Israel, India, and the United Kingdom all adopted socialism as an
economic model following World War II.
Socialism is guilty of a fatal conceit: It believes its system can make
better decisions for the people than they can for themselves.
Socialism has failed in every country in which it has been tried.
Socialists
are fond of saying that socialism has never failed because it has never been
tried. But in truth, socialism has failed in every country in which it has been
tried, from the Soviet Union beginning a century ago to three modern countries
that tried but ultimately rejected socialism—Israel, India, and the United
Kingdom.
While there
were major political differences between the totalitarian rule of the Soviets
and the democratic politics of Israel, India, and the U.K., all three of the
latter countries adhered to socialist principles, nationalizing their major
industries and placing economic decision-making in the hands of the government.
The Soviet
failure has been well documented by historians. In 1985, General Secretary
Mikhail Gorbachev took command of a bankrupt disintegrating empire. After 70
years of Marxism, Soviet farms were unable to feed the people, factories failed
to meet their quotas, people lined up for blocks in Moscow and other cities to
buy bread and other necessities, and a war in Afghanistan dragged on with no
end in sight of the body bags of young Soviet soldiers.
The
economies of the Communist nations behind the Iron Curtain were similarly
enfeebled because they functioned in large measure as colonies of the Soviet
Union. With no incentives to compete or modernize, the industrial sector of
Eastern and Central Europe became a monument to bureaucratic inefficiency and
waste, a “museum of the early industrial age.” As the New York
Times pointed out at the time, Singapore, an Asian city-state
of only 2 million people, exported 20 percent more machinery to the West in
1987 than all of Eastern Europe.
And yet,
socialism still beguiled leading intellectuals and politicians of the West.
They could not resist its siren song, of a world without strife because it was
a world without private property. They were convinced that a bureaucracy could
make more-informed decisions about the welfare of a people than the people
themselves could. They believed, with John Maynard Keynes, that “the state is
wise and the market is stupid.”
Israel,
India, and the United Kingdom all adopted socialism as an economic model
following World War II. The preamble to India’s constitution, for example,
begins, “We, the People of India, having solemnly resolved to constitute India
into a Sovereign Socialist Secular Democratic Republic . . .” The
original settlers of Israel were East European Jews of the Left who sought and
built a socialist society. As soon as the guns of World War II fell silent,
Britain’s Labour Party nationalized every major industry and acceded to every
socialist demand of the unions.
At first,
socialism seemed to work in these vastly dissimilar countries. For the first
two decades of its existence, Israel’s economy grew at an annual rate of more
than 10 percent, leading many to term Israel an “economic miracle.” The average
GDP growth rate of India from its founding in 1947 into the 1970s was 3.5
percent, placing India among the more prosperous developing nations. GDP growth
in Great Britain averaged 3 percent from 1950 to 1965, along with a 40 percent
rise in average real wages, enabling Britain to become one of the world’s more
affluent countries.
But the
government planners were unable to keep pace with increasing population and
overseas competition. After decades of ever declining economic growth and ever
rising unemployment, all three countries abandoned socialism and turned toward
capitalism and the free market. The resulting prosperity in Israel, India, and
the U.K. vindicated free-marketers who had predicted that socialism would
inevitably fail to deliver the goods. As British prime minister Margaret
Thatcher observed, “the problem with socialism is that you eventually run out
of other people’s money.”
Israel
Israel is unique, the only nation where socialism was successful—for a while.
The original settlers, according to Israeli professor Avi Kay, “sought to
create an economy in which market forces were controlled for the benefit of the
whole society.” Driven by a desire to leave behind their history as victims of
penury and prejudice, they sought an egalitarian, labor-oriented socialist
society. The initial, homogeneous population of less than 1 million drew up
centralized plans to convert the desert into green pastures and build efficient
state-run companies.
Most early
settlers, American Enterprise Institute scholar Joseph Light pointed out,
worked either on collective farms called kibbutzim or in state-guaranteed jobs.
The kibbutzim were small farming communities in which people did chores in
exchange for food and money to live on and pay their bills. There was no
private property, people ate in common, and children under 18 lived together
and not with their parents. Any money earned on the outside was given to the
kibbutz.
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