The Adam Smith Institute’s Tim Worstall claims to be one of the world’s foremost experts on scandium. Whether or not this is true I am ill-equipped to say, as I know almost exactly nothing about scandium. I assume they use it to make scanners, and I was figuring it was probably from Sweden, but then I realized I was confusing it with Scandinavium, a similar metal so heavy that Iron Maiden’s played there nine times. Anyhow, the point is: I don’t know anything about scandium, and I freely concede, in advance, any arguments about scandium I ever get into against Tim Worstall, who knows much more about scandium than he does about socialism. Sadly, it’s the latter he’s chosen to write about today, in an utterly bizarre article nominally about the mining strikes in Bolivia.
If you haven’t been following the Bolivian mining strikes, they’ve now escalated to the point where Deputy Minister of Internal Affairs Rodolfo Illanes was recently kidnapped, tortured, and murdered by the strikers. Our friend Tim Worstall would have us believe that the strikers are protesting against socialism, but is that really the case? We’ll explore that very soon, but before we dive into the pièce de résistance, we need to whet our appetites with this lovely little amuse-bouche of stupidity:
Around here we usually make fun of Bolivarian socialism by reference to the idiocies which Nicolas Maduro has been imposing upon the people of Venezuela. They do, after all, call their system "Bolivarian socialism." Across the continent, in Bolivia, we also have a closely related Bolivian socialism. Evo Morales has often said that he takes inspiration from Hugo Chavez, and that the system he is using in Bolivia is similar. So, Bolivarian socialism in Bolivia then. Umm, perhaps both Bolivian and Bolivarian socialism?
Why yes, those do sound rather similar! What an astonishing coincidence! On a related note, I’ve always found it weird how similar the titles of Superman and Superman II are. What do you suppose were the odds that would just happen by chance, as it so obviously did? The universe is a mysterious place, my friends!
That was delightful. Now the red meat:
This incident is not one to make fun of — Rodolfo Illanes, a government minister, has been beaten to death by striking miners. That’s not something to joke about. And yet it’s worth pointing out what the miners are actually striking against: socialism.
The miners actually provided the government with a list of ten demands, one of which was the demand to be allowed to contract with private companies. This demand is the rock upon which Tim is building his case that the miners are striking against socialism. Problems with that conclusion are not difficult to find, most notably that the mining coöperatives themselves will continue to be government-owned and government-operated even if the miners get their way. So they’re not really striking against socialism itself, they just want their socialist overseers to allow them a bit more leeway in running the day-to-day operations of the firms.
It gets worse, of course. Other demands made by the striking miners include better pay and working conditions, strengthening of alleged "workers’ rights," the creation of a deputy ministry (a government agency) to supervise the mining collectives, government subsidies for their electricity, more powerful labor unions, and an end to president Morales’ "neoliberal agenda," whatever that means. Suddenly this doesn’t sound quite so much like a popular uprising against socialism, does it? It sounds a lot more like a run-of-the-mill demand for a bigger slice of the socialist pie. I might, under ordinary circumstances, take this opportunity to accuse Tim Worstall of intentional omission of these inconvenient facts, except that I’m not really sure he actually knows what socialism is. To wit:
Just so that we’re all entirely clear here. This is not socialism as being price fixing, nor the government owning everything. This isn’t about the idiocy of the Soviet Union’s economic structures. Nor is it about central planning. This is about the proper definition of socialism in an economic sense – the communal ownership of productive assets, as opposed to the capitalist. A workers’ coop (say, Publix or WinCo supermarket chains in the US, John Lewis/Waitrose in the U.K.) is a socialist organisation. The workers within the organisation own the organisation itself. Those examples work very well. As do also Walmart, a capitalist organisation, and Tesco, similarly capitalist. The definition is in who owns. There are other variants, there can be producer coops (many farmers belong to one or another), it can be customer owned (the Co Op in the U.K.), management owned (most legal firms and partnerships) but the point of differentiation is that in a capitalist system it is outsiders who provide the capital and own the organisation, in a socialist one insiders.
Just so that we’re all entirely clear here: off the top of my head, I can say some variant of "no, you’re wrong" in seven different languages — a useful skill on the internet, to be sure — and I don’t think that’s enough to cover all the massive, unreasonable wrongness in that paragraph. It is obviously, hilariously untrue that any form of business organization in which "insiders" provide the capital is socialist. That makes no sense! When I was fourteen, I spent the winter shoveling porches and driveways to make pocket money. According to Tim, I was a socialist, because there was no outside investor backing my agency. Kids with lemonade stands? Socialists. Mom-and-pop thrift stores or cafés? Socalist.
To put the absurdity of this in relief as sharp as I can manage: according to Tim’s definition, if I borrow some money from my brother to open a box factory, I’m a capitalist. If instead of borrowing the money I work hard and save to open my box factory on my own, now I’m a socialist. Does this by chance seem insane to you? In the World of Worstall, perhaps the ultimate symbol of creeping socialism is the stock option. Curse those socialists, offering me stock in their privately-owned corporations!
No, Tim, the fundamental difference is that, in a socialist economy, the capital stock is not considered to be owned by anybody at all (or conversely, owned in common by everyone, which is the same thing). In fact, no less a source on socialism than Bolivian president Evo Morales would have been more than happy to explain that to you:
They are not another state, or a republic, our natural resources belong to the Bolivian people by constitution. The only one who can sign contracts is the state.
I apologize for the poor quality of that passage, but the translation is not mine; I’m assuming that Bolivian president Evo Morales is a bit more eloquent in his native Spanish than he is in machine-translated English. Regardless, his point is clear: "our natural resources belong to the Bolivian people." That, Tim, is what socialism is all about. It’s not socialism if a mining company owns its own mine instead of leasing somebody else’s; it’s socialism if the mining company has to use "the people’s mine" because nobody’s allowed to own it. Do you see?
Okay, maybe you don’t trust that Morales guy; he’s a socialist, after all, so he must be up to something! Maybe trying to sell us stock. Here’s Ludwig von Mises, a man who knew a thing or two about socialism, writing about socialism in his book on socialism, entitled Socialism:
A new social ideal long ago supplanted the naive [sic] fanaticism for equality of the distributors, and now not distribution but common ownership is the slogan of Socialism. To abolish private property in the means of production, to make the means of production the property of the community, that is the whole aim of Socialism. (p. 51)
Once again, we see that socialism has nothing to do with "insiders" as versus "outsiders," but only with the absence of private property titles in the capital stock. It’s unclear to me why Tim thought otherwise; perhaps he got hung up on some Marxoid sloganeering about workers owning the means of production and connected the dots to Bob’s Red Mill, said "aha — reds!" and then sat back, contented, his day’s work complete. Regardless, it led to an utterly madcap article, so shame on you, Tim Worstall. The end.
… Wait, there’s more? He’s not done yet? Oh dear.
Both have their advantages, both have their downsides. And how to work out which is the best one to use in a certain circumstance is one of the things we have markets for. As long as an organisation competes in said market then the market in forms of control is just fine.
Ah. I see. So what we need is a free market in markets, so we can market different markets on the market for markets. This goes far beyond the realm of economics and becomes a whole new field. I dub it "Xzonomics."
What we actually find is that capitalist organisations can work very well as socialist organisations, capital intensive ones not so much. Take a stylised and not very accurate idea of a steel mill using a blast furnace. That might require $1 billion in capital to get up and running. You might end up with 10,000 workers at such a plant. That means, if the workers are going to supply the capital, that you’ve got to find 10,000 would be steel workers with $100,000 each to put into the project. I submit that this is unlikely to be successful as an enterprise.
So, again, just to make sure I’m understanding this: if one person associated with this plant — say, Donald Trump — decides that he’s developed a serious passion for smelting steel, and he really just wants to get down there on the production floor with all the other guys and do… whatever it is one does in a steel mill, and he’s so committed to making this plan a reality that he doesn’t care a whit if his 9,999 fellow workers can’t put up the money, his opening of a steel mill with money from his own pocket makes that steel mill a "socialist organisation." That’s really what he’s saying here, right? I mean, they’re still buying their inputs and selling their outputs on the market like every other steel mill, and the workers still need to be paid an amount that’s competitive with other steel mills (after many complicating factors are taken into account) to keep them from leaving, and as far as God or anybody can tell it operates just exactly like any other steel mill, but this one’s somehow socialist. Why? How?
On the other hand say that we’re trying to write a new app. We need four laptops, eight months of time and a crate of Ramen. We might well find four programmers who would chip in to create that and in fact we do, the economic landscape is simply littered with people doing exactly that. And they, as both the workers and the investors, own the resultant company. It is, in our definition here, a socialist organisation.
Yeah, Tim! Stick it to those nerds! Then go back to bragging about being an expert on scandium.
Anyhow, there it is for all to see: he really is saying what I’m making it sound like he’s saying. Four guys who start a business with nothing but the clothes on their backs and tools they have to hand are socialists. I’ve actually run pretty much dry on histrionic examples I can use to illustrate how insane and wrong this is, so I’ll just point out that it pretty much fits the bill at the Adam Smith Institute, which organization claims on its website to be "at the forefront of making the case for free markets and a free society in the United Kingdom," and then a few paragraphs later calls for publicly-funded healthcare, a basic guaranteed income, and a George Bush-esque "liberalised planning system that lets many more houses be built, so everyone can afford to own their own home." Aces.
It is possible to say that the capitalists will simply be exploiting the workers. This Marxist idea that all value comes from labor and thus if labor isn’t getting all the value created then they are being expropriated of the sweat of their brow. It is also possible to be sensible here.
At this point, I’d settle for coherent sentences with the proper number of verbs in them.
At heart the entire argument is one against the imposition of socialism. Again, there’s absolutely nothing at all wrong with socialism, in this sense of ownership, in certain times and places. However, it’s inappropriate in other times and places. Specifically, when large amounts of capital are needed. Mining needs large amounts of capital – therefore socialism isn’t the right structure for this activity.
I would like to call your attention to the fact that Adam Smith Institute senior fellow in scandiology Tim Worstall says "there’s absolutely nothing at all wrong with socialism." It’s enough to make one wonder what the purpose of alleged "free market" think tanks could possibly be.
In the end, our buddy Tim Worstall has definitely shown one thing: the Bolivian protests absolutely, definitely are protests against socialism, as long as we’re willing to treat "socialism" as a magical catch-all word that doesn’t really mean anything. Pesky things, definitions — they really interfere with one’s ability to write about subjects one knows nothing at all about!