Why socialism fails: The Motivation Problem

    Since socialism is about the abolition of traditional authority, let us start with market authority, or simply money. Putting aside the socialist money system known as central banking for a moment (its replacement with market-based money is worthy of its own post), money is both a motivation and decision-making tool.

    Here's how the motivation works: a lazy man, has bills. An ambitious man, he has a dream. But both men lack the resources to get them, so this thing called "money" tells them to go out and do some work, or learn some new skills that let them get more from their work, so that they can pay for the things they need and want. The funny by-product of this is, that work produces goods, which include both immediate needs (like producing your next meal), but also goods that you can't use/eat, but make you more productive. In other words, the tractor that replaces the plow.

    Another part of the motivation problem is for the rich man. He can pay his bills, and he can fund his dreams. However, he also plays an important social function: investing in the earlier guys to help them, and by extension all of society, get ahead. This is where we get into investment. If there is no investment going on at all, it means that people with savings are either 1) spending it all on themselves, or 2) literally hoarding money Scrooge McDuck style. However, the freedom to invest, and the ability to get a return, is a motivation to not buy a new Honda over used at the low end of "rich," or taking private jets over flying commercial at a higher end of "rich," before having a much larger amount than the purchase price of either invested.

    If you read about the habits of actual rich people, you will find that they save and invest first, and that money is what makes up the principal for another man's mortgage, the operating capital for the company you work in, etc. Work, savings, and investment are in fact social, cooperative activities that would motivate people who are otherwise strangers to work together, and to work period.

Aside from money...

    I would also point out how family plays a key function in motivation. If I could never have a family, then I could probably live on $30,000 a year, maybe less, ride my bike on the weekends, and generally "opt out" of most of society. But being married, and having kids, means that you aren't just living for yourself, and that gets someone out of bed every morning. It also makes him think about the society that he's living in - not only do you want to set your kids off with good character and no debt, you also don't want them to grow up in a basket case of a society.

    The result being, a family will motivate otherwise unproductive, easily-satisfied people to become more productive. And that productivity provides the goods that create a functioning society.

Now here comes socialism

    Socialism de-links your effort from acquiring and producing goods. In the true Marxian utopia, if everyone is 100% equal, then every decision has exactly the same outcome. So, applying yourself and learning a new skill has the same effectiveness as doing what you always did, and slacking off occasionally (or always). You then run into the following issue:

> There are two men, one doing $20k worth of work, and the other $100k worth of work. The amounts are added, $120k, and each gets half, $60k.

> The $100k worker sees that working so hard isn't getting him what he wants, so he does $60k worth of work.

> Now, its $20k + 60k = $80k, and now the division is $40k.

> The higher-earning worker again drops his productivity to $40k, and the average is $30k, $25k, etc. etc.

    This is how starvation predictably takes place - when working more or less gives the same outcome, you work less and produce less. Less production means that there aren't enough goods, at first for a decent life, and then not enough goods for survival. At that point the "leadership" either starts having public floggings or executions to motivate people, or they give up on equality and start re-introducing inequality, where a better life is an incentive. This has been the outcome every time in history - equality is tried, motivation dies fast, "wreckers" are blamed, but when it gets untenable the socialists admit that equality is impossible, and allow people to self-motivate to get ahead again.

    Of course, with the power in the hands of a few at that point, they never truly give people their freedom back, just enough to make the system work.