What is Socialism?

Robert Heilbroner (1919 – 2005) defined socialism as “a centrally planned economy in which the government controls all means of production.”

Why is Heilbroner worth quoting on this matter? Because he knew what he was talking about. He was a committed socialist all his life. He was a best-selling author. His book The Worldly Philosophers: The Lives, Times and Ideas of the Great Economic Thinkers (1953) sold over 4 million copies. Clearly he was not stupid. And when he could not deny the evidence, late in his life he came to recognize that socialism had failed and was honest enough to admit that he had been wrong.

Here’s more on socialism from Heilbroner.

Socialism … must depend for its economic direction on some form of planning, and for its culture on some form of commitment to the idea of a morally conscious collectivity …

If tradition cannot, and the market system should not, underpin the socialist order, we are left with some form of command as the necessary means for securing its continuance and adaptation. Indeed, that is what planning means …

The factories and stores and farms and shops of a socialist socioeconomic formation must be coordinated … and this coordination must entail obedience to a central plan …

The rights of individuals to their Millian liberties [are] directly opposed to the basic social commitment to a deliberately embraced collective moral goal … Under socialism, every dissenting voice raises a threat similar to that raised under a democracy by those who preach anti-democracy. [1]

Heilbroner’s assessment of socialism versus capitalism:

Capitalism has been as unmistakable a success as socialism has been a failure. Here is the part that’s hard to swallow. It has been the Friedmans, Hayeks, and von Miseses who have maintained that capitalism would flourish and that socialism would develop incurable ailments. All three have regarded capitalism as the ‘natural’ system of free men; all have maintained that left to its own devices capitalism would achieve material growth more successfully than any other system. From [my samplings] I draw the following discomforting generalization: The farther to the right one looks, the more prescient has been the historical foresight; the farther to the left, the less so. (Source: Dissent 1990.)

Here’s how Heilbroner began his a Jan 1989 essay “The Triumph of Capitalism” in the New Yorker.

Less than 75 years after it officially began, the contest between capitalism and socialism is over: capitalism has won. The Soviet Union, China, and Eastern Europe have given us the clearest possible proof that capitalism organizes the material affairs of humankind more satisfactorily than socialism: that however inequitably or irresponsibly the marketplace may distribute goods, it does so better than the queues of a planned economy; however mindless the culture of commercialism, it is more attractive than state moralism; and however deceptive the ideology of a business civilization, it is more believable than that of a socialist one. Indeed, it is difficult to observe the changes taking place in the world today and not conclude that the nose of the capitalist camel has been pushed so far under the socialist tent that the great question now seems how rapid will be the transformation of socialism into capitalism, and not the other way around, as things looked only half a century ago.[2]

Finally, the piece on socialism in the Library of Economics and Liberty by — guess who — Robert Heilbroner is a must read. Quote:

The Birth of Socialist Planning

It is often thought that the idea of socialism derives from the work of Karl Marx. In fact, Marx wrote only a few pages about socialism, as either a moral or a practical blueprint for society. The true architect of a socialist order was Lenin, who first faced the practical difficulties of organizing an economic system without the driving incentives of profit seeking or the self-generating constraints of competition. Lenin began from the long-standing delusion that economic organization would become less complex once the profit drive and the market mechanism had been dispensed with—“as self-evident,” he wrote, as “the extraordinarily simple operations of watching, recording, and issuing receipts, within the reach of anybody who can read and write and knows the first four rules of arithmetic.”

In fact, economic life pursued under these first four rules rapidly became so disorganized that within four years of the 1917 revolution, Soviet production had fallen to 14 percent of its pre-revolutionary level.[3]

Whatever socialism is, its effects on human welfare is not pretty. India is a socialist country. Game, set and match.


[1] Heilbroner quoted by David Boaz in a 2005 piece “The Man Who Told the Truth: Robert Heilbroner fessed up to the failure of socialism.

[2] Robert Heilbroner, “The Triumph of Capitalism,” The New Yorker, January 23, 1989,

[3] Socialism: The Concise Encyclopedia of Economics

Author: Atanu Dey


6 thoughts on “What is Socialism?”

  1. People like Noam Chomsky have argued that the Soviet Union was called a Socialist society by the two major propaganda forces for opposite reasons.The West called it Socialism in order to defame socialism.The Soviet Union called it Socialism in order to gain popular support of the masses.But what happened there was not even remotely close to what Socialism espouses.He argues that the core of Socialism is workers’ control of the means of production.But workers’ were never in control of anything in the Soviet Union.In fact, the collapse of Soviet Union was a small VICTORY OF SOCIALISM.
    You may watch his views here.

    Secondly, capitalist system in its true form has never existed.Never throughout history, nor till the present day.What existed was the nanny state which subsidizes huge private corporations, imposes and enforces massive state intervention and protectionism, slavery and so on.To say therefore that capitalism has succeeded is a gross misinterpretation of history.My previous comment on your previous post derives mostly from this:

    Will you be kind enough to address these claims in your blog post sir?


    1. Chomsky is a great linguist. Unfortunately his understanding of economics compares unfavorably with my understanding of linguistics. If you would like to make a point regarding economics, I recommend not quoting Chomsky.

      I don’t care whether or not socialism in its pure form has never been implemented. Socialism, as an economic paradigm, cannot possibly attain its declared goals. It is not logically possible given what human nature is. The only way socialism can be made to work is to first transform human nature. People who are not suitable material for the socialist system have to be “educated” and if the education is too difficult (as it happens to be in nearly all instances), then off to the gulag for those. That is why we find that socialist states end up as concentration camps.

      I don’t care whether capitalism has been perfected in any economy or not. What matters to me is whether the system works or not in its imperfect implementation. You don’t even have to study the comparative merits of capitalism, socialism or any other -ism. Just look at the world and note which countries people want to migrate out of and where they want to go.

      Analogy: are Christianity comparatively better than Islam? Note the migration patters of Christian majority and Muslim majority countries. You don’t even have to know any details about those religions.


      1. I did not say that Socialism(When taken to mean as a system of worker’s ownership of the means of production) has never existed.I said that for capitalism.

        I think it’s perfectly logical that people will migrate from state managed capitalist societies to socialist societies(where workers own means of production).But unfortunately, socialist societies don’t exist at present, due to the propaganda system of the powerful, ‘manufactured consent’ and other reasons that I have stated in my comment to your previous post.

        That people migrate from countries where means of production are controlled by state to the state subsidized capitalist societies is not a rebuttal of Socialism(as Chomsky defines it.)
        Neither does it establishes why Socialism cannot work(I couldn’t find it in the writings of Hayek and Mises.They have argued logically against a system where state controls the means of production.)
        And the argument ‘Capitalism works doesn’t seem legitimate either for it’s continued existence.Slave societies worked for centuries.Is that an argument for continuation of slavery?
        And what alternatives do people have at present for state subsidized capitalism to receive admiration that it works?


  2. It looks like your hero, Lee Kuan Yew was also a big fan of socialist planning.

    Cases in point:

    Almost all land is publicly owned and housing planned and provided by the state.
    State Owned Enterprises (SOEs) operate all public utilities: telecommunications, power and transport, including the famous Singapore Airlines.
    SOEs, surprisingly, also run semiconductors, shipbuilding, engineering, shipping and banking industries.

    Similar is the story in the other Asian tigers, S.Korea, Taiwan, etc. Even China is no exception, their SOEs contribute 40% output. If we bring in the US, the case against central planning gets even worse. To quote a single example, why does the coca cola that you drink in the US contain no sugar (wholly sweetened by high fructose corn syrup thanks to massive central planning). Tangentially, it neither contains the addictive substance coca leaf extract or coke, why, if not for government regulation (another thing neoliberals like to beat on.)

    I don’t get why you neoliberals always keep regurgitating the same old tired nonsense: “central planning always is a disaster, private enterprise is always good”, get some perspective and accept that both forms of organization have their place.


    1. Dear Mr/Ms xNeoLiberal:

      Thanks for your comment. You write, “I don’t get why you neoliberals always keep regurgitating the same old tired nonsense: “central planning always is a disaster, private enterprise is always good”, get some perspective and accept that both forms of organization have their place.”

      First, I don’t know precisely what you mean by “neoliberal” and therefore cannot respond to the implied slur. I am a liberal in the Old World meaning of the term. I am a classical liberal, meaning I believe in the fundamental right of the individual to be left alone. It’s an old idea. There’s nothing “neo” about it.

      I know that there are no economies that are “pure” capitalist or socialist or communist. Ideals (genotypes) exist in a Platonic world while what’s realized in the world (phenotypes) are imperfect implementation, usually a mix. Of the various ideals, it is clear that capitalism beats socialism or communism. Why is that so? Because capitalism does not require system-wide planning. Why do systems that require system-wide planning fail? First, it is a “knowledge problem.” Friedrich Hayek pointed that out over 70 years ago in 1945. His paper “The Use of Knowledge in Society” can be read by any reasonably educated layperson.

      Second reason that systems that require system-wide planning fail is what I call the “dynamic-world problem.” Planning could work in a small, static world but cannot work in a large, dynamic world. I define “small,” “large,” “static,” and “dynamic” qualitatively. I will go into that in a bit.

      Liked by 1 person

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