The History Of Socialism And Capitalism

For nearly two centuries, societies have weighed the merits of free-market

capitalism

and

socialism

. Debates continue over which system maximizes prosperity and best promotes human flourishing. Free market

capitalism

decentralizes economic decisions by giving individuals control over what to produce, how much to charge, and what to buy in their decisions. They are based on market prices, which convey important information about scarcity and value to the consumer. Proponents maintain that capitalism offers the best economic results by giving individuals incentives to create and produce critics, on the other hand, they point to the persistence of poverty in market economies and the increase in inequality as evidence. that capitalism fails to generate broad-based prosperity argue that this inequality ultimately gives the rich disproportionate economic and political power, in contrast,

socialism

gives the government the authority to make most economic decisions the government chooses how to allocate scarce resources based on what is determined to be most useful to society as a whole advocates argue that socialism ensures that society's resources are distributed fairly critics claim that socialism does not provide people with the adequate economic incentives to innovate and produce, ultimately reducing economic opportunities for all Opponents further argue that socialism's powerful central governments become autocratic and threaten political freedom, so which system is best for humanity?

While this question is being asked, the debate too often devolves into insults and emotional arguments that have failed to move the discussion forward, and yet it is imperative that we continue to ask the human question. prosperity project that the hoover institution seeks to overcome these preconceptions employs the analysis of free market capitalism and socialism and their many variants to evaluate how each system affects human flourishing good morning and welcome to this speaker series from the hoover institution called human prosperity project i am russ roberts, john and gene denault fellow here at the hoover institution and founder and host of the weekly economics podcast.

This series is based on research and commentary from hoover scholars involved in the human flourishing project on socialism and free market capitalism. The overall goal of the project is to investigate the historical record to evaluate the consequences for human well-being, individual freedom, and interactions between nations of diverse economic systems. Go to Hoover Dot Org Slash Human Prosperity Project Hoover Dot Org Slash Human Prosperity Project to find essays and videos from This series and the ones you hear live during today's presentation use the q button at the bottom of the screen to submit questions to as the conversation begins.

Today I'm joined by two of Hoover's colleagues, Neil Ferguson and Victor Davis Hanson, to discuss the

history

of socialism and freedom. market capitalism both have written essays for this project that are available online at hoover.org neil ferguson is a milbag family senior fellow at the hoover institution and a senior fellow at harvard's center for european studies, where he worked for 12 years as lawrence a tisch professor of

history

his book kissinger 1923 to 1968 the idealist won the arthur ross award from the council on foreign relations his latest book is the square and the tower victor davis hanson is the martin and ellie anderson senior fellow at the hoover institution the author from newbush books and articles on war, the ancient greeks, and history in general his latest book is the case of trump, he received the national humanities medal in 2007 and the bradley prize in 2008, gentlemen welcome, you know, in 1942, Joseph Schumpeter published Capitalism, Socialism and Democracy and asked.

If capitalism would survive what was his answer his answer was no Russian this is what Schumpeter wrote can capitalism survive no I don't think it can and then he wrote can socialism work? Of course you can Now it's important to know that even though he was a Harvard professor when he wrote those words. Schumpeter was in fact a conservative who did not consider the answers to his own questions to be good news. He wrote, I think, in a spirit of wartime fatalism, arguing that the forces that were making socialism seem more and more attractive were very difficult to resist, so I began rereading Schumpeter when the idea arose to write about it. capitalism and socialism and I started to discover how well it actually read, I hadn't read it.

I've been writing it since I was a student, but it's actually a good read, a great book, part two, especially a big fan of that, uh, Victor, what's your opinion on the sustainability of capitalism? Do you have any chance? Yes, it does, many of these questions were raised. at the beginning of the century, but well into the '40s, and this was really before the implementation of capitalist support or capitalist economies that incorporated things like the eight-hour workday, the forty-hour workweek, social security , that whole safety net, so to speak. that's constantly expanding, but it's really changed the dialogue, so when people say you can capitalize, capitalism can't survive, it was a period where the middle and lower classes didn't have the social protections that not only implemented but finally felt at least. in its most unpleasant form so as not to be encapsulated incompatible with capitalism now let's go back a century before approximately uh a marx uh neil you wrote in your essay that quote that marx famously called religion the opium of the masses, if so, so nationalism was the cocaine of the middle classes that's a great line explain what you mean what is the role of nationalism in the middle classes in the uh in this conversation well, marx and engels were wrong about a couple of things, i mean, It's not like they invented socialism because of the way that idea came about.

It's been around since the 1820s and was part of a debate about the industrial revolution that really crossed conventional ideological lines. There were many conservatives who were nervous about capitalism, among them the great Scottish critic Thomas Carlisle, but by the time Marx and Engels came on the scene, what Marx in particular was trying to do was synthesize the German idealist philosophy of Hegel. and the ideas of political economy, particularly those of David Ricardo, and the idea was that you had a dialectical theory of history, a model of historical dialectics plus Ricardo's idea that wages were going to be reduced inexorably to subsistence and prediction The central point with which Mark spent the rest of his life refining industrial capital was that the tendency of capitalism was in favor of widening inequality to reduce the proletariat to dust until the time came when the expropriators would be expropriated.

Well, two things were wrong with this theory: one was that industrial capitalism did not, in fact, reduce wages to subsistence level in the most industrialized countries. They had the highest wages, this was absolutely clear when Marx was writing Capital and became even more obvious in the second half of the 19th century as time went on, but the second thing they missed was the way in which that nation states and the idea of ​​nationalism would somehow transcend the appeals to class interest that were central to the entire socialist and communist project; the proletariat would not in fact unite against the capitalist class because national loyalties would be more important than class loyalties and when it came to the crisis of 1914 there was no way that a general strike could stop the outbreak of the first world war there was no way way that the people of the different European countries could be prevented from uniting to their national standards and, in fact, the attempt to have a meeting of the great socialist international failed completely and the congress did not take place in 1914 and I believe that that illustrates the big mistake that Marx made, which was underestimating nationalism as an ideology, yes, that's um victor i.

I'm going to let you answer that in a second, but I want to ask you a follow-up to what you're suggesting is that there's a kind of um, a tribal impulse that has to be satisfied because that brand saw it as a class thing. generated and was dominated by nationalism, I mean, can I be a nationalist and a socialist without being a Nazi? Sorry for the confluence there, but could I support my nation in a war and at the same time fight for the revolution at home? The great questions of the 20th century: is there some type of possible synthesis between nationalism and socialism?

And the National Socialism that emerged in Germany was just one of many attempts to create a trap. Stalin actually came up with a version that was socialism in one country, this was kind of a concern really across the left for much of the 20th century because it was obvious that the call for some kind of international proletariat kept running into political barriers, that Russian revolution itself, which Lenin and Trotsky thought would globalize, ran into an impenetrable wall in Poland, where it turned out that in reality not, the Polish working class and indeed the Polish nation were not willing to simply turn around and embrace which was very clearly. a Russian revolution, so I think this was a concern and a puzzle really for socialists to this day.

I can remember myself as a student observing the knots in which members of the Labor party tied themselves on issues of national interest. Security insisted that no, they really were tremendously patriotic but at the same time they would like to unilaterally get rid of nuclear weapons because the Soviets weren't really going to do anything wrong after all, so I think this problem was never fully resolved and has been one of the great weaknesses of socialism as a company almost from the beginning. Victor. You raise similar points but from a very different perspective. Give us your analysis of the role nationalism has played in the evolution of socialism as a successful or unsuccessful strategy.

Well movement, it's curious that Marxism and socialism, the less toxic brand, I suppose, have always argued that class interests transcend national borders and create a secular religion and then in extremis and belittle, therefore, call for alternative to your theories, uh, cocaine or opium. nested brands but in extremism when they have their backs against the wall whatever the system, whether it's National Socialism in Germany or Soviet Communism, remember what happened. Hitler thought he could get rid of the Catholic faith. He couldn't do it. Stalin had almost done it. abolished and destroyed Christianity, Orthodoxy and the Soviet Union, but it persisted and finally an extremist people were allowed to say during the Russian and German invasion to continue worshiping, it is curious that after coming out of self-imposed exile after the impact of operation barbarossa , The first thing Stalin did was drop the word comrade and begin to address everyone about the motherland and they owed loyalty to mother Russia;

In other words, even the staunchest extreme socialist remembers, at least he believed that religion and nationalism were stronger human impulses than this. a sort of abstract idea that the workers of the world would unite across national borders, victors in this current moment, movements like Brexit, the rise of populism and nationalism elsewhere, how do they interact with socialism in its opinion, why do we seem to see both on the rise? At the same time, we see a rise in populism and nationalism and a greater interest in socialism in the United States of all places and I'm sure that in other places we will get to that in general, particularly in the United States, but I have curiosity.

How do you see those two things happening simultaneously or do you think I'm wrong? I think you're right. I think that in the EU there was the idea that there was going to be a new European man. This meal was written when Kissinger found out. He said who do I call if there is a president of Europe? and the point is that despite all the eu rhetoric there was no capacity to create a new european man based on a common kind of affinities and even if today it has been transformed into global warming or abortion on demand, whatever the issue particular cultural, nationalist concerns are much stronger and that is why the EU is now being, I suppose, quadricepted in the sense that southern Europeans have real differences over finance, as are Spain, Portugal, Greece and Italy with Deutsche Bank Eastern Europeans have very nationalistic concerns about illegal immigration that are not shared by Brexit from Western Europe, of course, where many Britons thought that people thought I have more common affinities with people who have long resided within the boundaries of the United Kingdom. and I speak English and I have a proud military tradition than the one I have with the Belgians, the Italians or the Czechs and, in the caseof the United States, we were very dissatisfied with the configurational obligations of NATO and the EU Dash and I would just like to realize that there is a The rule throughout history is that socialism tends to enter the uh, I guess the word would be weakened in defense capability because there is this formula that every drachma spent on hoplite armor comes at the expense of social activism and social welfare or every tank or every plane and therefore either the great French army of 1940, people wonder why an army that stopped the Germans at Bergan just 20 years later collapsed in six weeks, it's the same question people ask at the end of the 4th century.

Greece when the flies and the people said how we detained 180 to 250,000 Persians in salamis with a very poor city-state and let in 30,000 of these crazy Macedonians and the response was well, their cr said people don't care It paid to vote in those days as they were in Athens and the theoretical fund did not dominate and we did not have all these social programs, so that has been The problem with social networks, let me see it today with the EU, they cannot fulfill their contributions of the two percent to Germany, I think it's 1.3 and people generally follow what Germany does and the excuse apparently is that if we rearmed to a minimum level, then it would be taking away children's breast milk and things from children's mouths or whatever, but it always has to be a dialectic with social networks.

Can I jump to Russia if I can? Yes, go ahead. I feel that we need to draw a nice clear distinction from the beginning between socialism, on the one hand, which involves a significant violation of private property rights, including total expropriation and post-war phenomena, Christian democracy, social democracy, and, on the other hand, In fact, the welfare state that emerged in the mid-20th century because I think in the United States a lot of confusion arises when you combine these things and one of the arguments that I make in my article is that, as far as you can see, when young people Americans say they are in favor of socialism.

In reality, they are not in favor of the expropriation of the means of production and state control of the top brass of the economy, which would be, I think, a strict interpretation of socialism, which essentially they are saying and I understand it when listening to interviews. With people like Alexandria Ocasio-Cortez we would like the United States to have a welfare state and a tax system more similar to that of Western Europe and I think when you ask Victor why the Germans didn't pay a greater proportion of their income. their contribution is a higher proportion of the NATO budget, it doesn't really have much to do with socialism because both the Christian Democrats and the Social Democrats have tended to keep defense spending low and take advantage of American defense spending, so I'd rather we try to somehow keep that distinction clear because I'm not sure we're really talking about socialism most of the time in the United States we're just talking about whether taxes on the rich should be higher, whether there should be universal taxes. and free nationwide. health care service point that type of thing and to me that is not socialism and that was never how it was understood by the people who established it as an ideology in the 19th century, in the 19th century, I would like to answer very briefly.

I think that may or may not be true, but there is a history of socialism and evidence. I'm not a determinist, but he seems to always want more individual and more shared ownership. I'm looking out the window at the vineyards of the San Joaquin Valley. and I'll give you an example of what I mean, in 1936 there was something called the raisin administrative committee and that was to help farmers find a market and it basically said this: "you do not own the products of your own vineyard" . I don't know, in fact, it's a crime for you to dry your own raisins and sell them, they belong to the US government, so when you harvest them, we take them and pile them up in a big batch and they're called raisins. booking. and then we determine how many can be sold in the United States and the rest will be given away or sold cheaper below the cost of cattle feed or brandy or overseas or poverty program and anyone who tries to sell those raisins and acts like they were owners they will be charged with a felony that is still in operation today, so a group of bureaucrats determine uh, and I did this for 30 years, they determined that even though they didn't plant the grapes, they didn't They own the property, they say, but they were.

They were going to put me in jail if I decided to harvest them and say they were my property. I'll give you one more quick example. I decided I didn't like the 110 degree summer so I wanted to build a pool and off I went. to get a permit and the county told me, really no, we're not going to give you that permit because you don't really own your road. I said, what do you mean? He said well, in about 50 years we want to widen Mountain View Avenue, so we want to take 30 feet by 300 yards in front of your frontage and I said, well, that's my property, are you going to make up for?

Not if they want to get a permit, so maybe we'll do that in the future, but if you want a permit right now, you have to sign this property over to me and I could go on and on about the abuse of imminent domain, so you're right that such We may not have that final sense of lack of private property, but I think the idea of ​​an autonomous individual citizen with absolute freedom over his or her own goods, services and property has been greatly reduced and redefined. The interesting thing for me, the winner and I am sorry to cross paths with you again, Russian, is that this type of administrative logic is in fact an abuse.

Expropriation goes back a long way in American history, and in many ways what strikes me about American history is that it really happened without the underpinning of socialist ideology. I bet they're the bureaucrats you've dealt with. Those in California do not consider themselves socialists to be able to do so. Reviewing the history of the United States in the 20th century, the invasion of rights by the federal government and state governments. of people has not really been driven by socialism in the same way that socialism drove countries to the left in Europe and, indeed, in much of the rest of the world.

Let us not forget that after 1917 the most extreme version of socialism that aspired to create a communist society became extraordinarily prevalent not only in the Soviet Union but throughout Asia, in parts of Latin America, even in parts of Africa and the Caribbean, but the United States is an outlier here because socialism has not actually been a successful political brand. in American history and everything you're talking about, I think it comes from a different source, which is the strange way in which the administrative state expands its bureaucratic reach without necessarily a powerful ideological or certainly non-ideological socialist foundation.

Well, what I'm suggesting is that when the right or the capitalist interest says I want imminent domain because I want to rip out this part of downtown Fresno or Los Angeles and I'm not doing it because there's a public need for a highway or a bridge or a reservoir or a pipeline, but I want to do it to encourage economic development and I think these 50 small businesses can be liquidated because I am going to build a Radisson hotel with a large parking lot. It will be further away and it will be good for economic development. and that's you, you are absolutely right in the tradition of crony capitalism, but the people who support it and the bureaucrats who welcome it tend to be more liberal and it's very strange how capitalists work, they make a very socialist argument and they call it capitalism and then they employ administrative people who believe that there is a role in expropriating property, not necessarily for the apparent common good but for a more abstract idea of ​​the general well-being and that is what we see all the time, we see many capitalists acting as if they are socialists, I base myself on the idea that many people who are socialists who are in government will support them well.

Milton Friedman likes to point out that most business leaders weren't capitalists, they were capitalists for other industries, but his was special and needed, you know, this subsidy or that to make it work well, and the idea that They are taking advantage of the natural impulses of others. It is a kind of essence of crony capitalism that I contrast with what I call the real thing. One of the reasons Schumpeter was a pessimist back in 1942 was that he felt there was a tendency for the free market to produce, if not monopolies, then large corporations and corporatist relationships between business and the state that we are really undermining the free market as a scheme of organization of society, yes, but I think in my memory it spoke mainly of the implicit economic power that arose from that type of concentration.

Of course, it is a combination of companies working with the power of the government as a very monopolistic entity. Well, the interesting thing about Schumer is that he gives four reasons why he believes socialism can still win even in the United States. At its best, capitalism leads to creative destruction and that means that there are both losers and winners, that there is this tendency for the rise of monopolies or at least large companies, but it also makes two big points that are really worth it. remember people. The third reason he gives is that capitalism creates, educates and subsidizes a vested interest in social unrest, meaning left-wing intellectuals and academics and then he adds that socialism is irresistible to bureaucrats and elected politicians, so that nexus between large companies. and uh and uh and the bureaucracy, I think, is there in Schumpeter's argument as is and he sees coming the fundamental hostility of the academy of the intelligentsia towards the free market, I mean, and if that was obvious in 1942, think how much more to the left. academia has since the 1940s, I mean, if you took the Harvard professors of today to the Harvard of 1942, they would be absolutely dismayed that it wouldn't be enough work, so I think that was a really important part of Schumpeter's argument. which has turned out to be very true: there is virtually no intellectual support for the free market and there is great intellectual support for socialism in American universities today and the Hoover institution increasingly looks like a small island in a sea of ​​ideology of left.

When you just look at universities, one of the old arguments along those lines was that academics resented not being paid at the top of the pay scale, that simple businessmen were compensated much more and that obviously meant that the system It wasn't just, of course, that today academics are doing quite well, partly I think because of the subsidies that the government gives us. It is interesting that we have not become on average more capitalist. What do you think about that winner? Well, I think that's the key. To understand higher education in the United States is to distinguish what they say and what they do.

If you look at the salary difference between a part-time teacher without benefits or tenure or paid to teach the same class as a full teacher, it is a greater disparity than a greeter at Walmart and a district manager and then if we Look at their criticism of capitalism, they are really crony capitalists instead of being on the barricades. By that I mean they don't have any moral hazard when they make these student loans that they expect the government to guarantee. 1.4 trillion dollars of student debt and do not have the ethical and moral obligation of a housewife to tell their graduates that we can determine take an exit test judge gauge that now you have a better education you are more capable of making a living have a family buy a house than you were before you came to college, although maybe the statistics suggest that's true and we're going to cut costs so you don't go into debt, but once the moral hazard has been shifted to the government, then there is no incentive to discourage anything from a latte bar to a climbing wall in the student center to 16 diversity and inclusion czars and finally, what's really disturbing is that when we accumulate these donations and everyone is taxing the delta deductible and they are obtaining 17 18 20 40 50 million billion dollars in endowments, then really the taxpayer is subscribing in the style of rabbit capitals what the administrators and tenured professors and all these people are doing and perhaps they are not subject to the laws of the market.

This coveted virus and the quarantine and Skype and what we are doing today will give you some market reality because obviously there will be someone who says that I can download Nobel Prize-winning lectures and hire someone very cheap to correct papers and improvise a class on Skype and maybe get their accreditation and I won't have to charge a Harvard or Yale student to stay home 60 or 70,000 a year and I think the universities are going to be very concerned about that because they could inadvertently be subject to the laws of supply and demand and market value Neil,Do you want to comment on that?

Well, I think if you try to explain why in polls it is the youngest age group of Americans that has the most positive view of socialism and the least positive. of capitalism and that is a very surprising feature of recent surveys, so you have to attribute at least some of this to education and if you look at the way that major universities teach modern history, it is very surprising to see how few courses are available in the realities of socialism, whereas there are all sorts of courses that tend to call themselves the history of capitalism that, if you look closely, are actually quite socialist in their doctrine, so I think there's a huge bias in the way in which economic history in particular is presented.

It's taught in major universities and there really aren't enough courses on the realities of the Soviet Union, Mao's reality is Chinese, and in fact I think that's why we have this category error between millennials and the generation. Z think that socialism is Sweden and I think, as I try to argue in the newspaper, that that is just a complete misunderstanding of Sweden, but also of socialism. I mean, the interesting thing about Sweden is that when it was in Sweden's heyday. social democracy actually tried to violate property rights they were prevented from doing so and the rule of law was maintained and beyond that point the tide of socialism receded in Sweden and if you look at Sweden today and I did some homework According to this, the newspaper ranks ninth place in the world.the economic forum's competitiveness ranks 12th in the world bank's ease of doing business ranking and 19th in the heritage foundation's economic freedom ranking, so if sweden is associated with the state, so it no longer has any meaning as a word because, in truth, Sweden is actually a place where capitalism is very dynamic, yes, the tax system is certainly doing more redistribution than in the United States, but I think it is a complete mistake to say that that is socialism and if we only use socialism to mean higher tax rates, I think we are going to lose sight of a very important historical lesson: when socialist regimes are established that are capable of violating private property rights on a much larger scale than What are you talking about, Victor, I mean, this is not just a question. to stop you from building your pool when in reality they come and confiscate the land and tell you that you're gone, in fact they shoot you because you're a former landowner, that's what they did in the Soviet Union, that's what they did in the Union Maoist. revolution after 1949.

They expropriated and shot the landowners. If we forget that that is the core dynamic of socialism, that that is what emerged from Marx and Lennon and Marx Engels and Lenin, then I think there will be continued confusion about the dangerous nature of socialism. Wherever it has been attempted in the sense in which it was intended by Marx, it has produced anarchy, whether extreme authoritarian regimes or chaotic regimes, anarchic regimes. Choose Cuba or Venezuela, which one would you prefer, and I prefer that when people talk about socialism we point to Cuba and Venezuela rather than Sweden. , which is actually no more socialist than the United Kingdom or really the United States, I mean California and Sweden, I mean, come on, but I think I think the question I want to answer a question from one of our viewers, Mike Mike .

When I was asked: is it possible to combine capitalism with a strong social safety net that ensures that every resident has at least a roof over their heads? Food security, healthcare, and in the 21st century, reliable electricity, high-speed Internet, and high-quality educational opportunities. So my question to both of you will be Start with you, victor, because that is socialism with a human face, there are no Mao re-education camps, there is no famine, we promise that maybe it will be a little more, it is Sweden with a safety net a little bigger, that's what makes our discussion about, say, Cuba and Venezuela.

Does it have anything to do with what's coming if we expand the size of government? America is simply a point where the frog is boiled enough to transform into something more horrible or we can avoid it. I mean, I'm against both: I'm into socialism and dramatically bigger government, but a lot of young people like Neil have argued correctly, I think when they say socialism they just mean more activist government, what's wrong? with that victor, I mean, do the lessons of socialism apply out there? You already know your raisins well. I don't think there's anything wrong with that.

I think if you look at the US economy, let's say in January or December of last year, we had record minority unemployment, we had about 3.5 3.4 unemployment, a pretty good GDP, and yet we had a pretty generous social network to the point that we still had massive budget deficits for social programs, so the key is paying for socialism. agenda you need to have incentives, I think we have squared the circle pretty well between encouraging capitalism and socialism, but remember there were a lot of people who were not happy with that and Niels talked about youth and why was that?

Why did people say why am I? I'm unhappy and I think we had forgotten a couple of things and it came from two sources of dissent: the first was and we can see it on the streets of Seattle and Portland. We've had a whole generation of young people and Neil is right, they were indoctrinated. half of them went to college, but when you load that many people with 1.4 trillion dollars in student debt and then give them a semblance of education, they are eloquent, but they are actually ignorant because they don't have the inductive method . to think that it is not instilled in them unless they have an arsenal or two boxes of facts or data about the past or the present or the natural world and then you release them into society and they say well, my grandfather at my age was married, they had two children, three children, they had a house, they had cars, they didn't have any debt, what happened to me, who did this to me and they are articulate enough, they have been trained enough to know that there are methods. to explain the exegesis that can explain that at the same time we had this globalized project and it was wonderful at the beginning, I mean, it gave people glasses in the sense that the Amazon and the antibiotics, the people in Chad and the means of production Westerners were photocopies.

We went through, but somehow we entered into this matrix that the country, the states and the cities with a window to Asia from Seattle to La Jolla and a window to Europe from Boston to Washington or maybe even Miami, felt right, of suddenly people in law and business and the corporate world and the media and academia we have a market now eight billion people seven billion people and the people inside who had hard work or who were entrepreneurs and had a trade or a production that could be photocopied abroad much cheaper, whether it was making wine or peaches in Mexico or a job of workers to be subcontracted to Korea, whatever it was, then they did not do very well and we consider that we confused cause and effect, so we basically told them and I'm talking. now just to interject about voters who voted for donald trump on the right or bernie sanders on the left, we basically confused cause and effect, we said to the midwestern trump supporter, well, you're a meth addict or you're dysfunctional and you didn't learn to code or keep up with the global economy and we told people on the left, well, no one told you to go to college, we didn't say the college tricked you and you were sold out. a bed, but rather a list of goods with less information about what your specialty will earn you and the debt you will incur than when you sign up to buy a car at a car dealership, you are told about the moral and financial risk it represents. more honestly than any university, there was a lot of discontent and that's where we are now and the cure was, I think, to liberate and deregulate to some extent the economy to reach about three percent of GDP at full employment and and that would be, then, eliminate the programs that have a failed track record and improve those that don't, and I think we're almost there, and then you know I finished very quickly and I don't like these either. or comparisons, but the United States has about 330 million people, 50 million of them were not born in the United States, they are now residents of my state, California, our state, between 26 and 27 of the population were not born in the United States and, however, we have a gdp of over 20 trillion dollars with 330 million people and europe has about 450 million people it has a gdp of about 18 trillion gdp annually and i think that is the per capita income now they are going to argue that They have all kinds of different problems, but I think they are not, since they are not as important as ours and their per capita income is about 20,000 less a year than ours, so whatever we do, I think we've conveyed it a little more on the capitalist business side and I take seriously Neil's excellent point: I think California is more socialist, but I think it's still an outlier and we've conveyed it a little more on the capital side than Europe and has rewarded us for that reason.

We are richer materially we can't and that's just using gdp when I go to Europe and look I always wonder how many square feet or the lower middle classes and the poor that are allowed to live in Europe are impossible to live in how? How many window air conditioners do I see? How many televisions? How many cars? And I look at where I am now and I live in a city with a per capita income of 14,000 a year and this south Fresno county has a poor per capita income. capita in income than Appalachia, and yet when I look at the apartments and I look at the square footage and the price and the number of new cars, whatever it is, we have a consumer culture that is much richer than Europe in terms of satisfy appetites. of the lower middle classes, do you want to answer that?

Well, yeah, I mean, I think it's dangerous to make comparisons that are as broad as the United States has a huge resource advantage and a space advantage. In Europe, where the population density is much higher, but I would like to explain things a little differently, ultimately we know what happens. Going back to the listeners' question, when direct taxes are increased and they are increased gradually. the state's share of gdp and you and you increase the amount of redistribution that occurs because we have done this experiment before and what surprises me about the current debate in the united states is that essentially the democratic party is campaigning now to do one of the biggest tax and spending spectacles in American history, I mean, not only are they going to raise taxes starting with the corporate income tax, but probably moving on to the capital gains tax, but they're also going to increase spending and an even larger scale could be three could be five trillion dollars of new spending now we know from past experience where this leads because even the United States has tried this before, not that we need to go to Europe for ideas if the central goal of social progressivism Democracy whatever you want to call it is to use the tax system to increase the number of benefits paid expand the provision of health care spend more on education spend on infrastructure and at the same time increase taxes, especially on people with high incomes and in corporations it is absolutely obvious what is going to happen: you will end up with lower growth and at some point you will have higher inflation and if you don't have higher inflation then you will run into the unpleasant fiscal arithmetic of excessive debt because we have already been going in this direction for years actually uh, going in this direction at least since the financial crisis, if not before, and I and I think it's a whole set of different issues that don't have much to do with socialism that we saw in the 1970s, where those policies led to marginal tax rates rising higher and higher on both sides of the Atlantic, as also happened in the US and you ended up with the stagflationary disaster of the 1970s, there is one reason Milton Friedman rose to fame at the time by pointing out why this couldn't have ended any other way.

For me, it's a little depressing to see the increasing probability. Let me tell you that we are going to repeat this experiment waiting for it to happen. would have a different result and will not have a different result. I would just add that I think they call it Gorge the Beast and they increase spending to such a degree that it has desirable effects on cuts and one of them will be defense and we won't, we won't be able to spend even three and a half percent of GDP. in defense and they see that as a good thing, I don't think that Europe, even with a larger population and a large GDP, is going to feel that it can afford to spend two percent to protect itself and it exists because the United States spends about 33 percent of NATO's budget without it it would not exist at least it would have to domassive cuts to welfare benefits or raising taxes even more, but you're right that we've tried this before with that and they're advocating for remembering a wealth tax and an increase in the top income tax rate in California is 13.3 for the top earners, I think we have one percent. of the population of California who pay our five percent, pay about 55 percent of the income tax, they want to increase it to 16 and when you combine that with Biden's new proposal attacks the Obamacare tax, payroll taxes on a large portion of your income, it's easy to get up to 55 percent of your income, and unlike the rule in the pre-Reagan years, that's income without many deductions, so one of the purposes is to spend as much money which forces a large redistribution, but a perceived redistribution and an income.

I think we need to remember what the psychology is on this. Toppil said that unfortunately most people would rather be equal and poor than unequal and better and jealous. It was he who said that the two most powerful emotions in the human experience were jealousy and envy and he defined the difference, but they was the idea that someone else better off than you is a more important concern than you better off and That's what historically responds to trying to cover up socialism, there's an innate human desire to make sure that someone through accident or inheritance or tougher or intelligence or whatever doesn't look better than you and people can appeal to that. natural instinct and it's like you said we've been through this again before so why would we do it again?

Because it is because You are human and it is a natural instinct to repeat this quality. Well, you both elected Democrats. It's not that Republicans have been all that fiscally prudent recently or much in the past. I just see the government getting bigger. We have had times with minors. high tax rates and decent amounts of growth. Neil, you know it's possible. I'm not as pessimistic as you, it's just that the sheer size of the government is the problem, but it could be. But I want to come in, we have a few minutes left. I'd like to move on to the non-monetary, non-growth aspects of this.

I want to think about you. You know, this is called the human prosperity project, our project, but. You know, prosperity isn't just about financial well-being, it's about the meaning, agency, responsibility and dignity we get from our economic system. Socialists tend to see the capital system as cruel and rapacious. I see it as a form of cooperation. Uncoordinated from above, socialists see socialism as a way in which we can all share equally. I see it as a way that corruption becomes rampant through centralization, cronyism and lobbying, we are rewarded, and for me, although I think socialism will perhaps reduce our standard of living.

I'm more concerned about what it does to the intangible aspects of life and I would like you both to comment that if you want, beyond the material, you know the systems you have been criticizing. cuba venezuela the soviet union when these processes reach their extreme it's not just that the people there are poor uh they don't find much comfort in those systems for the fact that everyone is like them, in fact, they are people at the top who Lo They are doing very well and more than that, everyday life is fundamentally corrupt in those countries, so let's talk about the non-material part of this and am I too worried about the welfare state becoming such a dramatic change in our country ? in our way of life beyond the material, you know, if you could comment on that, yeah, I think it's pretty clear in the history of truly socialist systems that were characterized not only by, ultimately, inefficiencies and distortions in economic activity, but but. both for the kind of moral corrosion you're talking about and I think if anyone needed to remember what the Soviet Union was like, it was worth watching the dramatization of the Chernobyl disaster, which is one of the few television series I've seen in the last 20 years from start to finish for all the liberals, sure it was necessary to capture the fundamental mendacity of life, under the real existing socialism, everyone lied and ultimately those lies led to a disaster, uh, I would like to.

To add another point, Russ, before we run out of time, which we haven't touched on, but which is extremely important and is the metamorphosis of Marxism in academia initially into something that had nothing to do with economics or at least just the metamorphosis. of this into identity politics, critical race theory, false notions of social justice, and a whole set of very distinctive ideas that really have nothing to do with socialism, but offer an alternative sense of collectivism based not on class, but predominantly on race but also on sexual orientation and the rise in American universities of ideas like intersectionality has created a whole new set of problems for those of us who believe in the foundations of individual freedom, not only economic freedom. but political freedom and in a civil sense and I'm almost as concerned as the resurgence of social democracy and the taxing and spending of progressivism about this because I think this emphasis on identity to use a The term you used earlier to refer to tribal identity or to intersectional identity is very, very corrosive not only to individual freedom but also to the national or patriotic identity that tribal used earlier in that sense, but the point about nationalism was precisely that it transcended traditional tribal loyalties and created a possibility of national unity on a very large scale that has been crucial to the success of the United States since its founding and I think that the new form of socialism of the radical left, which is identity politics, cancel cultural variant, is in reality, as threatening as the old socialism that we've been mainly talking about, yes, I think very quickly, I think cultural Marxism as a kind of founder of Gramski, I think the idea was that with the industrial revolution and the welfare state modern here in the United States affirms that socialism was not going to be achieved with a strictly economic appeal, there were two, there was greater mobility and there was a material appetite that was being satisfied, so what happened is that we are redefining the victims not by economic means or clouds, but by race, and do that because race is a static idea, it is not fluid when you have people who do well, then they go from one class to another and you lose voters, but under this new identity politics, Lebron James may have 20 Mercedes and Jaguars living in the Great and he denied the state and you know, he's worth half a billion dollars or Oprah, but he's a victim and he said, you know, I don't feel like it can turn out well, you're in much less danger going out in your safety gear than a guy in youngstown ohio in a forklift is so the idea was that the left told themselves that the system is so insidious of free market capitalism that we're losing voters , so now we're going to address this idea that you're going to be part of each other for life and Barack Obama from his Colorama mansion in DC or his 20 12 14 million dollar estate on Martha's Vineyard will always be a victim, like Michelle said , said you know, Michelle Obama said I can't even go. to a supermarket without someone showing up and wanting me to go pick something up for her or when Barack leaves who knows what's going to happen to her, so it was a very brilliant transformation in the victim status of capitalism because she already fixed it.

It can't be changed, so I know that as someone who spent 22 years in the California State University system and was part of many affirmative action hiring committees, I finally got people in foreign languages, we were hiring aristocrats from Chile or Argentina or brazil or spain or portugal and then we had them come and they were upper middle class but they qualified as a victimized minority of you know a history of racism in the united states and we instantly gave them the title of victim for life. It was a very cynical process and that is what is happening.

It's a very good point because once you replace race with class, then that victimization creates cynicism because people look at certain fundamental material principles of one's life and say well based on the person's home. or their income has done very well, but they are still victims of our system and I think that is difficult to do because if we know anything about the 20th century, the slow but undeniable progress that we have had in the United States. particular races divorced from poverty there is no necessary connection the per capita income of Greek Americans or Asian Americans is much higher than that of so called white America and that is why I think the left is onto something and they have redefined Marxism and socialism and victimization and victimizers, but perhaps I can add a very brief point.

I've had 137 questions while we've been talking and I've been trying to keep an eye on them and several of them have prompted me to make the following observation that people who believe in a free capitalist society, if you want to use the pejorative term free market, are not indifferent the poor or the unfortunate, in fact one of the things that motivates us is the belief that the system we favor would actually do more for the people than the supposedly fairer socialist or social democratic alternatives - a reason I feel passionately conservative is the feeling that the left is deeply hypocritical and does not sincerely believe that it intends to help people at the bottom of the income distribution and, in fact, does virtually nothing for the poorest African Americans in the most disadvantaged parts of the country.

It is the hypocrisy of socialism that is ultimately its most repugnant feature. The champagne socialists I remember first meeting as a student at Oxford and who loved to start standing up and engaging in virtue signaling do nothing in practice for the people at the bottom of the social ladder whom they They never know in reality, uh, the enterprise of Welfare social democracy generally traps people in the bottom quintile of the income distribution in various forms of dependency, ensuring that social mobility remains out of reach and That is an extremely important point that we must emphasize: the fact that socialism systematically fails to achieve improvements in the quality of life of the poor, that it does not actually live up to its most fundamental claims, which makes me especially abhorrent as an ideology, We only have three minutes left, but I want to challenge you both.

I'm going to give everyone a minute, I don't think, um, I don't think that our side, the so-called free market side, has done a very good job of making that argument, now that our system is going to work better for the poor, They look at the poor today. Especially with the working poor, there is a whole group that can't find work because they received a terrible education provided by a public school, but there are many people who are working poor whose prospects were moving forward or not as far as they could have been. of the past, do you blame socialism or do you think we have to do a better job at creating real capitalism or do you think its critics are right?

I think we've done an extremely poor job, uh, speaking generally, of the conservatives. Not just in the United States, but around the world, advocating for free markets, free institutions, and individual freedom, I think we got a little stuck in the ideas of the 1980s and clinging to the prescriptions of the 1980s. 1980s for too long and then they were sort of hijacked by populists whose approach I actually don't think is entirely sympathetic to the first principles of conservatism. I have been critical of Republicans since the Bush administration for their fiscal improvidence and bouts of hypocrisy. I have been concerned about the ways in which the British Republican Party and the Conservative Party have strayed from the path of classical liberal principles in economics and politics for many years.

I wrote the Great Degenerate lamenting that this was a bipartisan undermining of the first principles of a free society. I think the Hoover institution has an urgent and priority mission to revive the case for conservatism and free institutions in terms of what they do for people at the bottom. of the bunch because if we are simply seen as representing the rich elite then we have no chance of winning the argument that we can win against socialism and we don't deserve to win it, I hope to be sure. Condi Rice is listening and you have time to say 10 seconds, yes, absolutely, you have 60 seconds, Vencedor, maybe 75.

Go ahead, I think in some ways the opiate of the left elite is socialism because it is a very similar psychological process to medieval penance and exemption the idea that the center can be free of sin through a contract to build a church or something like that and with that I wantto say that if you look at the concrete life of many members of the elite who left where they put their children, whether they have a wall around their house or not, whether they believe in charter schools, no, they live the life of a 19th century European aristocrat or a proud American gentleman, so they create this structure that they carry and that they want to be with. the other and they want to help the other through socialist government programs, but that always squares the circle of their own existence and that's why they were really worried about the other, maybe they would have their children tutored in East Palo Alto or maybe They would put their children in a Redwood City school so the other could see them or maybe they would have private tutoring with someone from the lower class or maybe they would try to introduce him to the Sierra Club who would try to help build a church in Fresno. or something like that, but it's always abstract and geared toward making people feel better and it's almost a religious experience for a lot of people who are secular agnostics and I think this drives a progressive movement today where all these barons of technology and they all really get richer.

The country today, if you look at the Fortune 500, they are more or less left-wing fortunes and they are people who do not, they never live their own lives in any way similar to defense, in fact, they use it to be exempt from the branches. of their own ideology and that they use that, it is this solidarity and abstract socialism that really makes life more miserable for the people they say they want to help, but it makes them feel much better about dealing with the problem, as I said in the abstract rather than the concrete, we'll close on that happy note uh victor davis hanson neil ferguson thank you very much for your time and for sharing your thoughts on such an important topic the next sessions of the human prosperity project speaker series are on 15 October we will have perspectives from Germany, China and Hong Kong with Michael Oslen and Russell Berman and then you can see on your screen that I can't read it on mine for our next event after that and I want to thank everyone for participating and listening sorry, no We couldn't answer any of your questions, but we had two extraordinary panelists and thank you for joining us.