In Theory
Anniversary Celebrations of the 1963 MARCH ON WASHINGTON 23 August 2003
Photo by Elvert Barnes via Wikimedia Commons
One of the most invidious loves of academics is theory. No matter the history of the practical application of a theory, the smug academic will insist that his preferred theory works, if all the conditions are just so. Another way to look at it is “in a perfect world.” The problem? We don’t live in a perfect world. This love of theory is why economics on an academic level is virtually useless. The models they use have so many assumptions that they might as well just be teaching calculus. Oh, assume a world with no taxes, perfect competition, and zero information differences between buyer and seller. How is modeling such a world in any way useful? Such a world will never exist. Yes, it makes it easier to teach, but offers zero practical use outside of the basic math underlying it.
This love of theory has one massive example of failure: Communism. The lovers of this extremely deadly theory believe that real communism has never been tried. Of course, that’s the true reason all communist governments have descended into human rights abusing hellholes of famine and wanton murder. Not because communism relies on a false interpretation of human nature. Heavens no! Real communism has never been tried! It’s an incredibly stupid argument that falls apart in seconds. Putting aside the issues with central planning, communism relies on the belief that people will care for the collective good as much as their own self-interest in a capitalistic society. Which is hilarious. Communism relies on the freerider problem never happening. In short, if everyone gets the same outputs no matter what each individual inputs into the system, why excel? Why do anything at all? It is why a collective space will always be more poorly managed than a space an individual owns themselves. Or why a person will always take care of something they favor better over something they do not. Parents have been trying to square that circle since time immemorial.
Let’s dive deeper, shall we? Communism relies on the Fatal Conceit. In short, it is the mistaken belief that one can plan the world around them according to their wishes. F. A. Hayek elucidated that central planning is uniquely impossible in that it will never be better than the spontaneous order of billions and trillions of transactions in a free market capitalist economy. Central planning is a government-enforced price system. It fails because of the Pretence of Knowledge (yes, Hayek wrote in British English, so he uses that spelling.) A person can never truly be a master of a subject because it is functionally impossible to know absolutely everything about a subject above a certain complexity. There will always be more to learn, in essence. The market price created by a communist government will never have the information and speed of change the market price established by a capitalist economy will have. It is not surprising that such governments tend to have massive shortages or excesses of various products. The communist market price is very slow to react to changes in the marketplace and is always based on incredibly incomplete information.
Now, I would love it if the US federal government operated more on the theories of F. A. Hayek. But we don’t live in a perfect world. While it can be disheartening to be a Hayekian at times, we assume the real world and human nature in our models. The chances of entitlement reform before the Medicare fiscal bomb goes off? Pretty much 0%. That’s very bad for my generation, Millennials, but the American people have no one to blame but themselves. The only politician of the last four decades that actually cared about this, Paul Ryan, eventually realized none of his colleagues wanted to solve the problem. He gets to be the Cassandra when the avoidable but inevitable collapse happens by no later than 2035. In theory, we could have avoided it all, but the incentives just were not there.
This seems like a strawman with a big dose of policy illiteracy. Medicare exists because of a series of gaps created by our system of health insurance. The primary two are that retirees by definition don’t work so aren’t covered by employee benefits and the inability of the private market to deliver coverage to the elderly. It was deemed unacceptable to allow the WW2 generation to fall into this gap, hence Medicare, as they were starting to age into it in the 60s.
The problem we have had since is unwillingness to invest properly in the system. Foreign wars and tax cuts for gazillionaires are for whatever reason have been more important than keeping basic services available to the citizenry and adapted for changing times. That’s what your hero Paul Ryan believes in, by the way. He doesn’t care about fiscal responsibility, he just believes other things are more important than the interests of working people and their families.
So yes, Millennials will likely be screwed by these systems that the tax-cut, invade the middle east Boomer political class let rot. But it’s entirely a matter of policy choices, not the inability to create better and more sustainable systems.Report
I really wish this “Communism works in theory” meme would die. If communism works in theory, it’s because your theory is garbage. The theoretical underpinnings of Marxism were debunked by the development of marginalist economic theory while Marx was still alive. Aside from a few cranks like Richard Wolff, Marxism is regarded as a mere historical curiosity by modern economists, and almost all Marxists in academia are in the humanities or other social sciences, because the only way to be a Marxist is not to understand the last 150 years of economic theory.
Also, what do you think Hayek’s ideas are, if not theory?Report
Also, it’s not like atheoretic empiricism has yielded good results in practice. After all, that’s how we got the Phillips Curve and that led to Stagflation.Report
It’s amazing people still debate communism today. It’s failures are legion and it’s dead as an idea.
Assuming human nature is good thing to try. Any model needs to give that a shot. But it also seems like the one area where every theory fails. Everyone’s view of human nature is colored by their own biases and wants. Rarely, if ever, does a person theory of human nature extend beyond their country or culture which means its not actually a theory of human nature. At best it’s a theory ( projection) of what you think about your own people. In a country with as many cultures and peoples as the good ol US of A that becomes even more fraught.
Isn’t Ryan just a DC lobbyist now?Report
There is no serious force for communism in this country, whatever may appear on the websites of a handful of House reps in the bluest of the blue seats. Further, to the extent there is support for anything remotely like that, it could easily be nipped in the bud by continuing to tweak our system to work better for more people in a globalized economy. But of course that’s the kind of thing intellectual luminaries like Paul Ryan vehemently oppose, and call the road to serfdom based on his own silly theories that fail the reality test.Report
Ryan’s ideas will work fine after the advent of New Randian Man.Report
I personally know a lot of people who are explicitly anti-capitalist and pro-socialist. And it’s not as though I went looking for them; they’re just people I met in entirely apolitical contexts. I lost a ton of respect for a lot of acquaintances after they started posting political stuff on Facebook. In Seattle, Kshama Sawant, while polarizing, has won reelection multiple times and has a large base of economically illiterate fans.
There is nothing like a majority in favor of revolutionary socialism (what’s commonly called “communism”), but there is a disturbingly large and seemingly growing minority. It has much more support in the US than any kind of far-right ideology. Furthermore, there’s an even larger group of people who, while not explicitly in favor of a socialist revolution, accept some form of folk-Marxist ideology, like the idea that employment is inherently exploitative or that for-profit business is bad. Left-populist ideology is a cancer which is metastasizing all through the Democratic Party. The center has (sort of) held this time, but not by a particularly reassuring margin.
The thing is, we’re not really seeing this from the Rust Belt. Those regions went right-populist. We’re seeing it from people in the coastal cities that are the big winners in the globalist economy. The biggest economic problem they’re facing is high housing prices, which are caused by local zoning restrictions. These cities’ governments are overwhelmingly Democratic, and the most left-wing politicians are often the ones fighting hardest against new housing. I seriously think that zoning reform is the single most important thing that could be done to beat back the rise of left-wing populism.Report
I like this one.Report
Man, Cory Mohler sure is crap.Report
The answer to that is system improvements around not only wages but most importantly benefits. Some group of ideological radicals and just plain old idiots will always exist. But hey, it’s America and everyone is entitled to their opinion no matter how stupid. Want to understand what’s driving sympathy for any of that stuff? Look no further than those who insist that reforms of the private insurance market originating with the Heritage Foundation and popularized by Mitt Romney are somehow straight from the Stalinist playbook.Report
The failure is not that they don’t assume human nature, it’s that they assume a very narrow slice of human nature, particularly the slice that includes the theorist and their peers.Report
The pivot from Communism to Medicare in the last paragraph seems…weird.Report
It seems bog standard Republican fever dream to me. Considering that Republicans exist in a never ending fever dream against anything slightly to the left of punch below the belt unregulated Capitalism, I am not surprised.
My general view is that the under 43 or so crowd did not really grow up experiencing the cold war as a threat but they have seen lots of capitalist gut punches. Cyclical depressions/recessions were a fairly regular occurrence in the 19th century. The under 43 set has seen several and sees shitpantsing about communism as a kind of boy who cried wolf. If everything to the left of Hayek is evil communism than the term communism is overbroad and meaningless.
The problem is that there are still plenty of relatively young to not so young people who seemed to have absorbed every bit of the evil empire stuff from being born between 1964-1974 or so. Or they had parents who instilled the same propaganda from the 1950s into their 80s and 90s childhood. These are your Shapiros and Wohls and Hawleys and Cottons. So we will be fighting this fight for decades to come as other countries go on knowing that you can have a robust welfare and multinational corporations spring from the same nation.Report
Yeah, people who know history are such a wet blanket. Socialism works to the extent that it’s not implemented. Other than that, it’s great stuff!Report
The young conservatives like Shapiro and Kirk seem like grifters, like those child preachers who make millions by telling old folks what they want to hear.
But the more serious ones like the IDW or Quillette crowd are interesting, in that they have no adult memory of Communism. I can easily see how people who came of age in the 60s and 70s (like me) came to see Communism as a real threat, as it appeared to be sweeping over the world in a relentless tide.
But for these guys, whose formative years were witnessing the collapse of the Wall and the rise of Yeltsin and Putin, and the evolution of China from Deng to Xi, and the Clintonesque rollback of the Great Society welfare state, their fixation on Communism seems stranger.
What could they possibly be seeing that makes them see such a threat? Their preferred ideology of markets has been on a winning streak politically for their entire lifetimes.
I think what stands out is the use of “Cultural Marxism” where they yoke together public control of the factors of production to ethnic and cultural issues. I think that the first is a proxy for the second which is their real enemy.
This way they can use the battle tested weapon of the Holomodor against the people who want to reform the police for example.Report
Quillette might be more interesting but they are also less relevant because outside of the very, very online, I think the response would be “What the hell is a Quillette?” I guess I don’t see them as super surprising but as other people who think that success in academia requires standing out and in this day and age that means knee-jerk contrarianism from the Orthodoxy of their peers. Better to preen to conservatives than to be another starving adjunct.
I also think Quiellette has largely gone into the background. There was a time when it seemed like everyone talked about them and spilled much digital ink about them but I have not seen that for a while.Report
Yes lots of ideologies run into problems when they encounter actual human beings. Yes this is true for Karl Marx. Want to know who else it is true for? Adam Smith, Hayek, the rest of the Austrian school, and Milton Freidman.Report
I have no problem with people describing things with math. Math is a lot like Latin: very precise, with a sense of authority. You really have to know what you mean to speak in either of them. But neither of them carries a guarantee of accuracy. I think the Austrians make a mistake by not using math more.Report
Paul Ryan? They guy whose signature achievement is a tax bill that made the system yet more complicated, raised the deficit, targeted benefits to members of Congress, and was pushed through while there were still hand-written notes in the margins?
But it also lowered the highest marginal rates and targeted blue states, so go GOP.Report
Yeah really gives the game away by rolling out Paul Ryan. Cassandra he ain’t unless historical Cassandra, while warning about the invasion of the Greeks, was busily demolishing the walls of Troy and pawning the Trojan arms and armor.Report
Open with: Economic theory is bad because it doesn’t reflect the complexity of the real world.
Next paragraph: Tragedy of the commons means that private ownership is always superior.
The opening thesis isn’t actually wrong. But it’s useless if the author is only going to apply it to simple-in-theory ideas that he disagrees with and not the simple-in-theory ideas that support his own preferred views.Report