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Increasing economic inequality and decreasing mobility have entered mainstream consciousness and been identified as among the most pressing challenges of capitalist societies like the United States in the 21st century. Today, capitalism has a distinctly pejorative interpretation here in its free-market Mecca.

Increasingly, Americans are questioning the ideology of capitalism itself. This crisis manifests itself prominently among the nuevo millennial socialists for whom capitalism is all about profit. For them, profit is a bad word. They ignore the reality that in any economic system people hope to gain more value from things than they put into them, and that this is true in whatever you do in life.

According to a new Harris Poll, more millennials would prefer to live in a socialist country (44 percent) than a capitalist one (42 percent). The percentage of millennials who would prefer socialism to capitalism is a full 10 points higher than that of the general population. What’s more, this crowd rejects capitalism as an economic system because it benefits the wealthy and powerful; poses large social costs; and contributes to the obscene prosperity of a tiny, privileged minority.

Alternatively, proponents of capitalism argue that it is the only system humans have developed that maintains both improvement in living standards and individual freedom. Despite criticism that it is morally bankrupt, capitalism has spread prosperity across the planet. Free markets have generated enormous wealth in recent decades, as documented by the World Bank delivering millions of people out of poverty and raising living standards throughout the world. In 1990, about 40 percent of the global population lived on less than $1.90 a day, according to the World Bank; today it is less than 10 percent.

But the story is different for the average American. Since the 1970s, their wages have stagnated. Since the 1990s, cheap imports made available by NAFTA and Chinese accession to the World Trade Organization benefited consumers, but depressed wages and robbed blue-collar Americans of the secure manufacturing jobs and the health and retirement benefits that went with them.

Technological advances certainly played a major role in worker displacement, but trade policy also contributed to the U.S. losing seven million of its 19.2 million manufacturing jobs from 1980 to 2015. Yes, consumers have enjoyed lower costs for imported products, but displaced workers in the United States have paid the price and contributed to what has been labeled the crisis of capitalism: the growing gap between haves and the have-nots.

How then to define capitalism? In theory it is another ism that describes an economic way of life, a system that emphasizes private ownership of personal property and business assets, property rights that protect ownership, the sanctity of private contracts, using prices to allocate resources efficiently, a reliance on competition and incentives, voluntary exchanges between consenting adults, profit maximization, an effective legal system and limited state intervention.

In practice, capitalism is not monolithic; it takes many forms. For instance, in the United States, government plays a more limited role in economic decisions than under China’s form of market driven state capitalism. There, the government has a substantial role in shaping the rules of the market and is a significant player in the economy. In the Russian style of state capitalism, the Kremlin relies on both direct government intervention in key economic sectors and control of politically connected businessmen to promote the interests of the Russian state and those who run it.

Like any economic system, capitalism is a human institution and, as such, is imperfect. It should be judged on the basis of whether it is the best system available, not the best imaginable. And it is capable of reform. As the saying goes “nothing is forever, not now, not ever, never.”

Finally it is worth remembering, to paraphrase John Kenneth Galbraith’s comment, “under capitalism man exploits man while under socialism the reverse obtains.”

Originally Published: May 11, 2019.

Capitalism seemed untouchable several decades ago, but not today. Many politicians aspiring to high office, such as Senator Bernie Sanders, a self-declared democratic socialist, are making the case for the inevitable and Darwinian triumph of socialism.

It is unclear what socialism means to them. It is a word that means many things to many people and has taken many forms. The modern version is different from the textbook variety of public ownership of the means of production, distribution, and exchange, leaving to individuals only the free discretion over consumer goods and creating a paradise on earth. Publicly owned property is preferable to private enterprise, with everyone acting virtuously and focusing on the greater good.

Is it the ideal commonwealth in Plato’s Republic, with a ruling class that has no property of its own and shares all things in common? Or a more robust version of New Deal Liberalism, or perhaps Northern European social democracy? What about the path taken in Venezuela, North Korea, and Cuba?

Or is it a planned economy with benevolent bureaucrats taking the place of free-market capitalism and playing the omniscient busybody in economic affairs to create more opportunity for the underprivileged; open the horizons of education to all, eliminate discriminatory practices based on sex, religion, race, or social class; regulate and reorganize the economy for the benefit of the whole community; protect the environment; provide adequate Social Security and universal health care for the sick, unemployed and aged in a utopian ideal of total equality of opportunity and outcome?

The term has become a blank canvas as presidential candidates embracing some of these ideas become more outspoken about socialism as the solution to problems of social and economic equality, and embracing a political wish list that includes Medicare for All, a Green New Deal and free public college. All grand ideas if they work.

These proposals have great appeal to millennials, the term generally used to refer to people born after 1980 and before 2000. Millennials outnumber baby boomers as the largest generational cohort in American society.

Recent surveys of Americans 18 to 34 find that 45 percent have a positive view of socialism. It gets even higher marks from Hispanics, Asian- and African-Americans. This attraction may have less to do with their understanding of socialism and more to do with their discontent with the current economic system. In contrast, only 26 percent of baby boomers would prefer to live in a socialist country.

Why the generational disparity? Is it because many of these folks reached adulthood in a dismal job market with crippling student loans caused by the brutal 2007-2009 recession that left them with less disposable income than their predecessors? They end up hating their own culture, even as millions around the world dream of coming to the land of milk and honey. Many agree with Governor Cuomo’s comment that “America was never that great.”

But these proposals also create agita for many politicians. That is why House Speaker Nancy Pelosi, in a recent interview with CBS’s “60 Minutes,” said socialism is “not the view” of the Democratic Party,” and that lawmakers on her side of the aisle “know that we have to hold the center.” The Republicans are trying to paint Democrats with the socialism brush, using accusations of rampant amnesia about the failures of socialism as a 2020 campaign weapon.

Former President Ronald Reagan once mocked Fidel Castro’s brand of socialism with a clever joke. He said Castro was immersed in one of his long speeches when a person in the crowd was heard shouting, “Peanuts, popcorn, Cracker Jacks.” Castro continued on with his speech when a second voice was heard shouting the same thing. This time Castro became angry and screamed, “We will kick the tush of the next person I hear say that all the way to Miami Beach.” At which point the whole crowd yelled, “Peanuts, popcorn, Cracker Jacks.”

Originally Published: April 27, 2019