Will Socialism Make a Comeback?

If socialism signifies a political and economic system in which the government controls a large part of the economy and redistributes wealth to produce social equality, then I think it is safe to say the likelihood of its making a comeback anytime in the next generation is close to zero. But the egalitarian political impulse to constrain the power of the wealthy in the interests of the weak and marginal remains strong and is already making a comeback. There are good reasons for thinking this impulse will not lead to new radical groups' achieving political power and implementing a coherent political agenda. Though, in the process of trying to influence the course of events, the global left may invent an entirely new form of governance that will act as a strong brake on multinational corporations and the governments that serve their interests.

Let's begin with the reasons why the economic system we called socialism back in the 20th century is unlikely ever to return. Today it's a cliche to say that socialism didn't work, that it produced a society in which, as the Soviets used to joke, they pretend to pay us and we pretend to work. In fact, socialism did work at one period in history: during the 1930s, and again in the '50s and '60s, socialist economies like that of the U.S.S.R. grew faster than their capitalist counterparts. But they stopped working sometime during the 1970s and '80s, just as Western capitalist societies were beginning to enter what we now call the information age.

There is one basic explanation for this. As the libertarian economist Friedrich von Hayek once pointed out, the bulk of information generated in any economy is local in nature. If this local information has to be processed through a centralized hier- archy--whether government ministry or even overly large corporate bureaucracy--it will inevitably be delayed, distorted and manipulated in ways that would not happen in a more decentralized economic-decision-making system. The U.S.S.R. used to have an office called the State Committee on Prices, where a few hundred bureaucrats would sit around setting every price in the Soviet economy. Imagine how well the U.S. economy would work if every price for every product had to be determined in Washington--in an economy in which a single Boeing 777 airliner can have as many as 3 million separate parts, each with its own price!