Socialism, a socio-economic system of centralized planning, which has been long rejected in our land of liberty, is now tempting many Americans. It is on the lips of pundits and politicians; wealthy and poor; young and old; blacks, whites, and Latinos; people of faith and of no faith—all searching for answers at a time of unprecedented division and uncertainty. Many Americans, especially millennials, blamed the Great Recession of 2008 on the vagaries of free enterprise—notwithstanding that government intervention in housing and finance contributed significantly to the crisis. The wealthiest 1 percent seemed untouched by the economic turndown and came under sharp criticism amid calls for “equality.”
The growing number of “nones” opened the way for the Marxist argument that religion is the opium of the people. The millennials have the lowest percentage of church membership among the modern generations.REF Let us seize the day, declared the prime movers of the Left, and push for a socio-economic system of universal welfare and controlled markets. They mobilized an army of liberals and progressives, ivory-tower academics, sympathetic CEOs, masters of mass media, Members of Congress, union bosses, and modernist clergy. To differentiate from the failed experiments of the past, they called their idea, democratic socialism.
Young Americans who had not experienced the supply-side prosperity produced by President Ronald Reagan’s economic reforms welcomed the idea. They swelled the rolls of the Democratic Socialists of America (DSA) and flocked to the presidential campaign of the socialist piper, Senator Bernie Sanders (I–VT). In 2020, 70 percent of millennials—Americans between 24 and 39—said they would vote for a socialist candidate for president. They did not know exactly what socialism was, but nonetheless held capitalism responsible for the economic slough. For Generation X, those between 40 and 55, the percentage was lower, but close to one-half said they would likely vote for a socialist.REF
Young Americans basked in the socialist “bern” of Senator Sanders, who promised, if elected, to institute Medicare-for-all; deal with climate change through the Green New Deal, which would phase out coal, oil, and natural gas energy; and provide free higher education for the nation’s would-be scholars. They were told not to worry about the cost; the rich and their corporations would be taxed and taxed and taxed again. Economist Milton Friedman was wrong: There is such a thing as a free lunch when you are sitting across the table from a billionaire who will pick up the tab. The millennials’ enthusiasm for democratic socialism and their rejection of the market were driven by their straightened circumstances.
During the past several decades, college tuition has more than doubled. By the early 2020s, the average student graduated with a loan debt of $30,000. Homes were nearly 40 percent more expensive than in the 1980s. Health care costs continued to soar: In 1960 the average annual health insurance cost per person was $146; in 2016, it topped more than $10,000. Young America did not understand that in a market economy progress is not automatic but must be earned anew by every new generation. Frustrated millennials and other young adults broke with the capitalist past and began considering the socialism of Canada and Sweden with their universal health care, “free” education, and subsidized childcare.
Young Americans have endorsed the moral argument of socialism that everyone should be equal—no more golden parachutes or off-shore tax shelters for the summa-rich. Those who could not provide for themselves, regardless of the reason, should be provided for by the government—from each according to his means to those according to his needs. Millennials, guided by figures like the Nobel Laureate economist Paul Krugman, who was careful not to propose outright socialism (“hardly any people in the U.S. want the government to seize the means of production,” he noted), but proposed social democracy—a synonym for democratic socialism. What people want, Krugman said, are “the kinds of guarantees of health care, protection against poverty that every other advanced country provides.”REF
Liberal publications like The New Republic and The Nation, as well as far-left journals such as Jacobin, made a case for democratic socialism while conceding some limited role for capitalism. “Markets existed before capitalism,” wrote Barry Eidlen in Jacobin, “and will exist after it’s gone. They just won’t have such a central life-determining role.”REF Wallace Shawn wrote in The Nation that many occupants of the Oval Office “knew that implementation of socialist or social democratic ideas did not put them at odds with the American experiment or the Constitution.” As proof, he mentioned modern government-funded programs like the G.I. Bill, Social Security, Medicare, Medicaid, and the War on Poverty.REF
The DSA and Utopian Idealism
The radicalism of the DSA was on full display at their 2021 national convention, which considered resolutions ranging from immigration and climate change to health care and the minimum wage. They called for an hourly wage of $25, Medicare for all, childcare for all, reparations for African Americans, the defunding of police, the abolition of prisons, the elimination of voter ID laws, the abolition of Immigrations and Customs Enforcement, the formation of a Democratic Socialist Party, and the “liberation” of blacks, Latinos, Asians, indigenous peoples, and all other oppressed nationalities and immigrants. The socialist movement, they declared, must become “a visible independent force” in American national politics.
The DSA and other segments of the socialist movement have champions in Congress eager to make the case for socialism. The best-known member is Representative Alexandria Ocasio-Cortez (D–NY), whose Green New Deal is breathtaking in its ambitious goals. If implemented, it promises to meet “100 percent of the power demand in the United States through clean, renewable, and zero-emissions energy sources” and to upgrade “all existing buildings” with state-of-the-art energy-efficiency technology. All this “should be accomplished through a 10-year national mobilization.” Nor does the Ocasio-Cortez Deal neglect long-held progressive goals such as health care for all, “guaranteed” jobs, and social justice for “indigenous communities, communities of color, migrant communities, deindustrialized communities.” When pressed, Ocasio-Cortez protests that “[s]ocialism does not mean government owns everything. I disagree with that notion…because I think it is undemocratic.” What socialism really means, she explains, is “democratic participation” in our economy and all aspects of our society.REF
Fellow Congressmen Jamaal Bowman (D–NY) is more open, admitting that he is building “a movement for transformative change.” “What we have now,” says Bowman, “is not working for the masses. If you want to call me a socialist, then call me a socialist.” Among his specific proposals are Medicare-for-all, housing as “a human right,” and a federal jobs guarantee. He is scathing in his criticism of capitalism, calling it “slavery by another name.” “This system of accumulating capital by any means necessary,” he charges, “is literally killing us.” In contrast, Bowman declares, free public higher education is a key example of the “transformative reform” that popularizes the idea of socialism.REF
At the heart of socialism’s appeal to young Americans is its idealism. Like all religions, socialism promises a better life but with one significant difference—a better life in this life, not the afterlife. Socialism declares that if property were owned by everybody, not individually, and if everything was shared equally, people would have no reason to argue or dispute. A universal brotherhood would emerge, and peace would reign among all peoples and nations.
Karl Marx declared that under capitalism a particular activity is forced on someone from which he cannot escape. Whereas under communism, society regulates the general production, making it possible for a person “to hunt in the morning, fish in the afternoon…criticize after dinner.”REF In “The Future of Man,” the Bolshevik revolutionary Leon Trotsky declared that under communism the average human “will rise to the heights of an Aristotle, a Goethe, or a Marx.”REF
Vladimir Lenin, however, was too much the revolutionary to wait patiently for the inevitable transformation of capitalism into the communism predicted by Marx. He invented the idea of political-party professional revolutionaries who would speed up the process and eliminate anyone and anything that got in the way. He conceded that dictatorship might be necessary to overcome those resistant to change but promised that it would be a dictatorship of the proletariat, the workers.
As the author Joshua Muravchik pointed out, not all socialists followed Lenin’s bloody trail. Some pursued democratic and peaceful paths “to the promised land of collective ownership and equal distribution.” But over the decades, these democratic socialists discovered that the socialist paradise promised by Marx and Frederich Engels turned out to be a centralized state administered by bureaucrats. Socialism and democratic socialism sought the same end—a system in which government ruled and the individual obeyed. The essential difference between socialism and democratic socialism lay in the means: Socialists relied on the gun, democratic socialists on the ballot box.
Social Isolation and Socialism
Why should such a system, so different from the classical liberal tradition of America, attract such widespread interest? American socialists have secured a prominent place in the national dialogue, says American Enterprise Institute Fellow Timothy P. Carney, because of our social and cultural poverty. “The root cause of both Occupy Wall Street and Bernie 2016,” wrote Carney, “was a prevailing sense of political alienation. Young people felt that they had lost the ability to make a difference in the world.” American society with its weakened community and a prevailing sense of personal alienation “has proven to be a fertile ground for socialism.” Once young Americans landed in the camps of Occupy Wall Street and Bernie Sanders, “they began singing hymns to Medicare for all, free college, and wealth taxes.”REF
Another non-economic reason for the spread of socialism, according to Deirdre Nansen McCloskey of the University of Illinois at Chicago, is that we all grow up in families which are in fact little socialist communities—Mom and Dad share their goods with each other and ensure that little Johnny does the same with sister Suzie. Friends are much the same. Erasmus of Rotterdam began all his works with the proverb, “Among friends, all goods are common.”REF
Man will continue to dream of and believe in schemes of perfection, says physician-philosopher Theodore Dalrymple, “of a life so perfectly organized that everyone will be happy, kind, decent, and selfless without any effort at all.” Illusion springs eternal, Dalrymple suggests, “especially among intellectuals.”REF And, it must be added, among young people.
How, then, to respond to the plotters and planers who want to do away with democratic capitalism, the socio-economic system that has brought more prosperity to more people than any other system in human history? We must expose the multiple flaws and failures of socialism, a system that has never worked since it issued from the mind of the 19th-century thinker Karl Marx.
The Foundation of Democratic Socialism
Let us begin with the foundation of democratic socialism. In his best-selling 1944 work, The Road to Serfdom, Nobel Laureate Friedrich Hayek set forth a simple thesis, “Planning leads to dictatorship.” Once begun, planning cannot be limited to the economic sphere. Central direction of economic activity inevitably requires the “suppression of freedom” in all aspects of society. Whoever has control of the means, he argued, “must also determine which ends are to be served, which values are to be rated higher and which lower—in short, what men should believe and strive for.”REF
There could be no exception: All collectivism was totalitarian, including democratic socialism, which was, in Hayek’s words, “unachievable.” No group of bureaucrats, no matter how expert and how brilliant, could make all the correct economic decisions for a large country like the United States. This was the “fatal conceit” of the socialists, the title of Hayek’s last book. Living in the United Kingdom in the wake of World War II, Hayek could see first-hand the dire effects of socialism. The path that Great Britain was taking in the post-war period was the same path that Germany had taken.
The Antidote to Democratic Socialism
Against socialism, Hayek proposed the road of individualism and classical liberalism. He described the personal virtues necessary to travel that road: independence and self-reliance, individual initiative and local responsibility, and “a healthy suspicion of power and authority.”REF He emphasized that he was not advocating a laissez-faire philosophy—he accepted a governmental role, limited by law, that encouraged competition and the functioning of a free society. In his later writing, Hayek conceded that government had a responsibility, carefully defined, to help care for those in need.REF
A great “liberal” of the 20th century was one of the greatest opponents of big government and the welfare state. In Liberalism, another “little” book like Hayek’s The Road to Serfdom, the economist Ludwig von Mises described the tree of liberty from the philosophical roots of the free society—property rights, equality before the law, and individual liberty—to the branches of public policy that give our world its social and economic shape—foreign policy, taxation, free trade, and economic regulation.
Mises, like Hayek, stressed the fundamental incompatibility of centralized planning and the preservation of liberty. The central issue, he said, “is whether or not man should give away freedom, private initiative, and individual responsibility and surrender to the guardianship of the gigantic apparatus of compulsion and coercion, the socialist state.” Mises was blunt in his description of the socialists:
They call themselves democrats, but they yearn for dictatorship. They call themselves revolutionaries, but they want to make the government omnipotent. They promise the blessings of the Garden of Eden, but they plan to transform the world into a gigantic post office. Every man but one a subordinate clerk in a bureau, what an alluring utopia! What a noble cause to fight for!REF
A dramatic convert to capitalism was the Catholic liberal philosopher Michael Novak, who declared that “[s]ocialism makes no sense as an economic theory” and resulted in dictatorship and poverty in all the countries in which it had been tried. Novak embraced capitalism because it alone recognized that “the cause of the wealth of nations is the creativity of the human person.”REF
In his best-selling work, The Spirit of Democratic Capitalism, Novak described the three systems on which democratic capitalism is based: a democratic polity, a market economy, and a moral culture. He argued that the natural logic of capitalism, with its emphasis on the individual, leads to democracy. Novak asserted that democracy and the market economy require a moral social system. The ethos of democratic capitalism includes pluralism; a respect for unintended consequences; a sense of right and wrong; and a conception of community, the individual, and the family.
Not all books about economics are dismal. In Economics in One Lesson, Henry Hazlitt, the longtime economics correspondent for the New York Times, posited that government’s economic actions frequently have consequences that are the opposite of what policymakers intended. As the 19th-century French economist Frederic Bastiat put it, there is that which is seen and that which is unseen, and the latter is ultimately more important.REF This was a reference to Adam Smith’s “invisible hand,” by which he meant that individuals pursuing their own self-interest would produce the greatest good for society.REF
As a prime example of unintended consequences, Hazlitt picked public-sector spending intended to stimulate a sluggish economy. Such spending may result in higher taxes, which actually slow the economy. Public works programs take valuable resources out of private hands, Hazlitt said, reducing the ability of the private sector to create wealth in the long run. Governments impose rent controls to protect certain citizens, but a price ceiling discourages landlords from maintaining their properties at a proper level. The quantity as well as the quality of available housing falls, hurting the “protected” citizens worse than if their rents had been increased.REF
An ardent defender of liberty was the University of Chicago economist and Nobel Laureate Milton Friedman. In his widely praised work, Capitalism and Freedom,REF Friedman criticized President John F. Kennedy’s neo-Keynesian call to “ask what you can do for your country.” Instead, Friedman proposed that “we take freedom of the individual, or perhaps of the family, as our ultimate goal in judging social arrangements.” His rationale was practical: Social progress resulted from a climate of variety and diversity. Free markets were a necessary condition for political freedom. Democratic socialism, therefore, could never be truly democratic. Most important, freedom and justice must work together, rewarding merit and allowing for coordination without coercion.
Friedman may have surprised some libertarians by writing that while freedom is the highest goal of society, it cannot be the highest goal of individuals. Freedom in and of itself is not “an all-embracing ethic,” he noted. “The really important ethical problems are those that face an individual in a free society—what he should do with his freedom.”REF Economic and social freedom, Friedman argued, is not a state of nature or a state of grace. Freedom created the space within which individuals can make their choices to preserve and protect a society of free men and free markets.
“The great advances of civilization,” Friedman said, “whether in architecture or painting, in science or literature, in industry or agriculture, have never come from centralized government.” Government, he insisted, “can never duplicate the variety and diversity of individual action.”REF The most recent example of the market in action is the research and development of the pandemic vaccine in less than a year, something most scientists said was impossible.
Economist Walter Williams noted that because of capitalism the common man enjoys a material comfort unimagined by Marx and Engels. Mass production and marketing “have made radios and televisions, vacuum cleaners, wash-and-wear clothing and microwave ovens available and well within the means of the common man,” sparing him the boredom and drudgery of the past. “Today,” Williams said, “the common man has the power to enjoy much (and more) of what only the rich could afford yesteryear.”REF
The socialists who insist their way is the better way ignore the America of the 1980s which provided indisputable proof of capitalism’s ability to create prosperity for the overwhelming majority of citizens. During the so-called “decade of greed,” America’s economy grew by nearly one-third, Americans’ standard of living increased by about one-fifth, the U.S. economy added 18.4 million jobs, and productivity rose by 10.6 percent.
In his book, The Seven Fat Years, Wall Street Journal editor Robert L. Bartley described how the economic crisis of the 1970s was overcome by market policies implemented by President Ronald Reagan despite the protests and warnings of a liberal establishment wed to Keynesian economics.REF Reagan instituted a tight monetary policy and across-the-board income tax cuts that ignited a wave of optimism and creativity. Among other advances was a communications revolution. In 1980, only 1 percent of American households owned a VCR; by 1989, more than 58 percent did. The number of personal computers exploded from 2 million to 45 million.
An economy “is not an inanimate machine but a living organism,” wrote Bartley. Through his liberating policies and uplifting rhetoric, President Reagan led the way out of an economic wilderness and sparked “an economic expansion of unprecedented duration.”REF The keys to growth, Bartley said, are to keep taxes low, keep government spending under some control, maintain a stable currency, keep markets open, seek free exchange around the world, and let entrepreneurs compete. Socialists would choose a different path in almost every instance, while denying the success of the 1980s led by President Reagan and his commonsense economics.
Myths About Socialism
The education of young Americans about socialism must include the dismantling of the most egregious myths about socialism.
Myth: Karl Marx, the founder of socialism, was one of the great thinkers of the 19th century. In truth, Marx was wrong about nearly everything. Almost 200 years after The Communist Manifesto, the nation-state has not withered away and capitalism, not socialism, rules most of the global economy. Workers have not turned into revolutionaries, but entrepreneurs. Private property is a cornerstone of every prosperous country, allowed even in the People’s Republic of China. The renowned economist Paul Samuelson wrote that Marx’s “scientific socialism” is “colossally useless.”REF
Myth: Socialism has attracted the West’s most influential intellectuals. In truth, some of the most celebrated writers of the West initially joined—but then rejected—the socialist cause, including black American novelist Richard Wright, Italian realist Ignacio Silone, French Nobel Laureate Andre Gide, Hungarian novelist Arthur Koestler, British poet Stephen Spender, and American journalist Louis Fischer. Their commitment to communism was shattered by the 1939 Hitler–Stalin non-aggression pact, which enabled the Nazis and the Soviets to invade and divide Poland, precipitating World War II.
Scales fell from the eyes of the writers, starting with Koestler, who wrote, “At no time and in no country have more revolutionaries been killed and reduced to slavery than in Soviet Russia.”REF After visiting the Soviet Union, Gide wrote: “I doubt whether in any country in the world…have the mind and the spirit ever been less free, more bent, more terrorized and indeed vassalized than in the Soviet Union.”REF
Myth:Socialism places power in the hands of the people. In truth, socialism cedes power to a dictator. After 60-plus years of revolución, the Cuban people are still waiting for the free and open elections Fidel Castro promised them. According to a leading Latino economist, Venezuela’s economic catastrophe “dwarfs” any in U.S., European, or Latin American history. Ninety percent of Venezuelans live in poverty. Once Venezuela had the world’s largest proven oil reserves; today, its citizens need a wheelbarrow of bolivars to buy a loaf of bread.
Myth: Socialism is working in Denmark and the Scandinavian countries. In truth, Denmark has a free-market economy that enables the government to finance an extensive welfare system through top-to-bottom personal income and value-added taxes. A frustrated Danish prime minister told a Washington audience, “I would like to make one thing clear…Denmark is a market economy.”REF Because Denmark has few business regulations and no minimum wage (along with the other Scandinavian countries), it is highly rated in The Heritage Foundation Index of Economic Freedom,REF leading one analyst to note, “Denmark is probably more capitalist than the United States.” In the 2021 Heritage Index, the United States is ranked 20th in the world, while Denmark is in 10th place.REF
Myth: Human nature is malleable and can be easily modified. In truth, there is an innate desire for freedom within every human being that cannot be suppressed by any Big Brother. The socialist state established by Vladimir Lenin, wrote the Harvard historian Richard Pipes, was “a grandiose experiment” in creating a new human being—Soviet Man.REF After 70 years of trying and failing, Marxist-Leninist socialism disappeared on Christmas Day, 1991. The inalienable rights outlined in the Declaration of Independence and the checks and balances established in the U.S. Constitution reject the Marxist idea that people can be effectively molded by a central government.
Myth: Socialism has never failed because it has “never truly been tried.” In fact, socialism has failed everywhere it has been attempted for over a century, from the Bolshevik Revolution of 1917 to present-day Chavez–Maduro socialism in Venezuela. Nowhere has democratic socialism been more faithfully practiced and then abandoned at public insistence than in Israel, India, and the United Kingdom following the end of World War II.
The Failure of Democratic Socialism: Israel, India, and the U.K.
In 1948, Israel’s first settlers sought to create an economy in which market forces were controlled for the benefit of all. Socialism appeared to work for nearly two decades—until 1965 when Israel suffered its first major recession despite extensive government controls. The Six-Day War then erupted, altering Israel’s political and economic map. For the first time, there was public debate between supporters of free enterprise and of socialism. When freedom won at the polls in 1977, the government reversed course and adopted a market economy. Within a year, inflation tumbled from 450 percent to 20 percent, while a large budget deficit shrank to zero. A high-tech revolution swept the country, transforming Israel into a major global technological player. In the 2000s, Israel’s economic growth topped the list of developing countries.
Following independence in 1948, India adhered strictly to a socialist line, restricting imports, prohibiting foreign investment, protecting small companies from competition, and maintaining price controls. The top personal income tax was a stifling 98 percent. However, a series of events—including wars with Pakistan and China, consecutive droughts, and the oil price crisis of 1973—shook the country. Economic performance between 1965 and 1981 plummeted. As in Israel, economic reform became imperative. The government adopted a non-socialist course prompting significant gross domestic product growth. India’s middle class expanded enormously, becoming the largest in the free world. Heritage’s Index of Economic Freedom reported that India, with its population of 1.3 billion was developing into an “open-market economy.” Never before in recorded history, wrote an Indian journalist, have so many people risen so quickly. The central reason was a shift from socialist controls and centralized planning to free enterprise.
Widely described as “the sick man of Europe” after three decades of socialism, the United Kingdom went through a socio-economic revolution in the 1980s because of one person—Conservative Prime Minister Margaret Thatcher. Privatization was a core Thatcher reform. She considered it fundamental for an improved economy and “one of the central means of reversing the corrosive and corrupting effects of socialism.”REF The Thatcher government sold off government-owned airlines, airports, and utilities, as well as phone, steel, and oil companies. The top personal income tax was cut in half to 45 percent. Some 3.3 million new jobs were created between 1983 and 1990. Inflation fell from 27 percent in 1975 to 2.5 percent in 1986. Turning from Keynes to Hayek, the once sick man of Europe bloomed with robust economic health.
In summary, Israel’s socialist “miracle” turned out to be a mirage. India discarded socialist ideology and chose a market-oriented path. Great Britain set a sterling example with its emphasis on privatization and deregulation. Whether in a small Middle Eastern country, a large agricultural country with a population of 1.3 billion, or the nation that sparked the industrial revolution, capitalism topped socialism every time.
This is the true story of socialism, a pseudo-religion posing as a pseudo-science and enforced by political elites. It is a utopian scheme that has failed everywhere it has been tried. It could only be adopted in the U.S. if Americans repudiated every first principle of the Founding, did away with federalism, regulated the 33 million small businesses that produce nearly half of the jobs in America, and taxed everyone—not just the top 1 percent—to pay for the government necessary to control the lives of 330 million Americans from the cradle to the grave.
The best way forward is to apply the supply-side economics practiced by President Reagan in the 1980s and advanced by President Donald Trump during his one term, when the U.S. economy grew annually by 2.5 percent and unemployment reached historic lows for women, blacks, and Latinos. Reagan called such policies commonsense economics because they put money where he argued it would do the most good—in the pockets of Americans who could spend it as they saw fit.
Millennials have a choice—the suffocating embrace of socialism, under which individual freedom and responsibility are minimized, or the freedom of democratic capitalism, in which the individual and the right to choose matter most. The choice is clear: the road to liberty that has empowered America to become the freest and most prosperous nation in human history.
Lee Edwards is Distinguished Fellow in Conservative Thought in the B. Kenneth Simon Center for American Studies, of the Edwin J. Feulner Institute, at The Heritage Foundation.