Governing Least: A Litany of Insight

Dan Moller’s Governing Least is packed with random insights and philosophic wit.  Some highlights:

Why so much political philosophy sounds desperate:

Only those already unsympathetic to utilitarianism are likely to be swayed by Rawls’s brief observations. Those who begin their political philosophy by defending the morality of rights don’t so much preach to the choir as exorcize the elect.

Why so much political philosophy sounds so blind:

The reason France does not require aid is not because some external group took pity on the French, but that they were able to generate exponential economic growth themselves. This makes it puzzling that philosophers write long books about aid without mentioning economic growth, and generally seem to imply that the path to escaping poverty lies through individual altruism. Why ignore the only mechanism that has ever succeeded in lifting millions of people out of poverty when thinking about poverty?

A great explanation of the Theory of the Second-Best:

Suppose that a company enjoys monopoly powers that we cannot immediately remove under the present regulatory regime, but that one of its upstart rivals enjoys a market- distorting state subsidy which we can remove. It is a fallacy to infer that market efficiency will be improved by at least killing the subsidy— the reverse may well be true— just as it is fallacious to reason that if our military lacks both bombs and bombers the second- best solution is at least to build the bombers.

Why predictable outcomes can co-exist with abundant opportunity:

The data on intergenerational mobility or its absence is sobering, to say the least. In the United States, sometimes this leads commentators to call into question the traditional self- conception of America as a “land of opportunity.” It’s hardly a land of opportunity if outcomes are determined at birth, runs the criticism.

Let us consider this reasoning in more detail. The critic seems to reason as follows: If there were anything like equality of opportunity, then we couldn’t predict outcomes at birth, but we can, and so the land of opportunity is a myth. Let us assume the standard to meet here isn’t exact equality of opportunity for every single citizen. Could there still be reasonably high levels of opportunity despite outcomes— including bad ones— being highly predictable from the start? The critic seems to assume the following principle:

Predictability defeats opportunity: if we are able to specify social outcomes with a high degree of accuracy in advance, then the people in question cannot enjoy much opportunity.

Why accept this principle? What is it that connects predictability and opportunity? The obvious answer is that we think we know enough about people to be confident that if they did enjoy opportunities, they wouldn’t exercise them in a way that leads to bad social outcomes. The fact that we know that Smith will end up poor in all likelihood suggests that he is powerless to avoid it, since if he were capable of influencing the outcome, then he would. This amounts to another, deeper principle:

Predictability is evidence of incapacity: the fact that we can predict poor social outcomes is evidence that those who experience them lack a capacity for avoiding them.

Another way of putting the matter is that a fixed proportion of poor outcomes might be bad, but it wouldn’t be bad for reasons of diminished opportunity, since it might be the case that there are going to be winners and losers in anything resembling a free society, and as long as everyone has a fair shot at being a winner, things aren’t so bad. (No doubt more would need to be said about what “losing” amounts to for us to feel reassured.) What is terrible about predictability is that the losers aren’t just random, but never had a chance. Because predictability is evidence of incapacity, we know that those with poor outcomes never had a chance to succeed, and a fortiori they lacked anything like an equal or reasonable opportunity for success.

The problem is that it isn’t true that predictability, in itself, is evidence of incapacity, that outcomes are beyond our control. I don’t want to deny in the end that certain forms of incapacity do play a role in social outcomes, but how much is far from settled, and by opening with the assumption that predictability implies incapacity, we go wrong from the start. The fundamental confusion is between the epistemic question of what we can say about the future and the metaphysical question of what people are able to do at a given time in given circumstances. There are various fancy examples to illustrate this in the free- will literature, but for our purposes we can stick to some everyday examples:

Rope line: at the airport, we predict with great confidence that people will walk along a particular circuitous path— the one laid out by the velvet ropes. Nevertheless, the passengers are free to step over the ropes any time they like. It’s just that hardly anyone does. Predictability here doesn’t imply incapacity, it’s just that the passengers all have reason to exercise their freedom in a certain way.
Victim-blaming is (often) question-begging:
[I]t sounds mean to claim that people generally have a capacity to influence social outcomes when thinking about the poor, a bit like victim-blaming. But such a denial would involve insisting that something like the following claims are generally true (readers are invited to imagine these in the mouths of their own children facing unfavorable social circumstances, such as a lousy school system):
• “I can’t help it that I skipped class.”
• “It wasn’t possible to do my homework.”
• “I had no control over whether I had children.”
• “There was no way I could have worked this past year.”
It is important to acknowledge that for some people, these statements will be true. Mothers have children due to rape, classes go unattended because of gunfire or violence in the school, recessions destroy employment opportunities even for those who are highly qualified and persevering and willing to accept low wages. The point isn’t that all poor social outcomes are blameworthy, but that most (not all) people can exercise an enormous amount of influence over whether they lead a decent life in the developed world, even when ignorance or other internal impediments bar the way.
Governing Least is so packed with insight that I could easily have made this post three times longer.  Read it and see for yourself!
Open This Content

The Gig Economy is What Yesterday’s Socialists Said They Wanted; Why do Today’s Socialists Hate it?

A February Harris poll finds that 49.6% of Millennial and Generation Z Americans would “prefer living in a socialist country.”

US Senator Bernie Sanders (I-VT) and US Representative Alexandria Ocasio-Cortez (D-NY), among other politicians, proclaim a message of “democratic socialism,” evoking an ideology last ascendant in the early 1900s when Eugene Debs and Norman Thomas moved the needle in US elections.

But the devil is, as always, in the details. The goals of today’s American “democratic socialism,” as laid out in Ocasio-Cortez’s Green New Deal resolution, in Sanders’s “Stop BEZOS Act,” etc. look a lot more like Franklin Delano Roosevelt’s effort to “save capitalism” through welfare statism than like the proposals of socialism’s last rise to prominence.

The essence of socialism as laid out by Proudhon and Marx and promoted by the International Workers of the World, et al., came down to destroying the wage system and building a classless society based on worker ownership of the means of production.

Those earlier socialists would almost certainly have lauded gig economy workers as examples of what socialism sought. Today’s socialists disdain them.

Consider gig economy drivers, once just called “gypsy cabbies.” In recent years many of them have chosen to affiliate with services like Uber and Lyft to get easier connections to people seeking rides.

Gig economy drivers own the means of production (their cars).

Gig economy drivers set their own hours and choose their own workplaces instead of slaving away on  someone else’s terms.

Gig economy drivers can use customer discovery services like Uber/Lyft, or they can go their own ways (many Uber drivers give me their cards, telling me to call them directly next time and cut out the capitalist middleman).

But today’s “democratic socialists” fought tooth and nail to preserve the capitalist “medallion cab” monopoly, and having lost that fight they’ve re-oriented their struggle toward roping the drivers, and the companies they choose to work with, into the old-style capitalist “wage employee” system.

Even the most virulent revolutionary Marxism posited that the state would wither away as workers seized the means of production, got rid of the bosses, and started working for themselves. That didn’t work out — the socialist parties ended up substituting themselves for the old ruling class, operating in the name of, but not as true proxies for, “the workers” — but that was the goal.

In the US, the same kind of substitutism came about “democratically” and incrementally as “progressives” co-opted pieces of socialist-sounding reforms. But just like the Marxist-Leninist parties in the old Soviet orbit, today’s “democratic socialists” are … well, conservative.

They don’t want the wage system to go away. They just want to run it.

They don’t want the workers to own the means of production. They just want to tax and regulate it.

They don’t want a classless society. They just want to be the new ruling class.

US president Donald Trump is already touting the 2020 presidential election as a referendum on “socialism.” Are any real socialists going to show up for that fight?

Open This Content

Social Media Regulation: Speak of the Devil and in Walks Zuck

In a recent column on the mating dance between Big Government and Big Tech, I noted that “Big Tech wants to be regulated by Big Governments because regulation makes it more difficult and expensive for new competitors to enter the market.”

Two days after I hit “publish” on that column, Facebook CEO Mark Zuckerberg called for government regulation of social media in a Washington Post op-ed.

Zuckerberg offers expansive arguments for regulating four areas of social media content, but those arguments are specious. My own claim as to his real reasons leers visibly over the shoulder of each argument he makes.

Zuckerberg’s first proposed regulatory area is “harmful content.” “Regulation,” he writes, “could set baselines for what’s prohibited and require companies to build systems for keeping harmful content to a bare minimum.”

Who’s best equipped to build such systems? Facebook, with assets of nearly $100 billion and annual revenues of $56 billion? Or a new site started by some middle class guy (or even an affluent Harvard student like Mark Zuckerberg 15 years ago) with a great idea and some spare time?

The second regulatory area is “protecting elections.” Zuckerberg: “Our systems would be more effective if regulation created common standards for verifying political actors. … We believe legislation should be updated to reflect the reality of the threats and set standards for the whole industry.”

Facebook, of course, has already invested billions in developing technology to identify users and advertisers and connect the two types of parties — all in-house.  Most startups don’t have the money to develop their own such systems. They hook into a third party advertising service or a standardized ad sales plug-in. The effect — and the intent — of those “updates” would be to protect Facebook from those startups (and the American political establishment from its own would-be competitors).

“Third, effective privacy and data protection needs a globally harmonized framework. … it should establish a way to hold companies such as Facebook accountable by imposing sanctions when we make mistakes.”

Facebook can easily accommodate “sanctions” that would kill most potential competitors. It already has big bucks in the bank (unlike a new company that may be years away from turning a profit), and that “globally harmonized framework” will almost certainly be built around its own standards and practices.

Finally, “data portability. If you share data with one service, you should be able to move it to another.” What will the “standard data transfer format” Zuckerberg calls for look like? Existing formats for handling user data. Who handles the most user data now? You know who. New competitors will be forced to build systems like Facebook’s, and forbidden to try their own, possibly better, user data handling schemes.

The Internet’s potential is encapsulated in the expropriated Maoism “let a hundred flowers blossom.” Zuckerberg agrees, but only if each of those hundred flowers is cloned from a geranium grown in his proprietary nursery.

Regulation, not competition, is where monopolies come from. Facebook isn’t a monopoly yet, but Zuckerberg clearly wants to make it one.

Open This Content

Will Elizabeth Warren Take on the Biggest Monopoly of All?

For a “progressive” presidential candidate, US Senator Elizabeth Warren (D-MA) is remarkably, well, conservative. Her proposals are neither new nor of the “democratic socialist” variety.  In fact, her aim is, as Matthew Yglesias puts it at Vox, “to save capitalism”  with stock proposals from the first half of the last century.

Much of her campaign platform co-opts Franklin Delano Roosevelt’s  1930s “New Deal” emphasis on social welfare, job creation, infrastructure, and highly progressive taxation to pay for it all — solutions she considers proven, for problems she considers similar.

Her latest proposal, though, takes an earlier Roosevelt as its model. Like  “Trust Buster”  Teddy Roosevelt, she wants to use regulation and antitrust enforcement to “break up monopolies and promote competitive markets.” Her initially announced targets for the idea included Facebook, Google, and Amazon. A couple of days later, she added Apple to  the list.

Interestingly, in her search for monopolies to slay, she ignores the biggest, most powerful, and most lucrative monopoly in America: The US government.

In 2020, the federal government expects revenues of about $3.4 trillion.

That’s more than 60 times what Facebook brought in last year. 25 times as much as Alphabet’s 2018 revenues (Alphabet is Google’s parent company). More than 14 times Amazon’s total 2018 take. Nearly 13 times Apple’s haul.

And then there’s market share. No one really has to do business with Facebook, Google, Amazon, or Apple. There are numerous alternatives to the offerings of each, and many consumers choose those alternatives.

Uncle Sugar, on the other hand, boasts 100% market share for his offerings. You’re required to be his paying customer whether you like it or not. Many of the alternatives are outright illegal, and among the ones that aren’t, you’re required to pay for them in addition to, not instead of,  the federal government’s services.

That’s the very definition of “monopoly.” And it’s the monopoly Elizabeth Warren wants to serve as CEO of.

Is Senator Warren is serious about “breaking up monopolies” and “promoting competitive markets?”

If so, I look forward to her proposal for breaking up the federal government and allowing real alternatives to compete for its market share.

A good start would be 100% federal tax deductibility for the purchase of private sector services that replace the government’s offerings, or a pro rata clawback for binding agreement to not use a particular government service.

Absent such a proposal, seems to me she’s just another greedy monopolist looking to suppress the competition.

Open This Content

Killing the American Meritocracy

The American Dream is under attack like never before—not just the ability to fulfill the dream—but its very concept and history. At the core of the American Dream is the idea of meritocracy. There is no royalty in America, no titles of nobility, no entrenched caste system. You could be born anywhere, to anyone, and still achieve success. It was not just a story. Many real-world examples show exactly this trajectory. Poor children, and sometimes even penniless immigrants, grew up to achieve great success. Some even become titans of industry.

Why then is there such an effort underway to denigrate the idea of meritocracy? It is my belief that those who prefer a centrally planned society to one based on freedom, liberty, and personal achievement are intentionally rewriting history so as to make people believe that so-called “privilege” rather than merit has been the primary factor in achieving success throughout American history. This lie is then combined with the fallacies of communism (such as the labor theory of value and the fixed pie fallacy) in order to bolster the argument for central planning and massive government.

In order to understand the nature of the attacks on our meritocracy, we should start by understanding what a meritocracy is—and what it is not. Some definitions of the word smuggle in the concept of central planning: Merriam-Webster defines it as “a system in which the talented are chosen and moved ahead on the basis of their achievement.” Others try to divorce the concepts of wealth from success: The Cambridge Dictionary defines it as “a social system, society, or organization in which people get success or power because of their abilities, not because of their money or social position.” Neither of these definitions fully explains what meritocracy is as it relates to the American Dream, however, so perhaps a new term is required. I propose we call this the American Meritocracy.

Unlike what some of these other definitions imply, no one is necessarily being selected or moved ahead nor are wealth or social position irrelevant to success. In the American Meritocracy, a free market allows individuals to leverage all of their intelligence, talents, knowledge, wealth, connections, and even luck to get ahead. Those who are successful are correctly regarded as having earned their success, while those who are not successful are rightly considered less ambitious… or worse.

One of the most pernicious fallacies in public discourse today is that someone having wealth represents “inequality” in some meaningful manner. This idea ties in directly with the myth of “privilege” which expands the possible sources of “inequality” to include race, sex, religion, education, and any number of other things depending on who is defining it. The purveyors of the “privilege” doctrine conspicuously fail to explain the myriad success stories involving un-privileged members of society, however; it is as if these achievers do not merit their consideration. They will happily prattle on with anecdotes of the single mother working three jobs while accumulating more credit card debt each month, yet fail to mention the single mothers who save money, start businesses, win awards, and send their kids on to college. If confronted with these inconvenient tales of success, they will hand-wave them away as irrelevant outliers, falling back on statistics that prove little more than that people who are successful tend to be exceptional in many ways.

Behind the fallacy of “privilege” are two fundamental communist doctrines. The first is the labor theory of value, which posits a direct correlation between the value of a good or service and the labor required to produce it. The irrationality of this concept is easily seen in comparing two works of art. Both could be the same size, use the same materials, and take the same amount of time to complete, yet one could be worth millions while the other might be worth little or indeed be judged as truly worthless. The only difference between them is the perceived talent of the artist.

I say “perceived talent” because value is not actually an inherent quality of a good or service. Utility and scarcity may be inherent qualities in some cases, but value is always externally ascribed. Both pieces of art may be one-of-a-kind creations, so they would theoretically have equal scarcity, and both would fill an empty wall with equal aplomb, so again, their utility should be equal. Why then is one worth a million dollars and the other unsold? Because their value (like their beauty) is in the eye of the beholder. Be it because of the identity of the artist or certain ineffable qualities in his work, prospective buyers will ascribe far more value to one piece than to another with little or no regard to the quantity of labor involved in its production.

One could labor for a great many hours digging an unwanted ditch and then labor for hours more refilling it without ever having created any value for anyone. Likewise, one can spend their life in a dead-end job asking if folks “want fries with that?” without ever producing $15 worth of value in an hour. Indeed, with the proliferation of self-serve kiosks with flawless knowledge of ingredients and prices combined with perfect memories and increasing speeds, we may soon see a day when the ability to mumble about the availability of supplemental fries has no marketable value at all.

The second fundamental communist canard that underpins the delusion of “privilege” is the fixed-pie fallacy. Economist Milton Friedman summed up this pervasive error well when we said, “Most economic fallacies derive from the tendency to assume that there is a fixed pie, that one party can gain only at the expense of another.” We hear this daily rhetoric expressed as concerns about “income inequality” and the supposedly unfair achievements of the “top 1% wealthy” who are nearly universally regarded with suspicion and envy thanks to the prevalence of this particular fallacy.

Skewed statistics suggest that these “Monopoly Man” caricatures have achieved their wealth by plundering the poor, yet these one-sided figures conveniently ignore that “the poor” are richer than ever before, enjoying far more luxuries and longer lives than their historical counterparts. Yes, the “rich” may enjoy a larger percentage of the pie today, but the pie itself is many times larger—and here’s the kicker—it has grown so much larger primarily because of the investments and contributions of those supposedly “evil” rich folks.

Look at it using simple math. If there is a 10-inch pie and you have two slices, how much pie would you have? Now imagine a 10-foot pie of which you have only one slice. To some people, this would be a tragedy, an unconscionable increase in “pie inequality” because you have just one-eighth of a total pie rather than the one-fourth you had before. But is this a reasonable way to measure things? (For the record, if you had 2 of 8 slices of a 10-inch pie, you would have approximately 19.6 square inches of pie. If you had 1 of 8 slices of a 10-foot pie, you would have 1,413.7 square inches of pie, an increase of 721%.)

While it is certainly true that state intervention has made the free market far less free than it could be, the American Meritocracy is still alive and well. Yes, due to taxes, regulations, and occupational licenses, it is more difficult to achieve success than it would be in a fully free market, but there are still virtually limitless opportunities for anyone who is willing to put in the necessary effort and to make the necessary sacrifices.

It is okay to be poor. Some people do not prioritize wealth creation, and that is their right. The problem is when they start blaming their poverty on other people or on “the rich” or “privilege” or some other external force that they claim is keeping them down. If you are poor in America, it is because you have not put in the effort necessary to become wealthy. This may seem harsh and judgmental, but that does not make it untrue. You can achieve success in the American Meritocracy, and if you do not, it is almost certainly your own fault.

Those whose ultimate goal is the eradication of the free market point to the existence of poverty as evidence that the free market has “failed.” They suggest replacing it with “universal” handouts in the form of fully subsidized education, healthcare, family leave, and even income itself. They imagine that these subsidies can be funded indefinitely by plundering the rich—ignoring that even at its current size, the government would blow through the net worth of the rich in a matter of months. In short, they want to kill the American Meritocracy and replace it with a one-size-fits-all communist utopia where the state controls everything and all the little people live in perfect equality.

Quite the fairy tale, is it not? Without “the rich” to keep growing the pie, the pie will naturally begin to shrink and each person’s “equal share” will shrink too. Add in an ever-expanding population, and the predictable economic contractions will guarantee worse outcomes across the board. Instead of some people living in poverty, everyone will live in poverty, and there will be no system in place to facilitate escaping it.

The American Meritocracy is not perfect due to government intervention, but it is still far superior to the abject failure of central planning that is on full display in Venezuela right now. After all, no one is eating zoo animals to stay alive in America.

The American Dream has always been that anyone could achieve success with enough effort and perseverance. This is still true for almost everyone who lives here. The fact that other people may achieve even more success than you does not diminish your success. Despite the fabricated doctrine of “privilege,” there is no ceiling through which you must break or systemic inequality you must overcome. If you can provide quality goods and services to which buyers ascribe value, you too can achieve success in the American Meritocracy. If you fail, you can blame your parents’ wealth (or lack thereof) your race, your sex, your religion, your education, or your astrological sign, and many people will accept your excuses—I will not.

Success in America is not a lottery, it is earned; and if you do not make the effort necessary to earn it, you do not deserve it. I am sure that holding these views makes me a heretic to the church of statism and a disbeliever in the gospel of privilege, but I make no apologies. Your life is of your own making—now go make it better!

Open This Content

The Reformer’s Plight in The Great Idea

I’m a fan of dystopian fiction, but I overlooked Henry Hazlitt’s The Great Idea (subsequently republished as Time Will Run Back) until last December.  I feared a long-winded, clunky version of Hazlitt’s Economics in One Lesson, but I gave it a chance, and my gamble paid off.  I read the whole thing (almost 400 pages) on a red-eye flight – feeling wide awake the whole way.

The book’s premise: Centuries hence, mankind groans under a world Communist government centered in Moscow.  People live in Stalinist fear and penury.  Censorship is so extreme that virtually all pre-revolutionary writings have been destroyed; even Marx has been censored, to prevent anyone from reverse engineering whatever “capitalism” was.  However, due to a marital dispute, Peter Uldanov, the dictator’s son, was raised in an island paradise, free of both the horrors and the rationalizations of his dystopian society.  When the dictator nears death, he brings Peter to Moscow and appoints him his heir.  The well-meaning but naive Peter is instantly horrified by Communism, and sets out to fix it.  In time, he rediscovers free-market economics, and sets the world to right.

Yes, this sounds trite to me, too.  But Hazlitt is a master of pacing.  It takes almost 200 pages before any of Peter’s reforms start to work.  Until then, it’s one false start after another, because so many of the seemingly dysfunctional policies of the Stalinist society are remedies for other dysfunctional policies.  Here’s Peter arguing with Adams, a reform-minded Communist minister.

“…The hard fact is that some people simply have to do more unpleasant chores than others, and the only way we can get the unpleasant chores done is by compulsion. Not everybody can be a manager, or an actor or an artist or a violin player. Somebody has to dig the coal, collect the garbage, repair the sewers. Nobody will deliberately choose these smelly jobs. People will have to be assigned to them, forced to do them.”

“Well, perhaps we could compensate them in some way, Adams—say by letting them work shorter hours than the others.”

“We thought of that long ago, chief. It didn’t work. It unluckily turned out that it was only the pleasant jobs, like acting or violin playing, that could be reduced to short hours. But we simply can’t afford to have people work only a few hours on the nasty jobs. These are precisely the jobs that have to be done. We couldn’t afford to cut our coal production in half by cutting the hours in half, for example; and we just haven’t got the spare manpower to rotate. Besides, we found that on most such jobs a considerable loss of time and production was involved merely in changing shifts.”

“All right,” agreed Peter; “so under our socialist system we can’t have freedom in choice of work or occupation. But couldn’t we provide some freedom of initiative—at least for those who direct production? Our propaganda is always urging more initiative on the part of commissars or individual plant managers. Why don’t we get it?”

“Because a commissar or plant manager, chief, is invariably shot if his initiative goes wrong. The very fact that he was using his own initiative means that he was not following orders. How can you reconcile individual initiative with planning from the center? When we draw up our Five Year Plans, we allocate the production of hundreds of different commodities and services in accordance with what we assume to be the needs of the people. Now if every plant manager decided for himself what things his plant should produce or how much it should produce of them, our production would turn out to be completely unbalanced and chaotic.”

“Very well,” Peter said; “so we can’t permit the individual plant manager to decide what to produce or how much to produce of it. But this is certainly a big disadvantage. For if someone on the Central Planning Board doesn’t think of some new need to be satisfied, or some new way of satisfying an old need, then nobody thinks of it and nobody dares to supply it. But I have in mind something different from that. How can we encourage individual plant managers to devise more efficient ways of producing the things they are ordered to produce? If these plant managers can’t be encouraged to invent new or better consumption goods, at least they can be encouraged to invent new methods or machines to produce more economically the consumption goods they are ordered to produce, or to produce a higher quality of those consumption goods.”

“You’re just back to the same problem,” Adams said. “If I’m a plant manager, and I invent a new machine, I’ll have to ask the Central Planning Board to get somebody to build it, or to allocate the materials to me so that I can build it. In either case I’ll upset the preordained central plan. I’ll have a hard job convincing the Central Planning Board that my invention or experiment won’t fail. If my invention does fail, and it turns out that I have wasted scarce labor and materials, I will be removed and probably shot. The member of the Central Planning Board who approved my project will be lucky if he isn’t shot himself. Therefore, unless the success of my invention or experiment seems absolutely certain in advance, I will be well advised to do what everybody else does. Then if I fail, I can prove that I failed strictly according to the rules…”

Finally Peter settles on a seemingly simpler radical reform:

“Well, I can think of one more kind of freedom,” Peter said, “and I am determined to create it. That is the freedom to criticize the government.”

Adams started. He seemed to waver between incredulity and alarm. “You mean that you would permit people to criticize the actions of the government, and perhaps even denounce the government, and go unpunished?”

“Exactly!”

“Why, chief, you and I would be destroyed in a few weeks! If we allowed people to criticize us with impunity they would lose all fear of us—all respect for us. There would be an explosion of criticism that would blow us out of our seats—out of Wonworld. And what would we accomplish? Our successors would, of course, immediately suppress criticism again, for their own survival. “

What happens surprises them both.

Peter eagerly looked forward to the results of his reform. There weren’t any. None of the things happened that Adams had predicted. On the other hand, none of the consequences followed that Peter had hoped for. There was simply an intensification of the kind of criticism that had already been going on. People in superior positions continued to criticize people in subordinate positions; they continued to put the blame for failure on people who were not in a position to protect themselves; they continued to accuse people in minor positions of being deviationists and wreckers.

This was what had always been known as communist self-criticism. Peter put out still another proclamation. He ordered a stop to this sort of criticism. For a while it greatly diminished. But still no subordinate criticized his superior, and no one criticized the Politburo, the Party, or the government itself.

“What happened, Adams? Or rather, why didn’t anything happen?”

Adams smiled. “I should have foreseen this, chief. It should have been obvious. All that happened is that nobody trusted your proclamation. They thought it was a trick.”

“A trick?”

“Yes—a trick to smoke them out. A trick to find out who were the enemies of the government, and to liquidate them. Everybody waited for somebody else to stick his neck out, to see what would happen to him. Nobody wanted to be the first. So nobody was.”

Much the same happens when Peter orders free elections.  Later, he launches a seemingly plausible experiment in worker management:

“One of our great troubles, Adams, is that we are trying to plan more than any human mind can hold. We are trying to plan every industry—and all their interrelations—and all the rest. Why not let the workers of each industry control and police their own industry? That would decentralize control and break up the planning problem into manageable units.”

“The idea has possibilities, chief . . . but it might lead to results we couldn’t foresee.”

“Precisely,” said Peter; “and that is why we ought to try it out.”

[…]

“Why not try it out, then, only on a small scale? Why not apply the idea, Adams, in only one province—far away from Moscow? Why not throw a censorship around that district, so that no news could get in or out until we were certain that the experiment was a success?”

“Have you decided, chief, who our guinea pigs would be?”

“How about the Soviet Republic of Peru? That’s certainly remote enough!”

Here’s what goes down in Soviet Peru:

At the very start he found himself confronted in Peru by a problem of unexpected difficulty. He wanted each industry to be self-governing and independent. But what was an industry? Where did each industry begin and end?… At the end, when the Peruvian commissars he had appointed had finished their work, they had named fifty-seven different industries…

A temporary head was named for each industry. Someone jokingly nicknamed these heads the industry “czars.” Each industry was told to organize itself in any way it thought fit, provided each worker was allowed an equal vote. The industry could fix its own production, its own prices or terms of exchange, its own hours and conditions of work, its own entrance requirements.

Some Peruvians called the new system “syndicalism”; others called it “guild socialism”; and still others liked the name “corporativism.”

Peter returned to Moscow, promising to be back in Peru in six months to see how the new system was working. He left a secret cable code with the three top commissars to keep him informed.

Before two months had passed he received urgent cables begging for his return.

He came back to find a chaotic situation bordering on civil war. The first thing the workers in each industry had done had been to exclude anybody else from entering the industry. Each industry had quickly discovered that it could exact the best terms of exchange for its particular product by rendering it relatively scarce. There had then developed a competitive race for scarcity instead of for production. The workers in each industry voted themselves shorter and shorter hours. Each industry was either withholding goods or threatening to suspend production altogether until it got the prices it demanded for the particular kind of goods it had to supply.

Peter was indignant. He called in the various syndicates of workers representing each industry and denounced them in blistering terms for the selfish and shortsighted way in which they had “abused” the privileges he had conferred upon them. But as he studied the matter further he cooled off, and took a more objective view. He was forced to acknowledge to himself that the fault was his own. It was inherent in the system he had set up. He had allowed each industry to become an unrestrained monopoly. The more essential or irreplaceable the product that it made, therefore, the more it could and would squeeze everybody else…

He dismantled the new system entirely, and ordered the restoration of the old centralized socialism under the Central Planning Board at Moscow.

In most literary dialogues, at least one of the characters has the answers.  (“Yes, Socrates, you are quite right!”)  What’s novel about Hazlitt’s dialogues is that all the characters are deeply confused.  Even when they sound reasonable, the Complexity of the World repeatedly makes fools of them.

The Great Idea was originally published in 1951.  Stalin was still alive.  Fifteen years ago, Hazlitt wrote a new introduction with a grim forecast:

The Communist rulers cannot permit private ownership of the means of production not merely because this would mean the surrender of the central principle of their system, but because it would mean the restoration of individual liberty and the end of their despotic power. So I confess that the hope that some day an idealistic Peter Uldanov, miraculously finding himself at the pinnacle of power, will voluntarily restore the right of property, is a dream likely to be fulfilled only in fiction. But it is certainly not altogether idle to hope that, with a growth of economic understanding among their own people, the hands of the Communist dictators may some day be forced, more violently than Lenin’s were when the mutiny at Kronstadt, though suppressed, forced him to adopt the New Economic Policy.

Hazlitt was, of course, thoroughly wrong.  As far as we can tell, Gorbachev never had any intention of restoring capitalism.  But Yeltsin – a career Communist – did just that.  And despite all the disappointment Putin has provoked, the former Soviet Union has seen nothing remotely approaching the horrors of the Russian Civil War.  The actually-existing dystopia of the Soviet Union practically died in its sleep, proving Hazlitt’s fiction to be the opposite of wishful thinking.

Open This Content