A Broken Record: Socialism and Capitalism

As I often tell my students, we Americans tend to be bipolar in our approach to the world. Events, policies and people are either all good or all bad, other nations are either “evil-doers” (in George W. Bush’s awkward formulation) or “good guys,” regulation is either killing jobs or protecting children.

Everything is either/or.

Unfortunately for our ability to communicate with each other,  life and reality aren’t so neatly divided.

The recurrent hysteria (on the Right) over “socialism” and the ferocious attacks (from the Left) on capitalism are part and parcel of that unrealistic (albeit comfortingly simple) dichotomy. In the messy real world, the pertinent questions are very different–even when the people making the arguments actually are able to define their terms, which they so often can’t.

Much of the current hostility to capitalism, for example, mistakes America’s current economic reality for capitalism. In some localities, it still may be, but nationally– thanks to money in politics, lobbying by powerful interests, outright corruption and a number of other unfortunate systemic fails– what we have is mostly corporatismor crony capitalism, not the idealized market system to which conservatives and ad agencies genuflect.

Genuine market competition has considerable merits: it encourages innovation and tends to keep consumer prices affordable. If I make a better mousetrap for a better price, my business grows, I hire more workers, and consumers catch more mice for the same money.

Similarly, “socialism” isn’t a dirty word, nor does it imply totalitarian communism. It is simply the communal delivery of services. We socialize police and fire protection, public schools, parks and highways and garbage collection, among other things, because it makes practical and economic sense to provide those things communally.

The question isn’t “should we have socialism or capitalism?” The question is: what sorts of things should a society provide communally–i.e., what services should be socialized–and what goods and services should be provided by the private market?

The question also isn’t: regulation versus no regulation. The question is: what regulations?

We want rules that ensure a level playing field–that prevent a manufacturer from dumping his waste in our rivers in order to keep his costs below those of his competitors, or that prevent a group of businesses from colluding to keep prices artificially high. We don’t want rules that are poorly conceived or unnecessarily onerous–but determining which rules are appropriate and which ones aren’t requires knowing something about the activities being regulated, and making informed judgments.

It requires the sort of expertise that Trump types sneer at as “elitist.”

Too many Americans want bumper-sticker solutions to complicated problems that don’t lend themselves to simplistic approaches. They want black-and-white answers to issues that require recognizing and working within several shades of gray. Too many of America’s loudest voices use terms they can’t define (or often, spell) and fling them as epithets rather than employing them to communicate.

We may disagree about the proper way to deliver certain services–whether we should “socialize” this or that economic or social activity or leave a particular service or function to a properly and deliberately regulated market. Those debates can be productive.

Labelling everything that offends us as “socialism” or “capitalism”–depending upon which intemperate and uninformed end of the political fringe you inhabit– gets us exactly nowhere. It may make the labeler feel superior and self-satisfied, but it doesn’t help solve our complicated problems, and it pisses off the folks at the other end of the ideological spectrum.


  1. Excellent posting today. I’ve tried to capture some of that in my books too. Corporatism is still too abstract a word for the general public to understand, because they haven’t heard it enough. Democrats are now running around like scalded cats trying to find a strategy – again – that will put them back in power. Of course, in all fairness, they tend to be chaotic themselves and the chaos sown by the Trump administration creates chaos squared. What a mess.

    Ironically, what makes our country work best is a responsible blend of capitalism that is regulated and enough socialism to make us civilized. I find it additionally ironic that our species evolved socially as a community organism where duties and resources were SHARED. Sounds like Marxism to me. Oh well….

  2. Vernon; thank you for putting the subject of Corporatism out front immediately this morning. Citizens United legalized Corporatism in the highest court in the land; handing capitalism over to the Republicans and buying the leadership of this country to turn over to a robber baron and his band of thieves.

    And Vernon; in your second paragraph you introduced the need for regulation in both Socialism and Capitalism. Just as we need criminal laws as the foundation to prosecute those who commit heinous crimes at the felony level; so do we need those regulations as the foundation to control corporations’ destruction of the environment and greed as well as Socialism and Capitalism. And as the criminals ignore all laws and are often returned to our streets; corporations have ignored regulations for decades and administration after administration in the Executive and Legislative branches have ignored corporate actions…both illegal and immoral. Now; the Judicial branch is rapidly following suit, responsibility to democracy, Rule of Law and upholding the Constitution have been dispensed with at all levels as the Democratic majority in the House struggles to regain equalibrium and return to “government of the people, by the people and for the people” consisting of interdependence between Democratic and Republican administration of this country.

    Neither is all right (correct) or all wrong; something Barack Obama tried to tell this country in his book, “The Audacity Of Hope” and carried over into his campaigns for the presidency. It worked in 2008 and 2012 but has been lost by the 1% and White Nationalist takeover of all three branches of this government. Simply stated; racism and money are now our Rule of Law.

  3. The Republicans have successfully exploited the use of epithets – especially Trump – to remain in power. The voting public is happy to play along, in spite of the negative effects that you pointed out yesterday. If the polling is accurate, it’s starting to look like the Republicans are not governing, but occupying the United States through “winning” state-by-state and at the federal level, in spite of the actual popular vote.

  4. Recently saw a meme stating that schools should drop Algebra 2 for a personal finance class that teaches students about banking, finance, loan calculations and checkbook balancing! It should include studying the differences between socialism, communism and how we ended up with crony capitalism with socialism to the farmers and rich. I had to wait until college classes to learn that myself.

    Are we winning yet?

  5. Sheila,

    Thank you for today’s post. Very important to be reminded of these facts.

  6. “The question isn’t “should we have socialism or capitalism?” The question is: what sorts of things should a society provide communally–…”

    Better questions may be who makes these “decisions” and how are they made?

  7. I don’t think both sides of the political divide are equally responsible though. Liberals who think the whole society should be burnt down and rebuilt as a purely socialist commune are pretty few and far between. It seems like “libertarians” who are in the ‘I’ve got mine, screw all of you camp’ are fairly thick on the ground.

  8. An especially excellent and accurate column today, Sheila! I’ll be sharing it and pleading with all my friends on both sides of the aisle to read it. Thank you!

  9. Vern has the subject down,most Americans dont know, and thats the issue. im home in nodak for the next 6 mos,working my const related trucking.ill have people coming from outta state who work our contracts here,and fo back to where they hang a hat. my conversations get some decent feedback from else where. many,dont like trump,or the present admin. those i relate to best,but,driving conversation to the loacals,is a bumby road. our news here is pure,no news,our prairie public station,supports fossil fuel, and never has BBC on air at night.90% of t.v.s on in cafes abd bars,and such,all fox. all day.. mind lock,with a landlocked state. farmers here are telling me,and others,Bernie will raise everyones taxes to 75% !!! no talking to them, they will not listen to me,or others,with facts.their mind set,,were all doomed if those liberals get voted in..as Vern said,corporatism. if people here in nodak would read beyond the headline,and soak i some reading,this wouldnt be a issue. but,damn,cant have the truth over fox. fox is corporatism on steroids. billion airs,telling million airs,(fox personel,and no i did not spell billions airs wrong,its the smell i get under my nose when its said) telling the useful idiots what they will
    know. sure im not of the educated here,but i do have continual contact with these trumpers.
    kinda like swiming in a pond,and find out it belongs to the city water dept…best wishes

  10. Ever since Marx and the Communist Manifesto the 1% and/or Ruling Class have been terrified. The Socialist movements and Unions were put down throughout the 18th and early 20th centuries by a combination of the 1% and the Ruling Class. Immense propaganda was used by the press of those times to vilify the Union and Socialist Movements. If propaganda failed the power of the state in form of the police, and national guard could be called upon to protect the interests of the 1%.

    Soviet Communism was every bit as phony, as American Capitalism, neither had the interests of the working class first and foremost. Both systems Soviet Communism and American Capitalism were dedicated to preserving power at the top.

    Here in the USA we have political stooges and puppets who write and pass the laws that govern corporations. Once in awhile some corporation will commit a crime. However the corporation can escape criminal prosecution by paying a fine, or going bankrupt. No jail time for the criminals in suits.

    The total failure of capitalism/crony capitalism and the political stooges is best exemplified by our Health Care for profit system. No matter how many facts are presented that prove our For Profit Health Care System is a failure compared to say Canada, Japan, France or Germany, Big Pharma, and the Health Insurance Companies find allies in the McMega-Media and our elected officials.

  11. It seems accurate to me to say that all of the countries in the world today have mixed economies. Last century was the time of great economic philosophers and experimentation and the mixed economy won.

    The markets successfully served by capitalism have one thing in common. They are markets that lend themselves to robust competition. Not all markets do. The government has to be effective at two critical requirements for capitalism to work. They must regulate effectively and as the cops and robbers back and forth goes on and corporations try to get ahead of regulation (and usually succeed) and the regulators must try to continuously catch up. The other requirement are progressive taxes to redistribute back to workers what capitalism inherently distributes up to the financial industry.

    Markets that are inherently resistant to competition, usually because it’s just not practical, are served socially.

    This must work because it’s the only economic system left standing in the world.

  12. Jack,

    Ask your North Dakota Fox-ites how they’d like their sons going to war for one of Trump’s tantrums? Ask them how they feel about a bank fraudster. A chronic liar. A golf cheater. A wife cheater. Ask them how they like our version of The Sopranos in the White House. Ask them if they like THEIR lawyers to ask them to lie. Ask them what they think of our President giving state secrets to the Russians. Ask them if they’ve read the Mueller Report themselves. Ask them how they liked the standing ovation given to Mayor Pete by a FOX town hall audience. Ask them why no honest bank would loan Trump money. Ask them how you make a gambling casino fail and go bankrupt. Finally, ask them if they voted for Trump strictly because he was angry, vile, insulting, childish, uninformed, corrupt and……white.

  13. After studying and applying anthropology (an “anthropological” meaning holistic perspective) for a lifetime… well I’m only 70… I came to a realization. Human beings will never become more able problem solvers until we transcend the dualistic framework that leads to extremism, as you say today. We have to learn to reframe rather than react; recognize the 358-degrees of options beyond either black or white, etc. No one is teaching systems thinking as it applies to our own life so I wrote about it for my Nonviolence Studies students.
    Take a look at The Tao of Nonviolence (Amazon). Let me know if you can imagine how to get this critical message out.

  14. Historically I believe that most people on the left are not as dogmatic as they are made out to be. They have a vision but are willing to see it grow and develop over time. What Eugene Debs and Norman Thomas proposed took decades to become a reality. Unfortunately, society can also slide backwards as we are currently experiencing in some areas.

  15. What most Democrats are referring to when they use the word “socialism” is laws that are socially responsible. Few have any interest in state ownership of the means of production. It has already been proven that government is as capable as private industry in screwing things up, and there is no American intellectually capable of devising or managing a national production quota system.

    In today’s parlance, socialism is used synonymously with “humane,” “fair,” “sustainable,” “democratic,” “communal,” “progressive,” “egalitarian,” “rational,” and, perhaps most importantly, “effective.” Those who use the term in other ways are illegitimately trying to conjure the mistakes that the Leninists made and lay them at the feet of the Democratic Party. While not entirely invalid, capitalism’s “invisible hand” must stay on its meds to prevent becoming arthritic.

    As for viewing the world in shades of gray, that priceless skill emerges from the discipline of critical thinking and, anecdotally at least, is an aptitude that is shrinking rather than expanding.

  16. You are so kind calling our current situation as “corporatism” . When government and oligarchs are allied to our current extent it is usually called by a term appropriate in Mussolini ‘s Italy and Hitler’s Germany. My only tests: Does it work? Does it benefit individual persons. Call it what you may. Social welfare within a democratic government framework is best.

  17. Back in the 1980’s I taught a continuing education class for insurance and financial professionals. It was titled The History of Money. Much of my source material was based on the book The Warburgs by Ron Chernow. A great book to learn about banking and money. I started the class by asking the participants what was the difference between one of them loaning me $100,000 and the bank loaning me $100,000.

    The main difference of course is that unlike the participants the bank did not have to have $100,000 on hand, but any one of the participants would have to have $100,000 cash on hand. That ability to loan out more than you have on hand has enabled Europe and the US to become the economic powers they have become. Combined with the our Federal Reserve it is pure genius. It was conceived by descendants of the Warburg and their married relatives. the Schiffs. It all started because Christians were not allowed to loan money and collect interest.

    I had a degree in History and Political Science long before I learned this years later in Business Graduate School and from reading Chernow’s great book. Of course the current occupant has no idea of History or how important the stability and focus of the Federal Reserve must be. This should be taught in High School.

  18. I really don’t remember when (80’s?) it started, but the time-line seems to be that the Repub’s decided abortion could get the evangelical vote, the ‘gelical’s decided G*d was on their side, so they were correct and compromise would be Evil! Since then, like the ACA, repub’s would offer lots of changes, but when it’s time to vote, no aye’s, all no’s. In other words, democrats would try to compromise to get some on board, to no avail! And the results are bad legislation and they still Will Not give an Aye! So for the last 3 – 4 years they’ve been on a 90 degree slope (straight down)! Answers, I have none, except to repeat something I’ve heard: “DON’T BOO, VOTE”! (Also: GOTV!)

  19. Charlie Belch, thanks for the book recommendation. And, as always, thanks to Sheila for starting a thoughtful conversation.

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