Everywhere I look, I see people expressing alarm about the popularity of socialism. It polls in the mid-to-high 30s, and considerably higher among younger people. Older people, who have a living memory of the various socialist regimes that once dotted the planet that at best didn’t deliver prosperity to their people and at worst threw them in jail by the thousands, can’t understand how this can be and seem to want to talk endlessly about it.
I, however, marvel at the other consistent result of all these polls, which these people don’t seem nearly as interested in talking about. I refer to the ratings Americans give to capitalism. They’re terrible. A big Gallup poll from last fall is representative. Socialism won the approval of 39 percent, while capitalism’s positive number was 54 percent.
That is pathetic—barely half the country! In the country that invented modern capitalism and where it is worshipped by the elite class. And you know what? It’s entirely deserved. In fact, it deserves to be a little worse (as it is among Democrats). The kind of capitalism we’ve been practicing in this country over the last 40-plus years is cruel, corrupt, and a perversion of what a humane capitalism ought to be. The people who are so freaked out about socialism ought to realize that the only way they’re going to arrest its rise is to change capitalism for the better.
From the founding of the country until the stock market crash of 1929, the general belief was that government should be small and markets should not be regulated. Some people say it worked pretty well until 1929, but in fact that isn’t true. It worked well enough to perpetuate itself, because if capitalism is anything it’s elastic and dynamic, but that’s about it.
First of all, 15 states had slavery up until it was prohibited, along with the obscene concentrations of wealth that came with that evil system. Also, throughout the nineteenth century, there were five major depressions and roughly 15 or 20 recessions. These downturns stemmed from a range of causes, but a common theme through many of them was the speculative bubble; that is to say, conmen trying to make a quick buck and bamboozle investors.
After the Great Depression hit, Franklin Roosevelt hired a few thousand cops to police this beat, creating the Securities and Exchange Commission and other entities that kept an eye on Wall Street. Human nature being what it is, this did not create a nirvana, but it improved matters considerably.
The New Deal did four other things that reined in capitalism and made it more humane. Roosevelt raised taxes on the rich, which had the dual benefits of bringing in more revenue and just being the right thing to do morally. He vastly increased public investment—Keynesianism—producing for example the water power that still delivers electricity to 10 million homes and businesses down in states where they curse the federal government and where a Democrat couldn’t get elected dogcatcher (its power sources today go beyond water to nuclear and gas). Third, he signed legislation that made it possible for many more workers to join unions, which gave them better wages and more humane working hours and conditions.
Fourth—and this is as important as the first three but isn’t mentioned as often—he cracked down on monopoly power. Teddy Roosevelt and Woodrow Wilson created antitrust enforcement, but FDR really amped it up. In addition, his 1944 Economic Bill of Rights contained eight provisions. Most of them were rights he wished to confer upon people simply for being born: an adequate wage, a good education, decent health care. But one right was directed specifically at owners of businesses: “the right of every businessman, large and small, to trade in an atmosphere of freedom from unfair competition and domination by monopolies at home or abroad.”
And what happened as a result of these changes? What the economists Claudia Goldin and Robert Margo called “the Great Compression”: a roughly 30-year period when income gaps decreased as never before in this country or pretty much any other peer nation. In addition to the vast reduction in economic inequality, the economy did great, too, with GDP growth in the 1960s for example averaging around 4.5 percent a year. That was capitalism working at peak.
Today? Capitalism is badly broken. At least four big things are wrong.
First of all, it’s rapacious and corrupt, yes, but it is also, to use a word cold-blooded economists might actually care about, inefficient. There are young people in rural Appalachia, inner-city Detroit, or on a New Mexico reservation who might have the potential to grow up to cure Alzheimer’s or invent a nifty device or write a great novel. But the way we refuse to educate and invest in these kids, we’ll never know, and they’ll end up being hospital orderlies. Among other things, that’s inefficient.
Second, monopoly power today is wildly out of control. And monopoly power, as FDR knew, is a complete bastardization of capitalism. It kills competition. It stifles shared prosperity. It gives rise to cronyism, corruption, and robber barons. These fraud-idiot free marketeers who bomb us with their propaganda and sing the praises of Adam Smith ought to take 10 minutes to go read about what an inveterate foe of monopoly Smith was. The damage done on this point to our country by Milton Friedman and Robert Bork (among others) is enormous, far greater than any socialist could inflict in his wildest dreams.
Third, these vast fortunes are just sick. Would you like to venture a guess as to what Elon Musk was worth in 2015? Go ahead. I’ll wait.
Ready? It was $13.9 billion. Today, as we all know, he briefly became the world’s first trillionaire, although I guess it depends on the day. That is sick. There is no other word for it. The same thing has happened with Jeff Bezos, Mark Zuckerberg, and so many others. Their fortunes have increased tenfold or more in the past decade. They constitute an oligarchy that is gaining more political power every year.
Fourth, technology has made it possible for corporations with bad intent to nickel-and-dime people in ways that just weren’t possible until the invention of these algorithms. People are getting hammered by hidden fees, all-but-secret subscription service price increases, and now, even surveillance pricing, which is just a disgusting practice. Brad Lipton of the Roosevelt Institute asks these disturbing and not-so-hypothetical questions:
Should people with iPhones pay more than Android users for food delivery? Should delivery drivers earn different amounts for the same job, based on personal information the app has about them? Do we want nurses who staff shifts at hospitals bidding against each other for work, competing over who will accept the least amount of money? Should people who live in certain zip codes be charged more for online test prep? What about single parents?
These four factors, among others, have given this country a capitalism today that is—well, to use Bernie Sanders’s favorite word, rigged. Everybody knows it.
I believe capitalism has two compelling qualities that make it, to borrow from Churchill, less bad than all the other economic “-isms.” The first is that at its best, it fosters healthy competition. The old Econ 101 textbook thing about the guys starting shoe stores on opposite corners is, or should be, true. The one who offers a better product at a better price will thrive, and consumers will benefit. The other guy needs to go find something else to do, but that’s life, and usually, in a balanced economy that offers ample opportunity, he will.
Second, capitalism does encourage innovation. It’s not a coincidence that most of the great inventions and scientific discoveries have happened in capitalist societies. Capitalism gives individuals room to experiment and tinker and grow. Of course, government can play a huge role here, too, with sufficient public investment in medicine, science, and related fields.
We do have competition and innovation in the United States today. But we could have a lot more of both if we had the right people in office passing the right laws. What we mostly have is system in which hard-working middle-class people are feeling more and more left behind, and in which young people in particular see very little opportunity and are convinced that Social Security, the crown jewel of United States public policy, won’t exist when they hit 67. And that is why socialism is gaining in popularity.
People who think they can stop this socialist renaissance by caviling about the state seizing the means of production or by issuing warnings about our becoming like Bolivia are going to get exactly nowhere. Those kinds of arguments are theoretical and very remote from people’s daily lives.
Anyone who’s interested in stopping socialism needs to work on fixing capitalism. If we had a more humane capitalism in which workers made a solid wage; in which basic health care was a right and was free or at least affordable; in which the government was investing in the small towns where opportunity has vanished; in which those kids in Appalachia and Detroit and New Mexico were given the tools they need to fulfill their potential; in which the very rich were appropriately taxed; if we had these things, socialism wouldn’t be so popular.
Any foe of socialism who doesn’t see this and isn’t working to change capitalism just isn’t a serious person. If the form of capitalism that we have now in this country continues unchecked and unchanged, socialism’s popularity will rise and rise. In this sense, the uber-capitalists and all those who ignore these deformities are dooming themselves, perpetuating a system that … well, contains the seeds of its own destruction. Didn’t a famous guy once say that?
