A Libertarian – Utilitarian Rejection of a Socialist Economic System

One may not consider oneself a Liberatarian, but that is not to say an economic system cannot be judged by Libertarian means for its extreme anti-Liberal presence. One can be a Libertarian in a specific framework, such as the one providid by John Rawls. This enables us to judge other economic systems that happen to be outside such framework, by Libertarian measures. One of these extremes is the Socialist economic system.

What is a socialist economic system? We can define a socialist economic system based on two important factors, and those are the idea of 1) social ownership with elimination of personal ownership, and 2) Vertical redistribution of wealth and resources (or rejection of market economy and accepting planned redistribution) (Gregory, Stuart, 2004).

It is self evident that this article is not about welfare states (such as Scandinavian countries economic system), but about the economic system of The Soviet Union in the past and North Korea or Cuba in present.

First principle: It is very obvious that how, on Libertarian grounds, we reject the first principle of such socialist economic system. On Libertarian grounds, any form of taxation is coercion, even theft or slavery, and is objectionable on the grounds that no state has the right to seize one’s property, and no thief or slave master has the right to steal or enforce his will on another human being (Sandel, 2009).

There are also notable Utilitarian rejections of the first principle, notably those of Ludwig von Mises and Friederick Hayek.  Mises mainly argues that individuals are motivated by their desire to self-betterment and this desire cannot be translated from individuals to the group. And since the resources are owned by the state and not individuals, therefore the profits will be for the state and the motivation for efficiency will be lost (Gregory, Stuart, 2004).

These objection are powerful: They target both the merits and the outcome of the system choosing the first principle, and history shows that they have been correct in a practical way, particularly Mises and the Utilitarian objection.

Second principle: The objection to this principle is solely from a Utilitarian point of view, and by using Pareto’s principle of efficiency (as John Rawls formulates in section 12 of A Theory of Justice): An efficient distribution is the one that there can be no redistribution that makes one person better off without making the others worse. In other words, if we can make one person off without making the others worse, that is an inefficient distribution of wealth.

For a vertical redistribution to be efficient, all individuals have to be satisfied to the extent that the need for any market is no more. But in reality, the mere existence of the so called black markets in the Soviet Union shows otherwise. If the system was efficient enough without a market, there would have been no market, legal or not.

Therefore from a purely Utilitarian view, this system is unjust because it does not bring out the greatest good for the greatest numbers, and in fact falls much shorter than that.


Georgy, P. R., R.C. Stuart. 2004. Comparing Economic Systems In the Twenty First Century. Houghton Mifflin Company. Boston, New York.

Rawls, J. 1999. A Theory of Justice. Revised ed. Oxford University Press. New York.

Sandel, M. J. 2009. Justice: What is the Right Thing to Do?. Farrar, Straus and Giroux. USA.


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