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True Socialism: Has It Been Tried Yet?

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True Socialism: Has It Been Tried Yet?

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Many people active on Twitter have come across, in one way or another the Twitter account for The Socialist Party of Great Britain. One of their primary themes is apparently searching for uses of the word “socialism” and then responding that “X is not true socialism because socialism is the public ownership of the means of production and this is not a feature of X.” Case in point:

Under this strict definition (public ownership of the means of production), they can therefore constantly and consistently claim that “true socialism has never been tried” and any attempt by “right-wingers” to mock using the Soviet Union or Venezuela is a completely dishonest non-starter. After all, no matter how involved states have become in the economy, so long as there is no instance of public ownership of the means of production, socialism can be said to remain yet untested.

Unfortunately, many other anti-socialists who either advocate true capitalism or some sort of economic interventionism, do not know how to respond to this, beyond cheap memery related to accusations of the “no true scotsman fallacy.” The purpose of this article is to set the Socialist Party’s tweets in a historical perspective and explain the nature of their socialism as it relates to the development of the idea. Once we have done this, we are better ground to critique their claims.

Historical Development of Socialism: A Short Summary

As I elaborate in my essay on the movement from the ancien regime Old Order to the rise of modern systems, it was the rising tides of classical liberalism and the radical idea of individual ownership of property that threatened the despotic stagnation that had existed for millennia.

The 18th century brought forth the Liberal movement and with it the new ideas of individualism and self-determination with in the context of socio-political orders. It claimed that prosperity and social progress could not stem from the tyrannies of old, that rather than being good for the individual, a massive empire controlled from the center was the source of social anguish, economic regressions, and the stagnation of civilization. This liberalism, which today is referred to as Classical Liberalism, was the precursor of the modern— and more precisely developed— Libertarian political theory.

But the era of this Old Liberalism was short-lived. It was almost immediately overrun by a complete bastardization of its principles, which came in the form of early socialist theory. Again, from my previous essay:

Instead, a Third Way offered itself as an alternative to the Ancien Regime and the new doctrines of Liberalism. Tragically— and profoundly indicative of future social and political revolutions— this third way stole the language of the liberals and yet did not at all define its terms, for by “freedom” and “revolution” and “self-determination” it did not mean what the liberals meant at all. And thus, this new alternative suckered in a great number of liberals and would be liberals. It offered freedom from the Old Order, a grand light at the end of the historical struggle with despotism. But this alternative would eventually—roughly a hundred years later— produce a political order that was far more frightening than the Ancien Regime of old.

This alternative that sat between liberalism and the Ancien Regime was Socialism, popularized by Karl Marx. Socialism, in Mises’ words, “aims at a social system based on public ownership of the means of production.”

Here at the dawn of the socialist movements, socialism and another word for it, communism, were synonymous. Under this pure and orthodox socialism, which we can, for our purposes, call “Marxist socialism” or Marxism, the people are the true owners and directors of the means of production. Thus, there is no delegation of this responsibility to the “State” as an independent entity that acts in accord with its own, separate, plan. Since all means of production are owned and therefore expended only by “the people,” there is no need for markets, for money, for profit.

Orthodox Marxism, in this pure form, is highly ideal and has little to do with “what is immediately practical” or what “might work given current circumstances.” It is therefore revolutionary and radical. This is an important component of Marxism for later on.

Now, the goals of these socialists, and indeed socialists of every breed, is egalitarianism, economic and social. They have the same goals (the eradication of hierarchy and the abolishment therefore of capitalism and the profit-orientedness that comes with it). But there is a problem: we don’t currently exist in a socialist world and therefore there must be some sort of strategy for the Socialist Cause. All socialists at the time agreed with the goal, but there was an inner tension over the proper path forward.

For some, the answer was strictly and always revolution; complete overthrow (sometimes violent) of existing governments and systems, a mass purge of all ideas contrary to the socialist doctrines. But for others, this presented a “public relations” problem. Who would be convinced by such a radical course? How would the proletariat everywhere be attracted to such immediately sweeping change?

And thus arose a gradualist branch of socialists; they advocated for reform, for correcting capitalism over time to prevent sudden— and historically bloody— transformation. As Hans Hoppe notes:

And, so they reasoned, as this strategy was much more in line with public opinion (more appealing to the mostly peacefully-minded workers and at the same time less frightening to the capitalists), by adopting it, socialism’s ultimate success would only become more assured.

The Reformists therefore pursued various levels of intervention, by the state, into the economy. Capitalism was bad, and it must be improved over time until that glorious day when true socialism can find fulfillment as the people saw with their own eyes the benefits of the new system.

But the revolutionists, the Marxists, dismissed the reformists as non-socialists who had abandoned true socialism. They accused them of merely compromising with the evils of capitalism and therefore retaining capitalism under the label of socialism! Thus, when one looks out at the various systems of heavy economic interventionism, which were implemented under the label of socialism, the Marxists can say, 100% true to their own definitions, that “true socialism has yet to be tried.” Even if the eventual goal is true socialism, reforming capitalism is still capitalistic, and therefore non-socialism.

Here, we see the context of the socialist party Twitter account. They mock those who mock socialist Venezuela because Venezuela, like all other experiments in particularly heavy economic interventionism, does not have public ownership in the means of production. There was no revolution which put the proletariat in charge. There was only a litany of compromising politicians which sought to manage the economy from the top and exchange resources on the international market with— heaven forbid!— capitalist countries.

Since there has never been a country that enjoyed the alleged blessings of the public ownership of the means of production, all countries lay on a spectrum of capitalism. On the far right we have the English speaking world, especially the United States. And then we have left-wing styles of capitalism such as Venezuela. And finally we have purely state-capitalism, which is still capitalism because goods and services are provided for sale and money and profit exist; an example of which is North Korea.

But where, they ask, has there ever existed truly public, egalitarian, and collective ownership of the means of production, of the farmlands, of the factories, of the utilities? This is the Marxist case against accusations of the failures of socialism and the disregard for all forms of Reformism.

(In fact, interestingly, these Orthodox Marxists, predict that various Bernie Sanders-esque interventionisms will fail— for these too are attempted within the context of a capitalist system.)

Therefore, under this Marxist understanding and definition of socialism, true socialism has not been tried; it is not responsible for millions of deaths, and it is not responsible for mass starvation.

Marxism and True Socialism

Now then, what should we think of all this? It is interesting to note that just as we pure laissez-faire capitalists dismiss all systems of interventionism as, by definition, deviations from True Capitalism, so the Marxists dismiss all systems which contain private property in the means of production as deviations from True Socialism.

From the laissez-faire capitalist perspective in which all means of production are both owned and therefore controlled (invested and expended) by private parties, any deviation from this private property order is an artificial transfer of wealth. Or, in the words of Hans Hoppe, an “institutionalized redistribution of property titles.” For something to be socialistic therefore, from the perspective of the libertarian, there must be a divergence from the private property order. If we choose to equate socialism with Orthodox marxism (as the marxists do), then any system that does not feature the public ownership of the means of production is merely socialistic (or tending toward socialism) in one way or another. Another word for this is the one Mises used: interventionism.

However, there is no such thing as an objective definition. Definitions are chosen based on their usefulness in the context of a broader view of things. There is therefore no objective reason why we must only allow Marxists the label of socialism. At a historic level, various forms of reformism, statism, and interventionism have applied the label socialism to its efforts. Hans Hoppe (paragraphs added for readability):

Both of these forces (radicalism vs. reformism) co-existed within the socialist movement, though their relationship was at times quite strained, until the Bolshevik Revolution of October, 1917 in Russia. In practice, the socialist movement generally took the reformist path, while in the field of ideological debate the revolutionaries dominated. The Russian events changed this.

With Lenin in the lead, for the first time the revolutionary socialists realized their program and the socialist movement as a whole had to take a stand vis à vis the Russian experiment. As a consequence, the socialist movement split into two branches with two separate parties: a communist party either more or less in favor of the Russian events, and a socialist or social-democratic party with reservations, or against them. Still, the split was not over the issue of socialization; both were in favor of that. It was an open split over the issue of revolutionary vs. democratic parliamentary change.

Faced with the actual experience of the Russian revolution—the violence, the bloodshed, the practice of uncontrolled expropriation, the fact that thousands of new leaders, very often of questionable reputation or simply shady, inferior characters, were being swept to the political helm—the social democrats, in their attempt to gain public support, felt they had to abandon their revolutionary image and become, not only in practice but in theory as well, a decidedly reformist, democratic party.

The point, therefore, is that there is very good historical reason to call these centrally planned and managed economies (especially the more interventionist one gets, ie. Soviet Union and Venezuala) socialistic. They’re just not Marxist, if one wants to get technical.

So then: if we let the Marxists have their narrow definition of socialism, we merely argue against both their socialism and other forms of central planning— we oppose socialism as well as all other deviations from the private property norm. On the other hand if we deny them their narrow definition and demand, with the historical development of socialism’s use in mind, that socialism is broader than just radical marxism, we can drive home that we oppose socialism in all its flavors: Marxism, Nazism, Fascism, etc.

Either way, no matter the definition used, we oppose the redistribution of property titles, regardless of who is in charge of the economy.

The problem is a deviation from the private property order.

Under a private property order, not only do we say that there is private ownership, as the non-Marxist socialistic systems often nominally (in name only) have (such as Nazi Germany), but for us, ownership implies the legal right to make the final decisions regarding the use of this property. If there is merely nominal ownership, without the right held by the alleged owner to do whatever is willed with this property, then the system cannot be said to be a true private property order. For the libertarian, ownership demands the legal right to what one wills with his own property and any system that denies this does not truly have a system of private property ownership.

Thus and therefore, the various 20th century schemes of nominal private property, regulated and heavy hampered by the dictates of the state, cannot be said to be examples of private property systems. Consider what Mises said about Germany at the beginning of the 20th century (paragraphs added):

The second pattern [as a juxtaposition to the Russian, quasi-marxist pattern— CJE] -we may call it the German system-differs from the first one in that it, seemingly and nominally, maintains private ownership of the means of production, entrepreneurship, and market exchange. Entrepreneurs do the buying and selling, pay the workers, contract debts, and pay interest and amortization.

But they are entrepreneurs in name only. The government tells these seeming entrepreneurs what and how to produce, at what prices, and from whom to buy, at what prices, and to whom to sell. The government decrees to whom and under what terms the capitalists should entrust their funds and where and at what wages laborers should work. Market exchange is but a sham.

As all prices, wages, and interest rates are being fixed by the authority, they are prices, wages, and interest rates in appearance only; in reality they are merely determinations of quantity relations in authoritarian orders. The authority, not the consumers, directs production. This is socialism with the outward appearance of capitalism. The labels of the capitalistic market economy are retained, but they signify here something entirely different from what they mean in the true market economy.

And as this is true, so it is true that lesser forms of interventionism, common in most of the Western World today, are in direct contradiction to the true meaning of private property system. There is an internal conflict in a system which claims to be one of private property, but does not allow business owners and consumers to do as they will with the property that they own. The world, therefore, is not capitalistic. Largely because of the massive failure of Soviet-style socialism, the nations worldwide have turned to systems of intervention; each nation lying somewhere on the path between capitalism and socialism. Interventionism is a spectrum, and it is the theme of our time.


Ever since the Bolshevists abandoned their attempt to realize the socialist ideal of a social order all at once in Russia and, instead, adopted the New Economic Policy, or NEP, the whole world has had only one real system of economic policy: interventionism. Some of its followers and advocates are thinking of it as a temporary system that is to be replaced sooner or later with another order of the socialist variety. All Marxian socialists, including the Bolshevists, together with the democratic socialists of various persuasions, belong to this group. Others are holding to the belief that we are dealing with interventionism as a permanent economic order. But at the present this difference in opinion on the duration of interventionist policy has only academic significance. All its followers and advocates fully agree that it is the correct policy for the coming decades, even the coming generations. And all agree that interventionism constitutes an economic policy that will prevail in the forseeable future.

When looking at the failures of the Soviet Union and Venezuela, the Orthodox Marxists (that Twitter account, for instance) will simply point out that the leaders of these experiments conducted business for profit, for the sake of their own status, and often in participation of a more capitalistic world around them. Whether or not this is “True Socialism” is entirely besides the point. They did not fail because the leaders were corrupt or because production was not done for the proletariat— these facts are merely situational symptoms. Rather, they failed because all systems that hamper the market process must fail.

Socialism, even in the Marxist sense, does not need to be tested before we can reject it as entirely untenable and even dangerous toward civilization. Even if Venezuelan interventionism isn’t true socialism because the Marxists stubbornly define the term as they do, we can still reject Marxism; for a Marxist system will inevitably fail as Venezuela did.

Socialist economies provide no means to calculate the proper allocation of scarce resources. In stages of production farther away from the consumer, how can the decision maker over the use of these production factors (the means of production) choose the most important application of these factors if there are no prices to guide him? If there is no money, no prices, no compass by which he can judge profitable from unprofitable decisions, the decision maker chooses blindly and arbitrarily.

The Twitter account in question, as all Orthodox Marxists, attempt to make the case that central planning that is not done by the public and for the people, will indeed fail, as the Soviet Union and the Venezuela. The leaders in these two experiments of central planning did not meet these requirements, it was not socialism practiced as taught by Marx. But the Marxists who run that Twitter account miss the entire point!

It does not matter if this “decision maker” is the unelected state bureaucracy, a board of elected representatives, the majority vote of the public, or any other scheme. The economic calculation problem cannot be overcome by putting the “right people in charge,” nor can it be solved by pursuing the vague “people’s interests” above the interests of corrupt officials. Marxism is not an alternative to other forms of central planning because it suffers from the same— even worse!— defects.

The problem is that decisions are not being made by individual private property owners, not who is making decisions in an economy without true markets. The intellectual errors of socialism cannot be corrected by putting the public in charge instead of corrupt politicians. The errors of socialism run much deeper than that, and only a private property order, where private property owners not only own but also freely decide, can provide a growing economy and a thriving society. As proponents of the free market, we don’t need the experiences of Venezuela to “teach us” that socialism doesn’t work. We don’t need to cite the murderous regimes of Stalin, Hitler, and Mao as proof of the inevitable collapse of collectivist and state-totalitarian social arrangements. Socialism doesn’t work in theory. Socialism as democratic policy contradicts what is known about the very nature of man.

Has socialism ever been tried? Depends how we define socialism. Will Marxism ever work? No it cannot, it fundamentally abolishes the components necessary for a truly productive and wealth-generating economy.

Austrian Economics | Property-Rights | Paleo-Culture

Austrian Economics | Property-Rights | Paleo-Culture

Essays on Economic, Political, and Social Theory

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CJay Engel

Creator and Editor of Austro Libertarian. Lives in Northern CA, runs several businesses, spends time with his family, and reads as much economics and political theory as possible.

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