Venezuela Reminds Us That Socialism Frequently Leads to Dictatorship

Nicolas Maduro's Venezuela is one place where Friedrich Hayek's most dire warnings remain relevant.


Manaure Quintero/NurPhoto/Sipa U/Newscom

On March 29, the Supreme Court of Venezuela dissolved the country's elected legislature, allowing Venezuela's top court to write future laws. The court is filled with allies of Venezuela's socialist president, Nicolas Maduro, while the legislature is dominated by Maduro's opponents, and the court's ruling was seen as the latest step on Venezuela's descent into a full-fledged dictatorship. But following international outcry—as well as the appearance of cracks within Maduro's own party—the court reversed itself just a few days later, on April 1.

Thus, the uneasy standoff between Venezeula's legislature and executive is set to continue. Last week's episode is only the latest reminder of the tendency of socialism to lead to dictatorship, as identified by the Nobel Prize-winning economist Friedrich Hayek in The Road to Serfdom.

In 1944, when he wrote his book, Hayek noted that the crimes of the German National Socialists and Soviet Communists were, in great part, the result of growing state control over the economy. As he explained, growing state interference in the economy leads to massive inefficiencies and long queues outside empty shops. A state of perpetual economic crisis then leads to calls for more planning.

But economic planning is inimical to freedom. As there can be no agreement on a single plan in a free society, the centralization of economic decision-making has to be accompanied by centralization of political power in the hands of a small elite. When, in the end, the failure of central planning becomes undeniable, totalitarian regimes tend to silence the dissenters—sometimes through mass murder.

Hayek was fortunate enough to live to see the defeat of both the Nazi and Soviet totalitarian regimes. Unfortunately, there are still places where Hayek's most dire warnings remain relevant. Nicolas Maduro's Venezuela is one such place.

Beginning in 1999, when Maduro's predecessor, the late Hugo Chavez, became President, the government has played an ever-increasing role in the Venezuelan economy. Price and wage controls were put in place, trade was restricted, and private property was expropriated—often without compensation. Partly as a result of those economically illiterate actions (the fall in the price of oil, which Venezuela depends on, did not have such dire consequences in any other oil-rich country), Venezuela's economy tanked and public opposition to the ruling regime increased. Thus, the 2015 parliamentary election saw the opposition to Maduro's leftist policies capture a super-majority in the country's National Assembly.

Unfortunately, socialism, in spite of its manifest failings and Hayek's warnings, refuses to go away. Wannabe socialists are thus destined to learn not from history, but from their own mistakes. In the meantime, ordinary people suffer.

To give just one example, between 1999, when Hugo Chavez took over as President, and 2016, average per capita income in Venezuela rose by 2 percent. In the rest of Latin America and the Caribbean, it rose by 41 percent. A similar story can be observed in Zimbabwe. Robert Mugabe, Chavez's erstwhile friend, has been in charge of his unfortunate country since 1980. Since then, Africa's income per person rose by 48 percent. In Zimbabwe, a socialist dictatorship, it has declined by 25 percent. Plus ça change, plus c'est la même chose.

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  1. Systems that attempt to deny human nature rather than be driven by it are always bound to fail eventually. But dang if the designers don’t try their best to hold on to those failing systems, a mindset made easy by years of central control. And all this is assuming benevolence on the part of the planners, which we all know isn’t the case.

    1. All they need is better leaders. Socialism is so kind, so humane, so caring. How can it fail?

      1. Simple. Those that fail Weren’t Really Socialist, ipso facto and by definition. In the language of looter politics a communist youth approaches a parade, draws a gun and shoots a politician. Newsmen know that, by a miracle not unlike transubstantiation, that youth not only became an anarchist as the bullet left the barrel, but he had ALWAYS BEEN an altruist just as certainly as Oceania has always been at war with Eurasia.

    2. RE: Systems that attempt to deny human nature rather than be driven by it are always bound to fail eventually.

      Ironically, this is the exact reasoning that leads me to believe that free markets are both untenable and immoral. Humans are naturally greedy and self-centered, and a free market encourages some of our worst impulses.

      If society is a car, capitalism is the engine and government is the brakes. Nobody sane wants to drive a car with insufficient brakes, or with brakes that can’t be disengaged.

      1. Governments are comprised of those same naturally greedy and self-centered people, except that they aren’t governed.

        It’s not that freedom is the best of all systems, it’s that it’s the least worst of all systems.

        1. Well they are governed in that they are elected and answerable to the people.

          Unless you’re an anarchist (in which case I don’t have much to say to you), you agree with me: SOME level of government is necessary to a healthy society. The disagreement is over how much government.

          1. Some level meaning a small army to protect from invasion, enforcement of private property rights and contract law, and some road building and maintenance.

            There is absolutely no need for business regulation or environmental regulation nor any other form that I can think of. .

            1. And that’s where we disagree. If you’d like to continue to hash this out, I’d love to – this is exactly why I like the comment section at Reason: smart commenters with engaged opinions.

              If so though, I have to think the burden of proof is on you: The examples of exploitative and predatory businesses are innumerate and go back hundreds of years. In the United States alone we’ve suffered a Depression, a Recession, people jumping from flaming buildings, people drinking poisoned water, and Enron (just to name a few), all as a result of “self-regulating markets.”

              1. Mortiscrum, those things you list are the direct result of government. The Depression was the result of changing our currency to non-convertible fiat as opposed to hard currency (among other well documented factors, none of which were ‘business practices’ that would have existed prior to the creation of fiat currency), the ‘Recession’ was directly caused by the government and their standards on who must receive loans, people jumping from flaming buildings isn’t an example of anything, and in Flint Michigan it was the government who failed at treating water. Enron is perhaps a valid example, but you’ll note that not every crime can be prevented.

                You see, the problem with central planning is that people are fallible and people are who centrally plan. Therefore you multiply the amount of damage those fools can do when you give them the authority to rule us all at once. It’s an obvious truism, but once which you apparently do not ascribe to.

                Milton Friedman dared people to give him an example of a system of government that does not run on greed; I would challenge you to do the same. You can not change the nature of man, no matter how many of us you stuff into gulags, ovens, or just shoot in the street.

                1. The big difference between the two is capitolism does not require the use of government authority to make things happen. Goverment has limited muscle to flex, therefore power hungery pols can’t control everything.

                  Socialism requires giving way to much authority to government. As a result it’s easy for the power hungry to get a lot of control over almost everything. That attracts people who want to use power to control. Chavez is a great example of what can happen.

                  Our concept of limited government was intended to keep any one person from becoming too powerful.

                  I find it friggin hilarious when anti-Trump crowd are advocating for goverment health care for all. They are advocating for Trump to be in charge of their health care. One of the biggest reasons I could not support the ACA is because it gave too much control to the executive branch via HHS.

                  1. Actually capitalism requires government action to establish and protect the markets and property rights that capitalism depends on.

                    Also note that you can’t establish and protect markets and property without defining and shaping them, and inevitably privileging some interests over others. Those who are favored of course like to cover the results under the color of “natural” or “objective” or “efficient” or “GDP maximizing”. Just be aware of the propaganda they pass out.

                2. I honestly struggling to see how you didn’t just make an argument in my favor: government opened a door with some perhaps ill-conceived law (I never said government is infallible), and the business titans’ reaction was to go charging straight through it. If they can’t even behave themselves with some amount of latitude, how is giving them ALL the latitude suddenly going to work out in a positive way?

                  Thing is, free markets are not the paragons of karmic justice they are touted to be. Powerful players find it extremely easy to insulate themselves from the fallout of their own practices, which means they have very little reason to act morally. To bring in something Indeed44 said, boom and bust cycles are a natural and necessary part of markets, but it’s not the movers and shakers of the market that REALLY suffer when the market takes a downturn: yeah, maybe they lost millions in stock value (maybe), but they certainly didn’t lose their job or their home. Regular people do.

                  Flaming buildings was a reference to the Triangle Shirt Waste Factory (yes, that tired old example).

                  Poison water was a reference to the Love Canal Disaster. Or the PG and E Disasters. Or Camp Lejeune. The examples go on.

                  1. The only thing that can protect a business from the workings of a free market *is* government.

                    As Smith said, “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.” But he also said, “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.”

                    The way things are today, it’s cheaper to buy off politicians and bureaucrats to enact subsidies, regulations or licensing requirements that skew the market in favor of existing businesses, practices and products than it is to actually earn their money by providing the balance of the best products and services at the lowest prices possible to the most people who want what they sell.

              2. The depression was driven by the same folks that forced The Federal Reserve down American’s throats. The lose lending on margin credit pumped the market while The Jekyll Island boys conspired to dump over several days essentially taking the profits provided by margin credit accounts of trusting citizens. Then used those profits to buy up everything on the cheap. Recessions however are not bad, they are healthy reactions to economic expansion. The problem with recessions is when the government manipulates the markets to delay recessions which is the raw example of what a free market is not. Enron was simply fraud and the bad actors were punished. Actually, Enron Executives did exactly what The Jekyll Island Boys did in 1929. This behavior is still ongoing and regulation has done nothing to avert it (see Wells Fargo scandal).

                1. “Thing is, free markets are not the paragons of karmic justice they are touted to be. Powerful players find it extremely easy to insulate themselves from the fallout of their own practices…”

                  And how, pray tell, do they insulate themselves from the results of their actions? Specifically, rent seeking and crony capitalism with the specific blessing of the institution you seem to think is responsible for keeping them from doing those things in the first place.

                  It is part-and-parcel that you would need to remove the governments ability to choose winners and losers in the marketplace as a reform in a market oriented system of government.

                  “Poison water was a reference to the Love Canal Disaster. Or the PG and E Disasters. Or Camp Lejeune. The examples go on.”

                  So you’re willing to use the example of corporate disasters to prove your point, but unwilling to use examples of the government itself doing the exact same thing with the same results, only without any recourse since the government will ultimately be regulating itself and/or paying out it’s malfeasance from the public treasury. I’m sure there’s no conflict of interest.

                  Some regulation of the market is probably necessary to prevent things like cartels, price fixing, or other non-competitive market features that naturally arise. However, using the centralized government to enforce the creation of those very things is where we stand now.

                  1. I’ll try to use an example: let’s say there’s two people, one with $100M and the other with $25K. The economy takes a tumble, stock values plummet, businesses go under, the whole shtick. As a result of falling stock and housing value, the rich guy loses most of his net worth, has to sell two of his houses at a loss, and is left with $8M. He’s lost 92% of his wealth. By any measure, he has completely lost his shirt.

                    The poorer guy loses his job when his employer closes up shop. Now instead of making $25K a year, he makes $17K. He’s only lost 32% of his financial power. But, because he was living pay check to pay check already, that 32% loss is devastating. He now must choose to pay rent or buy food.

                    The rich guy lost way more, both as a percentage and as an absolute. The difference? He still has $8m! He’s not in danger of starving, he’s not in danger of being homeless, he’s not in danger of telling his kids to suck it up because they don’t have any more food. That’s what I mean by insulated. The rich have a lot more than can afford to lose, so it’s a completely different calculation for them to risk money.

                    Your point about government wrongdoing is a fair one. Government is far from infallible, and it’s been responsible for some evil shit over the years. But I think the lack of a powerful government would be far, far worse.

                    1. “I’ll try to use an example: let’s say there’s two people, one with $100M and the other with $25K. The economy takes a tumble…

                      I’m not trying to cherry pick here, but the entire rest of this comment is merely talking about the person who has more being more insulated from economic downturns. That doesn’t have anything to do with any of your prior comments.

                      It would clearly still be in the ‘rich’ person’s best interests to maintain economic growth unless you’re implying they are destroying the market to make themselves worse off, which seems unlikely.

                      It’s also important to realize that a stronger market would benefit both of the individuals you’re talking about, and a weaker market would hurt them both. It’s in their combined interests to behave honestly in the market, and it’s also important to realize that behaving badly in the market is precisely the type of regulation that some if not most Libertarians tend to agree with. Obviously, this depends on the particular regulation in question though.

                      I would hope most of us would agree on things like anti-cartel and/or anti-trust regulation being reasonable but as always it’s a question of extent. I might be an odd duck though since I lean towards classically liberal but libertarianism is a strong influence.

                    2. (And yes, I know you were answering my rhetorical question on how they’re insulated but you missed the point of the question entirely.)

                    3. Questions beget answers, not points.

                    4. Sorry, I don’t understand your distinction (in other words, I don’t understand how what I said isn’t pertinent to the topic at hand).

                      My original point was that markets are not just in the way market proponents seem to think they are. The people who benefit from and affect markets the most are not the people who suffer the most when markets crash. I illustrated this point with my example of a theoretical rich guy and poor guy during an economic downturn.

                      You are correct that all parties are interested in keeping a healthy market because they would all benefit from it – but that’s missing the more salient point that rich people have money to lose and poor people don’t.

                    5. mortiscrum every transaction in a free market is done by people who think that transaction will benefit them. This is both sides of the transaction thinking they will walk away richer than they were before. It’s not a zero-sum game, it’s win-win according to both parties. How is this not the most “just” possible system? Where do you get the right to dictate otherwise?

                    6. And Enron went bankrupt all by themselves. They were gamblers and the market destroyed them without needing anyone’s help. The fraud was just them hiding this fact longer than they should have in order to rip off new investors a while.

                    7. You’re lack of imagination is the only thing holding you back. If we had a pure free market, practically all economic problems would be solved overnight. Government is never the solution, always the problem masquerading as the solution. Even if I am 100% wrong and all our economic problems get worse without the government, freedom is still vastly morally superior to the psychopathy from Washington that dictates how we are to live every aspect of our lives. I don’t give two shits what the best system is. Freedom is the only thing that matters.

                    8. Cartels and monopolists have never lasted long in the real world without government support and protection.

                      In and of itself a natural monopoly is not bad … as long as it’s maintained by using its knowledge and experience to give people what they want at the lowest possible cost such that no competitor can financially compete. Since the people are getting the best deal anyway, what does it matter how many or how few companies service their needs in any particular area.

                      Cartels have never worked for long either, because sooner or later (and usually sooner) one of them decides he needs something extra and breaks the price promises. Once the first one has done so, the rest have little choice but to follow.

          2. Well they are governed in that they are elected and answerable to the people.


          3. Well they are governed in that they are elected and answerable to the people.

            Hahaha! Good one.

            1. So much of our government is completely unelected that it astounds me when people try to make that argument

              1. I work in an unelected, local government entity. And, what you say, is so right!

                There are literally thousands of meetings going on throughout the nation at any one point in time where government employees are making decisions that affect your life directly but they are answerable to no one. Think water districts, special planning districts, transit agencies….ad nauseum. Worse, they’re spending your tax dollars while doing this. On themselves and on their “projects”.

          4. Government is answerable to the people in theory, but not in fact. How are the thousands of federal employees in the vast bureaucracy that create regulations every day with the force of law behind them, answerable to the people? How are liberal judges with lifetime appointments answerable to the people? The fact is more and more of our government is utterly unaffected by the results of elections.

          5. Well they are governed in that they are elected and answerable to the people

            Only in the most superficial sense. There are dozens of offices across the nation filled with unelected bureaucrats and crony appointees whose accountability to “the people” is the equivalent of a suggestion box, and who often make it a point to treat “the people” in the most passive-aggressive manner possible.

          6. The disagreement is over the legitimate function of government. A libertarian government is for preserving the rights of individuals. A looter government exists to violate the rights of individuals.

      2. I disagree. Free markets when truly free regulate themselves. The problem with your argument which is very common, is that you characterize participants of free markets as greedy and self-centered. That type of bias blinds your ability to intelligibly consider why free markets work. Their is one reason it works and that is because it rewards the successful execution thereof. If an organization does something well, it will dominate demand. Capital then flows down from the top to shareholders and employees including employees that are shareholders. When you have a system that unequivocally rewards those who perform and those who do not discourages any and everyone from doing anything well. With this type of system you must oppress workers to perform the way China does and the reward for performance in that case is you do not have to go to jail today. It is much easier to allow individual citizens the right to enjoy the harvest that was sown by the sweat and labor of his/her own brow.

        1. Mortiscrum once again encapsulates the misunderstanding of free markets and the success of brainwashing. That old “markets needs to be regulated for the sake of all” crap is simply the result of the American educational system and the repeated rhetoric of politicians playing towards people’s fears and envy.

          1. Spot on correct. Time for some unadulterated MAGA.

          2. We know what’s best for you and you’re going to like it!

        2. This type of thinking around free markets is as much of a fantasy as the people who think communism is still a good idea: show me a example of it working in any medium to large scale way, and I’ll entertain the idea. Until then, you have but theories about the way a particular “never actually been tried!!” system will guide human behavior to the opposite outcome that all available evidence suggests will happen.

          1. “show me a example of it working in any medium to large scale way”

            Why is the American economy and the living condition of the average American better by leaps and bounds than any place on earth? And that is with our perverted form of capitalism(cronyism and protectionism).
            How great would it be without government intervention? Way better with less wasted capital spent on the military industrial complex as an example.
            Nothing in history has rivaled the prosperity of the american economy. You cannot deny that.

            1. Nope, I cannot deny that: America fuckin’ rocks, and it’s because of capitalism. But like I said originally, if capitalism is the engine (which is it), a powerful engine is only useful if it can be controlled and harnessed by things like steering and brakes. Without those regulatory agents – i.e. government – the engine is only a danger to itself and everything around it.

              Sweden knows what time it is. Strong worker protections, high individual taxes, strong wealth redistribution, and low capital taxes. It’s top rated for both social mobility and business-friendly regulation.

              1. “””Nope, I cannot deny that: America fuckin’ rocks, and it’s because of capitalism””

                Curious as to why you asked for a example of it working on a large scale when you already knew one.

                There is a difference between government regulations and government ownership. Socialism is heavy on the latter. Capitalism is about citizens having ownership, offering goods and services, competition, and the ability of the consumer to vote with their money when they don’t like the services of their current supplier. Socialism is about you getting what the state can supply. If you don’t like it, tough. Well, there’s always the black market.

                1. My argument is that America’s success has as much to do with its regulation as it does its embrace of capitalism. This is the something the “less regulation is always better” crowd fails to appreciate, I think. The parts of government and regulation that work well are ignored and taken for granted, while the parts that don’t work as well are taken as evidence of the failure of regulation and are used to say that less regulation is better almost by definition.

                  I’m not arguing in favor of socialism. I’m saying “pump the brakes guys, government still has a really important and active roll to play in any society anyone would actually want to live in.”

                  1. America’s success had tremendously less to do with regulation than it does to it’s embrace of capitalism, and that is a literal historic fact. Once can argue about the various world wars and their effect upon industrialization but starting from the industrial revolution and going forward the United States blew past every other nation on the face of the Earth (including, by the way, the country that invented industrialization. And yes, we stole the plans from them which is ironic and is mirrored today with China.) Only after we began to strangle our industries off with over-regulation did the rest of the world begin to catch up.

                    Some regulation is necessary to keep trade fair in the sense that corporations should not be able to use unfair trade practices or, for example, industrial espionage or sabotage to gain advantage but to actually decide prices or determine which company is allowed to do what is not free trade.

                    While it is true that less regulation is not always a better option, the fact remains that there is demonstrably zero impetus for a more free market in the United States and that is a bad thing. We don’t need to perfectly agree on the extent to which the economy should be regulated at this point in history, but we should agree that it is currently over-regulated by an incredibly wide margin. Such a wide margin, in fact, that we are slowly approaching government control of somewhere to the tune of 2/5 of our GDP.

                    1. Po-ta-toe, po-tah-toe. You’ve ceded the point that regulation is in fact an important part of a healthy market, this was really the common ground I was striving for. Saying “America’s success has more to due with its embrace of capitalism than its regulations” is basically impossible to prove; one would not succeed without the other. It’s like saying “the wood is more important for a house than the nails.” Well maybe, in the sense that there’s more wood than nails, but without either you won’t have a house at all. It’s kind of a meaningless comparison.

                  2. It is so absurd to say REGULATION is a reason we are successful. If the regulatory burden was the same as it was in 1949, and was unchanged in the 60-70 years since, the household median income currently would have been 339,000 dollars a year. So don’t come on here and say we are successful because of regulations. The only regulations we need are contract and property laws and we could probably do that without government too.

                    1. You are making the exact same argument a few commenters made at the beginning of this discussion. If you’d like to see my answers/thoughts, go back and read them.

          2. Compare the dollar when banks were not FDIC insured and The Federal Reserve did not exist. Supply and demand of gold ruled the day. People would trust a bank based upon performance with capital flow and security. Now you have FDIC which is simply a bailout waiting to happen. Banks have no incentive to outperform because if they fail they know they will be rescued. If banks were once again allowed to fail and depositors lost their deposits, customers would be as diligent about where they keep their money as they are when purchasing a TV or appliance. Also the Fed’s ability to manipulate the supply of currency removes the free market ability to set the price of borrowing hence another so called safety net that is actually the illusion. Case in point the current bubble in U.S. Treasury bonds.

            1. Additionally, you’ll note that in the recent financial meltdown when banks were folding left and right people’s FDIC insurance did not kick in. Instead, the banks themselves were bailed out. So is that FDIC insurance really worth anything? Doubtful. They might as well simply call it ‘Bank Malfeasance Insurance’ (BMI) where if a bank truly mishandles your money it will all be ok since those shitty practices won’t ever sink their institution.

              1. Exactly the point I was making. If the bailout is subtracted and the market is free, banking practices by fiduciaries would be diligent because failure would not be rewarded. The bailout is the safety net of which safety thends to be synonymous with regulation when pro-regulators sale it. In fact pro-regulators have been known to design the crisis in order to make the designed regulation relevant and in demand. Case in The ACA death spiral was engineered to expand to single payer which is flagrant capitulation of a free market.

                1. I’ll admit I skimmed your comment and failed to realize you were saying the very same thing Indeed44. Entirely my fault for being redundant.

                  I will say this: the concept of FDIC insurance is not necessarily a bad one in the sense that if a bank does fail I appreciate that my life savings won’t be wiped out. As long as banks don’t become ‘too big to fail’ in the first place, as a concept, the bank itself would still be punished by closing it’s doors and going out of business whereas the individual person using their services shouldn’t be punished for the backroom failings of an institution. It’s not the consumers fault, nor would they have meaningful transparency or time, to evaluate their bank on a daily basis.

                  Or, in other words, the FDIC isn’t the problem; the problem is that the government has perverted the incentives of the institutions themselves. FDIC was to protect us from the banks, but now the banks themselves are the one’s who are protected while we are ruined. This is a classic example of crony capitalism perverting market protections.

                  1. Fault is a funny thing.

            2. If banks were once again allowed to fail and depositors lost their deposits, customers would be as diligent about where they keep their money as they are when purchasing a TV or appliance.

              And exactly how diligent are consumers in their other purchases?

              1. The point is consumers put more thought into buying the best television or refrigerator than they do when shopping for a bank. In fact, because of regulation how much do you need to put into choosing a bank? However, if banks had to compete for customers interest rates and fees would differ greatly in the market. Frankly, the bank that conservatively managed capital flows and had high ethical values would dominate market demand. The current situation has been simply consolidation. They will consolidate until their is only one bank left and then you have an even bigger problem.

                1. I would agree Indeed44. In my mind, the question becomes will a bank ever become so large as to trigger anti-trust protections? I’m sure it’s happened before, but it doesn’t seem like there’s much interest in anti-trust since the 90’s. If anything market consolidation across virtually all sectors has been the name of the game for almost 40 years.

                2. The point is consumers put more thought into buying the best television or refrigerator than they do when shopping for a bank.

                  I agree customers put more thought into their appliance purchases than where they choose to bank, but I question how much thought is actually used in their decision process. It’s unlikely customers of a bank would be any more diligent in selecting a bank than determining if it offers the best rates. Your average bank customer is never going to look into the things which determine if they are likely to remain solvent because FDIC insurance was eliminated.

                  Frankly, the bank that conservatively managed capital flows and had high ethical values would dominate market demand.

                  No it wouldn’t. Most banks treat customers like absolute garbage and yet people throw their money at them even though a smaller credit union would server them better in almost every way possible. Why would eliminating FDIC insurance change this? In all likelihood people’s gut instinct would lead them to bigger banks anyway since they are likely to believe those banks are less likely to fail (and with “too big to fail” as a government policy they would likely be correct).

                  1. Your average bank customer is never going to look into the things which determine if they are likely to remain solvent because FDIC insurance was eliminated.

                    Which is why they should be free to hire a private insurer to do it for them.

                    1. Sorry, I’m not trying to defend mandatory FDIC insurance. I would greatly prefer banks use it as competitive differentiation.

        3. The real answer and only answer to why capitalism is the best system is the profit motive. It has become an evil phrase in America now but it is the only reason that prosperity happens and that living conditions improve.

          Profit motive leads to proper asset allocations, capital formation, competition(lower prices for all), innovation(lower prices for all – technology is deflationary- so are robots) , investment, job creation and ultimately wealth for larger amounts of people.

          1. Profit motive is tempered by competition. Thus, the pressure to control costs leads to increased efficiency. Private enterprise, with rare and temporary exception, is all about cost control. I spent the first 20 years of my career there.

            In government, there is no profit motive and no competition. Thus, there is no incentive to control costs. In government, there is “funding” which is where we expend all of our energies rather than on cost control. We seek additional “funds” to shore up our inefficient operations. I have spent the last 20 years of my career in government.

            Sadly, the long I’ve been in government, the more anti-government I’ve become. I’m afraid that anarchy is just around the corner for me. 🙁

        4. The real answer and only answer to why capitalism is the best system is the profit motive. It has become an evil phrase in America now but it is the only reason that prosperity happens and that living conditions improve.

          Profit motive leads to proper asset allocations, capital formation, competition(lower prices for all), innovation(lower prices for all – technology is deflationary- so are robots) , investment, job creation and ultimately wealth for larger amounts of people.

        5. Speaking of China, it’s their limited free market reforms that have brought millions out of poverty, and the vestiges of the Communist mindset that continue to hold them back

        6. Ants and grasshoppers.

          Just don’t arm the grasshoppers!

      3. “Ironically, this is the exact reasoning that leads me to believe that free markets are both untenable and immoral. Humans are naturally greedy and self-centered, and a free market encourages some of our worst impulses.”

        Non-ironically, this is the exact reason that leads me to believe you’re an ignoramus.
        Listen, twit, the people in government are human, and then they have the control of coercion. But to lefty ignoramuses like you, they are thereby converted into angels.
        The market, at the very least, required persuasion rather than coercion, but lefties never want to allow persuasion; they might not get the ability to be dictators.
        Man, you are STUPID!

    3. CS Lewis “Of all tyrannies, a tyranny sincerely exercised for the good of its victims may be the most oppressive. It would be better to live under robber barons than under omnipotent moral busybodies. The robber baron’s cruelty may sometimes sleep, his cupidity may at some point be satiated; but those who torment us for our own good will torment us without end for they do so with the approval of their own conscience.”

      They think they are doing it for your good, and they will kill you with their kindness, all the while proclaiming their superior morality.

    4. “Venezuela Reminds Us That Socialism Frequently Leads to Dictatorship”

      A reminder presumes it was understood in the first place. Socialism begets more socialism. Not complicated.

  2. “On March 29, the Supreme Court of Venezuela dissolved the country’s elected legislature, allowing Venezuela’s top court to write future laws.”

    Under the last ACA ruling, SCOTUS declared that the law as written by the legislature did not matter. What mattered was what the Executive needed the law to mean to implement the Executive’s desired policy. A little more subtle than the Venezuelan’s court’s actions, but is it that much different in effect?

  3. So, does socialism redirect otherwise free societies down the path to dictatorship, or does socialism simply speed the progress of societies down that path once they are already on it? Maybe you have to already be on the path for socialism to take hold in the first place?

    1. Reminiscent of the incrementalist approach of progressives.

    2. One thing is for sure, America’s capitalists leanings have been successful because our founding was in utter defiance of the old guard systems and capitalism flourished due to lack of overbearing central government. All other countries have been in the throes of central control since their founding and thus harder to make the populous understand that there is anything else.

      1. Hear hear. With socialism it is not if, it is when it will fail. Even the citizens of Venezuela have concluded that socialism is the reason that they are in dire straits. Here is one fact that epitomizes the mentality that socialism cultivates. In Venezuela, all citizens receive electricity as an entitlement or right. Therefore individual citizens are not billed for their usage of electricity. Therefore Venezuelan citizens overload their grid by leaving AC on all day, even when not home. This causes many outtages for the entire country among other problems with the resource. Capitalism does not only provide incentive to out perform competitors, but it also incentivizes the conservation of a resource by encouraging the cost savings to the individual. People call capitalism greedy, but greed is actually abusing an entitlement for the mere fact you are entitled to it.

        1. This is an excellent point. It should also be noted that if you’re a citizen in Venezuela and you use your ‘right’ to electricity to mine bit coins they’ll slap you in prison. Personally I think bit coin is pretty stupid, but it’s even more stupid to put people in prison for using a resource they supposedly have a right to.

          In other words, you point out a central failing of socialist dictators in that you don’t have any rights at all. They are granted at the whim of the dictator, instead of by ‘natural law’. While I don’t believe in natural law per say, it has done wonders for our system of government to just take it as a given that such a thing exists whether or not it actually does.

          It’s the entire concept behind the rule of law as opposed to the rule of man. In that light, the United States trajectory is clear.

          1. I agree. In fact the socialist dictator makes it the citizens patriotic duty to abide by the rule “according to ability, according to need,” while the dictator goes all in with excess and tend to reward the military arm of its regime. You gotta keep those boys very happy if you want to ride this thing out for a lifetime.

    3. Soma baby. Soma.

      I love you brave new world!

  4. Meanwhile, guess who does all the raping while getting rich?

    I’m gonna guess pieces of vile shits like Maduro have much many moneys.

  5. Frequently? Just frequently?

    1. Yes, I also was wondering when it has not.

    2. they misspelled ‘consistently’, ‘invariably’ or ‘universally’. Auto-correct really mangled it though, so I can’t tell which.

  6. Just need the right TOP MEN.

  7. To the progs, this is a good thing. The stupid proles need a strong hand to keep them on the woke path. Just shut up and do what your betters tell you!

    1. Wait. What?

      Are we talking about the military? Catch-22?

  8. The article uses a broad brush to denigrate a political ideology, I think it’s far too easy to say ‘socialism is bad’ and to advocate capitalism as a better choice. Neither political ideology lives free of outside influences that attempt to derail it on some level. Another shortcoming in this article is a deeper look at Venezuela’s status as “petro state” on the global stage. It would be a lie to say outside actors aren’t pouring millions of dollars into the country to move the politics into their favor. This outside intervention never creates stability or improved conditions for the people of that country. I believe free markets are a good thing but again it’s not an honest system where the best thing for everyone emerges to the top. The U.S. Constitution states clearly in its opening, “…promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity.” Free markets rarely take this principle into account when elements of the system are attempting to disrupt a political process in a foreign country.

    1. Prags,
      Your appears to be the classic misunderstanding of free market capitalism. Of course we have never actually seen a completely laissez faire free market systems. That is no reason to say that it is not the best option. Free markets simply involve mutual exchange of value for benefit. Both parties agree to trade on agreeable terms absent any outside party dictating rules. The only function of government then becomes protection of private property rights and contract enforcement. No one enters into a contract under coercion nor from outside influence so contract law is easily and uniformly enforced.

      Capitalism, even with its gross perversions(cronyism/regulation/protectionism over free trade and economic freedom) practiced by the US and even parts of China, has obviously brought great prosperity to many in a short amount of time. All that marxism and socialism offers is proof after proof of centralized government’s obvious and certain failure. Is hat never worked and we have the many failures of socialists government from the 20th century to cite. Oh, and North Korea, and Cuba and Venezuela.

      1. “…examples both historic and modern.”

    2. “…promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity.” Free markets rarely take this principle into account when elements of the system are attempting to disrupt a political process in a foreign country.

      Those on the left put a lot of weight on this part of the Constitution, but then turn around and utterly fail to pay any attention to the laundry list of enumerated powers because they find the limits placed upon government to attain those goals unacceptable.

      I’m also pretty confused on how ‘free markets’ are trying to ‘disrupt’ political process in foreign countries. What political system, specifically, would you imagine a free market would destabilize or disrupt one wonders?

      1. And, they’ve been supported by silly SCOTUS rulings that attribute “the general Welfare” to be whatever they want it to be.

        1. Not to mention that the lefties can’t tell the difference between “promote” and “provide”, apparently…

  9. I’ll bet that Obama and the rest of Washington think articles like this are total BS.

    To your point Some Guy, we have been on the path towards socialism since FDR. I think the riches recognized by capitalism and freedom have suppressed the speed with which we have become a centralized economy. The pols have been trying to corrupt capitalism into cronyism from day one.

    Certainly our public school systems and our socialist welfare state have been breaking down the resistance to government control. It is quite evident in our public schools and colleges that the brainwashing is near complete. All college professors are marxists certainly, with very few exceptions.
    We have been on the train to total government control since 9/11. That gave politicians carte blanche to use fear as a weapon to make americans surrender their freedom willingly. Meanwhile the leftists stepped on the gas with the class warfare scam.
    Class warfare and nationalism are the vestiges of failed governments. We are hard in the throes of the beginning of the end. The beginning of the end was the Clinton Admin with the breakdown of society and morals along with abject corruption. The end of the beginning of the end was 9/11 and we have been working hard to implode since.

    1. “we have been on the path towards socialism since FDR”

      From your lips to God’s ear! Surely you are not a product of our public school system?

      To say this out loud is usually considered blasphemy and can have one end up in all sorts of bad situations.

      I cannot understand how history has been rewritten to mitigate the significance of this turning point in U.S. history.

  10. I can’t help but think of the healthcare debate while reading this article. Market distortions creates problems, call for more planning, more intervention, more top men!

  11. I remember vividly how Venezuela was considered a model of government run efficiency by the dems not very long ago. I remember their president, obama’s buddy, lecturing him on how to install an efficient socialist government, and obama grinning that stupid dunce grin of his as he did so. The same for Cuba, another socialist paradise that everyone is trying to escape from. And they also held Greece up as “The working man’s paradise”. And look at what they have and are still trying to do to this country and to Trump as he strives mightily to get things back on course!

    1. I remember when Obama was paraded out on that rooftop in Cuba for a photo op in front of Che Guevara’s mural.

      What a classic Marxist dipshit – Obama that is.

      Do you think that Obama, et al. know that Guevara was a murderous evil thug? I think they do and have absolutely no problem with it.

  12. I had an argument about Obama this morning. The other party went through a litany of the “good things” he achieved, with nary a mention of the $10T added to the debt. It’s like progressives really cannot understand what that “cost” part is in the phrase “cost/benefit analysis”.

    1. What did he do that was good? Seriously. Cannot think of one thing he did that was not a major increase in the bureaucracy or deep state or debt for future generations. Bad guy all around and really quite stupid.

      He was the jobs program president that simply increased the zombie numbers. That is all.

      1. Obama closed Gitmo, brought the troops home from Afghanistan and Iraq, fixed healthcare once and for all, paid off the national debt, ended the malfeasance of federal agencies ranging from the IRS to the NSA, and single-handidly halted rising sea levels.

        What did Obama do? WHAT DIDN’T HE DO?!

        1. He is a god.

          I have never seen anyone worshiped more by morons in my lifetime.

          I guess you can achieve anything when the entire media/entertainment apparatus is in your worship camp. Being completely brainwashed helps.

          1. I am currently watching Bloomtard, Chicken Noodle News and the rest disembowel themselves trying to report on todays news. Drudge was created because NYT sat on Lewinski…and she was sitting on Bill.
            Bloomtard sat on the Suzie story and now that it’s hit the headlines, they’re on her like white on Rice.

            1. Uh, rice is brown until its milled.

            2. The intelltigence community is really getting out of control. Even of the pols who supposedly control it. It’s become HAL in 2001 A Space Odyssey.

              I think in honor of the anniversary of 1984, I’ll start keeping a dairy today.

  13. One hundred million plus innocent bodies crushed dead under philosophical napalm unleashed by ‘virtuous’ collectives brutally imposing the Progress of Man through the last 100 years isn’t enough of a fucking reminder?

  14. I think you are mistaken here. Socialism does not lead to dictatorship. Socialism is a dictatorship, by their own definition. Being born and raised in socialist country, I think I know. I hated learning history of socialism, but I did pay attention. One of the principal rules of Socialism is a Dictatorship of Proletariat and that legitimized their hold on power. — Kris w/ PoloniaNews.

    1. What country please? Also, do you see real similarities to the shit show happening here or do amercians simply have no real idea what oppression is?

      1. timbo

        Do you even have to ask?

  15. As my Euro-leftist friends tell me, Venezuela’s problems aren’t due to socialism, it’s due to nutters holding power. Why then has every socialist nation ended up with nutters in power?

  16. Question from the floor:

    When has Socialism not led to Dictatorship as a system of government? The ‘frequently’ portion of the headline implies that sometimes it doesn’t, and I’m curious in which cases socialism leads to freedom or otherwise increases the standard of living of those who labor under it’s tenants?

    1. Fair point, and now the counter point. Sweden or Denmark, you can’t call them a Dictatorship but they are certainly socialist. Now though because the takers are burdening the system from the givers(taxpayers) they have chosen to import 3rd world 5th century mudbugs to do menial tasks and augment the tax base not taking into account their anti-social inbred lack of social skills. There is much mock surprise from the rapes, murders and beheadings in the name of their namesake religion to their base population while trying to placate their incongruent import taxpayers from killing with glee.

      1. That isn’t a counter point so much as a vaguely racist rambling agreement, which I’m having difficulty parsing for a point beyond rabid anti-immigrant anti-Muslim sentiment.

      2. Sweden:
        The vast majority of Sweden’s industry is privately controlled, unlike many other industrialized Western countries, and, in accordance with a historical standard, publicly owned enterprises are of minor importance.
        Heritage foundation index of economic freedom; 23
        Heritage foundation index of economic freedom; position 12.
        Both have high taxes and income redistribution, but neither is all that (economically) socialist.

  17. Socialism is watered down communism. Liberalism is socialism packaged as progressive to pudding brained liberal idiots who have no concept of history, human nature or the fact that as useful idiots, they are merely the tool used to form the chains that will bind them.

    Witness the lamestream lying and or covering up the illegal actions of the Obama Regime against President Trump.

    1. “We want the world and we want it NOW!” – J. Morrison

  18. Hugo Chavez’s daughter reportedly has more than $4 billion in banks outside of Venezuela. The problem with socialism is that some animals always end up more equal than others.

    1. That’s a lot. How many shiny suits and Ferraris does one family need?

    2. Animal Farm is less cautionary tale than playbook

  19. Psh, whatever, you kulak wrecker scum. Venezuela just didn’t do the right kind of socialism. Just wait’ll that happens! The workers and I will be enjoying our proletarian paradise, while you bourgeois class-enemies will be waiting in line for your place up against the wall! Viva la revolution! Next time’s the charm!

    1. Isn’t is always?

      Green grass, fence, meet other side.

  20. You say “In 1944, when he wrote his book, Hayek noted that the crimes of the German National Socialists and Soviet Communists were, in great part, the result of growing state control over the economy”

    Yet the Germany Nazi party’s full name is NAtional soZIalistische deutsche arbeiter partei – which literally translates from German as the National Socialist German Workers’ Party.

    Socialists hate the fact that the Nazi party was a National Socialist party with the same strong gun control agenda, the same strong social programs, the same government control of education, the same government control of the economy, and the same emphasis on government jobs and worker’s rights as modern socialists.

    There’s also the same Nazi brownshirt violence against those who refuse to follow their left-wing agenda (history calls it brownshirt violence because they dressed in brownshirts to easily identify attackers from their victims, today they’re masked and dress in black but still violent). So Socialists frequently try to rewrite history by referring to Nazi as right-wing whereas in truth Nazi is actually left-wing and socialist.

    Pity for the Venezuelan people who believe the Socialist rhetoric. And the same for America and those who believe the sophist message of Clinton and Bernie Sanders…

    1. Socialism vs fascism.

      Two sides of the same coin.

  21. Drudge Report is linking to this article. Welcome to Reason.

  22. You may throw any sort of correlation at Hayek’s hypotheses to see if they stick. More importantly, Venezuela’s socialism was based on a petroleum monoculture. You simply cannot have a stable economy based on the vagaries of the price per barrel of oil.
    The government of Texas has done the same thing. They have constructed a system of government finance wholly dependent on oil prices upon a base of property taxes. So they can proudly say that they have no income tax whilst their school finance system is falling apart, Child Protective Services is having trouble keeping children alive, and, like Venezuela, an intransigent (in this case right-wing totalitarian) government is in denial. Socialism is not the problem. A fiscal monoculture is.

    1. Texas is a ‘right wing totalitarian’ state? And it’s falling apart? Have you seen stats by state economic data recently?

      Whatever you’re on, it’s good stuff.

  23. When it comes to Venezuela, everyone seems to think that the socialism started with Chavez. It didn’t. It began with Carlos Perez, a generation earlier. He nationalized the oil and the steel industries (the number 1 industry socialists desired to nationalize, before nationalized healthcare became their dream nationalization). So those industries went into the toilet – which destroyed both their chief source of revenue (oil) and a chance at economic diversification (a strong steel industry). Chavez only increased the pace toward socialism, seemingly following the plot of Atlas Shrugged better than anywhere else, as Perez overspent the oil revenues in the 1970s, leading to the economic crises later on that lead to Chavez.
    A key to avoid socialism is a diverse economy. That means a government restrains their spending of the bonanza that results from an economy that booms off of the extraction of a valuable resource. If they don’t, then people don’t have an incentive to work, and create new industries (which result in economic diversification) because their needs and wants are met. This is how formerly wealthy countries became impoverished. Burnout also explains how resource-poor countries, like Switzerland, became the wealthiest on the planet.

  24. Reason has a habit of using the logical fallacy ‘Straw Man’ to support its opinions. Does socialism usually lead to dictatorships? Clearly some do, as in this example. Was Hitler or Mussolini socialists? Not really, they were fascists hiding underneath the name, very much as the RW Republicans hide under the mantle of ‘The Freedom Caucus’. And clearly, there are many dictators thoughout history that had no connection with socialism..Pol Pot, Ghengis Khan, Caesar, Mugabe, blah, blah, blah. The truth of the matter is that some leaders tend towards dictatorship, very much as Trump seems to.. That’s a personality flaw, not a political model. Currently the following are all the top 10 of existing socialist countries : China, Denmark, Finland, Netherlands, Canada, Sweden, Norway, Ireland, New Zealand, and Belgium. Not a single dictatorship in the mix. I’d like to see this ‘big list’ of socialists turned dictators.

    1. Sigh.

      1) All successful pseudo-socialist countries are European. Even then though most European pseudo-socialist countries are failures (e.g. Portugal, Greece, Spain, etc.) and the more successful ones were successful well before they were so socialistic. E.g., Germany and Sweden built most of their their welfare states after most of their more impressive postwar economic growth.

      IOW, pseudosocialism is a societal luxury rich capitalist countries but into to make themselves feel better; it does not precipitate prosperity. Look at Singapore and Hong Kong to see how developed countries that resist that temptation continue to grow at a faster pace.

    2. “…Was Hitler or Mussolini socialists?”


  25. China is/was not a dictatorship?

    Tell that to the deceased chairman please. And then tell that to his successors in the party.

    1. Yeah he threw in the atrocious authoritarian state of China against his better judgement, probably because otherwise adding up those ten in his list still yields a population much smaller than the US.

      And let’s pretend that China’s success came somehow as a result of socialism rather than despite it. Ignoring the fact that their economic “miracle” only started when they acquired the world-leading-free-market of Hong Kong and their maintenance of market freedom there along with allowing it other major cities to emulate Hong Kong’s success.

  26. Besides, the title didn’t say “usually”. It said “frequently”.

    Your argument blows up in your second sentence.

  27. Socialists do not learn from their mistakes; people just suffer from their mistakes. It takes a particular combination of arrogance and hubris to watch the deterioration of a country and blame the results on anyone and anything instead of accepting blame.

  28. If I understand socialism correctly, it is based on the idea that the state will be in charge of allocation of certain products and services in order to achieve a societal fairness to such distribution. In Venezuela this covered health care, food, power, etc. The problem is that in every instance to achieve ‘social justice’ in such matters, the state must know everything there is to know about every citizen so that that equality can be achieved. That results in a dictatorship and a totalitarian regime almost always. You know, to make sure a person doesn’t have more than any other. Except, of course, the leaders, who invariably live like kings. That is why governments should excluded as much as possible from interfering in any industry. The fiasco of Obamacare is a good example.

  29. Except when it doesn’t. Most innovative (financial, corporate, private sector) countries in world in order 1-15. Know why? Post-secondary education. Socialism reigns. Find one, just one survey, any measure, any kind, farthest left to farthest right, that Scandinavia isn’t at the top. At least equal the US. Ask Cato!

    Hong Kong

    1. Sweden, Switzerland and the UK are more innovative (financial, corporate, private sector) than the US, huh. Their ten million people, fewer than many metro areas in the United States has produced what? Integrated circuits? Biotech? Spaceflight?

      Read the wikipedia page… pretty big trade in arms, got their mojo back when they rolled back the welfare state.

      But anyway, whatever, your list doesn’t mean anything.

    2. That’s funny. The US gov spends more per student than all but one of those countries; it would seem your own numbers betray the failure not success of public (socialist) education.

    3. Korea is not a socialist state. It’s a banana republic / oligarchy where a handful of corporation control the entire economy. That’s sounds awful, but it’s still among economic giants. In a socialist state Samsung, Hyundai and LG couldn’t meaningfully exist. That’s why their northern brethren is hell on earth and under the Chinese thumb.

      Socialism reigns, but we have 8-10 times the population of most of the countries on that list.

    4. Socialism is not welfare, though (and the Republicans often try to conflate the two as well). It’s the government controlling industry.

      1. By your definition, none of the Scandinavian countries practice socialism. I wonder if they are aware of that?

  30. Worse, it often leads to even more socialism.

    Life for the average person is probably pretty decent under a right wing dictator. At least the economy is good. Oh sure, you can disappear like in any dictatorship, but generally only for trying to overthrow the state, not succeeding in business.

  31. “Socialism frequently leads to dictatorship”…? How about Socialism ALWAYS leads to social and economic collapse? Tell the truth.

  32. Or, in the immortal words of Orson Well: ” You know what the fellow said ? in Italy, for thirty years under the Borgias, they had warfare, terror, murder and bloodshed, but they produced Michelangelo, Leonardo da Vinci and the Renaissance. In Switzerland, they had brotherly love, they had five hundred years of democracy and peace ? and what did that produce? The cuckoo clock.”

  33. Socialism quite often leads to a dictatorship. Communism has ALWAYS led to a dictatorship.
    The goal of socialism is communism. – Vladimir Lenin

    1. I wish to read more issues about it!|
      how big is the universe

  34. Many things can lead to dictatorship, and socialism frequently does not lead to dictatorship. You could equally say that Chavez was a nationalist populist. Argument fail!

    1. “…You could equally say that Chavez was a nationalist populist. Argument fail!”

      If you were stupid enough, you could presume that was a point.
      Stupidity fail!

  35. The same thing happened in Brazil. After the Speaker of the House (a fanatic eager to ban contraception, birth control and pregnancy termination) was sent to prison for corruption and bribery, the President of the Senate was ordered out of office by the High Court. That worthy, backed by his Senate cronies, simply ignored the order with Jacksonian aplomb. Meanwhile in many of the largest cities, None Of The Above won large pluralities in forced elections from which Libertarian parties are excluded by the 33 government-subsidized looter parties. There is a difference in degree only between Brazil and Venezuela–that and oil.

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