There are some terms that get mixed up in conversations about economics, and Christians can find themselves confused about where different words actually refer to. I hope to go over a few key ideas here that will hopefully help clarify debates. Frequently, arguments about socialism come down to confusions (both purposeful and accidental) about these terms, so it’s important that we know what we’re referring to.
Socialism is a very broad term to refer to a collection of political-economic systems that center around social ownership of the “means of production” (the stuff used to make goods and services) and the firms of the economy being worker-managed. “Socialism” as a general term usually calls to mind the Soviet model, but that is far from the only conception of socialism—there are many variants, both in practice and theory. We’ll cover the two major historical variants: authoritarian and democratic socialism.
Authoritarian socialism is where social ownership of the means of production and worker management of the economy is undertaken by a single-party, authoritarian political structure, where the single party is said to be a “dictatorship of the workers.” This is generally associated with the Soviet model, where the party establishes “worker’s councils” that centrally plan the economy, deciding what’s produced and who’s going to produce it. When people talk about the failures of socialism, they are most of the time referring to authoritarian socialism, which was often accompanied by violent revolution at the beginning with repression and difficult economic management problems in the middle and end. What’s more, unless you’re a part of the party structure, you actually don’t have any more say in your economic life than people do under capitalism. This kind of socialism has been roundly critiqued by scores of socialist thinkers including George Orwell and Reinhold Niebuhr.
Democratic socialism takes an entirely different approach from authoritarian socialism. Democratic socialists believe that the government that ultimately manages the means of production ought to be democratic in nature, and that the process of achieving greater worker control over the means of production and economic decisions ought to happen by democratic means. Typically, democratic socialists don’t adopt the centralized planning approach employed by authoritarian socialists and instead think that markets with price signals are useful for significant parts of the economy. Democratic socialists also generally place strong emphasis on civil liberties—the ability of people to practice religion, to have families, to have free speech, to live their own lives. This recognizes that it’s not just a question of whether the government or the rich have the reins over the economy: control over the big economic decisions has to be accountable to all members of society.
This is the term that confuses the most people, especially in the United States. Many Christians think that democratic socialism and authoritarian socialism are very close, while social democracy is very distant from both. But the opposite is true: the difference between democratic socialism and social democracy is quite small. Since democratic socialism happens gradually rather than in sudden revolution, countries where a significant number of people are working for democratic socialism tend to have a mixture of private and social ownership and management of the economy as well as generous welfare states. These countries are often described as “social democracies” and their socialist parties are called social democratic parties (though some parties called “social democratic” are less socialist than others). Some people think that social democracy means the desire to reach this kind of mixed economy, while others think that it is essentially the same as democratic socialism. I tend to think the latter is correct, and that social democracy is a term more people should use, especially in the US.
The term “communism” is similar to socialism in that encompasses multiple different ideas. Communism can mean the basic principle that can operate on any social level (not just in terms of government) of “from each according to ability, to each according to need.” All sorts of institutions can, at different times, be “communist” in this small-C way. Most family households, for example, operate according to that principle, and theologian José Miranda described the church in Acts 2 and 4 as “communist” in this way. Communism can also refer to Karl Marx’s desired and predicted end-state where all things were owned in common by everyone worldwide and resources are distributed on the principle of small-C communism. Many historic political parties called “Communist” parties were ultimately authoritarian socialist parties that claimed their authoritarian socialism was the transition step to Marx’s communism. Some, like the Chinese Communist Party, are even less committed to even socialist ideas and instead operate ultimately like authoritarian semi-capitalist parties.
Capitalism is marked by private ownership and accumulation of the means of production, wage labor, and a commodity economy. Typically, the capitalism defended in the US is “free market capitalism,” where public ownership and market regulations are discouraged in favor of all economic decisions being made by the private owners of wealth. Just like socialism, it can take many forms, some democratic, others authoritarian—but in all of them, democracy never extends to the realm of the economy. Consequently, who produces what and who benefits from it is entirely controlled by whoever owns the wealth in society, and the system depends on some people being owners and other people not being owners and thus having to sell their labor in order to survive.
Having the right definition of terms doesn't automatically answer the question of which political economy Christians should subscribe to. After all, these are modern forms of economic life that didn't exist in the Bible, and Christians thinking about political economy today are making judgments based on biblically-informed thinking. Though faithful Christians may disagree in their judgments, proper definitions are an essential part of making judgments well.