Socialism Explained: Principles, History, and Catholic Insights
Anyone who pays attention to contemporary political discourse has heard the word socialism. Understanding it can be difficult, however, as the term has a wide variety of meanings depending on its usage. Sometimes, it denotes an entire socio-economic philosophy about man and the world, while other times, it refers to a specific system of government programs and policies—for example, people often refer to “Nordic Socialism” to describe the welfare state of Norway. In the United States, socialism is generally used as a derogatory label for legislative proposals that involve government management of some sector of the economy or society. It is also common to see the words socialism or socialist used interchangeably with communism and communist, although this is not entirely accurate.
As you can see, the idea of socialism is fluid. Like many -isms, the word can be overused or incorrectly used to the point that its objective meaning becomes elusive. In my experience as a history and economics teacher, the average high school student has very little knowledge of socialism, let alone how to identify it or explain it. In this article, we will attempt to rectify this by reviewing the fundamental principles and history of socialism.
Principles of Socialism
Unlike communism, socialism is not a single, comprehensive political program. Instead, it is a general set of principles that are applied to a greater or lesser degree depending on a variety of other factors. The underlying idea behind socialism is that the needs of society can best be met by leveraging the people’s collective resources under the government’s beneficent oversight. The fundamental principles of this ideal include the following:
Collectivism
Like communism, socialism is a collectivist philosophy. As a political ideology, collectivism is the belief that the needs of the many outweigh the interests of the few. Society should, therefore, be organized in such a way as to maximize the collective benefits of its members. Even if this means inconveniencing or interfering with the aspirations of particular individuals. Socialists believe that human society requires a collectivist approach to best manage the complex challenges people face. Generally, this collectivist approach entails the government taking resources from individuals and using them for the benefit of the community.
It should be noted that civil society generally requires some form of collectivism to function. For example, levying taxes on the community to build a road that benefits the community as a whole is a common collectivist enterprise. In non-socialist societies, collectivism is turned to only when it is entirely impractical to get something done by private enterprise. In contrast, socialism prefers to bring much more under the scope of the collectivist umbrella. Socialism thus exists on a spectrum, with society becoming more or less socialist to the degree that it opts for collective solutions to social challenges.
Equality of Outcome
The purpose of socialist collectivism is to ensure “equality of outcome.” Equality of outcome refers to a state in which all people have approximately the same material wealth and income. Or in which the general economic conditions of everyone’s lives are alike. This is typically contrasted with “equality of opportunity” in free market societies, in which all people have the same chance for advancement but must actualize this advancement by their own efforts. Socialism aims at using collectivism to bring about a similar standard of living for all people. For example, guaranteed access to health care, housing, or a specific wage.
To illustrate, in a free market society that believes in equality of opportunity, all people would have equal opportunity to find a job that suits them, to apply themselves, and to earn whatever wage they merit through their skill and intelligence. As people are naturally unequal, some will earn more than others. This is accepted because the outcome isn’t as important as allowing individuals the opportunity to unlock his or her potential.
In a socialist society, however, the focus is not on the individual’s potential but on the whole’s benefit. The socialist society, therefore, would guarantee every worker not just an opportunity to make a specific wage but the wage itself. Wages would be fixed at certain levels by the government, with the incomes of higher-earning individuals taxed to help subsidize this commitment, thus guaranteeing an equality of outcome.
Nationalization
Of course, such equality of outcome cannot be brought about without massive government intervention. Socialists believe the government should assume control over specific sectors of the economy in order to guarantee these desired outcomes. When the government takes control of an industry, program, or service, it is called “nationalization. ” This is so named because, from the socialist perspective, the government assumes control of the industry on behalf of the nation. For example, in Great Britain, the healthcare industry is governed by the National Health Service (NHS), a government-owned agency that provides healthcare services and manages everything relating to how such services are provided and paid for.
A country is more or less socialist to the degree that its industries are nationalized. Sometimes, one will find certain nationalized enterprises embedded within larger free market societies. For example, Amtrak is a government-owned train company in the United States. The U.S. government is the majority shareholder of Amtrak stock, and the Amtrak Board of Directors is appointed by the president of the United States and confirmed by the U.S. Senate. However, the existence of Amtrak does not make the United States a socialist country. In socialist countries, every major industry is typically nationalized (e.g., steel, railroads, energy, communications, health, etc.). Not only this, but the government is often given a monopoly over the nationalized industry. This means no private competition is allowed. For example, the nationalized Deutsche Bahn is the only major rail provider in Germany.
The Social Safety Net
Socialist societies are proactive about using the government to provide a host of services to their people. These programs are intended to provide a basic level of health and security. They generally include things like unemployment payments, free health care, pension payments, government-paid maternity leave and vacation time, public transportation, subsidized housing, free higher education, and a host of other services. These are collectively known as the “social safety net,” as they are ostensibly implemented to prevent people from slipping through the cracks into poverty.
Any one of these social safety net programs is extremely expensive. For example, even though Amtrak is structured as a for-profit company in the United States, it has never made a profit and is not anticipated ever to be profitable. It runs at a loss every year and is sustained only through continuous government subsidies. Amtrak costs the government money to operate every year.
The cost is astronomical in a country that provides all of these social safety net services. Socialist countries can only pay for these programs with extremely high levels of taxation, and even then, many programs lose money or are on the verge of insolvency. While people may think of these services as “free,” they require tremendous levels of government funding at taxpayer expense.
Who’s Who of Socialism
It is generally admitted that modern socialism emerged in the early 19th century with the Utopian Socialists. The Utopians were thinkers who criticized the burgeoning industrial society for the inequality it produced. They argued that people would be much better served by a collectivist approach to economic planning.
The Utopians
Francois Charles Fourier (1772-1847) and Robert Owen (1771-1858) were notable among the Utopians. They advocated for planned communities where the production and distribution of goods were tightly regulated. Owen constructed such a planned community called New Lanark in the U.K., and one of Fourier’s disciples founded Hunt’s Colony in Wisconsin. Both communities failed.
Another notable socialist was the Frenchman Henri de Saint-Simon (1760-1825), who wrote in favor of the state taking a more substantial role in organizing the economy. Saint-Simon’s 1817 “Declaration of Principles” called for an industrialized society managed by the workers, with the profits of industry reinvested into the community for its own benefit, as opposed to going into the pockets of the manager class. In the United States, Josiah Warren (1798-1894) attempted to build a socialist commune at New Harmony, Indiana, with collective ownership of property. This commune also failed.
British Fabian Society
A more pragmatic approach to socialism was promoted by the British Fabian Society. Founded in 1884 and reaching its heyday in the years leading up to World War I, the Fabians advocated for a gradualist approach to socialism. They hoped to implement socialist policies piecemeal through the democratic process. The Fabians were once a highly influential force in British politics. The great G.K. Chesterton was an early member of the Fabians before he grew disenchanted with them and abandoned socialism. While the Fabian Society still exists today in many English-speaking countries around the world, its influence is greatly diminished.
In France, meanwhile, a growing number of socialists became disillusioned with the viability of the gradualist approach and instead emphasized direct political action to establish socialism by revolution. A notable publication in the history of socialism was the publication of Pierre-Joseph Proudhon’s What is Property? in 1840. In this popular book, Proudhon would argue that private property itself was theft, as all private ownership was intrinsically contrary to the public good. In this, Proudhon anticipated Karl Marx and the Communist Manifesto, published eight years later in 1848. Marx argued for the total abolition of private property under the auspices of the government.
Marxism and Socialism
Marx’s communism is often confused with socialism. And while this is understandable (since both are collectivist), Marx’s socialism departed in significant ways from the ideas of his predecessors, such that the socialist movement split into those who embraced Marx’s vision (communists) and those who rejected it. Those interested in learning more about Marx’s vision should consult our previous entry in this series, “Communism Explained: History, Principles, and Catholic Insights.”
It is worth noting, however, that communists regard themselves as the “real” socialists insofar as they argue that communism is simply socialism with its principles taken to their logical conclusions. Non-Marxist socialists, however, vehemently reject the identification of communism and socialism. This has led to widespread confusion about just what socialism is precisely, with infighting about who represents “authentic” socialism. It is extremely important, therefore, to understand what a person means when they start talking about socialism because even socialists disagree about it.
Democratic Socialism
The mid-20th century saw the rise of Social Democracy, sometimes known as Democratic Socialism. Social Democracy emerged out of Germany in the preceding century, with August Bebel, Eduard Bernstein, Freidrich Engels, Wilhelm Liebknecht, and Carl Wilhelm Tölcke all considered among its founders. Notable for its prevalence in Germany and other Western European countries, Social Democracy is often presented as moderate or middle-road socialism.
Social Democracy makes wide room for private property, free market mechanisms, and personal initiative. Still, it uses the levers of socialism to redress what it considers the excesses of free market economies. In Social Democracy, certain pivotal sectors, such as health care, public transit, and retirement pensions, are nationalized while the free market is left to operate in other industries. High tax rates provide for specific social safety net programs but are not enough to negate the need for free competition.
Hugo Chavez
Socialism is particularly popular in Latin America, especially after the 1998 election of Hugo Chavez (1954-2013) as president of Venezuela. Chavez proclaimed a so-called “Bolivarian Revolution,” promoting a brand of socialism peculiar to Latin America. It incorporates aspects of Social Democracy with anti-colonialism, indigenous rights, and the cultivation of domestic industry with the aim to break free from the economic influence of the United States. Many full-blown socialist or moderate socialist governments took power in Latin America in the wake of Chavez’s election, and Chavez was seen as the face of Latin American socialism until his death in 2013.
Socialism in Practice
Assessing socialism in practice is challenging because, as we have noted, countries can be socialist to greater or lesser degrees. In the interest of space, however, it is safe to say that socialist economies from the 19th century to today have been less successful to the degree that they are nationalized. In other words, the more socialism is introduced, the worse the economy fares.
Nationalization and Economic Instability
While most modern economies can deal with the nationalization of certain segments of the economy (for example, the nationalization of the mail service in the United States or the nationalization of railways in Germany), more intensive nationalization results in economic problems. Hugo Chavez’s aggressive socialism in Venezuela brought that country to the brink of ruin and fiscal catastrophe. South Africa, too, implemented a bold socialist agenda in the 1990s in hopes of redressing historic racial inequalities, but instead it has seen its economy decline into insolvency. A majority of the world’s worst economies have socialism as a common thread tying them together.
The High Cost of Socialism
While socialism sounds good in theory, it tends to be too expensive and unwieldy to administer in practice. Even countries with very limited socialistic programs struggle to pay for the programs they do have.
Take the United States’ two most notable forays into socialistic enterprise, namely, Medicare and Social Security. These two programs account for one-third of the annual spending of the United States, with Social Security alone being the largest single expenditure of the U.S. government. Both programs are consistently underfunded due to their vast expense. Many economists believe these programs may cease to exist in the coming decades because of their immense price tags.
The Burden of High Taxation
The problem is even more acute in countries with more expansive social safety net programs. These counties can only pay for these programs with extremely high tax rates. Denmark, France, and Austria have the highest tax rates in Europe, all hovering a bit above 55%, which is needed to pay for their social safety net obligations. Tax rates these high have the effect of stifling business growth, which keeps wages stagnant and prices high. This tends to offset whatever benefits are conferred by the safety net. If government revenues decline during an economic downturn, the cost of these programs can entirely tank a government’s economy, as happened to the governments of socialist Greece and Portugal during the 2000s.
Bureaucracy and Efficiency Challenges
Another problem with socialist economies is their sprawling bureaucracies. The level of organization needed to manage entire industries is immense and challenges the organizational capacity of the governments that attempt such a feat. A perpetual complaint about socialist economies is their stifling bureaucracy, which in many cases leads to mismanagement of resources, long wait times for services, and frustrating customer experience.
That’s not to say socialized enterprises can’t work or are universally bad. Despite their difficulties, most people accept that some degree of nationalization is desirable. This is particularly the case in situations where only the government has the resources and power to provide a particular service. And, of course, society’s value systems come into play as well. For example, while the U.K.’s NHS may be a bureaucratic nightmare plagued by delays and red tape, some Britons still prefer it to the expensive and haphazard private health system of the United States. As they say in economics, there’s no such thing as a free lunch, and every economic decision has a trade-off. Ultimately, when considering socialist programs, people must decide what trade-offs they are willing to consider, as history has demonstrated that socialist policies come with considerable costs.
The Catholic Perspective
It can be confusing to assess the Catholic perspective on socialism. On the one hand, it is not difficult to find highly condemnatory statements against socialism from the Supreme Pontiffs. For example, Pius XI forcefully said, “No one can be at the same time a good Catholic and a true socialist” (Quadragesimo Anno, 120). More recently, in 2005, Pope Benedict XVI condemned the ideology that the state should be the guarantor of every public good. He wrote:
“The State which would provide everything, absorbing everything into itself, would ultimately become a mere bureaucracy incapable of guaranteeing the very thing which the suffering person—every person—needs: namely, loving personal concern. We do not need a State which regulates and controls everything, but a State which, in accordance with the principle of subsidiarity, generously acknowledges and supports initiatives arising from the different social forces and combines spontaneity with closeness to those in need.” (Deus Caritas Est, 28)
On the other hand, the same pontiff in his 2009 Caritas in veritate calls for an expanded social safety net in developed nations. Benedict said:
[M]ore economically developed nations should do all they can to allocate larger portions of their gross domestic product to development aid, thus respecting the obligations that the international community has undertaken in this regard. One way of doing so is by reviewing their internal social assistance and welfare policies. (Caritas in veritate, 60)
One can find many more such statements in Populorum progessio of Paul VI, John Paul II’s Centesimus annus, and Pope Francis’s Fratelli tutti. What is to account for this discrepancy? Is there a contradiction in papal teaching here?
The Principle of Subsidiarity
No. The fact is, the Magisterium makes a sharp distinction between social safety net programs and the wholescale government take-over of the economy. The Church’s views are governed by the principle of subsidiarity, which means that social problems should be handled at the lowest level possible. Because the Church affirms the rights of individuals, families, and communities to seek their own good as they see fit, it opposes any kind of government takeover of the economy or abolition of private property. This is what Pius XI is referring to in Quadragesim anno when he condemns socialism.
For example, speaking of ownership of property, Pius XI says, “We shall begin with ownership or the right of property…[the popes have] strongly defended the right of property against the tenets of the Socialists of his time by showing that its abolition would result, not to the advantage of the working class, but to their extreme harm” (QA, 44). It is clear that he here means socialism in the sense of the abolition of private property, as promoted, for example, by Proudhon. This is also what Benedict XVI condemned in the passage from Deus caritas est cited above.
The Balance Between Catholic Teaching and Economic Systems
The flip side of this, however, is that the Church also admits some issues are best addressed by the government. The Church’s social encyclicals thus tend to speak warmly of social safety net programs in general, as it sees the government as the only entity capable of providing such services. This is why when the Magisterium condemns socialism, it is not condemning Social Security, Medicare, or Amtrak. Obviously, whether a country can afford such programs and the details of how they are managed are political questions. The Church thus condemns socialism as a wholescale system for managing the economy while affirming that limited nationalization can be a valid solution for providing services that only the government is capable of managing, according to the principle of subsidiarity.
In the Homeschool Connections Catalog
You can find socialism mentioned in the following Homeschool Connections courses:
Introduction to Catholic Social Teaching (High School, Phillip Campbell)
History of Latin America (High School, Phillip Campbell)
Modern European History: 1789-1991 (High School, Phillip Campbell)
Fracturing of the Middle East (High School, Phillip Campbell)
Final Thoughts: A Balanced Catholic Perspective on Socialism
In conclusion, understanding socialism requires a nuanced approach. The term encompasses a wide range of economic policies, historical movements, and political ideologies. While socialism, in its more extreme forms, has led to economic instability and bureaucratic inefficiencies, elements of collectivist policies—such as social safety nets—are present in many modern economies. From a Catholic perspective, the key is subsidiarity: ensuring that societal needs are met at the most local level possible, balancing individual rights, community responsibility, and governmental intervention.
As we navigate discussions on socialism in politics, history, and faith, it is essential to approach the topic with clarity, historical awareness, and a well-formed Catholic worldview.
What are your thoughts or questions on this topic? You can join me and other homeschooling parents at our Homeschool Connections Community or our Facebook group to continue the discussion!
