Socialism from the Bottom Up: Where Lawson and Powell Meet Hayek and Buchanan
By Edward J. López
- Review of Socialism Sucks: Two Economists Drink their Way Through the Unfree World,1 by Robert Lawson and Benjamin Powell.
We have heard a lot about Socialism lately. It has made a big splash in the United States over the past few years. A string of opinion polls since 2016 have shown an upswell of support for adopting socialist economic policies in the world’s largest economy. This tidal wave of public opinion has been fueled by constant attention on cable news, social media, and elsewhere. Yet for all its promise in idealized form, socialism as actually practiced and historically carried out has led to misery, famine, and mass murder. Still, today’s wave of new socialists seem eerily comfortable with ignoring all that, as if to say, “No, no, we’ll do it right this time.” Meanwhile, folks who know how socialism has actually worked fold their arms and shake their heads. The two sides seem to be talking past each other.
Some observers have attributed today’s wave of socialism to generational causes. Edward L. Glaeser’s essay, “How to Talk to Millennials About Capitalism,”2 argues that millennials got stung hard by the Great Recession, right at the time when they were coming of professional age. The crash left millennials feeling like they had been ripped off while others got rich. They became disaffected with the status quo, and they were told that status quo is called capitalism. Why wouldn’t millennials search for other solutions, and why wouldn’t a predominance of them seek out the opposite pole from capitalism? Glaeser says people of these viewpoints should hear more about the promise of freedom and the perils of being controlled. Other observers look to non-generational answers. Some have noted, for example, that support for welfare state spending is actually higher among boomers as compared to millennials. Others have questioned whether socialism itself has become more popular, or if pollsters are just polling more about socialism these days.
Lawson and Powell: Socialism Sucks
Robert Lawson and Benjamin Powell take up these issues in their timely new book, Socialism Sucks. The book opens with the question, “How can so many Americans view socialism so favorably, when in practice it has led to misery and mass murder?” (Lawson and Powell, page 9). To seek answers, the authors travel to eight different countries—Venezuela, Cuba, Korea, China, Georgia, Russia, Sweden, and Colombia—before coming back to the United States and capping off their journeys at a large socialism conference in Chicago. The book’s eight chapters take us on a saucy ride through the authors’ edgy travels, as they gather first-hand evidence of socialism’s track record. In an innovative postscript, Lawson and Powell interview freedom activist Matt Kibbe about how far the socialism needle has moved and where it’s going next. Even though all three of them are trained as economists, the discussion is far from academic. Socialism Sucks has a casual relatability, as though the reader is talking with the authors over a tasty beverage. And yet the reader feels grounded in the authors’ grasp of the economic world. The vibe is wise yet extracurricular, genuine yet irreverent. Think Drunk History meets Planet Money meets Jay and Silent Bob. It entertains despite its subject venturing into weighty territory.
Lawson and Powell are well-suited to the Socialism Sucks project. Both are well-known economists, especially in free market circles where they are among the leading scholars of their generation. Lawson is a long-time co-author of the annual Economic Freedom of the World Report.3 Powell has written extensively on the case for liberalizing immigration, trade, and other labor markets. Both are directors of free market institutes, and both are seasoned travelers, having logged over 50 countries each. Finally (cheers, boys), both are avid drinkers. Economics, globetrotting, and booze. A fitting trifecta for this pair.
And it shows. The travelers’ tales are loose, yet insightful. Along the way, we find out why Sweden isn’t socialist, why a 1991 French-made car sells for $30,000 in Cuba today, why Venezuela actually ran out of beer once, and why the best description of China is “fake socialism.” There’s a wealth of knowledge running throughout these lines, and it’s not just about Peugeots and Polars. We also learn how deadly serious the move toward more socialism can be. We see people losing many of their basic freedoms when forced to live under socialism. We see Cubans enduring the same monotonous diet with little variety. We learn of Venezuelans traveling hundreds of treacherous miles to get basic household items and car parts. And we hear of North Koreans who escape to China and were caught, only to be returned to face harsh consequences, even execution, for themselves and family. When things get really bad, there’s mass famine and mass murder waiting around the corner. Socialism really does suck.
Lawson and Powell’s last stop brings the adventure full circle. Coming home from their travels in July 2018, the two checked into a big Chicago hotel for the largest conference of American socialists. What they found at the socialism conference was a roadmap back to the book’s opening question. Socialism properly defined means the abolition of private property in favor of state ownership and control of the means of production. But no one at the socialism conference could be found advocating for this definition of socialism. Instead, the focus was on social justice and anti-establishment slogans. None of the speakers argued for abolishing private property and centrally planning the U.S. economy. They argued instead for more redistribution of tax dollars to such favored causes as expanded abortion funding, single-payer health care, and a guaranteed basic income. They argued also for dismantling white privilege in favor of more protections for marginalized groups. They booed loudly at mentions of capitalism, President Trump, and war, while cheering and chanting for solidarity and structural change. The way Lawson and Powell portray the gathering, there was no socialism at the socialism conference, thus bringing them back to a version of their central question: “Why were we surprised that the speakers at the socialism conference didn’t talk about socialism?” (page 125).
They have two answers. The first answer corresponds to the economics definition of socialism, properly understood as state ownership of the means of production and the implementation of central planning. Folks who these days are calling themselves socialists—the poll responders, the crowds at socialism conferences—aren’t socialists at all. They’re abusing the term, and in doing so they’re distracting from the misery and death that actual socialism has brought. These people are of course entitled to their beliefs, but they should not call those beliefs socialism.
Their second answer evokes a more bottom-up notion of socialism. By Lawson and Powell’s account, the socialism conference was a grassroots, social movement type of crowd. Sure, they want higher taxes on the wealthy and free Internet, but they’re not clamoring for collectivization of property and top-down central planning from the commanding heights. Today’s socialists don’t seem to identify with that establishment stuff. They’re more communitarian than communist. More democratic than socialist. As the authors observed in Chicago, “the socialism at this conference seemed to prefer something called ‘socialism from below’.” (page 128) I underlined this part in the book. It evoked for me the phrase “bottom up,” which is used a lot to describe emergent and spontaneous phenomena and has been used to describe popular support for socialism.
A View from 1949: Hayek’s The Intellectuals and Socialism
In his essay “The Intellectuals and Socialism,” written 70 years before Lawson and Powell, Friedrich Hayek is preoccupied with essentially the same motivating question: How is it that socialism enjoys popular support, even when it has been discredited theoretically and shown to be disastrous historically? Similar to the dynamics surrounding today’s wave of socialism, at the time of Hayek’s writing at mid-century, socialism had risen to popularity during a tumultuous time of global ideological extremism and national political realignment. Hayek at mid-twentieth century is aghast at his contemporaries in the west who had begun embracing central planning as the new modernity. He devoted this stage of his career—from about 1946 to 1956—to applying the technical economic insights he had previously developed alongside Ludwig von Mises in the socialist calculation debate. His publications during this period began to reach out beyond the economics profession as his general and popular readerships grew. Published in 1949, “The Intellectuals and Socialism” comes five years after The Road to Serfdom, where he warns of the perils of vesting too much control in the hands of central planners, and five years before Capitalism and the Historians, where he argues that ordinary people get their ideas about human events not from historians but instead from intellectuals.
For Hayek, the term intellectuals refers to a class of influential figures in society. These are journalists, teachers, ministers, lecturers, publicists, radio and screen personalities, media commentators, cartoonists, writers, and basically anyone whose primary function is to communicate ideas to different audiences. Hayekian intellectuals are not original thinkers, or scholars, or even experts in a particular field of thought. Instead, they are masters of the technique of conveying ideas to particular audiences, and they tend to remain amateurs so far as real understanding of the issues goes.
Hayek says these intellectuals at mid-century had implicitly become seduced by something he calls scientism. Scientism is the fallacy that human interaction can be controlled by the same methods used to control the physical world. Hayek’s technical economics had trained him to think of society as an evolving collection of individuals each adapting their behavior to a changing world, and each discovering new and better ways to do things along the way. This counts especially in economic life, which is what a central planner would be required to control, by definition, down to the level of each individual person. Hayek deems that to be an impossible task. Central planning is impossible because the knowledge of each individual’s best course of action tends to be tacit. It exists only in the local context and subjective viewpoint of each individual, and this local, contextual knowledge is changing every moment. Hayek says that socialism is impossible because of the knowledge problem.
Therefore, what Hayek calls scientism is necessarily a fallacy of control, an impossible dream. Yet it is also the answer to his own question. The intellectuals embrace socialism despite its disastrous consequences, and in doing so he says they “have all been known to influence public opinion in the direction of socialism” (page 375). Ultimately Hayek’s explanation for popular support for socialism is top-down. “It is the intellectuals in this sense who decide what views and opinions are to reach us, which facts are important enough to be told to us, and in what form and from what angle they are to be presented.” (pages 372-3). Over the long term, he concludes, “the execution of policy will in general be in the hands of intellectuals.” (page 370)
Buchanan’s Socialism: Afraid to Be Free
Unlike Hayek, James M. Buchanan was not a contributor to the socialist calculation debate. In contrast to The Road to Serfdom, Buchanan’s books tend to confine themselves to academic discussion rather than venturing into popular opinion. The words Leviathan and liberty appear with far more frequency in Buchanan’s work than the word socialism does. Yet still he wrote at some length about socialism in a handful of articles. Especially relevant to discussion of today’s wave of socialism is Buchanan’s 2005 essay in Public Choice, “Dependency as Desideratum: Afraid to Be Free.”4 In this short piece, Buchanan sketches four broad sources of socialism, and predicts that socialism will continue and persist into the foreseeable future.
What is distinctive, to begin with, is how Buchanan defines the term socialism: “we loosely describe socialism in terms of the range and scope of collectivized controls over individual liberty of actions…” (Buchanan, page 19). This shifts our focus from an emphasis on collective ownership of the means of production to instead emphasize the extent of collective control over individual liberty. This is a very Scottish political economy way of looking at it, instead of the technical economics way of defining socialism. Conspicuously absent in Buchanan’s definition of socialism is any mention of the means of production or even property rights. Buchanan’s definition is focused first on liberty, and especially on how much power is vested by political-economic institutions into controlling the lives of individuals.
Buchanan predicts an expansion of socialism, so defined, during the first half of the twenty-first century. His article first provides a typology of socialisms. He then argues how these different socialisms interact. “There are at least four sources or wellsprings of ideas that motivate extensions in the range and scope of collective controls over the freedom of persons to act as they might independently choose” (pages 20-22).
Socialism 1: Managerial Socialism. This is the technical economics definition of socialism. This brand of socialism is state ownership of the means of production combined with central economic planning. The hallmark of Socialism 1 is to use economic models as scientific guides to economic policy. This approach was put into widespread practice in many countries during the twentieth century. However, due to knowledge and incentive problems, the scientific application of economic models proved fatally flawed. As a result, Buchanan describes Socialism 1 as “now dead and buried, both in ideas and in practice”.
Socialism 2: Paternalist Socialism. Socialism 2 is top-down socialism selected by elite intellectuals and handed out to the masses, much in the vein of Hayek’s scientism. With this type of socialism, Buchanan highlights how the intelligentsia can sustain the case for socialism even after the scientific case for central planning has been decimated by theory and history. Unbothered by concerns of practical implementation, the “self-anointed elites” envision their social ideals and steer discussions of economic policy to support “widened collective control over liberty of choice”.
Socialism 3: Distributionist Socialism. Socialism 3 is all about distributional equality. This system relies on private property and the efficiency and growth that competitive markets deliver. Yet it also relies on democracy to generate a large redistributive welfare state. Socialism 3 is not what economists have in mind when defining socialism as abolition of private property, but it seems akin to what we see in today’s wave of socialism. It is also what Lawson and Powell observed as “socialism from below” at the Chicago socialism conference. Why were none of the speakers at the socialism conference talking about socialism? Perhaps they were. Only they were talking about Socialism 3, not Socialism 1.
Socialism 4: Parentalism. So far Buchanan’s categories might seem to retrace existing territory, but where he really takes us someplace new is with Socialism 4. Here Buchanan introduces us to the interesting term parentalism. Parentalism is the inversion of paternalism. Whereas paternalism is the top-down exertion of control by elites over the masses, parentalism is the bottom-up plea to be controlled. Parentalism takes its root in the tendency to seek out ways to enjoy the benefits of individual liberty while avoiding the costs of accepting individual responsibility. Where the desire to abdicate responsibility grows sufficiently strong, there will arise a demand for being politically controlled. This popular preference for being controlled, Buchanan argues, will be the primary wellspring of socialism in the first half of the twenty-first century.
Looking Ahead: Interactions Among S1-S4
There can be no doubt that S1 as implemented in the twentieth century was a failure. Yet on the flipside, it remains equally true that Socialisms 2, 3, and 4 are alive and well. This is not a paradox, or even an inconsistency. As Buchanan argued, this is a predictable historical development. The rise of the parental state (S2) and the people’s demand for it (S4) have gradually emerged since the historical breakdown of the Church as the singular parental figure. These twin top-down and bottom-up forces aligned disastrously during the twentieth century experiments with Socialism 1. Today, and for the first half of the twentieth century, the dynamic is in place for these twin forces to conspire toward an expansion of Socialism 3.
From the vantage point of 2005, Buchanan predicts that Socialism 4 will be the prime force supporting socialism in future decades. He says that Socialism 4 “has been relatively neglected by analysts.” There may be some truth to this claim. Google Scholar returns 150 times more hits for paternalism (189,000) than for parentalism (1,260). But “more importantly,” he continues, Socialism 4 “is likely to swamp the other three in influence during the early decades of this new century… An overarching theme of the paper is that the thrust of development will be dictated by ‘bottom up’ demands rather than by ‘top down’ dictates of an elite.” (page 20).
In other words, Buchanan is saying that Socialism 1 is not the point. Those of us concerned about socialism, whether it is for ideological, methodological, or historical reasons, should be talking more about bottom-up socialism and less about top-down managerial socialism. Thankfully, Socialism 1 is dead and buried from the world. Even China, as Lawson and Powell point out, is best described as fake socialism. Buchanan urges us to keep alive the hard lessons learned by the drastic experiment with Socialism 1, as Socialism Sucks so colorfully does, while also engaging Socialisms 2-4 in our analysis and in our contributions to public discussion of today’s wave of socialism. That amounts to treating discussions of expanded welfare states and fiscal sustainability as discussions of bottom-up socialism. “The collapse of the Communist regimes in the last decades of the century did little or nothing toward slowing down the growth of the welfare state,” Buchanan concludes. “This, in itself, demonstrates that the parental motivation for collectivization remains perhaps the strongest of those identified above.” (page 26)
The path to understanding bottom up socialism can be found where Lawson and Powell meet Hayek and Buchanan. In their closing chapter about the socialism conference in Chicago, Lawson and Powell ask why none of the speakers at the socialism conference were talking about socialism. These speakers were in the role of Hayekian intellectuals, and they were talking about expanding Socialism 3 (redistributionist). They were unconcerned with and possibly oblivious to Socialism 1 (managerial). This also explains why they seem eerily comfortable with socialism’s atrocities. It’s not that they want the central planning and the communist oppression. No, their dream is to keep the liberty and only give up the responsibility part. Again, they’re more communitarian than communist, more democratic than socialist. So they might correctly feel like they’re having a different conversation all together. When they effectively say, “No, no, we’ll get it right this time” they actually mean it. They’re saying, “No, no, we don’t want to experiment with Socialism 1 again; instead we’re here with Socialism 2 and Socialism 4 this time, and we want some more of Socialism 3.”
In the postscript to Socialism Sucks, the authors interview freedom activist and fellow economist Matt Kibbe. Their conversation covers how the climate of ideas is changing, how socialism has become more popular, and how politicians such as Bernie Sanders, Elizabeth Warren, Donald Trump, and Alexandria Ocasio-Cortez have been responding. What’s interesting is how much their conversation focuses on bottom-up forces reinforcing and actually making possible the top-down forces. The political class is both motivated and constrained by popular support. This bottom-up control exerts itself through dynamics such as grassroots social movements using new technologies to decentralize politics and pave ways for insurgent outsider politicians. If anything, their conversation stresses how little top-down cohesion there is to socialist ideas today. Kibbe concludes, “I am not sure that the word ‘socialism’ to them means what you and I think about when we think about government ownership of the means of production.” (Lawson and Powell, page 147)
Those of us concerned about socialism should focus on the interaction of bottom-up and top-down forces—the socially destructive symbiosis between Socialism 2 (paternalism) and Socialism 4 (parentalism). Intellectuals who are on the side of freedom should continue to counter those intellectuals who remain seduced by scientism. Scholars and experts on the same side should remain always ready to warn of the perils of democratic power morphing into autocratic control, when suddenly the worst get on top and the harmless plans of Socialism 3 evolve into the failures of Socialism 1 and the atrocities committed by outgoing regimes clinging desperately to power. Lawson and Powell remind us that Venezuela’s recent authoritarian and oppressive experience grew out of democratic socialism. As for those who are calling themselves socialists—the poll responders, the crowds at socialism conferences—they should perhaps return the favor and pay much more attention to Socialism 1, perhaps even by reading Socialism Sucks and other books about the importance of taking socialism with the seriousness it commands. Bottom up can do better than socialism.
 Robert Lawson and Benjamin Powell, Socialism Sucks: Two Economists Drink their Way Through the Unfree World. Regnery Publishing, 2019.
 Public Choice. Volume 124, No. 1/2, pages 19-31.
*Edward J. López is Professor of Economics, BB&T Distinguished Professor of Capitalism, and Director, Center for the Study of Free Enterprise at Western Carolina University, where he teaches classes in macroeconomics, applied business economics, and the moral foundations of capitalism. He previously taught public choice and economics of intellectual property at San Jose State University.