Practical Problems Of Socialism

Practical Problems Of Socialism, Economics of Socialism

Socialists dare not congratulate themselves on overcoming theoretical difficulties, for they know that the application of socialist models to real-world circumstances would immediately uncover complex practical prob­lems. Intellectual honesty requires that those who criticize capitalism be­cause it does not conform in fact to the ideal of free-market theory be equally willing to submit their ideal economic model to the same test.

The Transition Period

The first problem focuses on the pattern of institutional changes that would prevail in the period between the initial rise to power of a social­ist regime and the time when the last vestiges of capitalism disappear so that the new society can be judged entirely on its own merits. The trans­fer of control of the means of production from individuals to society is the first step in the socialist program, but basic questions appear when one inquires into the way this transfer is to be accomplished.

Should the transition be sudden and comprehensive or gradual and fragmentary? The socialist movement has long been split into two schools of thought on this question. The revolutionary socialists hold that it must be sudden; socialist goals, they claim, involve a complete revamping of patterns of economic behavior. Gradual socialization removes the possi­bility for coordination of the total economy and creates the danger that industries outside the socialized orbit may be able to sabotage the entire planning effort. The evolutionary socialists argue that the skills necessary to operate a completely socialized economy may be absent in the early stages; selective socialization will create opportunities for planners to de­velop competence. In addition, it is claimed that initial successes on a limited scale will have a beneficial impact on public opinion, thus creat­ing a more favorable environment in which to expand the boundaries of the public sector.

Socialists who stop short of outright confiscation of private property face delicate questions about the level and nature of compensation for former owners. Should the former owners of producers' goods be com­pensated for the property shifted to socialized control? Generous provision of nontransferable pensions or long-term bonds means a diversion of funds and the creation of inequality through unearned incomes in a society ded­icated to greater equality. Meager compensation, on the other hand, would lead to the alienation of owners who possess vital management skills that could perhaps be utilized by the new regime. The issue of compensation is likely to be settled on the basis of judgments of immediate needs rather than by provoking arbitrary ideological slogans. As such, it will probably involve a compromise position of partial compensation.