The Socialist mindset is an obstacle to the functioning of the market economy

By R.M.B Senanayake

Our intellectuals’ even Catholic and Anglican priests seem to think that socialism is a good thing and that it is better than capitalism. The government’s socialized educational system has done an excellent job in propagandizing students into accepting socialist dogma. So have the state universities. There seems to be little debate and almost no discussion in our educational institutions that might have allowed the youth to dispense with the myths of socialism. Yet it would appear that for the students none was necessary, for they felt no need to actually think about the issues themselves. It is necessary therefore to engage students in the universities in a meaningful discourse so that they might see the falsehoods of socialism. There is much work to be done in our country to teach people the nature and value of human freedom and private initiative if we are to develop economically while maintaining our freedom and liberal democracy.

Co-operation versus Competition

Professor Hettige in his articles assumes that the spirit of co-operation among individuals is undermined by the competition inherent in capitalism. But competition and cooperation are not opposites; in fact, competition is really the only way for large numbers of people to effectively cooperate and use scarce resources. Those who argue otherwise do not reckon with the scarcity of resources. Those who are poor are better off organizing themselves into self help groups or co-operative societies to better themselves in economic activity for by doing so they increase their market power. But they have to compete with others in their economic activity.

There was an article in a local newspaper that co-operatives societies are a failure in Sri Lanka. It was not always so. Co-operative societies flourished in Jaffna in particular and the Northern Province Co-operative Society was practically monopolizing the sale of goods to the South. But the co-operative societies came to be undermined by the post 1956 politicians who wanted to control all power centers in their electorates. So they interfered in the election of office-bearers to co-operative societies and they became politicized institutions either supporting one political party or the other.

When the political fortunes changed and power shifted from the UNP to the SLF or vice versa the former office bearers were removed and replaced by those who were supporters of the new Government political party. The local Member of Parliament leveled criticisms at the office bearers and made allegations of financial impropriety or inefficiency against them to the Commissioner of Co-operatives who then held an inquiry and tried to please the Member of Parliament by dissolving the Committee and calling for new elections as office bearers. So the co-operative societies became politicized just like the public service and the police.

No independent institutions are tolerated by the local MP in his electorate. The MPs are supposed to be legislators not local governors. They lack the education and knowledge to be legislators and so they pursue their political self interest to retain power by seeking to control and dominate all institutions in their electorates. Even to this day they exercise power without responsibility, undermining all local institutions of the people.  

To get back to the criticism that capitalism undermines the spirit of co-operation which is widely held by people in our society, the argument is that capitalism promotes individualism and individual self interest. But liberal economists point out that the pursuit of self interest is an inherent characteristic of the individual. In previous societies they were forced to be subservient to the landlords and the nobles and could not exercise their freedom of activity.  It was capitalism that provided for individual liberty.

But market power is important in capitalism. The small farmers and individual proprietors lack market power when they seek to do business and the traders prevail over them in the sale or purchase of their produce. But if they get together and co-operate they can exercise greater market power and this is the way ahead for them. It is entirely in their self interest to co-operate in their buying and selling decisions and they require some form of organization such as the co-operative society. It is in their individual self interest to co-operate for they all stand to benefit thereby. 

What about competition? The competition is not within the group but with those economic agents outside their group. Co-operation includes competition since resources are scarce and they have to compete with those outside the group to obtain resources or conserve them.

Unlike socialism, liberalism embraces that kind of competition and genuine diversity, even if it means constantly having to come up with better ideas and more effective ways to present them and make them stick. Competition promotes innovation and invention and the great progress that modern societies have achieved is due to such innovations and inventions which were promoted by capitalism and by no other society before. But failure is always an option and disappointment and success go hand-in-hand in the competitive process. That’s why economists say capitalism has come to stay. As for the liberty movement to flourish, people need to listen to and discuss the opposing views of anyone who is willing to talk civilly about their ideas.

Human Nature cannot be changed

Socialists say that when an economic function is turned over to the government, social cooperation invariably replaces self-interest as the motivation for human action. This statement is "false" and redistributing control over property cannot change the underlying nature of human beings. In truth, "self-interest" remains an adequate term for describing human behavior, and it applies as much to government officials as it does to anyone else. If the demise of the Soviet system taught us anything, it is that communism will not reconstruct humanity and or usher in the "new man" who suddenly becomes only concerned about others.

CS Lewis the thinker and lay theologian who wrote and defended Christianity seems an unlikely "free-market advocate." But economists point out that Lewis had much in common with the great free-market thinkers of his time. He has been in agreement with the same issues as Ludwig von Mises and Friedrich Hayek. Bureaucracy, one of Mises’s critiques of governmental economic intervention, came out in 1944. Hayek’s The Road to Serfdom came out the same year. Lewis had released The Abolition of Man only a year before, and in the year that followed his That Hideous Strength made its debut. All these books were written to defend the idea of the individual human being as the locus of rational choice and moral responsibility. Mises and Hayek wrote as economists and Lewis as a lay theologian, but all three wrote to challenge the assault on human nature in the name of a false ideal by the Communists.

Some Christian clergy in the name of true Christianity came to adopt socialist doctrines and so-called progressive politics. This was particularly so in Latin America where there was much that was wrong. Religious clergy therefore came to adopt "secular utopianism". Members of the Christian clergy have been turning in large numbers to all-powerful governments as the solution for the world’s problems. Some offered the Soviet Union as an example of how socialism produced "comradeship and the zest for efficient public services." Bismarck had introduced a social welfare system acclaimed by German scholars, as a desirable State intervention.

Hayek pointed out that in Nazi Germany, scientists and engineers had "submitted more readily to the new tyranny." Before the scientists, however, teachers and the clergy had led the way by creating the mindset of obedience to power. As western intellectuals began to put their faith in the benevolence of an all-powerful State, religious leaders like Archbishop Temple supported them. During World War I, Charles Gore, Bishop of Oxford, published a collection of papers entitled Property: Its Rights and Duties. He argued at one point that there was no conflict between property rights and governmental programs for the redistribution of wealth. By the 1940s the British Council of Clergy and Ministers for Common Ownership was insisting that in order to establish socialism "all fundamental opposition must be liquidated."

C.S Lewis published The Screwtape Letters, in 1942. In this book a senior devil advises his subordinate on how to secure the damnation of the human being. Prominent among the recommended techniques is that of confusing the man’s thoughts by means of what he reads. Keep him away from anything carefully logical, Screwtape insists and as far as possible from subjects dependent on solid reasoning or demonstrable facts.

Lewis was not alone in his unhappiness with the careless thinking behind much of what passed for economics. Mises begged for "common sense and logical clarity." All three men could see that the most familiar themes on the subject of economics were far from a display of careful thinking. The London School’s Harold Laski is a case in point. He strongly advocated the public ownership of productive capital and centralized planning. Francis Townsend offered a plan for curing economic ills by giving people over the age of 60 an income of $200 a month, provided only that they spent every nickel and engaged in no productive activity.

It is this sort of ideas that our pioneer socialist leaders picked up during their student days in London and they have transferred them to the younger intellectuals and then to the Sinhala only generation of the JVP. We have been stuck in them with a hotchpotch of unaffordable welfare measures from free rice and free education to free health care - all noble measures but unaffordable because of the constraint of scarce resources.
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