Economic Myths #3
by Dr. Doug Cardell
This article is the third in a series debunking economic myths and misconceptions. The myth addressed here is socialism as the worker's paradise. Nothing could be further from the truth. There is only one socialist country in the world, North Korea. North Korea has some of the worst working conditions in the world. If it were indeed a workers' paradise, workers worldwide would be risking their lives to get in rather than risking their lives to escape. Four others are mainly socialist: China, Cuba, Vietnam, and Laos. As with North Korea, workers are leaving, not lining up to get in. Immigration patterns prove decisively that the workers believe the United States, the European Union, and Great Britain are the genuine workers' paradise. Why does "wonderful" socialism fail and "evil" capitalism succeed? The answer is innovation. Improvement in living and working conditions requires innovation. For conditions to improve in any situation, change is necessary. Change isn't always better, but better always requires change. Change requires innovation, the creation of a new way of doing things. Innovation requires as many people as possible to search for better ways to do things. Getting people to go to the trouble of finding improvement requires the economic system to reward success. Capitalism provides those rewards, but socialism does not. Where is innovation happening? According to the Global Innovation Index for 2023, the top ten innovative countries in the world are: 1 Switzerland 67.6 2 Sweden 64.2 3 United States 63.5 4 United Kingdom 62.4 5 Singapore 61.5 6 Finland 61.2 7 Netherlands 60.4 8 Germany 58.8 9 Denmark 58.7 10 South Korea 58.6 In case you still believe the socialist myth that the Nordic countries in the list are socialist, please read my article, Democratic-Socialism.php. All of these countries are capitalist. Capitalism rewards success, so people in those countries work hard and take significant financial risks to earn those rewards. Look around you where you are reading this. How many innovations do you see that socialist countries invented? Some socialist countries may have done the manufacturing—the 'grunt' work— but the innovation you see around you is the product of capitalistic innovation. As I look around as I write this, my desk, pencils and papers, some picture frames, souvenirs, and plants are the only things I see that I could have owned fifty years ago. Furthermore, only in a free market can an individual own their labor. In a free market, the worker is free to negotiate with thousands of employers to find a way to add value for the employers at an acceptable wage. This negotiation is the only means to a moral transaction. It is ethical because it is voluntary and mutually beneficial to the employer and the employee. Since socialism has no free labor market, there is no negotiation; no way to determine what labor is worth. The state decides the labor conditions, workplaces, and wages. That is not freedom; it is slavery. In North Korea, the average worker earns between 1 and 3 USD monthly. The typical American worker earns that much in about five minutes. Workers in any of the top ten capitalist countries earn an average of 3000 times more than their North Korean counterparts. A free market economy is not only morally superior to socialism; it pays a lot better. Why do people believe the myth that socialism is a workers' paradise? Why do people believe in myths? Myths imagine a utopian world of unicorns and mermaids. Philosophers have described utopian schemes for an ideal world for thousands of years, but none have ever succeeded because they don't apply to the world as it actually is. My article, Evidentiary Economics, explores the difference more thoroughly. Some people wish for a world of "sunshine, lollipops, and rainbows everywhere," but wishing doesn't make it so. In this world, to receive, you have to give. The value you receive is equal to the value you create for others. That may be the ideal world. What could be more fair and equitable? Wishing for a workers' paradise is to hope for an unethical world where workers receive more than the value they create for others. A world can't exist in which receiving exceeds giving. In scientific terms, this wish violates the First Law of Thermodynamics. It assumes that people's needs can be met by providing what is needed without anyone doing the creation. Believing the myth may seem more attractive, but it is neither desirable nor possible.
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