While we believe that economics is good at explaining an awful lot of things, even we have to admit that there are some topics outside its purview. For example, we don't intend to address the issue of issue of whether "Christ preached socialist values." That's best left to theologians (and former heads of state). Instead, in this and the next chapter, we want to ask the following question: Which system do you think would do a better job of promoting peace and goodwill on earth among men? Socialism or capitalism?

In discussing socialism, we agree with former Soviet President Gorbachev that it is best to focus on "true socialism." "True" socialism is to be distinguished from "observed" socialism, which is the only form of socialism that has actually been implemented in human experience. "Observed" socialism is the form of economic organization that has been practiced in the former Soviet Union, China, the former East Germany, Cambodia, Uganda, Cuba, Iraq, and many other countries with equally distinguished economic records.

Observed socialism is usually associated with tyrannical dictatorship centered around one absolute ruler. Observed socialism is now widely recognized for being primarily responsible for the economic impoverishment of much of the world's population. And under observed socialism, literally hundreds of millions of people have been killed in the twentieth century by their own governments in places like the former Soviet Union under Stalin, China under Mao Tse Tung, Cambodia under Pol Pot, etc. Indeed, as proponents of socialism are quick to point out, true socialism should never be confused with observed socialism. So what would "true socialism" be like?

Since it's never been tried in real life, this is a difficult question to answer. But let's suppose we attempted to organize a society around the idea "from each according to his ability, to each according to his need." To begin with, let's suppose that our society is composed entirely of saints. Big-hearted people. People who are motivated solely by the desire to help others. In other words, let's suppose we have an entire society composed of Mother Theresa's and her ilk.

In this kind of world, how would the well-intentioned Mother Theresa's know what to do? How would they know whether their fellow citizens needed more carrots, or more green beans? Whether they wanted bigger homes located outside the cities, or smaller apartments located within the cities? How would they know whether they should produce more cars, or more roads; or maybe both, but fewer schools? In other words, how would the do-gooders know what good to do?

Consider the following problem. Suppose two Mother Theresa's went to Proletariat-Mart, the state-owned version of Wal-Mart. They both had poor neighbors who needed extra blankets to keep them warm at night. But there wasn't enough blankets at the store for both neighbors. What should Mother Theresa Number One do? Which is the nicer thing to do? Let Mother Theresa Number Two have the blankets for her neighbor, or try to get them for her own neighbor? You see, even in a world where people are very nice and are trying to help their fellow man, the problem of allocating goods to their highest valued use doesn't go away.

Even in an imaginary world populated by tender-hearted do-gooders, it's not at all clear that a socialistic society would be a place you'd want to live. Oh the people would be very nice. But it would be a very confusing and chaotic world. In fact, we imagine that a socialistic society full of Mother Theresa-like beings would be a little bit like two very nice people trying to enter a building.

FIRST PERSON: "Please, you go first."

SECOND PERSON: "Thank you, that's very nice of you, but, please, you go first."

FIRST PERSON: "No, I insist, you go first."

SECOND PERSON: "No, I just couldn't, you go first."

FIRST PERSON: "No, no, no, your time is much more valuable than mine. Please, you go ahead."

SECOND PERSON: "No, really, I wasn't in any hurry at all. I just couldn't bear the thought of cutting in front of you."

POLICE OFFICER: "If you ladies don't get moving, I'm afraid I'll have to arrest the two of you for loitering."

BOTH PERSONS: "Oh please officer, it wasn't her fault, arrest me."

Now consider the following scene in a free-market/capitalistic economy: A man walks into a department store. He examines the winter coats on the rack. He decides not to purchase one. He walks out. To the untrained eye, this might seem like a fairly unremarkable event. Not the kind of thing which would cause one to call the city newspaper and tell them to stop the presses. But consider what has just happened. A consumer went into a store interested in buying a winter coat for himself. After examining a particular coat, he decided that the price was too high. While he wanted a new winter coat, it wasn't worth it to him to pay that much money. In other words, he decided to leave the coat for somebody else who wanted the coat more than he did.

It is exactly the same as if the man had said to himself: "You know, I like this coat. I would get some pleasure from having this coat. But there is a brother of mine--somewhere out there in the economy--who wants this coat more than I do. I don't know who he is or where he lives. I don't know if his old coat is wearing thin, or if he's shivering in the cold even now. But I do know this. If I take this coat, it won't be available for him. So I choose to leave this coat so that it will be here for him when he comes into this store. I hope it brings him much happiness." And as he leaves the store without the coat, he quietly sings, "He Ain't Heavy, He's My Brother."

Of course the reality is that this consumer probably didn't spend a moment thinking about the other consumers in the economy. And that's too bad. Indeed, the world would be a nicer place if people spent more time thinking of others. We heartily agree that a first-best world would be a place where people really cared about other people.

But free-market economies do an amazing thing. They take people, imperfect as they are, and get them to behave AS IF they really cared about other people. This is a truly amazing achievement. For surely the next best thing to having a world full of caring people is having a world full of people behaving as if they cared. FREE-MARKET ECONOMIES TAKE GREEDY, SELFISH, SELF-INTERESTED PEOPLE AND GET THEM TO BEHAVE AS IF THEY WERE RAVING ALTRUISTS.