Proponents of the international socialist movement of the early 1900s shared a common vision: "Social Justice." The ultimate goal was to create a more equitable (as they determined it) distribution of material welfare for all through government ownership of the means of production. Doing away with the private ownership of the means of production (or the notion of private property in general), it was thought, would allow for all economic activity to be comprehensively planned and directed by government authorities toward the ends defined by "social justice."
As F.A. Hayek points out in The Constitution of Liberty
, "The various socialist schools differed mainly in the political methods by which they intended to bring about the reorganization of society." He goes on to cite the Fabians and the Marxists: one group favored incremental-ism and the other totalitarian authoritarianism to achieve the common ownership of the means of production for the ultimate goal of remaking society in the socialist image of "social justice."By the mid twentieth-century, however, socialist proponents became disillusioned as their vision collided with the realities of human nature and basic economics. The impracticality of coordinating economies, top-down, to meet the material needs and wants of entire populations made many realize the private ownership of production was simply more efficient and productive than socialist central planning. Voluntary coordination, free association and the resulting division of labor in market economies could not be duplicated, much less bettered, by authoritarian central control.
And from the perspective of freedom and the power of the state, the spectacle of totalitarian communism and fascism made many realize the incompatibility of socialism with individual freedom. It also revealed the brutal and inhumane extent to which the unlimited power of the state required to plan economies can lead. (As Hayek points out in his classic work The Road To Serfdom, “Most planners who have seriously considered the practical aspects of their task have little doubt that a directed economy must be run on more or less dictatorial lines.”) Seeing the futility of the nationalization of the production did not, however, move along socialist apologists to abandon the overarching Utopian goals of social justice. The ultimate goal of remaking society in the nebulous image of "social justice" remained unchanged.
Seeing the efficiency of capitalism with its private property and ownership of production of wealth on one hand and totalitarianism with its gaze fixed on redistributing wealth on the other, many socialists sought out a third alternative somewhere in the middle.
Ludwig von Mises, in Liberalism: The Classical Tradition
, labels this third way interventionism:"In this way, one forms the conceptual image of a regulated market, of a capitalism circumscribed by authoritarian rules, of private property shorn of its allegedly harmful concomitant features by the intervention of the authorities."Basically, freedom in the market and private ownership of production (capitalism, that is) suffices to efficiently provide the wealth and prosperity society demands, but government planners stand by and intervene from time to time to indirectly implement the overall vision of socialism. Intervention takes the form of regulations, price controls, tariffs, punitive taxes, minimum wage laws, wealth transfer programs (like Social Security), and myriad redistributive social legislation.
Mises sees no possible way to maintain a "third way" between freedom and socialism, free markets and central planning:
"There is simply no other choice than this: either to abstain from interfenece in the free play of the market, or to delegate the entire management of production and distribution to the government. Either capitalism or socialism: there exits no middle way."Why the either-or, black or white scenario? Once government sets out to manipulate the market for some goal of "social justice," it will artificially inhibit the otherwise free market and disable it to provide the very goods and/or services the government originally set out to enhance. Demand is made artificially high and supply diminishes, so prices go way up. Less people, not more, can afford the very thing government set out to make more accessible. And once a commodity is no longer provided in the market, government rarely relinquishes control in order to allow the market to again efficiently provide for its demand. It simply doubles down and makes the market less free.
A recent example: "Affordable housing" and government manipulation of the housing market through Fannie Mae and Freddie Mac. Now, it simply cannot be argued there is a free market in housing.
