Thursday, September 5, 2013

Socialism - Definitions and Versions

Just recently, I realized that defining socialism is a very challenging task. Last August 22, I started a thread in a Facebook group composed of Filipino pastors, theologians and educators. I asked this question, "Should Reformed and Evangelicals support socialism as an economic system or not? Why?"

Pastors are divided. There are those who advocate Christian socialism. Others would defend the free market. But still others think that a mixture of two systems is possible. 

The Difficulty of Defining Socialism

Someone suggested to define the term first. I searched and came up with the following definitions:

Wikipedia's definition is not easy. However, there are at least two important things to bear in mind. 

First, concerning the conventional definition, "Socialism is an economic system characterised by social ownership of the means of production and cooperative management of the economy." In this definition, we need to further clarify the meaning of "social ownership" and "cooperative management". In continuing the definition given by Wikipedia, it appears that "social ownership" and "cooperative management" are closely connected. And under the umbrella of "social ownership", "cooperative enterprises, common ownership, state ownership, citizen ownership of equity, or any combination of these" are included. So as for me, this definition is not easy to grasp and if this is what we understand by socialism, no wonder, the question is difficult to answer.

Second, Wikipedia also identified that "varieties' of socialism exist "and there is no single definition encapsulating all of them." And then Wikipedia mentioned about "markets" and "productive institutions" and I think this is the reason why some people believe that under socialism, a free market can exist. Moreover, i consider that the most important insight Wikipedia pointed out is about the "role of the state in constructing socialism". 

After reading this difficult definition, I asked, "Is this really true in practice? Are all forms of socialism similar to Soviet or North Korean models? How about the German version? And how about the kibbutz, the commune and Scandinavia?

A Clearer Definition of Socialism

At Mises Wiki, this is the given definition: "Socialism is the system of social organization in which private property and the distribution of income are subject to social control; it also refers to the political movements aimed at putting that system into practice." This definition is clear and this is the meaning I would like to adopt in my question above. 

Furthermore, since I think it is related, I would like to include two insights Mises mentioned in his book, "Socialism: An Economic and Sociological Analysis." They are about socialism's aim and the seeming existence of the free market under socialism. Mises named this aim as the transfer of " the means of production from private ownership to the ownership of organized society, to the State" (1951, p.56). And regarding the free market, this is how Mises interpreted its existence under socialism:

"If the State takes the power of disposal from the owner piecemeal, by extending its influence over production; if its power to determine what direction production shall take and what kind of production there shall be, is increased, then the owner is left at last with nothing except the empty name of ownership, and property has passed into the hands of the State" (ibid.).

Some Ideas to Consider for an Extended Definition of Socialism

However, if you are looking for a longer definition of socialism, I think Mises' second lecture in Argentina dated 1959 would help. You can find that lecture in his book, "Economic Policy: Thoughts for Today and Tomorrow". Some of the ideas and economic realities evident under socialism are as follows:

  • The lost of economic freedom

  • Priority of the interest of the State 

  • Government ownership of means of production 

  • Absence of consumer sovereignty

  • The sovereignty of the state over the people

  • Use of laws to "protect" (coerce) the people from economic mistakes 

  • The absence of middle class and the division of social classes into two - the planners and the people

  • Socialism's economic system is characterized by centralized planning despite its impossibility to calculate the real situation in the "market" due to the absence of price system. 
However, Mises admitted that socialism requires an "exhaustive treatment", which was impossible for him to accomplish in six lectures. He advised his readers to consult his other books particularly "Human Action" and also to read the book of a socialist Polish economist Oskar Lange to see the other side of the story.

Other Versions of Socialism

Another discovery that surprised me recently was the realization that even during the early history of the Austrian school of economics, two traditions already existed - the Eugen von Bohm-Bawerk tradition and the Friedrich von Wieser tradition. Ludwig von Mises followed the Bohm-Bawerk tradition whereas von Wieser tradition was adhered by “social democrats” or advocates of mixed economy.

In reading "Planned Chaos", I thought as far as Mises is concerned, there are only two versions of socialism, the Russian and the German or the communist and the interventionist. However, my discovery of "Omnipotent Government" shows that Mises actually saw three forms of socialism - communism, social democracy and Nazism or national socialism. 

Mark Thornton confirmed these three forms of socialism except that Nazism was placed under conservative socialism (together with feudalism, monarchies, and the US Republican Party). Among these three, the most popular and dominant is social democratic socialism where property rights are still allowed, but heavy on taxation,

Another Austrian author, Hans-Hermann Hoppe expanded the three versions of socialism into four in his book, "A Theory of Socialism and Capitalism". He shared similar thought both with Mises and Thornton concerning the nature of social democracy. He also confirmed the existence of conservative form of socialism. His new addition is the social engineering form of socialism. 

A Broader Category of Looking at Socialism

So far, we came up with four types of socialism. But still those types are not exhaustive compared to the broader framework provided by Wikipedia. The free web-based encyclopedia distinguished between two general categories of socialism, economic and political. From economic point of view, socialism has four forms - planned economy, self-managed economy, state-directed economy and market socialism. From political perspective, it has five versions (I removed anarchism for I think it has a separate root), which are libertarian socialism (synonymous to left anarchism), democratic socialism, religious socialism (Christian socialism, Islamic socialism and Buddhist socialism), social democracy and syndicalism. So all in all, you can come up with nine or ten versions of socialism. 


As expected, the Facebook thread was left open. Answering a question connected to a sensitive economic and political issues like socialism is not easy. The debate continues. As for me, at least my own reading clarifies that there are at least three ways to define socialism and more than four versions to see it.

Related Article:

What Price Socialism? 

Time to Wean Millennials Off the Lies of Socialism