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I think it's hard for anyone to understand the problems with communism unless they either are above a certain threshold of intelligence and thus able to understand how communism affects incentives, or they are from a communist country and have seen the problems first-hand. And high intelligence is no barrier against believing in communism, as we saw during the 20th century when a large fraction of the entire world's intelligensia were communist. Many of them were very smart people, just deluded.
One of the biggest difficulties with trying to persuade people out of communism is the simple and basic undeniable fact that our modern social/economic/political system really is unfair, to an often ridiculous degree. There is no plausible moral justification for why some people should be born rich, and others poor, out of no merit or fault of their own. The problem with communism is that in practice, it does not actually solve this problem - instead, it makes social problems even worse. But the problem is a real one. There is no justifiable defense of our capitalistic system on moral grounds, you can only justify it by making fairly subtle although correct arguments about how in practice, it is the best system that has actually been proven to work in practice, and all attempts to replace that system with a theoretically nicer, more moral one, just end up actually creating an in-reality worse system. Plus you can try to teach people about how market incentives work, and how because the market has better information-flows and incentives than central planning, it ends up making everybody richer in the long term.
The whole communism/capitalism debate is so covered with mottes and baileys, is so entrenched, at this point, that it is like some WW1 battlefield. I don't think that frontal assaults work well in that context, it may be better to try to seduce people into taking a fresh look at their assumptions. Hours of arguing about politics may not be as effective as simply taking your communist friend out to some fun event and make them see that even though you are anti-communist, you are not a bad person.
It also helps if you support a good level of social welfare redistribution programs despite being a fan of capitalism, instead of being some kind of turbo-capitalist believer who is ideologically strict and is fine with orphans begging for bread in the streets. After all, our American system's success is not explained by the fact that it is turbo-capitalist, because in reality it is not turbo-capitalist at all. Our system is a deep hybrid of capitalism, central planning, and bureaucracy, with a blend of both competition and top-down control. No truly capitalist system, in the sense of how capitalism works in theory, has ever existed on a large scale. And if it did exist, I doubt that it would work well.
You can defend it on the grounds that it has generated the greatest amount of wealth in human history, something even socialists grant. And that this is good.
The problem is precisely that it has done this, and it has continued to do so despite some deviations from some purer form of free market capitalism. Quite natural for people to then think "well, just a little more fiddling and we'll have it really fair", especially when the downsides of the previous round of fiddling can be very diffuse, the benefits seemingly clear while inequities remain very visible. Everyone knows how much the CEO of Starbucks makes.
I don't think you have to sell most people on avoiding collectivization or central planning at this point. But this sort of slow slide into an allegedly "fairer" capitalism? Very hard. I think people just naturally distrust the market and are biased towards action.
Especially since no one wants to hear that their subsidized X is part of the distortion causing problems or, even worse, they're just not as productive as they think they are. "Skill issue, gg no re" doesn't really work as an argument.
That's what I think of as the consequentialist argument for capitalism.
My experience has been, arguing with communists, that there are basically two planes on which that the argument can occur.
The first plane is the consequentialist one, which usually comes down to empirical data. Forget concerns about abstract justice - what happens when these systems are actually instituted? Which is best for living standards, or economic growth, or whatever your own preferred measurement is? This approach makes a lot of looking at the USSR in practice, or making case studies of one country or other changing its policies - China's embrace of markets, say, or occasionally people try to argue from the welfare state in the direction of socialism. The point is that you just don't worry too much about theoretical justifications, but only look at outcomes.
The second plane is the opposite - the deontological, or in-principle, side of the argument. Here you argue that there's something intrinsically morally wrong with one system or other, or a sacred moral rule that's transgressed. This might be a Marxist using the labour theory of value to argue that capitalists exploit workers by capturing a portion of the value of their labour, or anarcho-capitalist or Randian arguments about how taxation is theft might also fall into this category. I'd say a typical capitalist argument here might be something like the Wilt Chamberlain argument - here the principle is that voluntary transactions shouldn't be obstructed.
In practice I find people tend to operate on both planes, or shift between them strategically. I often find communists or socialists begin with an inchoate feeling of injustice, and then jump between planes as needed to try to explain it. This can be very base (it is deeply frustrating to talk to people who seem to reason "there are injustices in the present system, therefore communism"), or it can be dressed up a bit (for instance, the first third or so of Robinson's Why You Should Be a Socialist is dedicated to pointing at current problems and feeling disgusted at them), but the starting moral impulse is to look around and say, "Something is wrong here! This isn't how it should be. For some people to be rich like this while others are so desperately poor is wrong."
That starting impulse is one I have a lot of sympathy for, especially as, at its best, it's rooted in real empathy. Where I depart from communists/socialists is at the "therefore communism" stage. The observation "this is bad" may be valid, but it's not enough by itself. That observation needs to be interrogated and clarified, and then solutions critically evaluated to see if they would actually improve things.
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