Friday, August 10, 2012

When Should We Reject a Theory? Communism versus Expansionary Austerity

-- Posted by Neil H. Buchanan

In a Dorf on Law post a few months ago, and in a related Verdict column, I discussed the difficult question of when enough evidence has accumulated to allow us to reject a theory. The specific examples that I discussed were "expansionary austerity" and Keynesian stimulus. I argued that there was more than enough evidence to conclude that The Austerions are all wet, whereas I rejected the idea that Keynesian economics had been proved wrong -- specifically rejecting the claim that "the stimulus didn't work."

These two examples were easy pickings, of course. There is simply no evidence supporting the idea that government spending cuts (especially in an already depressed economy) will lead businesses and consumers to feel such confidence that they will more than offset the government's drag on the economy. As I have discussed at length, the supposed examples supporting expansionary austerity do not actually demonstrate the claims that the theory's partisans are making. Meanwhile, it is child's play to defeat the "stimulus didn't work" claim, because all the evidence (even studies by stimulus opponents) supports the conclusion that it worked as well as it could, given how little stimulus was actually enacted (under pressure from both Republicans and some misguided Democrats). The 2009-10 stimulus program worked by preventing the unemployment rate from rising even further, which is no mean feat.

As I noted in that Dorf on Law post in May, there is a deeper issue at play here. Theories (especially in the social sciences) are very difficult to test definitively, making it difficult-to-impossible ever to convince diehard fans to give up the ghost. Even so, reasonable people with open minds need to have some way to draw some rough lines, neither holding on too long (for example, waiting for one more study to come in, before concluding that smoking causes cancer) nor jumping the gun (for example, giving up on the idea that a coin is fair when it comes up "heads" twice in a row). There is no clear answer to this difficult question, but it is so important that it deserves to be explored, even when we can only add a few more examples to the discussion.

The stakes in these debates can be quite high -- so high, in fact, that the nature of our economic and political systems can lie in the balance. In my post, I noted: "On a grander scale, Professor Dorf mentioned to me (after reading my new Verdict column) that this 'never tested' meme also captures the attitude of believers in Communism. They argue, quite plausibly, that Marx's writings simply are not the basis for so-called Communist regimes in the 20th Century. They thus claim (perhaps not as plausibly) that Stalinism, Maoism, and other real-world regimes that have been labeled Communist are wrongly used to smear an idea that has never been given a chance to succeed or fail."

In response, a reader wrote: "Professor's Dorf's comparison between austerity and Stalinism is unfair ... to Stalinism. Stalinism has had its failures, but at least it's had success as well: industrializing Russia so it could withstand Hitler's onslaught and now, industrializing China faster than any other third-world country."

We potentially have, in short, a much more difficult test case here, more difficult than the question of whether there is enough evidence to reject expansionary austerity (yes, obviously) or to reject Keynesian stimulus (no, just as obviously). If Communism lies between those two cases, however, that would mean that Communism is actually more difficult to reject, on the evidence available, than expansionary austerity. Can that possibly be true? Should the rejection of Communism not be at least as easy as the obvious case against expansionary austerity? Surprisingly, no. Even Communism has more to be said for it than Austerionism.

This analysis becomes even more complicated, of course, because defining Communism is itself so difficult. But if one wants to give the defenders of some reasonable notion of what constitutes Communism a fair shake, the definition should involve two things: (1) the idea that Communism can be based on a political apparatus that is non-totalitarian, and (2) the core economic requirement that the government directly operates the means of production, including accumulating capital through non-competitive means. If such a government were to try to honor "From those who have the ability, to those who have the need" in some meaningful sense, then we would have at least the basis for asking whether such a system could succeed.

The most common argument against the success of Communism, of course, rejects my first premise. That is, Communism is said to be marked definitively by a totalitarian (or, at least, strongly authoritarian) political system, along with a centralized economic system. We then hear the usual list -- the Soviet Union, Cuba, North Korea -- and are told that this cannot work. (Usually, this is accompanied by some triumphalist chest-beating, along with broad and conclusory comments about the importance of capitalist incentives and Marxists' supposed naivete about "human nature.")

As the comment above noted, however, an extremely authoritarian modern Chinese government has done an astonishingly effective job of bringing 300 million of its citizens up to a modern middle-class standard of living (just as a brutal totalitarian government brought the Soviet Union out of pre-capitalist poverty in no time at all). And as one of my hosts during my visit to Hong Kong earlier this year (an Anglo-Australian by birth) pointed out, China's huge progress in reducing poverty among its citizens looks especially impressive compared to the next-largest country in the world, India. With more than a third of the world's population living in those two countries combined, that comparison is fairly difficult to dismiss. We can at least conclude that material economic progress is possible under non-democratic political regimes that control the means of production.

Even so, I think that it is essential to return to my first premise, that we should want to see a test of a regime that is non-totalitarian, even as the government controls the means of production. The debate, after all, resonates in the United States (if at all) only if the pro-Communist position can promise that the economic gains that we saw in Stalin's Soviet Union and modern China could be achieved in a constitutional democracy marked by the rule of law. If that is not possible, then it does little good to point to China's growth. The price of such economic growth -- even if it can be attributed to central control of the means of production -- is simply unacceptable.

All of which brings us to an even more difficult question: What do we do when there are no examples, either way, to test a theory? One answer, of course, is to say that it is no mistake that we have seen no national-scale constitutional democracies with Communist economic systems. Under this view, centralized economic power is too easily abused, and the political regime thus becomes corrupted nearly immediately. Maybe, but that explanation suggests a time sequence that real-world regimes have simply not followed: under this view, a democratic regime adopts communist economic principles (or, a new regime simultaneously adopts democratic politics and communist economics at its founding), only to see the political regime become overwhelmed by the economic centralization. Notwithstanding the rhetoric of "people's movements," I do not think that any real-world country that has been given the label "Communist" has followed that pattern. Usually, the political regime begins as a non-democracy, with promises of moving in the other direction ... soon.

The claim that "it was never given a fair test," therefore, is at least a plausible one coming from those who wish to continue to believe that democratic Communism has some potential to improve people's lives. I am not one of those people, because I do think -- even as a supposed "big government tax-and-spend liberal," by American standards -- that the default position should be for the government to set rules, while private actors live and engage in economic transactions under those rules. By comparison to the claims from the American right that fiscal austerity was never fairly tested, however, the diehard Communists at least are not burdened with the record of unmitigated failure that the Austerions simply cannot explain away.