10. A Destructive Ideology: Democratic Socialism

In socialist ideas, the most daring idealism has always met the most covetous materialism.
– HEINRICH VON TREITSCHKE

Socialism promises people a better world with enticing words: a world where peace reigns, where justice and good fortune prevail. Economically, socialism entails that the means of production are not privately owned, but nationalized, i.e., owned by the state. As an economic and social model, socialism is thus the opposite of capitalism, which describes the economic and social model in which the means of production are privately owned. But, however tempting its promises may sound, socialism is not feasible.

The impossibility of socialism was conclusively explained, using scientific means, by Ludwig von Mises in 1919 in his essay “Die Wirtschaftsrechnung im sozialistischen Gemeinwesen” (“Economic Calculation in the Socialist Commonwealth”). In short, under socialism—because there is no ownership of the means of production—there can be no market prices for scarce goods. Without them, however, an economic calculation is completely impossible. The socialist planners cannot know in which quantity and quality, goods are desired, nor can they assess the feasibility of production projects. Socialism leads to chaos, violence and impoverishment—as opposed to all contrary proclamations of salvation.63

To be sure, socialism comes in different forms and manifestations.64 But there are two basic forms that can be distinguished. On the one hand, there is the socialism of Russian influence (also called: Marxism-Leninism). It stands for revolution and bloody overthrow, for the violent expropriation of the owners and the nationalization of the means of production. On the other hand there is the socialism of German influence: German socialists recognized that the Russian path to socialism could not be implemented in Germany. It was too ruthless, too cruel to have any prospect of success in Germany. The German socialists therefore opted for a different strategy. They were in favor of retaining in principle the private ownership of the means of production. At the same time, however, they demanded that the owners should not be entitled to all the revenue they generated by the use of their property. Part of it belonged to the community and was to be paid to the state in the form of taxes.

Once the democratic socialists have found support for their demands, the way ahead is virtually preprogrammed. If one has regarded partial expropriation as correct and good, then no principled reason can be raised any more against ever further tax increases. If an initial income tax of, say, 20 percent is levied, then over time it will become 25, 30, 35, 40 percent, or more. These small steps lead to the progressive expropriation of income earners and to an ever-greater redistribution of income and wealth based on political considerations, which increases the power of the state and the groups it favors. Private property then exists only formally, but no longer in economic terms. Thus, from the point of view of democratic socialism, property is property by grace of the state; it is fiat property.

Democratic socialism finds its intellectual basis in cultural Marxism (or neo-Marxism). It has grown out of the Marxist-Leninist insight that the hoped-for revolution does not emanate from the working masses, but that instead the basis for the transformation of society must be created by the intellectuals. The goal is not sudden violent overthrow, but a creeping peaceful upheaval—through the change of values, culture, and beliefs of the people. In this way, the masses, denuded of meaning and disoriented, are ultimately to effectively fall into the clutches of communism.

After decades of persistent preparatory work (the “march through the institutions”), cultural Marxist intellectuals today occupy many key positions in politics, administration, art, and culture. They can be found especially in schools and universities, popularizing their ideas, which are veiled in the garb of democratic socialism. New group conflicts are constantly being stirred up and talked up—whether it is a question of gender or nationality—which unsettle people and deliberately confuse them, until emotions reach psychotic proportions.

Political globalism relies on democratic socialism. Its aim is to direct and determine in an authoritarian way all relations between people from different continents. According to them, it is not the free market, the division of labor, and free trade that should determine what is produced and consumed when and where, but rather these decisions should be influenced or made by an ideological and political creative will. Political globalism receives support not only from the political left. Large companies in particular are expressing their support—because they hope to be able to influence the political process in their favor.65

Democratic socialism has—and this can be shown with the a priori theory of action—negative consequences for the material prosperity and morality of society. Here are a few examples. Taxing company profits reduces the return on investment: it is lower compared to a situation in which entrepreneurs are not taxed. This makes investing less attractive. The capital stock is growing less strongly than it actually could, and consequently future real wage increases will be lower than they would otherwise be.

The incentive to work, to engage in productive activity, decreases because the cost of not working decreases. Under democratic socialism, one can ultimately earn (transfer) income without having to offer a marketable service. All you have to do is elect a government to power that will give you the desired benefits. The bill has to be paid by the taxpayers, the productive people—who then have a reduced incentive to be productive. The material prosperity of the economy as a whole will therefore be lower compared to a situation where there is no taxation.

Democratic socialism abolishes the sharp distinction between “mine” and “yours.” Anyone who is allowed to vote for a government will vote for the party he expects will improve his financial situation, even if that happens at the expense of his fellow human beings. In order to defend themselves, actual and potential victims of the election results (the productive ones, whom one can take things away from) will also want to get politically involved. This leads to a politicization of the community that encompasses all areas of life, from which nothing and nobody is spared. The “political struggle” that ensues increasingly diverts scarce resources (money, time, personnel, etc.) from productive to unproductive uses.

Above all, however, democratic socialism ruins social morality. In a free market economy, you can only earn and preserve income and wealth if you do something that others demand voluntarily. You have to consistently place your labor at the service of customer wishes and prove yourself anew every day. In a free market economy, income and wealth are therefore the reward for serving one’s fellow human beings.

In democratic socialism a different moral and value concept emerges. In democratic socialism, unlike in a free market economy, there is less incentive to earn an income and build wealth by aligning one’s abilities with the desires of fellow human beings. Above all, there is no longer any unconditional respect for the property of others. Their income and assets are instead downgraded to potential prey, which can be appropriated with impunity if one elects the appropriate party, the idea being: The government takes something away from the others, and it gives me a bit of the loot. Democratic socialism thus creates a permanent conflict by dividing the community into net state profiteers and net state losers.

Democratic socialism, however, faces a particularly sensitive problem when it is spatially limited: In a single region, the policy of taxation and redistribution of income and wealth is more or less limited as long as there is an international free movement of labor and capital. For example, if companies and workers are taxed very heavily in the country where democratic socialism prevails, they migrate to other countries where the tax burden is comparatively lower. This is a thorn in the side of the democratic socialists.

The emigration of productive people ultimately reduces the available volume of taxation and redistribution that the democratic socialists can seize. Democratic socialism can only get the problem of “voting with one’s feet” under control if it succeeds in establishing global democratic socialism under a unified leadership. But how can that succeed? This question will be examined in more detail in the following chapters. Before that, however, it will be shown how a priori theory can help to better understand and estimate the developmental dynamics of democratic socialism and its socio-economic consequences.

• 63Even the worst experiences with socialism—think of Stalin, Hitler, Mao Zedong, Pol Pot—are not enough to discredit it once and for all. This is mainly due to the following reason: In the field of human action, of human history, experience can never provide the convincing and conclusive proof that something had to proceed as it did. The history of human action always forms a complex of many individual phenomena, whose respective influence on the final result can never be determined separately. Therefore, no laws can be derived from human history, the way they are gleaned from scientific investigations (here, the isolated influence of a factor on the final result can usually be filtered out by means of laboratory experiments). Consequently, a theory concerning human action, such as socialism, cannot be confirmed as true or refuted as false by experience. It is precisely this insight that the socialists make active use of. They explain that socialism, where and when it was put into practice, did not produce the hoped-for results, with the following: socialism had not been implemented consistently enough. At the next attempt one must proceed more resolutely—and then it will be obvious that socialism works. Or the next time, all that needs to be done is to place more capable people at the levers of socialism, and they will lead socialism to victory and, as promised, create a fairer and more peaceful world in no time. Many other subterfuges and attempts at justification could be cited to excuse the failure of socialism and the horrors it brings to people. On the history of socialism see Erik von Kuehnelt-Leddihn, Leftism Revisited: From de Sade and Marx to Hitler and Pol Pot (Washington, DC: Regnery Gateway, 1990), pp. 33 ff.
  
   
• 64See Ludwig von Mises, Die Gemeinwirtschaft: Untersuchungen über den Sozialismus (Stuttgart: Lucius und Lucius, 1932), esp. pp. 56–61.
• 65See Thorsten Polleit, “Bewahrt die wirtschaftliche Globalisierung: Freihandel und Polit-Globalismus sind nicht das gleiche,” Schweizerzeit, Jan. 27, 2017.