I’m writing this in my room at the Palace Hotel in Zagreb, Croatia. Croatia is one of the six republics which used to comprise the Socialist Federal Republic of Yugoslavia. From the end of World War II until the 1980s, Yugoslavia was a successful socialist economy under the leadership of the benevolent and much-beloved dictator Josip Broz Tito (1892-1980), whose birthday is still widely celebrated on May 25 every year. After Tito’s death, Yugoslavia broke up into constituent republics, and Croatia, along with other republics, opted to embrace capitalism and democracy. As has been the experience of most other former socialist nations which converted to capitalism in recent years (like Russia and other former Soviet republics), however, most people in Croatia have become economically worse off after the transition to capitalism and people often miss the “good ole days” of socialism. Why is this? Why are people often disappointed after the transition to capitalism?
My friend and local host, Professor Meri Tadinac of the University of Zagreb, makes a very astute observation: Capitalism is like polygyny. As I mention in an earlier post, when men imagine what living in a polygynous society might be like, they imagine themselves married to several wives, when they can only have one wife in a monogamous society. The men therefore believe that they’d be better off in a polygynous society than in a monogamous society. What they don’t realize, however, is that, more than likely, they would be left without any wife in a polygynous society, so most men are actually better off in a monogamous society than in a polygynous society.
Similarly, when men (and women) living their drab, monotonous lives as factory workers and office clerks in a socialist economy imagine what living in a capitalist economy might be like, they imagine themselves to be the next Bill Gates, Richard Branson, or Oprah, none of whom exist (or can possibly exist) in a socialist economy. They can become millionaires, nay, billionaires, in a capitalist economy, whereas they have no chance of winning big in a socialist economy. They therefore believe that they’d be better off in a capitalist economy than in a socialist economy. So, with their newly franchised vote, they opt for capitalism. What they don’t realize, however, is that they’d be much poorer and much worse off economically in a capitalist economy than in a socialist economy.
Both capitalism and polygyny increase the variance in the distribution of desired outcomes while it can potentially (and often does) lower the mean. The mean number of children per man is (mathematically defined to be) exactly the same under polygyny and monogamy, but the proportion of men who have children is much greater under monogamy than under polygyny. More men are reproductively successful under monogamy than under polygyny. In sharp contrast, socialism and monogamy decrease the variance in the distribution of desired outcomes.
Capitalism and polygyny are systems designed to reward the winners and punish the losers; socialism and monogamy are systems designed to reward the losers and punish the winners. The winners, be they Bill Gates or Moulay Ismail the Bloodthirsty, are much better off in the former type of systems; the best Bill Gates can ever hope to do in a socialist economy is only slightly better than the average worker. The hard cold truth that often escapes us (including the residents of former socialist economies) is that most men and women are by definition losers and do better in the latter type of system than in the former.
Where are the facts here?
No one wants to distil this argument down to a comparsion of median GNP per capita (because we all know there's much more to life)...but if you were to do so, you would not find a single (established) socialist economy in the world where long term GNP pc exceeded that of an established capitalist one. Try it. Name one? (And don't say Sweden, because they've backed off the idea after recognising the folly of their ways).
So your "hard cold truth" is only partially true: "most people may be losers" (whatever that means) but only the most disadvantaged (say the bottom 10%) measured by income are better off in a socialist economy relative to its median than the equivalent in a capitalist one.