Researching a future work on Utopian movements and their failures, I’ve been reading a short book on Karl Marx. Peter Singer, an American leftist writing Marx in 1980, believes communism’s most influential theorist was disproven as a scientific economist, but is still relevant as a social philosopher. Singer discusses the libertarian concept of capitalism as benign, workers and buyers being free to go elsewhere. But he argues this “liberal definition of freedom is open to a fundamental objection.”
Singer illustrates this objection by example. When we all freely choose to commute by car, a traffic jam may result, making us less happy and more tardy than if we had all taken a bus. Yet we have no incentive to take the bus, since buses are also slowed by the congestion of automobiles. He writes, “The solution, obviously, is for us all to get together and make a collective decision.” He concludes there are cases where the common good overrides individual freedom, where collective thinking should prevail over individualism. I’ll call this Singer’s Paradox, cases where individual freedom seemingly makes us less happy.
Does Singer have a good point, a fatal flaw in capitalism? I find it amusing that his example really illustrates the failure of socialism rather than capitalism.
Public roads are the fruits of socialism, not capitalism. Roads are in limited supply at least partially because they are collectively owned and managed. So another way of looking at Singer’s traffic problem is to see collective government mismanagement. We might extend capitalism to privatize roads, forcing commuters to pay tolls, encouraging entrepreneurs to create new or wider highways, allowing bus transportation to pay for preferential access, and generally allowing supply and demand to meet on happier common ground. In a very real sense, by making roads collectively owned and “free”, we create traffic problems.
Does Singer’s particular example just happen to be bad? Are there other examples where he is right? He is arguing that there are cases where most people are better off if they are not allowed to decide for themselves, where the common good is better served by a dictator, or at least a dictatorship of the proletariat. And he is correct in theory, at least some of the time.
In business school, we studied a theoretical case where adding a new road results in slower transit times between two points, even though people freely choose their routes and even though no older roads are closed. This counter intuitive situation, where adding roads could sometimes result in less overall throughput, is unusual but mathematically provable. (Though it was many years ago and I no longer remember the case specifics.) So clearly, if some higher authority simply stopped people from using the new road, all people would be happier. Yet under capitalism, that new road would probably stay open if its owner profited, especially if he did not own older alternatives.
More importantly, most people argue that scarce resources lead to Singer’s Paradox in many other situations. For example, there is limited radio spectrum, so government allocates and regulates wireless communication. There is limited available land for roads, so government reallocates private property for public right of ways and regulates resulting transportation. The environment, our air and water, are limited resources demanding global cooperation and regulation to preserve life on Earth.
I think socialists and government regulators overlook a basic truth with their approach to scarce resources. Simply put, under capitalism there are never scarce resources, at least in the long run. By balancing supply and demand, capitalism eliminates scarcity. In our guts, we all believe in scarcity, the insufficiencies of almost everything in our lives, from food and friendship to fame and fortune. We forget that there are always alternatives. Sure, there are a limited number of radio frequencies, but there are ways around that including better radio multiplexing, beamed satellite communications, fiber optic cables and the Internet. Sure, there is limited land for roads, which is one reason we learned to fly and communicate electronically. Sure, there is only so much clean air and water, but advancing technology did much more to clean up the industrial revolution’s squalor than government fiat, and future ingenuity can right the feared environmental wrongs of today, at least those that are not false alarms. By concentrating on the apparent scarcity of resources, socialism often blinds us to alternatives, forcing us to trod regulated roads that inhibit innovative new alternatives, keeping us living in a past with fixed resources and fixed wealth.
So maybe there is no real scarcity, a free economy eventually finding better alternatives for any item in limited supply, imagined scarcity disappearing in an ever more innovative future. That still leaves examples like my school math problem, the case where building a new road, even a private toll road, makes us worse off. Surely a wise communal government can avert that? Not likely, since communes and committees of all stripes are seldom very wise, organisms with too many bodies and no head, places where good ideas can be ignored, strongholds of provincial politics and pettiness. What is worse, we understand the limits of communal planning by committee, and so end up allowing leaders or dictators to make decisions. Sure, a single person might improve on the blind and impersonal results of capitalism, but not very often. Given human nature, that all-powerful manager is more likely to become a mass-murdering tyrant in the image of Hitler or Stalin.
I cannot argue that capitalism is perfect. It’s just the best system of social organization we’ve found, being relatively impervious to follies of human management and our irrational, selfish, clannish and ultimately mortal natures.