Consider these two couplets:
Socialists are far more likely to deny actually-existing socialism.
Couplet #1: "Socialism has failed." "No, real socialism has never existed."
Couplet #2: "Libertarianism has failed." "No, real libertarianism has never existed."
In both cases, the point of the first clause is to discredit an economic system.
In both cases, the point of the second clause is to shield an idea.
And in both cases, the shielding comes at a high intellectual cost: You escape blame for real-world failures, but also lose credit for real-world successes.
Y Denies that Real X Exists
Strategically, then, you'd expect advocates of views with few successes and many failures to adore the "real X" defense. Advocates of views with ample successes and few failures, in contrast, will use it more reluctantly. This expectation holds up: Though both groups have been known to invoke the "real X" defense, socialists are far more likely to deny the relevance of actually-existing socialism than libertarians are to deny the relevance of actually-existing capitalism.
But the fact that an argument is strategically useful (or harmful) for an intellectual movement doesn't speak to its truth. Maybe socialists are wrong to evade blame for their system's failures. Maybe libertarians are wrong to claim credit for "their" system's successes. How would you know?
Libertarians would conclude, "Socialism has been tried; libertarianism hasn't." But who else would concur?
One approach is to drop binary thinking – "real" or "not real" – and classify actually-existing economic systems on a continuum. Set pure socialism – full government ownership of the means of production – equal to 0, and anarcho-capitalism – full private ownership of the means of production – equal to 1. Countries below 0.2 are at least approximately real socialism; countries above 0.8 are at least approximately real libertarianism.
Ideally, you could just outsource this to e.g. Fraser's Economic Freedom rankings. But there are two problems. First, extreme socialist regimes like North Korea and Cuba don't even get ranked, presumably due to lack of trustworthy official data. Second, the rankings are top-coded. Hong Kong gets the high score – 9.03 out of 10, but it's a far cry from minarchism, much less anarcho-capitalism.
In any case, believers in the "real X" defense would probably just dispute the methodology. Suppose Fraser gave North Korea a 0.1, and Hong Kong a 6.0. Libertarians would eagerly conclude, "Socialism has been tried; libertarianism hasn't." But who else would concur?
Who Had Real Power?
The better approach, in my view, is historical. To ascertain whether "real X" ever existed, you have to find self-conscious believers in X who were, at some point, a powerless fringe movement. Why a fringe movement? Because it demonstrates that they weren't significantly compromising their ideals to gain power.
Next, you have to find the subset of such movements that subsequently ruled a country. Then, you have to find the subset of such movements that were so politically dominant during their reign that they had little need to compromise with any other viewpoint. Finally, you have to find the subset of the subset of such movements that retained extreme political dominance for many years – enough time to actually implement their ideals.
You have to find the subset of the subset that held political dominance long enough to implement their ideals.
By these historical standards, real socialism has happened dozens of times. Look at Lenin's Bolsheviks. Before World War I, they were a powerless band of socialist fanatics. Fellow socialists often loathed them, but for their dogmatism and cruelty, not lack of commitment to socialism. Then, a perfect storm gave the Bolsheviks absolute power over Russia – power that lasted over 70 years. The origin stories of the other triumphant Marxist–Leninist movements fit the same mold, though the socialists of the Soviet satellite states did have to compromise with the socialists of the Soviet Union proper.
And by these standards, I'm sorry to say, real libertarianism has never happened. Yes, plenty of libertarian groups manage to become self-conscious fringe movements. But none of these movements were ever more than junior partners in a broader political coalition. Reagan and Thatcher gave a few libertarians a place at the table of power, but they were hardly libertarians themselves. You could point to the Founding Fathers of the American Revolution, but they included plenty of mercantilists and slavers. Even post-Communist Georgia doesn't qualify.
The lesson: Socialists own the disasters of actually-existed socialism – and we should never let them forget it. Libertarians, however, do not own the successes of actually–existing capitalism. We were there on the sidelines, desperately trying to nudge the world in a freer direction. But it's pragmatists that pulled the strings that made the modern world possible.
Reprinted from the Library of Economics and Liberty.