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Monday, December 4, 2017

This Explains Man’s Fatal Attraction to Communism

Marxism has appeal because it is consistent with our primitive beliefs about economics.

“Dan hears the screaming, rushes in, wrestles Alex into the bathtub, and seemingly drowns her. She suddenly emerges from the water, swinging the knife.” (Wikipedia summary of the 1987 movie, Fatal Attraction)

Favorable views of capitalism were 47% among Gen-Z; 42% among Millennials; and 45% among Generation X.

Marxism is like Alex in the movie Fatal Attraction. We thought it was dead as an ideology, but it keeps returning, swinging its hammer and sickle.

Bernie Sanders ran as a socialist and got much of the Democratic vote. A 2016 Harvard Youth Poll found that 51 percent of millennials rejected capitalism. A 2016 poll by YouGov found that favorable views of capitalism were 47 percent among Generation Z; 42 percent among Millennials; and 45 percent among Generation X.

Bill de Blasio, the mayor of New York, the center of American capitalism, has recently complained that “private property rights” limit his ability to plan for New York. Yet he has just won a second term.

In the United Kingdom, the Labor Party’s Shadow Chancellor, John McDonnell, quoted from Mao Zedong on the floor of the House of Commons in 2015. He said, “To assist [Conservative Chancellor] comrade Osborne about dealing with his newfound comrades, I have brought him along Mao’s Little Red Book.”

Try. Fail. Repeat.

Communism’s failures are legion and well known. In the 20th century, Communist regimes killed about 100 million people: 20 million in Russia, 65 million in China, and the rest from a miscellany of countries including Vietnam, Cambodia, North Korea and others. North Korea is a failed country; South Korea is rich and prosperous. Similarly, East Germany was poor, and West Germany highly economically successful. Cuba is still poor. China’s economy has been growing as the Marxist influence has declined.

For those born after 1985, this is all ancient history.

But young people do not know this or ignore it. After all, the Berlin Wall fell in 1989, the Soviet Union was dissolved in 1991. For those born after about 1985, this is all ancient history. North Korea remains a failure, but that is nothing new if it is even known. The Cold War is before millennials’ time, and the fall of the Wall is something in a history book.

Of course, Venezuela is an ongoing disaster. People are starving, and even eating zoo animals. Professional women and young girls are turning to prostitution to make enough money to eat. Hundreds of thousands of people are leaving for Colombia or other countries, and the country has become a dictatorship.

But Bernie Sanders’ supporters may not know this, or may not know that it is the predictable result of the “socialism” that he advocates. And of course, the press does not generally indicate that the disaster is due to communism.

Folk Economics

Why do so many advocate a system which has failed whenever it has been tried? Communism is based on primitive economic thinking, what has been called “folk economics.” That is, Marxism appeals to those untrained in economics because it is consistent with our primitive beliefs about economics. This is ironic because Marx called his system “scientific socialism,” when in fact it is consistent with a pre-scientific view of the economy.

Zero-sum thinking is responsible for most of the major fallacies in economic policy.

Our intuitions about economics evolved in the long period called the Environment of Evolutionary Adaptedness when our ancestors were largely hunter-gatherers. During this period, societies were small, approximately 200 people or fewer; there was virtually no technological progress or economic growth, and the world was zero-sum. Because societies were mobile, there was little capital investment. This entire set of beliefs is exactly consistent with Marxism and its child, socialism.

One of the tenets of folk economics is that the world is largely zero-sum – economic values do not change in response to changes in prices. I have come to believe that this issue – zero-sum thinking – is responsible for most of the major fallacies in economic policy, such as tariffs and immigration restriction. One of the fundamental policies of Marxism is “From each according to his ability, to each according to his needs.” Both halves of this proposal are based on zero-sum thinking. They ignore that output depends on incentives as well as ability and needs depend on prices as well as desires.

In a zero-sum world, the only way to become rich is to steal from others. There was no technological change and no investment, and so no possibilities of becoming rich by inventing a new stone ax, or investing in a growing industry. Therefore, prejudice against the rich is part of our evolved mental architecture. Class conflict (capital versus labor, or today’s version, race, class, and gender) is also a product of zero-sum thinking – the pie is viewed fixed, and the only relevant issues are the division of the pie. In fact, of course, labor and capital cooperate to produce output, and the amount of output depends on the rules governing use of inputs.

Another pillar of folk economics is that labor is the only source of value. This was true when our minds were evolving and there was relatively little capital but certainly is not true now. But the labor theory of value is part of communism. Folk economics does not understand invisible hand theories of social organization, and so communism requires central planning.

Advocates of scientific socialism are advocating a primitive view of the world.

While these primitive views are part of our evolved mental structure, it is certainly possible to learn that they are false. But the modern view of economics is not a natural way of thinking. Think of flat earth thinking: our intuition is that the earth is flat, but we can learn that it is not.

However, it is particularly ironic that those who profess a “deep” understanding of the economy, and the advocates of what Marx called scientific socialism, are actually advocating a primitive view of the world. Perhaps the best way to counter these views is to point out that they are primitive. Intellectuals do not want to be “on the wrong side of history” nor do they want to be science deniers.

Reprinted from Economics21.

  • Paul H. Rubin is a Research Fellow at The Independent Institute, the Samuel Candler Dobbs Professor of Economics at Emory University, and Editor in Chief of Managerial and Decision Economics.