I cannot absolve myself from the guilt of failure to exercise critical responsibility toward my own radical ideals. I was guilty of judging capitalism by its operations and socialism by its hopes and aspirations; capitalism by its works and socialism by its literature. To this day, this error and its disastrous consequences are observable in the judgment and behavior or some impassioned individuals, mostly young.In thinking about what he and others meant by "socialism," Hook wrote (pp. 599-601):
I cannot claim any special competence in economics, although I have read--not really studied--the great classical economists since Adam Smith. I believe I can say with justification that I was one of the few American "Socialist intellectuals" who read Marx's Capital closely but was drawn to socialism on moral grounds rather than economic ones. This I believe was true of all the leading Socialists of our time. Capital offered us evidence, so we believed, that the normal operation of a commodity-producing society rested on the exploitation of the worker. We did not realize what should have been evidence even before the Soviet economy confirmed it; that workers could be exploited in a collectivist society as well as in a free market economy--in the absence of free trade unions even more so--and that the distribution of social wealth could never be adequately accounted for in purely economic terms. As a group, although we were intensely interested in the economic questions of the day, we were indifferent to, and largely ignorant of, current-day economic theory. ...
Because our support of socialism as an economy rested on moral grounds, the very meaning of socialism changed once we abandoned serious advocacy of collective ownership of all social means of production, distribution, and exchange. Since World War II, the famous Clause IV of the Constitution of the English Labour Part, which advocated complete socialization of the economy, has never been taken seriously--not by the Labour Party itself nor by the Socialist Parties of Germany, France, and Italy nor by most of the members of the Socialist International, including its American affiliates. The primary reason for this is that they were more wedded to political democracy than to any totally planned economy. In time, the term socialism seemed to have changed its meaning to signify the responsibility of the stage to intervene in the economy to provide a safety net for those willing and able to work but who find themselves unable to find employment or make ends meet when they do. All major political parties in Western countries seem committed to preserve the free-enterprise system at the same time as they call for some form of government intervention into the economy and support for the welfare state. ...
I no longer believe that the central problem of our time is the choice between capitalism and socialism but the defense and enrichment of a free and open society against totalitarianism. ... Most human beings in modern societies prefer a social order in which their choices are voluntary rather than coerced. But sustained economic hardships and deprivation can in time erode the allegiance to freedom among large masses of people. That is why we cannot organize a society on the purely economic principles of a free enterprise society.Hook also writes about a basic problem for socialist thinking, including his own--an insufficient level of attention paid to problems of incentives (p. 600):
Socialists, and I include myself among them, never took the problem of incentives seriously enough in the socialized sector of the economy, in which there was to be guaranteed tenure and in which government subsidies were to underwrite the failure of productivity to match the rising costs of the welfare state. The irony of the situation is that we used to worry about who would do "the dirty work" under socialism, a problem that never existed in a capitalist economy because the market seemed automatically to provide diligent candidates for the available posts. ... What has happened in almost all socialist sectors of the economy is a decline in productivity, an erosion in the skills of craftsmanship and in the work ethic. ...
Our error consisted, I believe, largely in the uncritical extrapolation we made from our own mode of living and earning a living. We were teachers, students, writers, artists, and professionals. Our vocation was freely chosen, and we assumed that inasmuch as there would be no problem of incentive for us, since we found self-fulfillment in our work, this would apply to everyone else. But until some way can be found to organize a society in which everyone's way of earning a living is at the same time a satisfactory way of living his or her life, there will always be a problem of incentive.The passages quoted here resonate with me for a number of reasons. Here, I want to focus on the implications for what people mean today when they talk about "socialism."
For example, when discussing "socialism," it does seem to me that many people have turned away from the dictionary definition, which specifies state ownership or control of the means of production, and instead their idea of socialism focuses on government support for those who lack jobs or whose jobs don't pay enough to make ends meet.
It's common to hear of "socialists" (including some prominent Democratic politicians) who say that their preferred set of policies would be something closer to those common in western Europe, and perhaps especially in Scandinavian economies. Of course, using the standard dictionary definition of socialism as involving government ownership or control of the means of production, countries like Sweden, Denmark, and Norway are clearly capitalist. And many Americans who feel supportive toward the governments benefits provided by these countries tend to quail when confronted by specifics of these economies, like a national value-added tax at rates of 20% or more, low corporate income tax rates, embrace of international trade, and (in Sweden) vouchers for school choice.
I smiled ruefully at Hook's admonition that "we cannot organize a society on the purely economic principles of a free enterprise society." This sentiment is often voiced by those who express sympathy with socialism. But it's a "straw man" argument--that is describe an argument that literally no one is actually making, and then knock that argument down and declare victory. I'm unaware of any prominent economist, ever, of any political leaning, who has argued that free enterprise is sufficient for organizing a society. Anyone who makes such a claim is revealing (as Hook readily admits) that they have not actually studied economics.
Instead, economists have for decades argued that markets have been proven to have a lot of useful incentive properties when it comes to how a society addresses the necessary issue of production, distribution, and exchange of goods. Economists also recognize that pure free enterprise can lead to a range of problems: poverty and inequality, environmental issues, the appropriate social investment in education, health, technology, and more. Countries that call themselves "socialist" clearly have these problems, too. Thus, economics sees the problem of practical politics as how to arrange and constrain markets to support their strengths and to address their weaknesses.
From my own view, the idea that there is some group of people who believe in unfettered Darwinian survival-of-the-fittest free-for-all markets, while the alternative is to move to "socialism," is playing games with terminology. After all, the US has had nothing resembling truly unfettered markets for decades, and has certainly not been organized "on the purely economic principles of a free enterprise society." Indeed, it has been a favorite argument of some market-oriented thinkers to claim that the US economy has already been "socialist" for decades (for example, Milton Friedman often made this argument in the 1980s).
If "socialism" is going to be defined by a belief in democracy, it's important to remember that truly democratic countries operate through a mixture of popular voting along with various checks and balances, not by electing a dictator. Moreover, "democracy" contains its own black temptation, which is that some of those who claim to support democracy are also very quick to claim that democracy has been hijacked or fooled or corrupted when it doesn't lead to the result they prefer. But democracy is a process, not a result. If you only believe in democracy when it delivers your desired result, then you are a believer in the result, not the process, and you will tend to find excuses to jettison the inevitably imperfect real-world "democracy" when it produces outcomes that you deem incorrect or inconvenient. (As Hook noted, if you think that capitalism is the only form of oppression, or that countries which call themselves "democratic" don't oppress workers, you aren't paying attention.)
At the end of all these disputations, it seems to me that those who emphasize their support for big single-word terms like "socialism," "capitalism," or "democracy"L are pushed back to saying that they want "the right kind" of the system they favor. Some emphasize markets or capitalism, but "the right kind" of markets or capitalism. Some emphasize socialism, but of "the right kind." Some emphasize democracy, but again "of the right kind." In all of these settings, the qualifications about what "the right kind" means seems more important for making moral or practical judgment than the label that precedes it.
Being specific means digging into particulars, like the dramatic differences in how health insurance financing actually works in different countries, rather than just using labels like "market" or "single-payer" or "socialized medicine." It means being transparent about incentives and tradeoffs, rather than assuming them away. It means not making big judgments about one abstract system by focusing heavily on the shortcomings of its real-world operations, while judging alternative choices based on theories and promises.