would be water, food, and shelter for self-preservation. Let us say he found a wild fruit tree. Since no person planted the tree there, it is therefore a gift (i.e., a resource) from nature. The ten fruits he collects using his body, time, and effort are, therefore, his property. He wholly owns those ten fruits. If he produces a spear (i.e., a capital good) from a tree branch (i.e., a natural resource), the spear is his property in full—as is the animal (i.e., a consumer good), he hunts with his spear.

Individuals own their bodies, time, and labor. Consequently, the fruit of their labor is their private property, be it a spear, a house, a salary, a business, (rightfully acquired) land, etc. Ultimately, the right to property ownership stems from individuals’ owning their bodies, time, and labor. Logically, one owns what one creates, produces, and legitimately acquires (e.g., through trade, gift, inheritance). The right to self (and property) ownership is just as fundamental as the rights to life and liberty. However, this crucial fact remains mostly unknown or disregarded in a statist world, where policies are paternalistic, intrusive, repressive, and governments act as if they owned their citizens’ lives and bodies.

Now, a religious person may argue: “Okay, my body obviously does not belong to anyone, not even my parents or the state, but it does not belong to me either because I submit to God. My body belongs to Him.” Valid point. Still, the principle of self-ownership remains well-grounded. Because that is related to an individual, spiritual, and cosmological viewpoint. And not applicable to material matters such as legal, social, economic, cultural, and marital relations. For a just and peaceful co-existence, society’s legal framework and socioeconomic system must uphold the fact that individuals naturally and inherently own their bodies and, consequently, the fruit of their labor. Respecting this principle is also crucial for the complete eradication of the forms of slavery that persists. Moreover, notice that the relationship between a believer and God is strictly voluntary – no coercion, no compulsion. Notice further that a believer can become an atheist, and an atheist can become a believer. Hence, believing one’s life and body ultimately belong to God does not invalidate the fundamental right of self (and property) ownership.

Human Nature

Humans are inherently rational, methodical, and purposeful beings. People do indeed act irrationally or emotionally at times. But that does not alter the fact that humankind is endowered with reason and hence capable of rational thinking, complex analysis, and methodical action. Unlike other physical existences (e.g., animals, the moon, and stars), humans can reason and act purposefully toward achieving a chosen immediate or long-term goal. Conscience, creativity, moral values, ethical discernment (e.g., good vs. evil), and logical reasoning are some of the characteristics that set humans apart from other physical existences. 

Again, this does not mean that people’s rationality and cognitive abilities are infallible. Nor does this mean that humans always abide by moral values or exercise ethical judgment. Still, humankind does have innate moral standards and ethical discernment. And are inherently rational and purposeful beings, however faulty and prone to immorality or corruption mankind may be. Consider, for example, that people brush their teeth every day not necessarily because they like doing so but because the result of not doing so is costly in monetary, health, and aesthetic terms. People choose to avoid such expense, pain, or discomfort by rationally, purposefully, and methodically doing oral hygiene.

In Human Action Ludwig von Mises ([1949] 1998, 11), notes that “human action is purposeful behavior. Or we may say: Action is will put into operation and transformed into an agency, is aiming at ends and goals, is the ego’s meaningful response to stimuli and to the conditions of its environment, is a person’s conscious adjustment to the state of the universe that determines his life.” Such is human nature—free will, conscience, moral values (and obligations), rational, and purposeful. Also, corruptible and fallible.

Human Society

Human beings are individuals—not necessarily individualistic, but individuals, nonetheless. This natural and immutable fact may seem truistic to point out, but it must be emphasized, considering the prevalence of collectivist (i.e., dictatorial) ideologies. Also, because of the ethical, legal, and socioeconomic implications that stem from respecting individual rights. As individuals, people have fundamental rights that must be respected and have a moral obligation not to infringe on the rights of others. The non-aggression principle is essential. 

As individuals, people have characteristics such as fingerprints that are uniquely theirs. Even the world’s most identical twins are two separate individuals with distinct features, abilities, and preferences. Out of eight billion or more people on the earth, there are eight billion or more individuals with unmatched biological, genetic, and physiological attributes that are uniquely theirs. Therefore, society, tribal or modern, large or small, is merely a combination of families, which in turn are combinations of individuals. A human society is simply a combination of individuals. Individuals who live in a territory and tend to share common characteristics such as language, culture, and ethnicity.

It is a prevailing but dangerous statist misconception to see society as a separate entity above and beyond the individuals that compose it. This philosophical error has led to the outburst of collectivist ideologies (e.g., socialism and fascism) which in turn have led to some of the most tyrannical and murderous systems of government the world has seen. As cataloged in The Black Book of Communism: Crimes, Terror, Repression (Courtois 1999) and other scholarly works. The atrocities committed by collectivist systems of government that started with the Union of Soviet Socialist Republics (USSR) in 1922 were a consequence (not a coincidence) of the collectivist practice of placing the “greater good” of society (again, a group of individuals) over and above the rights of the individuals who compose it. The greater good comes from upholding individual rights and justice more so than from repressing them in the name of a fleeting and politically dictated “greater good.” As sound economic theory shows and history proves, collectivism—the suppression of individual rights and individuality—is an ideological hallmark of tyrannical and murderous systems of government.

It is crucial to recognize that society over and outside the individuals who compose it does not exist. To think otherwise is erroneous. A dangerous moral and philosophical error whose implications have led, and can still lead, to systemic human rights violations, mass murder, and other terrible consequences. Acknowledging the fact that people have natural rights to life, liberty, and (self and property) ownership that must respected and not be infringed under the pretext of fleeting political justifications is vital to preventing the (further) rise of tyrannical systems, and for attaining structurally just, more prosperous, and peaceful societies. It is equally crucial to realize that the individual and the family precede the concepts of society, kingdom, nation-state, or country. The individual and the family also predate authorities such as the first tribal chief, the first king, the first government, and the first dictator. Logically, therefore, individuals and their rights (life, liberty, and (self and property) ownership) antecede and thus supplant all artificial law.

Statism

The established academic and popular consensus that the United States, other Western economies, and much of the world are capitalist economies is one of our time’s most significant (and detrimental) economic fallacies. A fallacy that is perpetuated either out of willful ignorance or because doing so serves state interests. However, as remarked earlier, today’s economies are statist, not capitalist. Statism is a doctrine and socioeconomic system where the state has considerable centralized control over social and economic affairs (i.e., people’s lives). A statist socioeconomic system is one where the state, through elected and unelected officials, centrally plans, bureaucratically controls, and technocratically manages the economy and society. Governments today do have substantial centralized control and command over the economy and society, making existing economies heavily statist socioeconomic systems of varying degrees of state control, repression, and interventionism. The predominant model is the mixed, or social market, economy. Western countries and, therefore, much of the world fall within this category.

Why is statism problematic? For several reasons. For one, because interventionism is a model that does not last and creates injustice, instability, and disharmony in society. A government-managed economy is not superior to a free-market economy because government officials are not all-knowing, altruistic, and incorruptible individuals. Stated differently, as government officials are not angels, nor are they beings equipped with superhuman knowledge, foresight, or capabilities—and are just as fallible and corruptible as everyone else—a free society is much preferable to a technocratically-managed society. Moreover, statism is problematic because statist socioeconomic systems are inherently coercive-repressive and therefore unjust and unethical. Statist systems violate people’s natural rights to life, liberty, and (self and property) ownership, only varying in form and extent of repression. Aggravating this injustice is the fact that statist systems tend to grow more statist (i.e., more tyrannical) as time passes. 

Summary

To recapitulate, this article’s philosophical and analytical framework is grounded on these axiomatic facts:

  1. People are individuals who have natural rights to life, liberty, and (self and property) ownership. These rights emanate from God, natural-moral law, and reason, and not from the generosity of a monarch, a political leader, or the state. These three rights are fundamental and inherent to people. All people, not some people. Furthermore, these rights precede and transcend manmade law and artificial authority (e.g., the first tribal chief, the first king, the first government, and the first dictator).
  2. Humankind is inherently rational, purposeful, and fallible. Unlike animals and other physical existences, humans are capable of logical reasoning, ethical discernment, complex analysis, purposeful and methodical action, creativity, etc. Also, capable of integrity and kindness or corruption and cruelty. Furthermore, unlike other living creatures, humankind has innate sense of morality and ethical discernment.
  3. People are individuals—not necessarily individualistic, but individuals. This is a natural, beautiful, and immutable fact. Hence, human society, tribal or modern, large or small, blue or brown, is merely a combination of individuals. The world, too, is a combination of individuals, as the societies that compose it are merely a combination of the families that compose them, and families are, of course, composed of individuals. Further, keep in mind that only individuals act. Collectives (e.g., the family, the firm, the army) do not act.
  4. Existing economies are statist, not capitalist. Statism is a doctrine and socioeconomic system characterized by varying degrees of centralized, coercive, and technocratic management of the economy and society by the state.

THE SCALE OF STATISM

The six socioeconomic systems on the Scale of Statism are discussed below: free-market capitalism (stage 1), crony capitalism (stage 2), mixed economy (stage 3), economic fascism (stage 4), democratic socialism (stage 5), and Marxist-Leninist socialism (stage 6).

1. Free-Market Capitalism

To the extent that it has been implemented, capitalism has remarkably transformed and raised humankind’s living standards. Not so long ago, before the Enlightenment and the industrial revolution, much of humanity was poor, and harsh living conditions were the norm. Today even the masses enjoy living standards that that ancient royals could not have dreamt of. Air conditioners, cars, air travel, sophisticated devices, delicious food, vacations, modern medicine, online shopping, and an almost endless list of other products and services are readily and affordably available to common people, and not restricted to the wealthy and powerful. So much is the prosperity that markets, entrepreneurship, and trade have created that most of today’s products and services are considered banalities even by many in the middle- and low-income brackets. 

For instance, writing about the refrigerator, economist Gale Pooley remarks,

In 1956, a top-of-the-line Frigidaire cost $469.95. Back then, the U.S. blue-collar compensation (wages and benefits) rate was around $2.16 an hour, making the time price of the Frigidaire about 217.57 hours. Today you can get a Frigidaire at Home Depot for $549.00. It doesn’t have some of the nifty features of the older model, but at nearly 14 cubic feet, it is larger and more energy efficient. The hourly compensation rate, in the meantime, has increased to $33.39 an hour, so the time price of a refrigerator has fallen by 92.44 percent to 16.44 hours. You can get 13.23 refrigerators today for the time price of one in 1956.

Pooley continues,

In 1956, the U.S. population was about 164 million. We have more than doubled in size to over 333 million today. The total time required to earn the money to buy everyone a refrigerator in 1956 was around 35.6 billion hours. The time today is only about 5.48 billion hours. So, we have reduced the total time to provide everyone with a refrigerator by 84.66 percent.

Figure 1: Decline in global extreme poverty

Screenshot_1

This economic development and prosperity, the lifting of billions of people out of extreme poverty, greater interconnectedness within and between societies, today’s living standards, among other benefits result from the extent to which nations, led by the West, embraced principles of capitalism (e.g., private property, rule of law, free enterprise, international trade, etc.). The world’s socioeconomic situation is far from perfect, of course; in fact, prevailing (statist) economies are fundamentally troubled. Still, much has been achieved, and living standards progressed vastly, again, because of the extent to which free-market capitalism have been implemented, and not because of central planning and socialist policies.

All aspects considered, as sound economic theory shows and the evidence proves, a market economy is the morally, sociologically, and economically superior approach for ordering a human society. That is because, besides the material prosperity it creates, a free-market economy is the socioeconomic system that least violates, most upholds people’s natural rights to life, liberty, and (self and property) ownership. Moreover, since individuals and their rights precede artificial law and constructs (e.g., kingdom, country, government), it follows that a free-market economy is the just and natural socioeconomic order.

As philosopher-economist Frédéric Bastiat writes in The Law (1998, 1-2):

Life, faculties, production—in other words, individuality, liberty, property—this is man. And in spite of the cunning of artful political leaders, these three gifts from God precede all human legislation, and are superior to it. Life, liberty, and property do not exist because men have made laws. On the contrary, it was the fact that life, liberty, and property existed beforehand that caused men to make laws in the first place.

Certainly, the state (therefore government interventionism), is a relatively new construct considering how far human history runs. Historian of political theory Luigi Bassani and political philosopher Carlo Lottieri (2021) note that “whether we see its cradle in the Italian system of States after the Peace of Lodi (1454), or in western Europe (Spain, France, and England) in the 1600s, one thing is clear: the State ‘gradually emerged in the course of the fifteenth and sixteenth centuries and found its first mature form in the seventeenth’ (Lubasz 1964).”

Mises (1998, 258) explains what capitalism (i.e., the market economy) is:

The market economy is the social system of the division of labor under private ownership of the means of production. Everybody acts on his own behalf; but everybody’s actions aim at the satisfaction of other people’s needs as well as at the satisfaction of his own. Everybody in acting serves his fellow citizens. Everybody, on the other hand, is served by his fellow citizens. Everybody is both a means and an end in himself, an ultimate end for himself and a means to other people in their endeavors to attain their own ends.

Similarly, Henry Hazlitt (2019), points out that,

There are basically only two ways in which economic life can be organized. The first is by the voluntary choice of families and individuals and by voluntary cooperation. This arrangement has come to be known as the free market. The other is by the orders of a dictator. This is a command economy. In its more extreme form, when an organized state expropriates the means of production, it is called socialism or communism. Economic life must be primarily organized by one system or the other.

It can, of course, be a mixture, as it unfortunately is in most nations today. But the mixture tends to be unstable. If it is a mixture of a free and a coerced economy the coerced section tends constantly to increase.

Most people notice that something is fundamentally wrong, or broken, with the prevailing order, and that today’s socioeconomic systems, incorrectly referred to as capitalism, are cruel and oppressive. Thus, many advocate (even more) government intervention or outright socialism as an alternative that, some claim, truly would serve and empower the people. However, not to their fault, most fail to grasp that existing socioeconomic systems are heavily statist and that free-market capitalism, not socialist and other statist models, is the approach that truly serves and empowers ordinary individuals and families (i.e., the people). Statist socioeconomic systems, by their very nature, repress and hurt the many; while empowering and benefiting the state, those in it, favored by it, and associated with it.

Consider this: under which system were ordinary people more prosperous, dignified, and empowered? In the United States or in the Soviet Union, in East Germany or in West Germany, in South Korea or in North Korea, in Mao’s China (radical socialism) or today’s China (i.e., post-pro-market reforms)? The answer is obvious. 

Also, many mistakenly believe that capitalism is about racism, greed, or exploitation. On the contrary, the market economy is about individual rights, the negation of force and aggression, free and open markets—principles that are antithetical to oppression, exploitation, and conquest. The market economy is also about the division of labor, voluntary exchange, sound monetary system, and peaceful, not forceful, relations among people who, in pursuit of their own goals, serve, not coerce, others. Such is the essence of a free-market capitalism. Seems ethical, just, and civilized.

As it is not possible to discuss each socioeconomic system on the Scale of Statism exhaustively in one article, let us close this part by noting that a free-market economy does provide society with a much greater degree of liberty, dignity, justice, stability, and prosperity relative to available alternatives. Therefore, however imperfect it may be and considering mankind’s corruptibility and fallibility, a free-market economy is, without doubt, the morally, sociologically, and economically superior socioeconomic system.

2. Crony Capitalism

Statism begins with crony capitalism. This statist socioeconomic system is least intrusive and repressive as it is the first step in drifting from free-market capitalism. It must be noted, however, that terms like “crony capitalism” and “state capitalism” are contradictory and, thus, should not be lumped together. That is because if it is crony capitalism, it is no longer capitalism. Likewise, if it is state capitalism, it is no longer capitalism; it is a form of statism. A more correct term is minimal interventionism, or simply cronyism. That said, for the sake of familiarity, let us proceed with crony capitalism. 

Crony capitalism is a socioeconomic arrangement where the state begins to intervene in the economy and mount its bureaucratic apparatus (e.g., tariffs, licenses, permits). Crony capitalism is a minimal, mild form of interventionism. At this stage, the state usually intervenes under the banner of protecting certain firms or industries deemed strategic or vital by the political establishment. This implies collusion between government entities and certain large businesses or special interest groups. At this stage, the government starts imposing tariffs, licensing, permits, or other regulatory restrictions that hamper free enterprise and free trade. Such bureaucratic and restrictive measures can, of course, be used to penalize some while favoring and protecting others. The crony capitalism stage is where the injustice of government picking winners and losers begins. This is also the stage where government intervention begins creating a situation where profits and benefits are privatized/concentrated, but costs and losses are socialized/dispersed.

Daren Bakst (2021) notes that,

Cronyism takes many forms, but ultimately the effect is the government picking winners and losers, such as through subsidies to prop up a government-favored industry (e.g., for electric vehicles) or regulations that create barriers to entry for new competitors in an industry (such as state occupational licensing laws). Those actions are taken at the expense of competition and innovation. Even worse, by their very nature, they don’t account for the overall public interest. Instead, they benefit a small, favored interest at the expense of everyone else, from taxpayers and consumers to other businesses.

Noble-sounding words, and sometimes indeed good intentions, often underline justifications for government intervention. However, a problem with interventionism is that political promises and processes tend to be disconnected from reality, hidden agendas may be at play, and detrimental consequences are quite often disregarded in the myopic business of politics. Thus, while initial state interventions are lauded as necessary to correct “market failures” or to bring about a “better” or “fairer” social or economic outcome, evidence shows that such interventions do tend to be counterproductive and create a cascade of other problems as time passes. 

In a crony capitalist society, the government uses its regulatory and coercive power to steer sectors and broader economic activity in a certain direction—often for devious objectives and in collusion with powerful interests—instead of letting free enterprise direct economic activity, and free markets (i.e., the people) pick winners and losers. Therefore, this arrangement breeds repression, injustice, and systemic corruption that tend to permeate society. As Newman (2021, 14) notes,

Those who control the government’s power are corrupted over time. To quote Lord Acton, “[P]ower tends to corrupt and absolute power corrupts absolutely.” I define corruption as the willingness of government officials to push for interventions that benefit themselves and other favored interests. Coercion and the use of force increase the ability to dispense favors, which incentivizes corruption.

Indeed. Hundreds of millions of dollars are spent annually on lobbying government officials. For example, in the United States, lobbying spending reached an all-time high of $3.73 billion in 2021 (Statista 2022), and “3,700 new companies and organizations hired lobbyists since the start of the pandemic” (O’Connell and Narayanswamy 2022).

In closing, as the first stage in drifting from free-market capitalism, and the beginning of statism, crony capitalism is a socioeconomic system where the state, large businesses, and other powerful groups start colluding and exchanging favors. This arrangement is, of course, beneficial and enriching to the political, business, and other elites, but detrimental to most of the population. Interventionism, consequently, breeds more interventionism, which results in, among other things, economic repression, favoritism, endemic corruption, rent-seeking, protectionism, and the centralization of political and economic power that tends to characterize statist societies. Especially socialist and other heavily statist ones. 

3. Mixed Economy

Next on the Scale of Statism is the mixed economy, also known as the social market economy or the third way. As the name indicates, this statist socioeconomic system seeks a middle ground between free-market capitalism and socialism that, allegedly, combines the best elements of both systems while avoiding the downsides of each. The mixed-economy approach sounds noble in theory. After all, who would not want the best of both worlds (capitalism vs. socialism) while avoiding the disadvantages of each? If that were true or possible, the mixed economy would perhaps be the incontestably superior socioeconomic system. In practice, however, the mixed economy is a mirage. It is an unworkable and untenable arrangement. For three reasons:

  1. The theoretical middle point cannot be determined.
  2. Given that the middle point cannot be determined and defined, it follows that it cannot be maintained either. If the history of government is guide, one can assert that the natural tendency of the state is to gain more, not less, control of the economy and society. (There are cases, such as after the fall of the Soviet Union, where some countries significantly reduced the reach and scope of government. Still, the natural tendency of the state is to intrude ever more and grab more power and control over people’s lives).
  3. Considering the corrupt and deceptive nature of politics, political officials will tend to make ever more unreasonable but alluring promises to get into office or to stay in office. Notice that politicians and bureaucrats are not particularly famous for integrity, transparency, and sound economic thinking. Also, since the public is economically illiterate and mainstream economics is tilted in favor of the state, mixed economies will tend to move from the fictitious middle area and gravitate toward more state control and interventionism. The fact that the size and scope of government have been steadily increasing, for example, in the United States and other mixed economies over the past decades, reflects this.

In “The Middle of the Road Leads to Socialism,” Mises (1950) writes,

Interventionism cannot be considered as an economic system destined to stay. It is a method for the transformation of capitalism into socialism by a series of successive steps. It is as such different from the endeavors of the communists to bring about socialism at one stroke. The difference does not refer to the ultimate end of the political movement; it refers mainly to the tactics to be resorted to for the attainment of an end that both groups are aiming at.

As pointed out, the mixed economy, or social market economy, is the prevailing socioeconomic system in Western countries and, therefore, in much of the world. The precarious monetary, economic, and social situation becoming increasingly apparent reveals the mixed model for the unworkable, unstable, and unjust system that it is. It is no coincidence that existing economies are characterized by excessive debt, heavy taxation, overregulation, currency debasement, inflation, and among other issues that keep prevailing economies in an almost constant state crisis. For instance, government intervention created the (so far) $1.6 trillion student debt bubble (Shermer 2021) and drove higher education costs sky-high in the U.S. (Kittredge 2018). This market distortion, like other crises, is blamed on capitalism when interventionism is the real culprit. Unaware that the student debt crisis is a creature of state intervention, with the central bank in the background, the public and many politicians demand more state intervention to “solve” a problem caused by state intervention. 

Speaking of central bank in the background, notice that central banking is incompatible with capitalism. Notice further that a central bank is one of the most important pillars of statist socioeconomic systems. Said differently, central banking is a principal fuel to statist systems. Jörg Guido Hülsmann (2021) observes that, 

The Saint-Simonians in France had already grasped it at the beginning of the nineteenth century. They understood that the economy of a country could be controlled particularly easily and safely with the help of the printing press [i.e., central banking]. A few years later, the demand for the “centralization of credit in the hands of the state through a national bank with state capital and an exclusive monopoly” soon also held center stage in the 1848 Communist Manifesto by Marx and Engels.

Furthermore, a large and overbearing bureaucracy is typical of mixed economies. Recall that this is a stage past crony capitalism (i.e., minimal interventionism). At this stage, the state has mounted for itself an overarching and far-reaching bureaucratic apparatus of control and repression. The government no longer intervenes here and there in this or that sector; instead, it significantly controls and directs socioeconomic life in a centralized and technocratic manner. 

Consequently, in this statist socioeconomic arrangement, the collusion between political, business, and other elites is more accentuated, thus making this system more unethical, repressive, corrupt, and wasteful than the previous one. At this stage, the centralization of political and economic power also tends to be more accentuated since regulatory controls and impediments are greater, free enterprise and free trade are further restricted, and the state has a greater scope and reach. Logically, people’s natural rights to liberty and (self and property) ownership are also more significantly infringed upon at this stage as government coercively manages the economy and society.

4. Economic Fascism

In deviating from a free-market economy, state control and interventionism become economically fascist after the mixed economy stage. Although fascists do not outright ban private property, allow some markets to operate nominally free, and do reject Marxist-Leninist socialism, the economic nature of fascism is a socialist. A fascist socioeconomic system is characterized by a high and authoritarian degree of centralized planning, control and management of the economy and society. 

While the definition of economic fascism may vary, what does not vary is the fact that it is a collectivist ideology. The previous system—mixed economy—is also collectivist, albeit a minor, subtle form of collectivism. In contrast, economic fascism is less timid about its collectivist nature, and more assertive in its antagonism to individual rights, markets, and a free society. Benito Mussolini, the leader of the first fascist state, was originally a member of the Italian Socialist Party, and Nazi Germany’s ideology was called National Socialism. Evidently indicating the socialist nature of economic fascism. Emmanuel Rincón (2021) points out that,

Practically everyone knows that Karl Marx is the ideological father of communism and socialism and that Adam Smith is the father of capitalism and economic liberalism. Do you know, in contrast, who the mind behind fascism is? It’s very likely that you don’t, and I can tell you in advance that the philosopher behind fascism was also an avowed socialist. Giovanni Gentile, a neo-Hegelian philosopher, was the intellectual author of the “doctrine of fascism,” which he wrote in conjunction with Benito Mussolini. Gentile’s sources of inspiration were thinkers such as Hegel, Nietzsche, and also Karl Marx. Gentile went so far as to declare “Fascism is a form of socialism, in fact, it is its most viable form.” One of the most common reflections on this is that fascism is itself socialism based on national identity.

Similarly, Sheldon Richman (2019) writes that, 

As an economic system, fascism is socialism with a capitalist veneer. The word derives from fasces, the Roman symbol of collectivism and power: a tied bundle of rods with a protruding ax. . . . Where socialism sought totalitarian control of a society’s economic processes through direct state operation of the means of production, fascism sought that control indirectly, through domination of nominally private owners. Where socialism nationalized property explicitly, fascism did so implicitly by requiring owners to use their property in the “national interest”—that is, as the autocratic authority conceived it. (Nevertheless, a few industries were operated by the state.)

In a way, what differentiates a fascist economy from a mixed economy is that in the latter, the state still respects private property rights to a meaningful degree, and appreciates some free markets, despite having considerable control and command of the economy. A common feature between a fascist socioeconomic system and existing mixed economies is the collusion between government, corporations, and other powerful groups. Both systems have significant corporatist and protectionist elements in them. In today’s mixed economies, for example, many corporations are deemed “systemically important” or “too big to fail.” Thus, many companies, in some cases entire sectors, are favored and protected by the state through subsidies, regulation, bailouts, and other anti-capitalist policies. Nonetheless, corporatist and protectionist elements are more salient in the economic fascism stage than in mixed economy. 

This is not to imply that Western economies are fascist. As already noted, the mixed economy is the prevalent socioeconomic model in the West, and, thus, in much of the world. It must be stated, however, that some of the authoritarian systems in the developing world are unwittingly fascist. Instead of leading itself and the world to true capitalism (i.e., peace and prosperity), Western societies are gravitating toward more state control, interventionism, economic warfare, or worse. This is a concerning trend because it means that societies are further drifting from free-market capitalism and toward economic fascism. While Western socioeconomic systems are not presently fascist, they do contain some elements of economic fascism, as most economies today do by fact of being heavily statist systems. Some of those elements are the state’s control or collusion with corporate, media, academia, and other powerful groups; central planning, unending interventionism; significant protectionism and subsidies; authoritarian tendencies; centralization of political and economic power. Also, surveillance and censorship.

In The Road to Serfdom ([1944] 2001, 139), Friedrich von Hayek warns:

No doubt an American or English “Fascist” system would greatly differ from the Italian or German models; no doubt, if the transition were effected without violence, we might expect to get a better type of leader. Yet all this does not mean that, judged on our present standards, our Fascist system would in the end prove so very different or much less intolerable than its prototypes.

Indeed, the threat of and tendency toward economic fascism is real. Llewellyn Rockwell (2022) also warns,

Everyone knows that the term fascist is a pejorative, often used to describe any political position a speaker doesn’t like. There isn’t anyone around who is willing to stand up and say, “I’m a fascist; I think fascism is a great social and economic system.” But I submit that if they were honest, the vast majority of politicians, intellectuals, and political activists would have to say just that. Fascism is the system of government that cartelizes the private sector, centrally plans the economy to subsidize producers, exalts the police state as the source of order, denies fundamental rights and liberties to individuals, and makes the executive state the unlimited master of society.

5. Democratic Socialism

Democratic socialism is as popular as its definition is vague and incoherent. If one polls ten or ten million self-declared democratic socialists, one will hardly get a consistent and cogent definition. Even prominent democratic socialists such as U.S. politicians Bernie Sanders and Alexandria Ocasio-Cortez, give different definitions when asked. A web search shows that when defining it, they start by saying, “What democratic socialism means to me . . .”—not what democratic socialism is, but rather what it means to each of them. The absence of a consistent definition of democratic socialism suggests that proponents are confused (or perhaps delusive) and thus unable to offer a structured and consistent definition of what a democratic-socialist socioeconomic system is. Hence, the typical “what democratic socialism means to me . . . .”

It is true that proponents of, for example, a free-market economy do not all share the same view. However, the excessive opaqueness and incoherence that characterizes proponents of democratic socialism are unsettling. Because a loosely defined socioeconomic system, especially one with the word “socialism” in it, may well be the same tried-and-failed tyrannical system in a new wrapper. Given that Congresswoman Ocasio-Cortez is a superstar of democratic socialism and a member of the Democratic Socialists of America (DSA), the largest socialist organization in the United States, a visit to their website in pursuit of a structured definition was warranted. The DSA website (Democratic Socialists of America, n.d.) defines democratic socialism as follows:

Capitalism is a system designed by the owning class to exploit the rest of us for their own profit. We must replace it with democratic socialism, a system where ordinary people have a real voice in our workplaces, neighborhoods, and society. We believe there are many avenues that feed into the democratic road to socialism. Our vision pushes further than historic social democracy and leaves behind authoritarian visions of socialism in the dustbin of history.

We want a democracy that creates space for us all to flourish, not just survive and answers the fundamental questions of our lives with the input of all. We want to collectively own the key economic drivers that dominate our lives, such as energy production and transportation. We want the multiracial working class united in solidarity instead of divided by fear. We want to win “radical” reforms like single-payer Medicare for All, defunding the police/refunding communities, the Green New Deal, and more as a transition to a freer, more just life.

We want a democracy powered by everyday people. The capitalist class tells us we are powerless, but together we can take back control.

Still, the DSA does not define how democratic socialism would look and work as a socioeconomic system. Besides, there are many fallacies in the above description that it could take a book to debunk all of them. A few are worth addressing here.

First, “capitalism is a system designed by the owning class to exploit the rest of us for their own profit” is an entirely false statement. Capitalism was not and could not have been designed by the “owning class” because it is about free markets, free enterprise, and free trade. These concepts are natural and predate artificial constructs such as a king or a government, and thus the “owning class.” Moreover, the very “owning class” (i.e., political elites, business elites, and other powerful groups) being accused of having designed capitalism for their own profit, oppose (free-market) capitalism because it threatens their power and wealth. A free-market economy decentralizes economic activity and power, thus empowering everyone and no one.  In contrast, in socialist and other statist socioeconomic systems, the ruling elites and associates—the real “owning class”—use state interventionism to benefit and protect themselves while controlling and commanding the lives of the rest.

Second, the most fundamental piece of information underpinning the DSA’s definition of democratic socialism is: “we want to collectively own the key economic drivers that dominate our lives.” By which they, of course, mean they want to collectively own (and manage) the factors of production—nothing new under the sun. In reality, “collectively own the key economic drivers that dominate our lives” is the very socialist socioeconomic system that has been tried all over the world and disastrously failed every time. It is also the same socialist economy where ownership is collective in theory, but in practice, the state alone ultimately owns and controls all relevant factors of production and distribution. Furthermore, it is the same socialist socioeconomic system that requires force, bloodshed, mass censorship and propaganda to maintain—even if for now proponents claim it to be democratic, and not totalitarian, socialism. 

Fundamentally, democratic socialists are not so different from Marxist socialists (the totalitarians). They are both statist groups who seek to abolish individuality and people’s natural rights to liberty and (self and property) ownership. In doing so, strip individuals of their human dignity and reduce individuals to mere pieces in the centralized and repressive machinery of state planning, control, and technocratic management of society. Notice that by abolishing property rights and imposing ‘collective’ ownership of “the key economic drivers that dominate our lives,” democratic socialists abolish individual rights altogether. That is so because the right to self and property ownership is the foundation that ultimately sustains all rights. Such a system is inherently tyrannical and dictatorial, as sound economic theory and history demonstrate.

Hayek ([1944] 2001, 91) points out that,

Most [central] planners who have seriously considered the practical aspects of their task have little doubt that a directed economy must be run on more or less dictatorial lines. That the complex system of interrelated activities, if it is to be consciously directed at all, must be directed by a single staff of experts, and that ultimate responsibility and power must rest in the hands of a commander-in-chief, whose actions must not be fettered by democratic procedure, is too obvious a consequence of underlying ideas of central planning not to command fairly general assent. The consolation our [central] planners offer us is that this authoritarian direction will apply “only” to economic matters.

Third, the DSA asserts, “we want a democracy powered by everyday people.” Fair enough. The difference is, however, that, unlike democratic socialists (and other statists), some realize that the only socioeconomic system that is powered by and therefore truly empowers ordinary people is a free-market economy. Statist socioeconomic systems, especially socialist ones, by design, empower the state, government officials, and their associates to the repression and detriment of the majority. The “everyday people.”

Professor Walter E. Williams (2014) explains:

The fruits of the free market are the best thing that ever happened to the common man [emphasis added]. The rich have always had access to entertainment, often in the comfort of their palaces and mansions. The rich have never had to experience the drudgery of having to beat out carpets, iron their clothing or slave over a hot stove all day in order to have a decent dinner. They could afford to hire people. Mass production and marketing have made radios and televisions, vacuum cleaners, wash-and-wear clothing and microwave ovens available and well within the means of the common man; thus sparing him of the boredom and drudgery of the past. Today, the common man has the power to enjoy much (and more) of what only the rich could afford yesteryear.

This brings us to the “democracy” part of democratic socialism. Democratic socialists emphasize that they are democratic and not authoritarian or totalitarian. Perhaps they are indeed democratic. Regardless, a crucial fact democratic socialists fail to grasp is that it does not matter whether a socialist economy is implemented democratically, as in the case of Venezuela, or through force and violence, as in the case of Russia and other places. The fact is that the socialist model is an entirely defective philosophy that results in the cruelest and most oppressive of socioeconomic systems.  One should be wary of those selling socialism wrapped in a democratic veneer. Socialism, whether democratically implemented or violently imposed, remains a nefarious model that severely violates the ethical, just, and natural socioeconomic order based on individual rights to life, liberty, and (self and property) ownership.

In this vein, Jacob Hornberger (2022) remarks that

Democracy is often confused with the concept of freedom. If a system is democratic, the argument goes, that shows that people are free. That’s ludicrous. Freedom has nothing to do with how people elect their rulers. Consider Latin America, for example, the part of the world that was the focus of that recent Summit of the Americas. It’s often said, with validity, that people in Latin America have the freedom to elect their dictators every four or six years. That’s because their rulers wield and exercise dictatorial powers. So, whoever gets the most votes is the one who gets to be the dictator… [The situation is not eminently different in some Western democracies. For example, U.S. (imperial) presidents’ excessive use of executive orders for domestic and foreign affairs resembles a characteristic typical of centralized and autocratic systems.]

What matters is not that people get to elect who heads a tyrannical socioeconomic system. The moral imperative is that a socioeconomic system is fundamentally ethical and structurally just. This means that society’s legal framework upholds and the government, elected or otherwise, respects the fundamental rights to life, liberty, and (self and property) ownership of the people it represents. Indeed, many autocratic systems use democracy as a legitimizing and calming veil to conceal their cruel and oppressive nature.

Moreover, when pressed, democratic socialists conveniently ignore Venezuela and point to Scandinavian countries as proof that their model works. However, no Scandinavian country is socialist, and more importantly, no Scandinavian country became wealthy because of socialist policies. Scandinavian countries have a large welfare state and high taxes, but they also have well-established elements of free-market capitalism (e.g., property rights, openness, economic freedom, entrepreneurship, and relatively free trade). Speaking at the Kennedy School of Government in 2015, Danish prime minister Lars Løkke Rasmussen publicly rebuked repeated statements from U.S. Senator Bernie Sanders that Denmark is what he means by democratic socialism, saying: “I know that some people in the U.S. associate the Nordic model with some sort of socialism. Therefore, I would like to make one thing clear. Denmark is far from a socialist planned economy. Denmark is a market economy” (Goldhill 2015). Likewise, Nima Sanandaji (2021) clarifies that,

Much of the strength of Nordic societies lies in the advanced free market system, which is why it’s essential that they are returning to their centrist roots. As I have previously written with Klas Tikkanen, chief operating officer of Nordic Capital, Sweden is a leading innovation hub in Europe that’s able to attract foreign capital to growing companies. One reason for this success is its smart tax policy, where funds from a successful investment in one company may be invested in new companies, and taxation only applies when gains are realized. Thus, growth capital can be attracted to a high-tax country.

An actual case of democratic socialism is Venezuela under the late President Hugo Chávez and his successor, President Nicolás Maduro. Believing that they could use oil money to usher in “Socialism of the 21st century” (Chávez’s own words [Forero 2005]) – several socialist policies and programs were implemented over the years. Unsurprisingly, the twenty-first-century socialist model of presidents Chávez and Maduro failed, causing severe shortages, starvation, and a hyperinflationary collapse of the Venezuelan economy. What is now an economic disaster and humanitarian crisis (Thomson 2021), where “more than 7 million Venezuelans have fled the country since 2015, with 6 million settling in other Latin American countries. The region’s largest migration episode in history is driven by the collapse of the country’s economy, which has left Venezuelans struggling to meet their basic needs.” (Arena et al. 2022). 

Figure 2: Mass migration out of Venezuela

Screenshot_2

The disastrous hyperinflationary collapse of democratic socialist Venezuela is yet another reminder of the tyrannical, ruinous, and unworkable nature of socialist systems. Even if one sits on the world’s largest proven oil reserves, as Venezuela does.

In closing, no goodness, justice, and prosperity can come out of socialism simply because it is implemented democratically and not violently. One self-deceives in believing that democratic socialists, unlike totalitarian socialists, will finally deliver the long-promised socialist paradise here on earth. Democratic or not, and however alluring it may still be, socialism remains a nefarious doctrine that, in practice, results in tyrannical rule, impoverishment, and mass misery.[1]

[1]The reader may ask how the author explains the People’s Republic of China’s economic transformation. It is undeniable that China’s economic development has been remarkable. However, it does not mean socialism finally works or the Chinese Communist Party (CCP) invented a new socioeconomic system. Not at all. China’s economic success was because the CCP, under Deng Xiaoping, considering the catastrophic failure of Mao’s radical socialist policies, made the pragmatic (and correct) decision to initiate pro–market economy reforms. In other words, China prospered because of the degree to which it embraced capitalism and international trade while maintaining a party-state regime. The CCP’s relative embrace of capitalism to survive and thrive was a sound strategic move and an unwitting admission that socialism does not work.

Similarly, Vietnam’s economic transformation has happened not because of the outstanding central planning capacity of the Communist Party of Vietnam (CPV), but because starting in mid 1980s pro-market reforms, known as Doi Moi, were implemented. With pro-market reforms, the country also opened to world and international trade. As a result, Vietnam flourished. Here too, by abandoning its full control and command economy, and creating a “socialist-oriented market economy,” the CPV yielded to natural law and unwittingly admits that socialism is indeed a failed experiment.

6. Marxist-Leninist Socialism

Marx-Engels-Lenin’s socialism, also known as scientific socialism, is the harshest, most tyrannical of the statist socioeconomic systems, and the last on the Scale of Statism. The oppression, horrors, and brutality of communist governments are documented and relatively well-understood, thus this part of the article is brief. Born and raised in Angola, then the People’s Republic of Angola, the author is familiar with the tyrannical and ruinous nature of such systems.

This system has different names: communism, international socialism, sovietism, Marxism-Leninism, and bolshevism. A Marxist-socialist system is characterized by complete or near-complete state ownership, control, and command of the economy and society. Under this socioeconomic system, private property is abolished, and all land is ultimately and exclusively owned by the state. Economic, social, and cultural activity is centrally planned and coercively managed, resulting in a highly centralized, thoroughly corrupt, and severely oppressed society under a totalitarian government. In other words, Marxist-Leninist socialism is the philosophy and system of totalitarian dictatorships. 

To reiterate, in theory, socialism is collective ownership, but in practice it is a system of state ownership veiled as public ownership. The word “public” is essential to this ploy because it helps maintain the illusion of public (popular, or collective) ownership. However, in this type of statist system, the state, personified by a supreme leader, who is also the president or general-secretary of the ruling communist party, effectively holds all the power and controls everything and everyone—to the extent that it is possible—through censorship, mass surveillance, propaganda, arbitrary imprisonment, torture, murder, and other nefarious means that comprise the state’s apparatus of control and repression. 

Despite being the most tyrannical and murderous system of government in history (Satter 2017), Marxist socialism remains popular, even in Western countries. Anton Balint (2022) writes that,

Poll after poll, conducted over the years and across different Western countries—such as the United States, the United Kingdom, Australia, Germany, New Zealand, and other nations that share the two pillars of Western civilization—have shown that those below the age of 35 support socialism, with a startling number of young people living in the UK believing in 2018 that “communism could have worked if it had been better executed.”

As such, many young Westerners continue to have a romantic view about international socialism (communism), often expressed in apologetic slogans such as the well-known “that was not real communism,” aimed at whitewashing Marx’s ideology that has been responsible for over 100 million deaths over the past 100 years.

Professor Ebeling (2021) likewise notes that,

Thirty years ago this month, the nightmare experiment in Soviet communism formally came to an end. On the evening of December 25, 1991, the red flag of the Union of Soviet Socialist Republics was lowered from the walls of the Kremlin in Moscow for the last time. After almost 75 years, the communist nightmare was over. Begun in the midst of the First World War with the Bolshevik Revolution led by Vladimir Lenin in November of 1917, it has been estimated that upwards of over 60 million people died as the intentional victims of building the bright, beautiful socialist future. Worked to death, starved to death, tortured to death, or simply shot, each of these innocent and unarmed men, women, and children were declared to be “enemies of the people,” somehow standing in the way of constructing the collectivist utopia-to-come.

Further, a distinct characteristic of Marxist-Leninist systems is the deification of the state and a fanatical cult of personality around the leader. Much more so than in any other statist system, at this stage religions practices are banned or suppressed. Which is a consequence of the fact that Marx-Engels-Lenin’s socialism is a strictly materialist-positivist philosophy. Most socialist republics of the USSR and member countries of the wider Soviet bloc adopted state atheism. Presently, state atheism is official policy in communist China, Vietnam, Cuba, and North Korea. In the case of the Democratic People’s Republic of Korea, the dictator is worshiped as godlike (Roth 2017). Indeed, a godlike cult of the leader and statolatry are, to varying degrees, an inherent feature of Marxist-Leninist dictatorships (see Stalin and Mao). 

How tragically ironic that an ideology that promises a worker’s paradise, power to the people, equality, collective ownership, and a classless society, in practice, delivers the cruelest, most oppressive, and most murderous system of government in recorded history. A socioeconomic system that starved to death millions of the very workers and people it sought to liberate from “oppressive and exploitative capitalists.” A system where individuals are stripped of their natural rights and essentially reduced to slaves of the godlike, totalitarian government.

As historian Lawrence Reed (2018, 18) remarks,

It was, therefore, always predictable that by requiring the abolition of private property and the family, and monopolistic State ownership of agriculture and industry, the socialist pursuit of equality would necessarily produce the evil fruit of totalitarianism. One-party rule, the secret police, the imprisonment and torture of dissidents, concentration camps, mass executions, the political indoctrination of the young, the persecution of religious minorities—all these horrors have been the inevitable result of that concentration and monopolization of power that invariably corrupts the ruling elites and bureaucracies of all full-blown socialist societies.

DIAGRAM OF THE SCALE

 

Figure 3: The Scale of Statism

Screenshot_3

Though societies today are statist economies, the extent to which socioeconomic systems are statist varies notably and most contain overlapping elements, as remarked much earlier. The middle area in Figure 3 indicates the stage in which the United States, other Western economies, and, therefore, much of the world are. Western societies are mixed economies that, as of the past few decades, are drifting from the middle area of the scale toward more government control, bureaucracy, and interventionism—even as economic conditions continue to deteriorate. Stated differently, Western societies are moving from mixed economies (stage 3) toward economic fascism (stage 4), and thus are still on Hayek’s Road to Serfdom. Using the United States—the leading, and still by far largest economy—as a reference, one can argue that the 2008 global financial crisis marked the point at which developed economies went past the mixed economy area and began to drift to economic fascism.

The socioeconomic systems of the developing world vary from stages 3 (mixed economy) to 5 (democratic socialism), besides the few remaining cases of stage 6 (Marxist-Leninist systems, e.g., North Korea, Cuba, and Eritrea). For the most part, however, developing countries are located between stages 3 (mixed economy) and 4 (economic fascism). For instance, countries that were part of the USSR and the wider Soviet bloc which have implemented moderate, but not considerable, pro-market reforms, and maintain authoritarian governments, are likely at stage 4. For instance, countries such as Estonia, Latvia, Lithuania, and the Czech Republic have significantly scaled back their socialist economies after the collapse of the USSR. In contrast, countries such as Kazakhstan, Azerbaijan, Belarus, Algeria, Ethiopia, Madagascar, Mozambique, and others, not quite as much. However, before pointing out the situation in others’ houses, the author will address the situation in his own house, Angola.

Angola gained independence from Portugal in 1975. From 1975 to 1992, Angola, for that period the People’s Republic of Angola, was a socialist economy controlled and commanded by single-party state (i.e., a totalitarian dictatorship). Angola’s socialist socioeconomic system was modeled after the USSR, as the ruling party’s ideology was Marxism-Leninism. Since 1992, Angola has been the Republic of Angola, a unitary presidential system with a multiparty, representative democracy. 

Political, social, and economic reforms have undoubtedly been implemented. As a result, Angola is more open, slightly freer, some economic development has been achieved, the long civil war ended in 2002, and the country enjoys relative peace and stability. However, the political and socioeconomic landscape remains excessively centralized, repressive, and under authoritarian rule, as indicated, for example, by a score of 3.3 where 1 is fully authoritarian and 9 is fully democratic in Mapped: The State of Global Democracy in 2022 (Amoros, Routley, and Fortin 2022).

Officially, the ruling party has abandoned its Marxist-Leninist ideology and “reformed to a market economy.” Perhaps it has indeed abandoned the radical brand of socialism and internally adopted a more moderate version of it. That only the party itself can know. What is known and evident is the fact that the state still plays the by far most dominant role in the economy and society. For instance, not only is the state (along with state-owned enterprises) still the largest employer in the country, one can reasonably assert that in Angola, the state is still the economy, and the economy is still the state. The Ministry of Planning still plans the economy; 48 years of central planning, technocratic management of the economy, and many Five-Year Plans it remains unclear when Angola will transform from an undeveloped economy into a stable, prosperous, and happy economy. 

The fact is that Angola, like most African countries, is far from being a market economy. The United States is not a market economy; imagine Angola. Being far from being a market economy, and past the middle point on the Scale of Statism, means that a country’s socioeconomic system is considerably tyrannical. And thus, closer to a socialist economy than a capitalist one. The further away from a free-market economy a society drifts, the crueler and more oppressive its socioeconomic system becomes. Ultimately, this means that the pro–market reforms that have been implemented in Angola are minimal, largely ceremonial, and not significant enough to make the country a market economy. Placing Angola at stage 4 (economic fascism), as shown in Figure 3.  

Data from the world’s leading economic indexes are telling. The Fraser Institute’s Economic Freedom of the World: 2022 Annual Report places Angola in the least free quartile (Gwaltney et al. 2022). The Heritage Foundation’s Index of Economic Freedom 2022 notes that Angola is a mostly unfree economy with a score of 52.6 out of 100 (Miller, Kim, and Roberts 2022). The Cato Institute’s Human Freedom Index 2021 gives Angola a score of 6.09 on a scale of 0 to 10, where societies closer to 10 enjoy greater human freedom (Vásquez et al. 2021). The Democracy Report 2022, published by the V-Dem Institute at the University of Gothenburg, places Angola at the Bottom 20-30% of countries (a repressive/tyrannical group), and categorizes the country as an electoral autocracy (Boese et al. 2022). 

Moreover, Freedom House’s Freedom in the World 2022 Report: The Global Expansion of Authoritarian Rule (Repucci and Slipowitz 2022), gives Angola a total score and status of 30 out 100—not free. The report also points out that, 

Global freedom faces a dire threat. Authoritarian regimes have become more effective at co-opting or circumventing the norms and institutions meant to support basic liberties, and at providing aid to others who wish to do the same. In countries with long-established democracies, internal forces have exploited the shortcomings in their systems, distorting national politics to promote hatred, violence, and unbridled power. Those countries that have struggled in the space between democracy and authoritarianism, meanwhile, are increasingly tilting toward the latter [emphasis added]. The global order is nearing a tipping point, and if democracy’s defenders do not work together to help guarantee freedom for all people, the authoritarian model will prevail.

The global rise in authoritarianism is bad news for humanity and human progress, but for Angolans, it may mean that the system under which they live could become even more tyrannical. One hopes that the regime does not follow such a global trend, and finally reforms into a free-market economy. Thereby establishing the basis for a free, just, prosperous, and dignified Angolan society. Until then, the prevailing situation is that Angola remains under an authoritarian and repressive government with a socioeconomic system that is unwittingly fascist (as illustrated in Figure 3). Peter F. Drucker ([1939] 1995, 246) is not wrong in remarking that “[economic] fascism is the stage reached after communism has proved an illusion.” Like everywhere else, in Angola too, Marx-Engels-Lenin’s scientific socialism proved a disastrous and murderous experiment.

Notice, however, that Angola is not the only country in Africa or in the world whose socioeconomic system is unwittingly fascist. Analysis of countries that live under authoritarian and semi-authoritarian regimes, particularly post-communist states, and others that have experimented with socialist policies, would likely reveal that most are between stages 3 (mixed economy) and 5 (democratic socialism), with many being at stage 4 (economic fascism). In the case of African societies, however, it must be noted that there has been a great betrayal: after colonial rule, instead of liberty, Africa’s leadership delivered tyranny. (See Prof. George Ayittey’s 1992 book Africa Betrayed.)

SUMMARY AND CONCLUSION

This article presented the Scale of Statism, a framework for understanding and ranking socioeconomic systems. It also demonstrated that contrary to established academic and popular consensus, existing economies are not capitalist (i.e., market economies). Today’s socioeconomic systems are statist, with overlapping characteristics and varying degrees of state control, repression, and interventionism. The six socioeconomic systems on the scale are free-market capitalism (stage 1), crony capitalism (stage 2), mixed economy (stage 3), economic fascism (stage 4), democratic socialism (stage 5), and Marxist-Leninist socialism (stage 6). 

While statist socioeconomic systems vary notably in nature and configuration, a common characteristic is that they are inherently tyrannical, unjust, and thus unethical systems. Differences lie in the degree and extent to which the state represses individual rights as it plans, controls, and manages the economy and society in a centralized and technocratic manner. Consequently, as aforementioned, as a socioeconomic system drifts from a free-market economy, it becomes crueler and more oppressive. Moreover, to reiterate, people’s individual rights to life, liberty, and (self and property) ownership are inherent and emanate from God, natural-moral law, and reason. Being natural rights, they precede and transcend the first tribal chief, the first king, the first government, and the first dictator. All such institutions can do is uphold, repress, or altogether violate these three fundamental rights.

Acknowledging that existing economies are statist, not capitalist, is an essential starting point if socioeconomic understanding is to significantly improve toward more just, prosperous, and peaceful societies. The alternative means that authoritarian and tyrannical models may remain prevalent, hindering economic development and perpetuating avoidable human suffering across the world. As a framework for understanding and ranking socioeconomic systems, this article contributes toward a more ethical and sounder socioeconomic understanding for greater liberty, justice, and prosperity. 

AUTHOR:

Manuel Tacancho is a social philosopher and economist; founder and president of the Afrindependent Institute.

Suggested citation:

Tacanho, Manuel. 2023. "The Scale of Statism: A Framework for Ranking Socioeconomic Systems." Afriendependent Institute Paper No. 01-EN/2023.

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