Socialism Is No Alternative to Capitalism—Not Even AI Can Make It One

When people blame the world, they often say capitalism is the problem. Underlying that idea is the belief that society is responsible for whatever is not working well. The endpoint of that way of thinking is a socialist worldview. But does socialism not have such problems? Can socialism really be an alternative? To state the conclusion first: socialism is not an alternative to capitalism.

Socialism can exist only in the imagination. Under socialism, someone must devise solutions to problems and everyone else must accept them. In a democratic society, such a dictatorial figure who creates those solutions cannot exist, and should not exist. The world does not move according to a design. People act autonomously and constantly change their decisions according to their own interests. To coercively force this in the first place is impossible.

Just as a socialist state cannot be sustained in reality, socialism cannot be established in theory either. Hayek focused on the “structural ignorance of human reason” as the fundamental reason economic activity—that is, division of labor and exchange—takes place. Because human reasoning is not perfect, no one can possess all the necessary information; each person can hold only partial information limited to his or her own area of expertise.

Based on this “structural ignorance of human reason,” Hayek logically demonstrated that social design is impossible, citing the following two reasons. First, it would require a human intellectual capacity capable of perfectly designing all the tasks society needs. Second, it would require “completeness of information,” meaning knowledge of all the information necessary for designing society.

The two conditions Hayek presented are, in practice, impossible to satisfy. Human intellectual capacity is not perfect, and obtaining all the information needed to design society is also unrealistic. In modern society, the volume of information is exploding. Collecting all information, considering every variable, rationally designing society, and controlling it perfectly is beyond the reach of imperfect human cognition—it is, quite literally, the domain of God.

Socialism’s centrally planned economy cannot flexibly respond while fully reflecting all the diverse and complex variables of the real world. Even a large organization made up entirely of elites can never design the most optimized economic plan while taking into account economic variables that change constantly.

If AI could perform such a role, might a socialist state then be sustainable? That possibility does not exist either. The idea that AI is all-powerful is an illusion. AI, too, is merely an object of individual choice. Along with economic choices, political choices belong entirely to the individual. In a free and democratic society, socialism cannot satisfy the requirements of freedom and democracy.

The problem is the arrogant belief that the ideal society human beings pursue can be designed by human reason. Artificially created institutions, far from improving society, shrink individual freedom and lead to abuses of power and corruption. Massive manipulation enters every sector of production and every accounting method, and false reports riddled with distorted figures and incorrect information run rampant. Productivity and efficiency fall to rock bottom, and the economy stagnates. If that is the case, how could social prosperity, economic abundance, and the happiness of society’s members possibly be achieved?

Once it became clear that socialism itself had difficulty sustaining a single state, it has, since the collapse of the former Soviet Union, survived by parasitizing capitalist societies. In particular, in affluent economies, socialist political forces operate by reflecting dissatisfaction with the world and demands for equality.

The problem arises when such socialist demands are institutionalized. That is because the same phenomena that caused failure in socialist states begin to appear. Only by restoring those areas to capitalist principles can people’s lives improve in those sectors.

Sung-no Choi, President of the Center for Free Enterprise (CFE)

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Original title: 사회주의는 자본주의 대안이 아니다, AI도 못한다

Author: Sung-no Choi

Date: 2022-03-08

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=press&idx=24577