Socialism Never Works - Apparently

I could feel my irritation rising when I saw somebody on Substack confidently declaring that “socialism has never worked”.

The commenter was probably American, which immediately narrowed things down a bit because this is a surprisingly common theme in American political discourse. In the US, “socialism” has gradually become shorthand for almost anything involving collective provision, public spending or the government doing more than waving politely from the sidelines.

School meals? Socialism.

Universal healthcare? Socialism.

Public transport? Apparently one step from the gulag.

At this point, half the American right would probably describe public libraries as creeping Bolshevism.

And it struck me, yet again, that people saying this almost always confuse socialism with Soviet communism, as though the NHS, Swedish childcare and Stalin’s Soviet Union are all basically the same thing with different logos.

Mind you, Stalin’s USSR was hardly the stateless workers’ paradise Marx had in mind. It was essentially an authoritarian command empire wearing socialist branding. Workers did not control production. A paranoid state bureaucracy did. But nuance tends to die quickly once political tribalism gets involved.

What really annoys me about the argument, though, is that the answer to virtually every major crisis in modern history has involved collective action, state intervention and enormous public spending.

In other words, when things become genuinely serious, even committed capitalists suddenly become temporary socialists.

Because the awkward reality is that capitalism does not merely suffer crises occasionally. It repeatedly creates them.

That is not some accidental software bug in an otherwise perfect system. It is baked into the machinery itself.

Markets reward risk because risk sometimes produces innovation, growth and wealth. Fair enough. The problem is they also reward speculation, bubbles and increasingly detached optimism during boom periods. Every cycle eventually reaches the stage where people convince themselves this time the old rules no longer apply.

You can practically set your watch by it.

Tulips in Holland. Railway bubbles. Dotcom shares. Subprime mortgages. Crypto firms valued largely on confidence, hoodies and podcasts.

Human beings do not become rational merely because somebody put a Bloomberg terminal in front of them.

The pattern barely changes. Credit expands, asset prices soar, everybody becomes an investment genius for six years, journalists start writing pieces about “a new economic paradigm”, and eventually somebody discovers the entire thing has been balanced on debt, fantasy and PowerPoint presentations.

At which point governments arrive like exhausted parents cleaning up after teenagers who borrowed the car and wrapped it round a lamp post while insisting they were “disrupting transport”.

Again.

And suddenly all the anti-socialist rhetoric evaporates overnight.

Banking collapse?
Nationalise risk immediately.

Pandemic?
Government furloughs, emergency healthcare coordination and massive public borrowing.

War?
State planning, rationing, industrial coordination and central control of production.

Energy crisis?
Price caps, subsidies and intervention.

Take the current Iran war energy panic. The same political voices who normally treat state intervention as one step away from Lenin are suddenly furious that Labour is trying to persuade supermarkets to keep staple prices down and trying to stop fuel costs exploding.

Kemi Badenoch has spent days attacking Starmer over Russian-linked fuel imports and North Sea policy, presenting herself as defending ordinary consumers. But her actual solution is essentially “drill more in the North Sea”, which may or may not help in ten years’ time but does absolutely nothing to reduce next month’s petrol prices in Chipping Sodbury.

And yet the moment prices spike, even governments instinctively hostile to intervention start reaching for intervention anyway.

Because deep down, even the loudest free market evangelists know perfectly well that civilisation itself depends on collective systems once reality turns up dripping wet and demanding something actually be done.

And the irony is that many of the same people denouncing socialism spend almost their entire lives surrounded by systems built collectively over generations.

They drive on public roads to publicly regulated workplaces, protected by publicly funded police and military, using infrastructure heavily shaped by planning, regulation and state investment.

Then they go online using technology originating partly from publicly funded research and announce:
“Socialism never works.”

None of this means pure state control works brilliantly either. Soviet supermarkets were hardly the pinnacle of customer experience. Human beings are perfectly capable of creating chaos with clipboards as well as hedge funds. A badly run bureaucracy can become every bit as absurd as a speculative financial bubble.

The actual lesson of history is not that capitalism or socialism “wins”.

It is that civilisation itself depends on a delicate balance between markets, regulation and collective response.

Markets generate enormous wealth and innovation. Regulation stops that process drifting into monopoly, exploitation and the whole thing periodically disappearing up its own backside. Collective systems provide the stability and resilience that stop ordinary people experiencing the full force of market failure every time the economy hits a wall.

Modern capitalism survives precisely because welfare states and public institutions soften the impact when markets periodically lose their minds.

Markets are useful tools. Extremely useful tools. But left entirely to themselves they tend to concentrate wealth, underinvest in resilience, ignore long-term costs and periodically disappear into speculative madness.

So societies spend decades enjoying the wealth markets generate, then repeatedly have to install regulations, welfare systems and emergency interventions afterwards to stop the whole thing unravelling socially and politically.

Modern social democracy is basically capitalism fitted with airbags after repeated high-speed collisions with reality.

And yet after every crash there is still somebody climbing out of the wreckage insisting the real problem was too many seatbelts.

Usually while relying on the NHS, their state pension and somebody from the council remembering to empty the bins.