“Socialism” is a loaded term that people like to throw around. Unfortunately, there are almost as many definitions of socialism as there are people throwing the term around. Some clarity is in order.

The classic definition of socialism is an economic system in which the government owns the bulk of land, natural resources and capital (factories, equipment, etc.); government officials decide what is produced and how it’s produced; and government officials determine the distribution of income.

Today, many people who identify as socialist or otherwise routinely shove the classic definition aside. But it’s the only definition that makes sense. Here’s why.

The term ‘socialism’ came into widespread use in the 1830s. The word was deliberately chosen to express opposition to ‘individualism’ — as in economic individualism, as in private property, private enterprise and voluntary exchange, or, in a word that came into being some 50 years later, capitalism.

Economic individualism, or capitalism, is an economic system in which the bulk of land, natural resources and capital are privately owned. Consequently, decisions about what is produced, how it’s produced and who gets what’s produced are predominantly made by private individuals through markets.

Socialism, in opposition to economic individualism, means the bulk of land, natural resources and capital are owned and managed collectively by society. But as a practical matter, collective ownership means government ownership, and collective management of resources means decisions about what is produced, how it’s produced and who gets what’s produced are made by government officials, not private individuals. Hence the classic definition of socialism.

Today, many socialists consider socialism to be a set of values rather than an economic system. For instance many socialists today define socialism as a commitment to creating a more egalitarian society, a commitment to promoting the values of community and cooperation over selfishness and competition, and a particular concern for the poor. Viewing socialism as a set of values, they reject the classic definition of socialism.

The problem with a “values” definition of socialism, though, is it provides little if any clue about what socialism, as an economic system, would be. It quite possibly could be capitalism.

Economic individualists from Adam Smith and David Hume to F.A. Hayek and Deirdre McCloskey have argued that capitalist societies are more egalitarian than most societies in history, including authoritarian socialist societies. They have always regarded selfishness as a vice, have repeatedly argued that protecting individual liberties strengthens rather than diminishes community, and have always had a keen eye for how different economic systems affect the living standards of the poor.

A socialist according to the “values” definition who is persuaded by such arguments is thus a socialist in favor of capitalism. A definition that logically leads to the conclusion that socialism can be capitalism is a mess.

Other people think that welfare programs make an economy socialist. They don’t.

Programs that redistribute income leave the bulk of land, natural resources and capital in private hands, which leaves the bulk of production decisions in private hands, which leaves a capitalist economy a capitalist economy. Yes, redistributing income can effect what is produced and who gets it, but the effect is small, and utterly miniscule compared to a system in which the state owns and directs the means of production.

To claim that an economy with welfare programs is socialist is to claim that capitalism can be socialism. That’s another mess.

It would be nice if people used the term ‘socialism’ more carefully. I’m not holding my breath, though.

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