Why People Hate Capitalism

I have written several articles on postings related to politics. A list of links have been provided at bottom of this article for your convenience. This article will, however address different aspects on these political events.

Criticism of capitalism

Criticism of capitalism ranges from expressing disagreement with the principles of capitalism in its entirety to expressing disagreement with particular outcomes of capitalism.

Criticism of capitalism comes from various political and philosophical approaches, including anarchistsocialistreligious and nationalist viewpoints. Some believe that capitalism can only be overcome through revolution while others believe that structural change can come slowly through political reforms. Some critics believe there are merits in capitalism and wish to balance it with some form of social control, typically through government regulation (e.g. the social market movement).

Prominent among critiques of capitalism are accusations that capitalism is inherently exploitativealienatingunstableunsustainable, and creates massive economic inequalitycommodifies people, and is anti-democratic and leads to an erosion of human rights while it incentivizes imperialist expansion and war.

History

Industrial Workers of the World‘s “Pyramid of Capitalist System” cartoon is an example of socialist critique of capitalism and of social stratification.

According to modern critics of capitalism, rapid industrialization in Europe created working conditions viewed as unfair, including 14-hour work dayschild labor and shanty towns. Some modern economists argue that average living standards did not improve, or only very slowly improved, before 1840.

Early socialist thinkers rejected capitalism altogether, attempting to create socialist communities free of the perceived injustices of early capitalism. Among these utopian socialists were Charles Fourier and Robert Owen. In 1848, Karl Marx and Friedrich Engels released The Communist Manifesto, which outlined a political and economic critique of capitalism based on the philosophy of historical materialismPierre-Joseph Proudhon, a contemporary of Marx, was another notable critic of capitalism and was one of the first to call himself an anarchist.

By the early 20th century, myriad socialist tendencies (e.g. anarcho-syndicalismsocial democracy and Bolshevism) had arisen based on different interpretations of current events. Governments also began placing restrictions on market operations and created interventionist programs, attempting to ameliorate perceived market shortcomings (e.g. Keynesian economics and the New Deal). Starting with the 1917 Russian RevolutionCommunist states increased in number and a Cold War started with the developed capitalist nations. Following the Revolutions of 1989, many of these Communist states adopted market economies.

General criticism

Anarchism

French anarchist Pierre-Joseph Proudhon opposed government privilege that protects capitalist, banking and land interests and the accumulation or acquisition of property (and any form of coercion that led to it) which he believed hampers competition and keeps wealth in the hands of the few. The Spanish individualist anarchist Miguel Giménez Igualada sees “capitalism is an effect of government; the disappearance of government means capitalism falls from its pedestal vertiginously…That which we call capitalism is not something else but a product of the State, within which the only thing that is being pushed forward is profit, good or badly acquired. And so to fight against capitalism is a pointless task, since be it State capitalism or Enterprise capitalism, as long as Government exists, exploiting capital will exist. The fight, but of consciousness, is against the State”.[4]Emma Goldman denounced wage slavery by saying: “The only difference is that you are hired slaves instead of block slaves.”

Within anarchism, there emerged a critique of wage slavery which refers to a situation perceived as quasi-voluntary slavery, where a person’s livelihood depends on wages, especially when the dependence is total and immediate. It is a negatively connoted term used to draw an analogy between slavery and wage labor by focusing on similarities between owning and renting a person. The term “wage slavery” has been used to criticize economic exploitation and social stratification, with the former seen primarily as unequal bargaining power between labor and capital (particularly when workers are paid comparatively low wages, e.g. in sweatshops) and the latter as a lack of workers’ self-management, fulfilling job choices and leisure in an economy.

Libertarian socialists believe if freedom is valued, then society must work towards a system in which individuals have the power to decide economic issues along with political issues. Libertarian socialists seek to replace unjustified authority with direct democracy, voluntary federation and popular autonomy in all aspects of life, including physical communities and economic enterprises. With the advent of the Industrial Revolution, thinkers such as Proudhon and Marx elaborated the comparison between wage labor and slavery in the context of a critique of societal property not intended for active personal use, Luddites emphasized the dehumanization brought about by machines while later Emma Goldman famously denounced wage slavery by saying: “The only difference is that you are hired slaves instead of block slaves”. American anarchist Emma Goldman believed that the economic system of capitalism was incompatible with human liberty. “The only demand that property recognizes”, she wrote in Anarchism and Other Essays, “is its own gluttonous appetite for greater wealth, because wealth means power; the power to subdue, to crush, to exploit, the power to enslave, to outrage, to degrade”. She also argued that capitalism dehumanized workers, “turning the producer into a mere particle of a machine, with less will and decision than his master of steel and iron”.

Noam Chomsky contends that there is little moral difference between chattel slavery and renting one’s self to an owner or “wage slavery”. He feels that it is an attack on personal integrity that undermines individual freedom. He holds that workers should own and control their workplace. Many libertarian socialists argue that large-scale voluntary associations should manage industrial manufacture while workers retain rights to the individual products of their labor. As such, they see a distinction between the concepts of “private property” and “personal possession“. Whereas “private property” grants an individual exclusive control over a thing whether it is in use or not and regardless of its productive capacity, “possession” grants no rights to things that are not in use.

In addition to anarchist Benjamin Tucker‘s “big four” monopolies (land, money, tariffs and patents) that have emerged under capitalism, neo-mutualist economist Kevin Carson argues that the state has also transferred wealth to the wealthy by subsidizing organizational centralization in the form of transportation and communication subsidies. He believes that Tucker overlooked this issue due to Tucker’s focus on individual market transactions, whereas Carson also focuses on organizational issues. The theoretical sections of Studies in Mutualist Political Economy are presented as an attempt to integrate marginalist critiques into the labor theory of value. Carson has also been highly critical of intellectual property. The primary focus of his most recent work has been decentralized manufacturing and the informal and household economies. Carson holds that “capitalism, arising as a new class society directly from the old class society of the Middle Ages, was founded on an act of robbery as massive as the earlier feudal conquest of the land. It has been sustained to the present by continual state intervention to protect its system of privilege without which its survival is unimaginable”.

Carson coined the pejorative term “vulgar libertarianism”, a phrase that describes the use of a free market rhetoric in defense of corporate capitalism and economic inequality. According to Carson, the term is derived from the phrase “vulgar political economy”, which Karl Marx described as an economic order that “deliberately becomes increasingly apologetic and makes strenuous attempts to talk out of existence the ideas which contain the contradictions [existing in economic life]”. Capitalism has been criticized for establishing power in the hands of a minority capitalist class that exists through the exploitation of a working class majority; for prioritizing profit over social good, natural resources and the environment; and for being an engine of inequality and economic instabilities.

Conservatism and traditionalism

Edmund Burke accepted the liberal ideals of private property and the economics of Adam Smith, but he thought that economics should remain subordinate to the conservative social ethic, that capitalism should be subordinate to the medieval social tradition and that the business class should be subordinate to aristocracy.

Distributism is an economic ideology asserting that the world’s productive assets should be widely owned rather than concentrated. It was developed in Europe in the late 19th and early 20th centuries based upon the principles of Catholic social teaching, especially the teachings of Pope Leo XIII in his encyclical Rerum novarum (1891) and Pope Pius XI in Quadragesimo anno (1931). It views both capitalism and socialism as equally flawed and exploitative, and it favors economic mechanisms such as small-scale cooperatives and family businesses, and large-scale antitrust regulations.

In Conservatives Against Capitalism, Peter Kolozi relies on Norberto Bobbio‘s definition of right and left, dividing the two camps according to their preference for equality or hierarchy. Kolozi argued that capitalism has faced persistent criticism from the right since the beginning of the Industrial Revolution. Such critics, while heterogeneous, are united in the belief “that laissez-faire capitalism has undermined an established social hierarchy governed by the virtuous or excellent”.

In September 2018, Murtaza Hussain wrote in The Intercept about “Conservatives Against Capitalism”, stating:

For all their differences, there is one key aspect of the intellectual history charted in “Conservatives Against Capitalism” that deals with an issue of shared concern on both the left and the right: the need for community. One of the grim consequences of the Social Darwinian pressures unleashed by free-market capitalism has been the destruction of networks of community, family, and professional associations in developed societies. … These so-called intermediate institutions have historically played a vital role giving ordinary people a sense of meaning and protecting them from the structural violence of the state and the market. Their loss has led to the creation of a huge class of atomized and lonely people, cut adrift from traditional sources of support and left alone to contend with the power of impersonal economic forces.

Fascism

Fascists opposed both international socialism and free-market capitalism, arguing that their views represented a Third Position and claiming to provide a realistic economic alternative that was neither laissez-faire capitalism nor communism. They favored corporatism and class collaboration, believing that the existence of inequality and social hierarchy was beneficial (contrary to the views of socialists) while also arguing that the state had a role in mediating relations between classes (contrary to the views of economic liberals).

Liberalism

During the Age of Enlightenment, some proponents of liberalism were critics of wage slavery.[31][32] On the other hand, some modern-day liberals are critical only of laissez-faire capitalism and support a social market economy while others are critical of the mixed economy welfare state and advocate either its abolition in favor of laissez-faire capitalism or a reduction of its role in favor of free-market capitalism.

Marxian responses

Marx considered capitalism to be a historically specific mode of production (the way in which the productive property is owned and controlled, combined with the corresponding social relations between individuals based on their connection with the process of production).

The “capitalistic era” according to Karl Marx dates from 16th-century merchants and small urban workshops.[33] Marx knew that wage labour existed on a modest scale for centuries before capitalist industry. For Marx, the capitalist stage of development or “bourgeois society” represented the most advanced form of social organization to date, but he also thought that the working classes would come to power in a worldwide socialist or communist transformation of human society as the end of the series of first aristocratic, then capitalist and finally working class rule was reached.

Following Adam Smith, Marx distinguished the use value of commodities from their exchange value in the market. According to Marx, capital is created with the purchase of commodities for the purpose of creating new commodities with an exchange value higher than the sum of the original purchases. For Marx, the use of labor power had itself become a commodity under capitalism and the exchange value of labor power, as reflected in the wage, is less than the value it produces for the capitalist.

This difference in values, he argues, constitutes surplus value, which the capitalists extract and accumulate. In his book Capital, Marx argues that the capitalist mode of production is distinguished by how the owners of capital extract this surplus from workers—all prior class societies had extracted surplus labor, but capitalism was new in doing so via the sale-value of produced commodities. He argues that a core requirement of a capitalist society is that a large portion of the population must not possess sources of self-sustenance that would allow them to be independent and are instead forced to sell their labor for a wage.

In conjunction with his criticism of capitalism was Marx’s belief that the working class, due to its relationship to the means of production and numerical superiority under capitalism, would be the driving force behind the socialist revolution. This argument is intertwined with Marx’ version of the labor theory of value arguing that labor is the source of all value and thus of profit.

In Imperialism, the Highest Stage of Capitalism (1916), Vladimir Lenin further developed Marxist theory and argued that capitalism necessarily led to monopoly capitalism and the export of capital—which he also called “imperialism”—to find new markets and resources, representing the last and highest stage of capitalism. Some 20th century Marxian economists consider capitalism to be a social formation where capitalist class processes dominate, but are not exclusive.

To these thinkers, capitalist class processes are simply those in which surplus labor takes the form of surplus value, usable as capital; other tendencies for utilization of labor nonetheless exist simultaneously in existing societies where capitalist processes predominate. However, other late Marxian thinkers argue that a social formation as a whole may be classed as capitalist if capitalism is the mode by which a surplus is extracted, even if this surplus is not produced by capitalist activity as when an absolute majority of the population is engaged in non-capitalist economic activity.

In Limits to Capital (1982), David Harvey outlines an overdetermined, “spatially restless” capitalism coupled with the spatiality of crisis formation and resolution. Harvey used Marx’s theory of crisis to aid his argument that capitalism must have its “fixes”, but that we cannot predetermine what fixes will be implemented, nor in what form they will be. His work on contractions of capital accumulation and international movements of capitalist modes of production and money flows has been influential. According to Harvey, capitalism creates the conditions for volatile and geographically uneven development

Sociologists such as Ulrich Beck envisioned the society of risk as a new cultural value which saw risk as a commodity to be exchanged in globalized economies. This theory suggested that disasters and capitalist economy were inevitably entwined. Disasters allow the introduction of economic programs which otherwise would be rejected as well as decentralizing the class structure in production.

Religion

Many religions have criticized or opposed specific elements of capitalism. Traditional JudaismChristianity, and Islam forbid lending money at interest, although alternative methods of banking have been developed. Some Christians have criticized capitalism for its materialist aspects and its inability to account for the wellbeing of all people. Many of Jesus’ parables deal with economic concerns: farming, shepherding, being in debt, doing hard labor, being excluded from banquets and the houses of the rich and have implications for wealth and power distribution. Catholic scholars and clergy have often criticized capitalism because of its disenfranchisement of the poor, often promoting distributism as an alternative. In his 84-page apostolic exhortation Evangelii gaudiumCatholic Pope Francis described unfettered capitalism as “a new tyranny” and called on world leaders to fight rising poverty and inequality, stating:

Some people continue to defend trickle-down theories which assume that economic growth, encouraged by a free market, will inevitably succeed in bringing about greater justice and inclusiveness in the world. This opinion, which has never been confirmed by the facts, expresses a crude and naive trust in the goodness of those wielding economic power and in the sacralized workings of the prevailing economic system. Meanwhile, the excluded are still waiting.

The Catholic Church forbids usury. As established by papal encyclicals Rerum Novarum and Quadragesimo AnnoCatholic social teaching does not support unrestricted capitalism, primarily because it is considered part of liberalism and secondly by its nature, which goes against social justice. In 2013, Pope Francis said that more restrictions on the free market were required because the “dictatorship” of the global financial system and the “cult of money” were making people miserable. In his encyclical Laudato si’, Pope Francis denounced the role of capitalism in furthering climate change.

Islam forbids lending money at interest, the mode of operation of capitalist finance, although Islamic banks have developed alternative methods of making profits in transactions that are traditionally arranged using interest.

Socialists argue that the accumulation of capital generates waste through externalities that require costly corrective regulatory measures. They also point out that this process generates wasteful industries and practices that exist only to generate sufficient demand for products to be sold at a profit (such as high-pressure advertisement), thereby creating rather than satisfying economic demand.

Socialists argue that capitalism consists of irrational activity, such as the purchasing of commodities only to sell at a later time when their price appreciates (known as speculation), rather than for consumption. Therefore a crucial criticism often made by socialists is that making money, or accumulation of capital, does not correspond to the satisfaction of demand (the production of use-values). The fundamental criterion for economic activity in capitalism is the accumulation of capital for reinvestment in production. This spurs the development of new, non-productive industries that do not produce use-value and only exist to keep the accumulation process afloat. An example of a non-productive industry is the financial industry, which contributes to the formation of economic bubbles.

Socialists view private property relations as limiting the potential of productive forces in the economy. According to socialists, private property becomes obsolete when it concentrates into centralized, socialized institutions based on private appropriation of revenue (but based on cooperative work and internal planning in allocation of inputs) until the role of the capitalist becomes redundant. With no need for capital accumulation and a class of owners, private property of the means of production is perceived as being an outdated form of economic organization that should be replaced by a free association of individuals based on public or common ownership of these socialized assets. Private ownership imposes constraints on planning, leading to uncoordinated economic decisions that result in business fluctuations, unemployment and a tremendous waste of material resources during crisis of overproduction.

Excessive disparities in income distribution lead to social instability and require costly corrective measures in the form of redistributive taxation. This incurs heavy administrative costs while weakening the incentive to work, inviting dishonesty and increasing the likelihood of tax evasion (the corrective measures) while reducing the overall efficiency of the market economy. These corrective policies limit the market’s incentive system by providing things such as minimum wagesunemployment insurance, taxing profits and reducing the reserve army of labor, resulting in reduced incentives for capitalists to invest in more production. In essence, social welfare policies cripple capitalism’s incentive system and are thus unsustainable in the long-run.

Marxists argue that the establishment of a socialist mode of production is the only way to overcome these deficiencies. Socialists and specifically Marxian socialists, argue that the inherent conflict of interests between the working class and capital prevent optimal use of available human resources and leads to contradictory interest groups (labor and business) striving to influence the state to intervene in the economy at the expense of overall economic efficiency.

Early socialists (utopian socialists and Ricardian socialists) criticized capitalism for concentrating power and wealth within a small segment of society who do not utilize available technology and resources to their maximum potential in the interests of the public.

Racial

According to Immanuel Wallersteininstitutional racism has been “one of the most significant pillars” of the capitalist system and serves as “the ideological justification for the hierarchization of the work-force and its highly unequal distributions of reward”.

Issues

Democracy and freedom

Economist Branko Horvat stated that “It is now well known that capitalist development leads to the concentration of capital, employment and power. It is somewhat less known that it leads to the almost complete destruction of economic freedom”.

Critics argue that capitalism leads to a significant loss of political, democratic and economic power for the vast majority of the global human population. The reason for this is they believe capitalism creates very large concentrations of money and property in the hands of a relatively small minority of the global human population (the elite or the power elite), leading, they say, to very large and increasing wealth and income inequalities between the elite and the majority of the population. “Corporate capitalism” and “inverted totalitarianism” are terms used by the aforementioned activists and critics of capitalism to describe a capitalist marketplace—and society—characterized by the dominance of hierarchicalbureaucraticlarge corporations, which are legally required to pursue profit without concern for social welfare. Corporate capitalism has been criticized for the amount of power and influence corporations and large business interest groups have over government policy, including the policies of regulatory agencies and influencing political campaigns. Many social scientists have criticized corporations for failing to act in the interests of the people; they claim the existence of large corporations seems to circumvent the principles of democracy, which assumes equal power relations between all individuals in a society. As part of the political left, activists against corporate power and influence work towards a decreased income gap and improved economical equity.

“Capitalism is the astounding belief that the most wickedest of men will do the most wickedest of things for the greatest good of everyone”.

— John Maynard Keynes

The rise of giant multinational corporations has been a topic of concern among the aforementioned scholars, intellectuals and activists, who see the large corporation as leading to deep, structural erosion of such basic human rights and civil rights as equitable wealth and income distribution, equitable democratic political and socio-economic power representation and many other human rights and needs. They have pointed out that in their view large corporations create false needs in consumers and—they contend—have had a long history of interference in and distortion of the policies of sovereign nation states through high-priced legal lobbying and other almost always legal, powerful forms of influence peddling. In their view, evidence supporting this belief includes invasive advertising (such as billboards, television ads, adwarespamtelemarketing, child-targeted advertising and guerrilla marketing), massive open or secret corporate political campaign contributions in so-called “democratic” elections, corporatocracy, the revolving door between government and corporations, regulatory capture, “too big to fail” (also known as “too big to jail“), massive taxpayer-provided corporate bailoutssocialism/communism for the very rich and brutal, vicious, Darwinian capitalism for everyone else, and—they claim—seemingly endless global news stories about corporate corruption (Martha Stewart and Enron, among other examples). Anti-corporate-activists express the view that large corporations answer only to large shareholders, giving human rights issues, social justice issues, environmental issues and other issues of high significance to the bottom 99% of the global human population virtually no consideration. American political philosopher Jodi Dean says that contemporary economic and financial calamities have dispelled the notion that capitalism is a viable economic system, adding that “the fantasy that democracy exerts a force for economic justice has dissolved as the US government funnels trillions of dollars to banks and European central banks rig national governments and cut social programs to keep themselves afloat.”

David Schweickart wrote: “Ordinary people [in capitalist societies] are deemed competent enough to select their political leaders-but not their bosses. Contemporary capitalism celebrates democracy, yet denies us our democratic rights at precisely the point where they might be utilized most immediately and concretely: at the place where we spend most of the active and alert hours of our adult lives”.

Thomas Jefferson, one of the founders of the United States, said “I hope we shall crush … in its birth the aristocracy of our moneyed corporations, which dare already to challenge our government to a trial of strength and bid defiance to the laws of our country”. In an April 29, 1938 message to CongressFranklin D. Roosevelt warned that the growth of private power could lead to fascism, arguing that “the liberty of a democracy is not safe if the people tolerate the growth of private power to a point where it becomes stronger than their democratic state itself. That, in its essence, is fascism—ownership of government by an individual, by a group, or by any other controlling private power. Statistics of the Bureau of Internal Revenue reveal the following amazing figures for 1935: “Ownership of corporate assets: Of all corporations reporting from every part of the Nation, one-tenth of 1 percent of them owned 52 percent of the assets of all of them”.

United States President Dwight D. Eisenhower criticized the notion of the confluence of corporate power and de facto fascism and in his 1961 Farewell Address to the Nation brought attention to the “conjunction of an immense military establishment and a large arms industry” in the United States and stressed “the need to maintain balance in and among national programs—balance between the private and the public economy, balance between cost and hoped for advantage”.

In a 1986 debate on Socialism vs Capitalism with John Judis vs Harry Binswanger and John Ridpath, intellectual Christopher Hitchens said:

“…capitalism as a system has coexisted with and in on occasion sponsored feudalismmonarchyfascismslaveryapartheid, and under development. It has also been the great engine of progress, development and innovation in a certain few heartland countries. This means that it must be a system studied as a system and not as an idea. Its claims to be the sponsor of freedom are purely contingent. It’s good propaganda but it’s not very good political science…” 

Exploitation of workers

Critics of capitalism view the system as inherently exploitative. In an economic sense, exploitation is often related to the expropriation of labor for profit and based on Karl Marx‘s version of the labor theory of value. The labor theory of value was supported by classical economists like David Ricardo and Adam Smith who believed that “the value of a commodity depends on the relative quantity of labor which is necessary for its production”.

In Das Kapital, Marx identified the commodity as the basic unit of capitalist organization. Marx described a “common denominator” between commodities, in particular that commodities are the product of labor and are related to each other by an exchange value. By using the labor theory of value, Marxists see a connection between labor and exchange value, in that commodities are exchanged depending on the socially necessary labor time needed to produce them. However, due to the productive forces of industrial organization, laborers are seen as creating more exchange value during the course of the working day than the cost of their survival (food, shelter, clothing and so on). Marxists argue that capitalists are thus able to pay for this cost of survival while expropriating the excess labor.

Marxists further argue that due to economic inequality, the purchase of labor cannot occur under “free” conditions. Since capitalists control the means of production (e.g. factories, businesses, machinery and so on) and workers control only their labor, the worker is naturally coerced into allowing their labor to be exploited. Critics argue that exploitation occurs even if the exploited consents, since the definition of exploitation is independent of consent. In essence, workers must allow their labor to be exploited or face starvation. Since some degree of unemployment is typical in modern economies, Marxists argue that wages are naturally driven down in free market systems. Hence, even if a worker contests their wages, capitalists are able to find someone from the reserve army of labor who is more desperate.

The act (or threat) of striking has historically been an organized action to withhold labor from capitalists, without fear of individual retaliation. Some critics of capitalism, while acknowledging the necessity of trade unionism, believe that trade unions simply reform an already exploitative system, leaving the system of exploitation intact Lysander Spooner argued that “almost all fortunes are made out of the capital and labor of other men than those who realize them. Indeed, large fortunes could rarely be made at all by one individual, except by his sponging capital and labor from others”.

Some labor historians and scholars have argued that unfree labor—by slavesindentured servantsprisoners or other coerced persons—is compatible with capitalist relations. Tom Brass argued that unfree labor is acceptable to capital. Historian Greg Grandin argues that capitalism has its origins in slavery, saying that “[w]hen historians talk about the Atlantic market revolution, they are talking about capitalism. And when they are talking about capitalism, they are talking about slavery.” Some historians, including Edward E. Baptist and Sven Beckert, assert that slavery was an integral component in the violent development of American and global capitalism. The Slovenian continental philosopher Slavoj Žižek posits that the new era of global capitalism has ushered in new forms of contemporary slavery, including migrant workers deprived of basic civil rights on the Arabian Peninsula, the total control of workers in Asian sweatshops and the use of forced labor in the exploitation of natural resources in Central Africa.

Academics such as Howard Gardner have proposed the adoption of upper limits in individual wealth as “a solution that would make the world a better place”.

Marxian economist Richard D. Wolff postulates that capitalist economies prioritize profits and capital accumulation over the social needs of communities, and that capitalist enterprises rarely include the workers in the basic decisions of the enterprise.

Imperialism and political oppression

Placard at a Stop Asian Hate vigil in New York City (2021)

Critics of capitalism (e.g. John Bellamy Foster and Robert W. McChesney) argue that the system is responsible for not only economic exploitation, but also imperialistcolonial and counter-revolutionary wars and repression of workers and trade unionists.

Near the start of the 20th century, Vladimir Lenin wrote that state use of military power to defend capitalist interests abroad was an inevitable corollary of monopoly capitalism. He argued that capitalism needs imperialism to survive. According to Lenin, the export of financial capital superseded the export of commodities; banking and industrial capital merged to form large financial cartels and trusts in which production and distribution are highly centralized; and monopoly capitalists influenced state policy to carve up the world into spheres of interest. These trends led states to defend their capitalist interests abroad through military power. Bison skull pile, 1870s

Sociologist David Nibert argues that while capitalism “turned out to be every bit as violent and oppressive as the social systems dominated by the old aristocrats,” it also included “an additional and pernicious peril—the necessity for continuous growth and expansion.” As an example of this, Nibert points to the mass killing of millions of buffalo on the Great Plains and the subjugation and expulsion of the indigenous population by the U.S. military in the 19th century for the purpose of expanding ranching operations, and rearing livestock for the purpose of profit.

Capitalism and capitalist governments have also been criticized as oligarchic in nature due to the inevitable inequality characteristic of economic growth.

The military–industrial complex, mentioned in Dwight D. Eisenhower‘s presidential farewell address, appears to play a significant role in the American capitalist system. It may be one of the driving forces of American militarism and intervention abroad. The United States has used military force and has encouraged and facilitated state terrorism and mass violence to entrench neoliberal capitalism in the Global South, protect the interests of U.S. economic elites, and to crush any possible resistance to this entrenchment, especially during the Cold War, with significant cases being BrazilChile and Indonesia.

Inefficiency, irrationality and unpredictability[edit]

Some opponents criticize capitalism’s inefficiency. They note a shift from pre-industrial reuse and thriftiness before capitalism to a consumer-based economy that pushes “ready-made” materials. It is argued that a sanitation industry arose under capitalism that deemed trash valueless—a significant break from the past when much “waste” was used and reused almost indefinitely. In the process, critics say, capitalism has created a profit driven system based on selling as many products as possible. Critics relate the “ready-made” trend to a growing garbage problem in which 4.5 pounds of trash are generated per person each day (compared to 2.7 pounds in 1960). Anti-capitalist groups with an emphasis on conservation include eco-socialists and social ecologists.

Planned obsolescence has been criticized as a wasteful practice under capitalism. By designing products to wear out faster than need be, new consumption is generated. This would benefit corporations by increasing sales while at the same time generating excessive waste. A well-known example is the charge that Apple designed its iPod to fail after 18 months. Critics view planned obsolescence as wasteful and an inefficient use of resources. Other authors such as Naomi Klein have criticized brand-based marketing for putting more emphasis on the company’s name-brand than on manufacturing products.

Some economists, most notably Marxian economists, argue that the system of perpetual capital accumulation leads to irrational outcomes and a mis-allocation of resources as industries and jobs are created for the sake of making money as opposed to satisfying actual demands and needs.

Market failure

Market failure is a term used by economists to describe the condition where the allocation of goods and services by a market is not efficientKeynesian economist Paul Krugman views this scenario in which individuals’ pursuit of self-interest leads to bad results for society as a whole. John Maynard Keynes preferred economic intervention by government to free markets. Some believe that the lack of perfect information and perfect competition in a free market is grounds for government intervention. Others perceive certain unique problems with a free market including: monopoliesmonopsoniesinsider trading and price gouging.

Inequality

Critics argue that capitalism is associated with the unfair distribution of wealth and power; a tendency toward market monopoly or oligopoly (and government by oligarchy); imperialism, counter-revolutionary wars and various forms of economic and cultural exploitation; repression of workers and trade unionists and phenomena such as social alienation, economic inequality, unemployment and economic instability. Critics have argued that there is an inherent tendency toward oligopolistic structures when laissez-faire is combined with capitalist private property. Capitalism is regarded by many socialists to be irrational in that production and the direction of the economy are unplanned, creating many inconsistencies and internal contradictions and thus should be controlled through public policy.

In the early 20th century, Vladimir Lenin argued that state use of military power to defend capitalist interests abroad was an inevitable corollary of monopoly capitalism.

In a 1965 letter to Carlos Quijano, editor of Marcha, a weekly newspaper published in Montevideo, Uruguay, Che Guevara wrote:

The laws of capitalism, which are blind and are invisible to ordinary people, act upon the individual without he or she being aware of it. One sees only the vastness of a seemingly infinite horizon ahead. That is how it is painted by capitalist propagandists who purport to draw a lesson from the example of Rockefeller—whether or not it is true—about the possibilities of individual success. The amount of poverty and suffering required for a Rockefeller to emerge, and the amount of depravity entailed in the accumulation of a fortune of such magnitude, are left out of the picture, and it is not always possible for the popular forces to expose this clearly. … It is a contest among wolves. One can win only at the cost of the failure of others.

Wealth inequality in the United States increased from 1989 to 2013.

A modern critic of capitalism is Ravi Batra, who focuses on inequality as a source of immiseration but also of system failure. Batra popularized the concept “share of wealth held by richest 1%” as an indicator of inequality and an important determinant of depressions in his best-selling books in the 1980s.

In the United States, the shares of earnings and wealth of the households in the top 1 percent of the corresponding distributions are 21 percent (in 2006) and 37 percent (in 2009), respectively. Critics, such as Ravi Batra, argue that the capitalist system has inherent biases favoring those who already possess greater resources. The inequality may be propagated through inheritance and economic policy. Rich people are in a position to give their children a better education and inherited wealth and that this can create or increase large differences in wealth between people who do not differ in ability or effort. One study shows that in the United States 43.35% of the people in the Forbes magazine “400 richest individuals” list were already rich enough at birth to qualify.  Another study indicated that in the United States wealth, race and schooling are important to the inheritance of economic status, but that IQ is not a major contributor and the genetic transmission of IQ is even less important. Batra has argued that the tax and benefit legislation in the United States since the Reagan presidency has contributed greatly to the inequalities and economic problems and should be repealed.

Market instability

Business might fail or not sell enough to pay bills

Critics of capitalism, particularly Marxists, identify market instability as a permanent feature of capitalist economy. Marx believed that the unplanned and explosive growth of capitalism does not occur in a smooth manner, but is interrupted by periods of overproduction in which stagnation or decline occur. In the view of Marxists, several contradictions in the capitalist mode of production are present, particularly the internal contradiction between anarchy in the sphere of capital and socialized production in the sphere of labor. In The Communist Manifesto, Marx and Engels highlighted what they saw as a uniquely capitalist juxtaposition of overabundance and poverty: “Society suddenly finds itself put back into a state of momentary barbarism. And why? Because there is too much civilization, too much means of subsistence, too much industry, too much commerce”.

Some scholars blame the financial crisis of 2007–2008 on the neoliberal capitalist model. Following the banking crisis of 2007, economist and former Chair of the Federal ReserveAlan Greenspan told the United States Congress on 23 October 2008 that “this modern risk-management paradigm held sway for decades. The whole intellectual edifice, however, collapsed in the summer of last year”, and that “I made a mistake in presuming that the self-interests of organizations, specifically banks and others, were such that they were best capable of protecting their own shareholders and their equity in firms … I was shocked”.

Property

Pierre-Joseph Proudhon and Friedrich Engels argue that the free market is not necessarily free, but weighted towards those who already own private property. They view capitalist regulations, including the enforcement of private property on land and exclusive rights to natural resources, as unjustly enclosing upon what should be owned by all, forcing those without private property to sell their labor to capitalists and landlords in a market favorable to the latter, thus forcing workers to accept low wages to survive. In his criticism of capitalism, Proudhon believed that the emphasis on private property is the problem. He argued that property is theft, arguing that private property leads to despotism: “Now, property necessarily engenders despotism—the government of caprice, the reign of libidinous pleasure. That is so clearly the essence of property that, to be convinced of it, one need but remember what it is, and observe what happens around him. Property is the right to use and abuse”. Many left-wing anarchists, such as anarchist communists, believe in replacing capitalist private property with a system where people can lay claim to things based on personal use and claim that “[private] property is the domination of an individual, or a coalition of individuals, over things; it is not the claim of any person or persons to the use of things” and “this is, usufruct, a very different matter. Property means the monopoly of wealth, the right to prevent others using it, whether the owner needs it or not”.

Mutualists and some anarchists support markets and private property, but not in their present form. They argue that particular aspects of modern capitalism violate the ability of individuals to trade in the absence of coercion. Mutualists support markets and private property in the product of labor, but only when these markets guarantee that workers will realize for themselves the value of their labor.

In recent times, most economies have extended private property rights to include such things as patents and copyrights. Critics see these so-called intellectual property laws as coercive against those with few prior resources. They argue that such regulations discourage the sharing of ideas and encourage nonproductive rent seeking behavior, both of which enact a deadweight loss on the economy, erecting a prohibitive barrier to entry into the market. Not all pro-capitalists support the concept of copyrights, but those who do argue that compensation to the creator is necessary as an incentive.

Environmental sustainability

As petroleum is a non-renewable natural resource the industry is faced with an inevitable eventual depletion of the world’s oil supply.

Many aspects of capitalism have come under attack from the anti-globalization movement, which is primarily opposed to corporate capitalismEnvironmentalists have argued that capitalism requires continual economic growth and that it will inevitably deplete the finite natural resources of Earth and cause mass extinctions of animal and plant life. Such critics argue that while neoliberalism, the ideological backbone of contemporary globalized capitalism, has indeed increased global trade, it has also destroyed traditional ways of life, exacerbated inequality, increased global poverty, and that environmental indicators indicate massive environmental degradation since the late 1970s.

Some scholars argue that the capitalist approach to environmental economics does not take into consideration the preservation of natural resources and that capitalism creates three ecological problems: growth, technology, and consumption. The growth problem results from the nature of capitalism, as it focuses around the accumulation of capital. The innovation of new technologies has an impact on the environmental future as they serve as a capitalist tool in which environmental technologies can result in the expansion of the system. Consumption is focused around the capital accumulation of commodities and neglects the use-value of production.

One of the main modern criticism to the sustainability of capitalism is related to the so-called commodity chains, or production/consumption chains. These terms refer to the network of transfers of materials and commodities that is currently part of the functioning of the global capitalist system. Examples include high tech commodities produced in countries with low average wages by multinational firms and then being sold in distant high income countries; materials and resources being extracted in some countries, turned into finished products in some others and sold as commodities in further ones; and countries exchanging with each other the same kind of commodities for the sake of consumers’ choice (e.g. Europe both exporting and importing cars to and from the United States). According to critics, such processes, all of which produce pollution and waste of resources, are an integral part of the functioning of capitalism.

Critics note that the statistical methods used in calculating ecological footprint have been criticized and some find the whole concept of counting how much land is used to be flawed, arguing that there is nothing intrinsically negative about using more land to improve living standards (rejection of the intrinsic value of nature).

Many environmentalists have long argued that the real dangers are due to the world’s current social institutions that claim to promote environmentally irresponsible consumption and production. Under what they call the “grow or die” imperative of capitalism, they say there is little reason to expect hazardous consumption and production practices to change in a timely manner. They also claim that markets and states invariably drag their feet on substantive environmental reform and are notoriously slow to adopt viable sustainable technologies. Immanuel Wallerstein, referring to the externalization of costs as the “dirty secret” of capitalism, claims that there are built-in limits to ecological reform and that the costs of doing business in the world capitalist economy are ratcheting upward because of deruralization and democratization.

A team of Finnish scientists hired by the UN Secretary-General to aid the 2019 Global Sustainable Development Report assert that capitalism as we know it is moribund, primarily because it focuses on short term profits and fails to look after the long term needs of people and the environment which is being subjected to unsustainable exploitation. Their report goes on to link many seemingly disparate contemporary crises to this system, including environmental factors such as global warming and accelerated species extinctions and also societal factors such as rising economic inequalityunemployment, sluggish economic growth, rising debt levels, and impuissant governments unable to deal with these problems. The scientists say a new economic model, one which focuses on sustainability and efficiency and not profit and growth, will be needed as decades of robust economic growth driven by abundant resources and cheap energy is rapidly coming to a close.

Some scientists contend that the rise of capitalism, which itself developed out of European imperialism and colonialism of the 15th and 16th centuries, marks the emergence of the Anthropocene epoch, in which human beings started to have significant and mostly negative impacts on the earth system. Others have warned that contemporary global capitalism “requires fundamental changes” to mitigate the worst environmental impacts, including the “abolition of perpetual economic growth, properly pricing externalities, a rapid exit from fossil-fuel use, strict regulation of markets and property acquisition, reining in corporate lobbying, and the empowerment of women.”

Profit motive

The majority of criticisms against the profit motive center on the idea that the profit motive encourages selfishness and greed, rather than serving the public good or necessarily creating an increase in net wealth. Critics of the profit motive contend that companies disregard morals or public safety in the pursuit of profits.

Free market economists counter that the profit motive, coupled with competition, actually reduces the final price of an item for consumption, rather than raising it. They argue that businesses profit by selling a good at a lower price and at a greater volume than the competition. Economist Thomas Sowell uses supermarkets as an example to illustrate this point:

It has been estimated that a supermarket makes a clear profit of about a penny on a dollar of sales. If that sounds pretty skimpy, remember that it is collecting that penny on every dollar at several cash registers simultaneously and, in many cases, around the clock.

American economist Milton Friedman has argued that greed and self-interest are universal human traits. In a 1979 episode of The Phil Donahue Show, Friedman stated: “The world runs on individuals pursuing their separate interests”. He continued by explaining that only in capitalist countries, where individuals can pursue their own self-interest, people have been able to escape from “grinding poverty”.

Comparison to slavery

Wage labor has long been compared to slavery. As a result, the phrase “wage slavery” is often utilized as a pejorative for wage labor. Similarly, advocates of slavery looked upon the “comparative evils of Slave Society and of Free Society, of slavery to human Masters and slavery to Capital” and proceeded to argue that wage slavery was actually worse than chattel slavery. Slavery apologists like George Fitzhugh contended that workers only accepted wage labor with the passage of time as they became “familiarized and inattentive to the infected social atmosphere they continually inhale”. Scholars have debated the exact relationship between wage labor, slavery, and capitalism at length, especially for the Antebellum South.

Similarities between wage labor and slavery were noted as early as Cicero in Ancient Rome, such as in De Officiis. With the advent of the Industrial Revolution, thinkers such as Pierre-Joseph Proudhon and Karl Marx elaborated the comparison between wage labor and slavery in the context of a critique of societal property not intended for active personal use while Luddites emphasized the dehumanization brought about by machines. Before the American Civil War, Southern defenders of African American slavery invoked the concept of wage slavery to favorably compare the condition of their slaves to workers in the North.[citation needed] The United States abolished slavery during the Civil War, but labor union activists found the metaphor useful. According to Lawrence Glickman, in the Gilded Age “references abounded in the labor press, and it is hard to find a speech by a labor leader without the phrase”.

The slave, together with his labour-power, was sold to his owner once for all. […] The [wage] labourer, on the other hand, sells his very self, and that by fractions. […] He [belongs] to the capitalist class; and it is for him […] to find a buyer in this capitalist class.

Karl Marx

According to Noam Chomsky, analysis of the psychological implications of wage slavery goes back to the Enlightenment era. In his 1791 book On the Limits of State Actionliberal thinker Wilhelm von Humboldt explained how “whatever does not spring from a man’s free choice, or is only the result of instruction and guidance, does not enter into his very nature; he does not perform it with truly human energies, but merely with mechanical exactness” and so when the laborer works under external control, “we may admire what he does, but we despise what he is”.[199] Both the Milgram and Stanford experiments have been found useful in the psychological study of wage-based workplace relations. Additionally, as per anthropologist David Graeber, the earliest wage labor contracts we know about were in fact contracts for the rental of chattel slaves (usually the owner would receive a share of the money and the slave another, with which to maintain his or her living expenses). According to Graeber, such arrangements were quite common in New World slavery as well, whether in the United States or Brazil. C. L. R. James argued in The Black Jacobins that most of the techniques of human organization employed on factory workers during the Industrial Revolution were first developed on slave plantations. Girl pulling a coal tub in mine, from official report of the British parliamentary commission in the mid 19th century.

Some anti-capitalist thinkers claim that the elite maintain wage slavery and a divided working class through their influence over the media and entertainment industry, educational institutions, unjust laws, nationalist and corporate propaganda, pressures and incentives to internalize values serviceable to the power structure, state violence, fear of unemployment and a historical legacy of exploitation and profit accumulation/transfer under prior systems, which shaped the development of economic theory.

Adam Smith noted that employers often conspire together to keep wages low:

The interest of the dealers… in any particular branch of trade or manufactures, is always in some respects different from, and even opposite to, that of the public… [They] have generally an interest to deceive and even to oppress the public… We rarely hear, it has been said, of the combinations of masters, though frequently of those of workmen. But whoever imagines, upon this account, that masters rarely combine, is as ignorant of the world as of the subject. Masters are always and everywhere in a sort of tacit, but constant and uniform combination, not to raise the wages of labor above their actual rate… It is not, however, difficult to foresee which of the two parties must, upon all ordinary occasions, have the advantage in the dispute, and force the other into a compliance with their terms.

Aristotle made the statement that “the citizens must not live a mechanic or a mercantile life (for such a life is ignoble and inimical to virtue), nor yet must those who are to be citizens in the best state be tillers of the soil (for leisure is needed both for the development of virtue and for active participation in politics)”, often paraphrased as “all paid jobs absorb and degrade the mind”.[208] Cicero wrote in 44 BC that “vulgar are the means of livelihood of all hired workmen whom we pay for mere manual labor, not for artistic skill; for in their case the very wage they receive is a pledge of their slavery”. Somewhat similar criticisms have also been expressed by some proponents of liberalism, like Henry GeorgeSilvio Gesell and Thomas Paine as well as the Distributist school of thought within the Roman Catholic Church.

To Marxist and anarchist thinkers like Mikhail Bakunin and Peter Kropotkin, wage slavery was a class condition in place due to the existence of private property and the state. This class situation rested primarily on:

  1. The existence of property not intended for active use.
  2. The concentration of ownership in few hands.
  3. The lack of direct access by workers to the means of production and consumption goods.
  4. The perpetuation of a reserve army of unemployed workers.

For Marxists, labor as commodity, which is how they regard wage labor, provides a fundamental point of attack against capitalism. “It can be persuasively argued”, noted one concerned philosopher, “that the conception of the worker’s labor as a commodity confirms Marx’s stigmatization of the wage system of private capitalism as ‘wage-slavery;’ that is, as an instrument of the capitalist’s for reducing the worker’s condition to that of a slave, if not below it”. That this objection is fundamental follows immediately from Marx’s conclusion that wage labor is the very foundation of capitalism: “Without a class dependent on wages, the moment individuals confront each other as free persons, there can be no production of surplus value; without the production of surplus-value there can be no capitalist production, and hence no capital and no capitalist!”.

Supply and demand

A hypothetical market which cannot be described in the standard theory of supply and demand. The Sonnenschein–Mantel–Debreu theorem implies the existence of such a market.

At least two assumptions are necessary for the validity of the standard model: first, that supply and demand are independent; and second, that supply is “constrained by a fixed resource”. If these conditions do not hold, then the Marshallian model cannot be sustained. Sraffa’s critique focused on the inconsistency (except in implausible circumstances) of partial equilibrium analysis and the rationale for the upward slope of the supply curve in a market for a produced consumption good. The notability of Sraffa’s critique is also demonstrated by Paul A. Samuelson‘s comments and engagements with it over many years, stating:

What a cleaned-up version of Sraffa (1926) establishes is how nearly empty are all of Marshall’s partial equilibrium boxes. To a logical purist of Wittgenstein and Sraffa class, the Marshallian partial equilibrium box of constant cost is even more empty than the box of increasing cost.

Aggregate excess demand in a market is the difference between the quantity demanded and the quantity supplied as a function of price. In the model with an upward-sloping supply curve and downward-sloping demand curve, the aggregate excess demand function only intersects the axis at one point, namely at the point where the supply and demand curves intersect. The Sonnenschein–Mantel–Debreu theorem shows that the standard model cannot be rigorously derived in general from general equilibrium theory.

The model of prices being determined by supply and demand assumes perfect competition. However, “economists have no adequate model of how individuals and firms adjust prices in a competitive model. If all participants are price-takers by definition, then the actor who adjusts prices to eliminate excess demand is not specified”. Goodwin, Nelson, Ackerman and Weisskopf write:

If we mistakenly confuse precision with accuracy, then we might be misled into thinking that an explanation expressed in precise mathematical or graphical terms is somehow more rigorous or useful than one that takes into account particulars of history, institutions or business strategy. This is not the case. Therefore, it is important not to put too much confidence in the apparent precision of supply and demand graphs. Supply and demand analysis is a useful precisely formulated conceptual tool that clever people have devised to help us gain an abstract understanding of a complex world. It does not—nor should it be expected to—give us in addition an accurate and complete description of any particular real world market.

Externalities

Top 10 Reasons to Hate Capitalism

10. Capitalist corporations suffer from a personality disorder characterized by enduring antisocial behavior, diminished empathy and remorse, and are rewarded by shareholders for acting that way. If corporations could be sent to a criminal psychologist’s office they’d be diagnosed as psychopaths and locked away forever.

9. Capitalism encourages greed. But greed is only good for capitalists. For normal people it is anti-social and soul destroying, not to mention very bad for our communities, which rely on altruism, compassion and a generalized concern for others.

8. Capitalism is a system of minority privilege and class rule based on the private ownership of means of livelihood. This gives a few rich people the power to buy and sell jobs, which means they can build or destroy entire communities that depend on those jobs.

7. Capitalists praise freedom and individualism, but they destroy freedom and individualism for everyone but themselves. The vast majority of us who work for a living are daily asked to uncritically follow orders, to act as if we are machines, and limit our creativity to what profits our bosses.

6. Capitalists denigrate cooperation and collectivism, but create mass production processes that rely on both from workers. Their system requires us to be cogs in a giant profit-making machine, but because they fear the power this gives us we are told working together for our own interests is illegitimate and bad. Thus capitalists undermine unions and other organizations that encourage workers to cooperate with each other and act collectively.

5. Capitalism requires the largest propaganda system the world has ever known to convince us it is the only system possible. It turns people into consumers through advertising, marketing, entertainment and even so-called news. Millions around the world are employed to use their creativity to twist our feelings of love, desire, human solidarity and fairness into tools of manipulation, so that ever more profits can flow into the hands of a tiny minority.

4. Capitalism is a system in which the principle of one dollar, one vote, dominates that of one person, one vote. Those who own the most shares (bought with their dollars) control giant corporations, many of which are more powerful than all but a few governments. Rich people also use their money to dominate the elections that are supposed to give us all one, equal vote. Under capitalism those with the most money are entitled to the most goods and services as well as the most say in directing our governments and our economy.

3. Capitalism proclaims the virtue of naked self-interest, but self-interest without regard for morality, ecology or common sense leads to environmental degradation, destruction of indigenous communities, colonialism, war and other forms of mass destruction. Self-interest leads capitalists to seek profit absolutely everywhere, regardless of the damage done to other people and the health of the planet’s ecosystem. Self-interest leads capitalists to destroy any rival economic system or way of thinking (such as indigenous communal land use and respect for nature) that can be a barrier to their endless quest for profit.

2. Capitalism is not a friend to democracy but ultimately its enemy. When pushed, capitalists choose capitalism over democracy. If people use democracy to weaken the power of capitalists the rich and powerful turn to various forms of fascism in order to keep their privileges.

1. Capitalism is a cancer taking over our planet. Capitalists make profits from global warming, from destroying our oceans, from pumping ever more chemicals into the atmosphere and from patenting everything they can, including life itself. Only by getting rid of capitalism can we rescue our environment.

10 REASONS TO HATE CAPITALISM

09.05.201406:28 pmTopics:Class WarTags:capitalism


 
10. Capitalist corporations suffer from a personality disorder characterized by enduring antisocial behavior, diminished empathy and remorse, and are rewarded by shareholders for acting that way. If corporations could be sent to a criminal psychologist’s office they’d be diagnosed as psychopaths and locked away forever.
 

 
9. Capitalism encourages greed. But greed is only good for capitalists. For normal people it is anti-social and soul destroying, not to mention very bad for our communities, which rely on altruism, compassion and a generalized concern for others.
 

 
8. Capitalism is a system of minority privilege and class rule based on the private ownership of means of livelihood. This gives a few rich people the power to buy and sell jobs, which means they can build or destroy entire communities that depend on those jobs.
 

 
7. Capitalists praise freedom and individualism, but they destroy freedom and individualism for everyone but themselves. The vast majority of us who work for a living are daily asked to uncritically follow orders, to act as if we are machines, and limit our creativity to what profits our bosses.
 

 
6. Capitalists denigrate cooperation and collectivism, but create mass production processes that rely on both from workers. Their system requires us to be cogs in a giant profit-making machine, but because they fear the power this gives us we are told working together for our own interests is illegitimate and bad. Thus capitalists undermine unions and other organizations that encourage workers to cooperate with each other and act collectively.
 

 
5. Capitalism requires the largest propaganda system the world has ever known to convince us it is the only system possible. It turns people into consumers through advertising, marketing, entertainment and even so-called news. Millions around the world are employed to use their creativity to twist our feelings of love, desire, human solidarity and fairness into tools of manipulation, so that ever more profits can flow into the hands of a tiny minority.
 

 
4. Capitalism is a system in which the principle of one dollar, one vote, dominates that of one person, one vote. Those who own the most shares (bought with their dollars) control giant corporations, many of which are more powerful than all but a few governments. Rich people also use their money to dominate the elections that are supposed to give us all one, equal vote. Under capitalism those with the most money are entitled to the most goods and services as well as the most say in directing our governments and our economy.
 

 
3. Capitalism proclaims the virtue of naked self-interest, but self-interest without regard for morality, ecology or common sense leads to environmental degradation, destruction of indigenous communities, colonialism, war and other forms of mass destruction. Self-interest leads capitalists to seek profit absolutely everywhere, regardless of the damage done to other people and the health of the planet’s ecosystem. Self-interest leads capitalists to destroy any rival economic system or way of thinking (such as indigenous communal land use and respect for nature) that can be a barrier to their endless quest for profit.
 

 
2. Capitalism is not a friend to democracy but ultimately its enemy. When pushed, capitalists choose capitalism over democracy. If people use democracy to weaken the power of capitalists the rich and powerful turn to various forms of fascism in order to keep their privileges.
 

 
1. Capitalism is a cancer taking over our planet. Capitalists make profits from global warming, from destroying our oceans, from pumping ever more chemicals into the atmosphere and from patenting everything they can, including life itself. Only by getting rid of capitalism can we rescue our environment.

The Real Reason Millennials Hate Capitalism

It’s no statement of revelation by now to say that many millennials hate the idea of capitalism.

In 2011, the Occupy Wall Street movement gave the world its first real glimpse into the anti-capitalist angst of today’s youth. Chants of “We are the 99%” shed plenty of light on the manifesting divide between the purported haves and have-nots of American society.

In 2016, widespread fervor over “democratic socialist” and presidential candidate Bernie Sanders only further confirmed the growing anti-capitalist sentiment among millennials. During the primaries, Sanders won more votes among people under 30 than both Clinton and Trump combined.

That same year, a Harvard University survey confirmed what by then seemed obvious enough: only a minority (42%) of adults between the ages of 18 and 29 now supported capitalism. It’s a stunning statistic considering that prior generations widely recognize the economic system as the greatest wealth generator in history.

As a millennial myself, I have to admit I find the sentiment of my demographic bewildering at times. At a moment in history when Venezuelan children are literally dying of hunger en masse and its average citizen is losing 24 lbs in body weight a year, many of my peers are decrying the fact that college and medical treatment are not “free.”

At the same time, I do understand where much of the ire comes from. Millennials undeniably drew the economic short straw of our time, and many are looking for something to blame. Justified or not, capitalism turns out to be an easy target for those who are struggling to succeed within it.

Millennials were hit with a financial crisis in 2008, as many were first entering the workforce. They were corralled like sheep into a system of “higher” education as academic debt doubled between 1996 and 2006. They’re also the first generation in modern history to be worse off than their parents in terms of income.

These factors aside, a long list others have led folks like those at The Atlantic to dub millennials the “Unluckiest Generation,” and, in a relative sense, it’s an accurate characterization.

What gets lost in that framing, however, is the fact that economics is not a zero-sum game. The reality is that millennials are living in what is objectively the most prosperous period in history.

BBC has summarized this point succinctly in its reporting:

Life expectancy has risen more in the past 50 years than the previous 1000; the likelihood of a violent death has never been lower; on average, we’re better educated than ever, and childhood mortality has plummeted. Among the most striking changes, the last few decades has brought remarkable successes in tackling global poverty: in 1981, almost half the people in the developing world lived below the poverty line; as of 2012, that figure had dropped to 12.7%.

Yet despite these absolute truths, many millennials can’t stop comparing themselves to the wealthiest members of society and declaring that something just isn’t right. After all, if Jeff Bezos is worth $139 billion and John Doe is working for minimum wage, there must be something inherently wrong with our economic system, right?

Well, not necessarily.

But if you try to debate these individuals, they simply won’t have it:

Why People Who Think Capitalism Sucks Are Just Plain Stupid

Breaking down the definition of the word capitalism and exploring the perversion of the word in America and around the world.

Why write this?

Political Correctness has pushed us so far out of the realm of honest conversations that so many people are scared to talk openly about anything that might offend anyone around them.

Not only am I hoping to start a discussion here, I am trying to start an all out war on the battlefield of ideas over the political incorrectness of being politically correct. That being said, read along, challenge what you know and let’s talk it out in the comments after we’re done. Get it? Got it? Good!

It’s not that I think you’re stupid…

Unless of course you actually do think capitalism sucks. In that case I would ask you to kindly pack your shit and head off to Europe, China or anywhere other than America really.

Maybe you would be happier in North Korea or some other tyrannical state. I hear the soviets are making a comeback! And before you say anything about how great Canada is, I direct you back to my “pack your shit” statement a few sentences back.

No one is keeping you here! If you think they do it better somewhere else then by all means, be gone! Just saying.

Now, before we get into the ideological debate behind the bastardization of the word capitalism, let’s understand the origin and root of the word.

The definition:

We will start out with a few generalizations about the word capitalism, I’ll explain why it really is that simple and the tell you why people who think capitalism sucks are really just plain stupid.

What is capitalism?

Google

/cap-i-tal-ism/

noun:

An economic and political system in which a country’s trade and industry are controlled by private owners for profit.

Wikipedia

Capitalism is an economic system based on the private ownership of capital goods and the means of production, with the creation of goods and services for profit.

Neither of these definitions tells us a whole lot about capitalism at its core so let’s dive a little deeper.

What is a capitalist?

Google

cap-i-tal-ist
Noun:

A wealthy person (apparently you have to already be wealthy in order to capitalize on anything) who uses money to invest in a trade and industry for profit in accordance with the principles of capitalism. (We’re starting to see the skew already)

Wikipedia

Wikipedia actually redirected me to the definition of capitalism that I listed before where I quickly ended up on a page about Karl Marx’s critique of political economy and his views on the capitalist mode of production.

This is where I start to get frustrated

Lets look at one more definition (capitalize) before I get started explaining why we need to be careful of how we let people redefine words and the context in which we use them.

What does it mean to capitalize?

Google:

Cap-i-tal-ize

Verb:

1: Taking the chance to gain advantage from.

2: Provide (a company or industry) with capital. For this article I will ignore this definition as it relates to the funding of businesses and the capital (money) used to start and fund business ventures.

Let’s use a little common sense

If I am capitalizing on a situation, I am simply using that situation to my benefit. Where we pervert the game is in the governance and regulation of capital and industry. When we begin picking and choosing winners and losers.

Which is really part of why it bothers me when people vilify the word capitalist or capitalism. Furthermore, the system of capitalism has served to push forward technology and innovation and has free’d more people from the clutches of poverty than any other system before it.

If you think about it, the person who tells you that capitalism is bad is actually trying to capitalize on your intellectual ignorance and sway you into thinking that their definition is the one you should believe.

As if capitalizing on a low information audience is any different than a dishonest business capitalizing on an uninformed buyer.

This is not to say that people do not capitalize on the stupidity of others (it happens all the time), but since when does motive determine the definition of a word?

A politician might capitalize on his opponents weakness or mistakes just as easily as a business might capitalize on an opportunity stemming from a failed competitor or by taking advantage of an opening in the market for a new product.

A salesperson might capitalize on the stupidity of a naive car buyer, but is it not the responsibility of the consumer to also protect themselves? Is the world around us not always some battle which requires survival. It used to be jungles and wildlife, but now it is the wild world of consumerism and advertising which vies for our lives and souls. So yes, the salesman is sleazy for trying to take advantage of you, but you are naive to think that the salesperson would operate with anything other than their best interest in mind.

You see, we are all born with the natural instinct to take advantage of the situations that present themselves to us through the course of our lives. Whether it be for advancement financially, personally or intellectually.

Someone with a full-ride scholarship might be capitalizing on a lot of hard work leading up to receiving that scholarship. Just like an entrepreneur who makes it big by capitalizing on the years of hard work and struggles they put in before taking their company to the next level. Neither of which makes that person evil. In fact, it makes them smart, and we should applaud a system which rewards hard work and dedication.

We should applaud and protect a system that allows individuals to go out and create value in the world. But more importantly, a system that allows people to own the fruits of their labor. This is why capitalism is so important. Because in a capitalist system, the government protects the individual’s right to ownership of property. A fundamental tenet of a free society.

Humans are prone to greed

Generalizing all capitalists as bad would be like saying all Catholic priests are child molesters.

Whether in business, government, religion or life in general, people are prone to failure and greed, which eventually leads to an abuse of power.

That being said, assuming that all capitalist are bad and that they are all trying to get to the top solely by taking advantage of others is narrow minded, ignorant and impractical. The economy is not a zero sum game. It can expand and grow as new innovations are introduced to the market which means many people can succeed without others having to fail.

If you think business people and “capitalists” are bad people, then you should be willing to admit that people in general are bad, therefore the people that would teach you to hate a capitalist are also bad.

Isn’t your effort to convince me that capitalism is bad an attempt to capitalize on my ignorance on the true understanding of the word? Isn’t your effort to vilify the producers just an attempt to try and steal something you have not yet earned? What system would you suggest in its place? How should we treat the people and money of a country in order to produce a better outcome than what we are working towards today in America?

Let’s examine a few alternatives:

We already defined capitalism, so let’s look at some of the other “ism’s” that people might look to replace it with.

Socialism

We could just give everyone the things they need. You know, take from the rich and give to the poor and all that shit. Some might say that we are already living in a form of socialism now as we have welfare systems and social safety nets of which more than 50% of our population participate in. And on paper, it sounds like a great idea to just give people their basic subsistence, but in practice, it never works.

This is not to dispel the idea of a Universal Basic Income, which I actually support at some level but will discuss in a future article. 

In a socialist world, there would be no accumulation of capital (wealth) and equality would abound! But the truth is that socialism has been tried (without success), time and time again, and you cannot guarantee an equal outcome for any large group of the earth’s population at any given time. What you can do is provide equal opportunity at success, which is really why America was so successful as an experiment in the first place.

That being said, I think everyone considers socialism to be a viable solution at one point in their intellectual evolution. Typically before they acquire any fundamental understanding of economics and free markets at scale. Don’t believe me? Just go ask someone on the street to share their hard earned paycheck with you. It likely won’t happen. But ask the same person for advice on how you should spend your money, and they will surely give it.

The truth is that at some point, the producers will quit producing and the entire system will collapse. Without compensation that is commensurate to the efforts, people eventually quit trying to produce and soon there are no goods or services (or anything else for that matter) to redistribute amongst the people.

Communism

After socialism comes communism which is really just a natural progression of state controlled means of production and equal distribution of capital. Which never seems to actually get distributed equally funny enough. To each according to their needs, from each according to their abilities. Or some stupid shit like that. What actually ends up happening is that the separation between classes becomes extreme and you eliminate any chance at upward economic mobility.

Eventually you end up with some dictator who thinks they are a god. A self inflated ego who runs around breaking shit like some pissed off toddler who needs a nap. Seriously, Mao, Stalin, Castro, etc. They all ruled over a communist regime which lead to death and despair for millions of people. Yet surprisingly you still see these dumb antifa fucks running around with the hammer and sickle on their flags while criticising the swastika on others. like for some reason the genocide attached to one is acceptable while the other is repugnant. Because obviously, they get to set the rules in every debate.

Communism sucks the life out of its people by propping up a select few who hold all the power. Eventually a communist society devolves into mediocrity and tyranny. Completely divided into have and have not while espousing equality for all. No middle class, no ability to separate yourself or change your station in life.

Fascism

At least with socialism and communism you get a cursory effort to provide for the people. With Fascism, all you get is fucked. Essentially this is a complete dictatorial control of a country and their entire economic system.

Think Hitler and Mussolini here.

Another key problem with Fascism is the propensity for violence. In a Fascist system, there can be no dissent or second party. Often, Fascist dictators rule through the threat of military violence, and through the subjugation of their people. Yet even in these corrupt systems, enterprising and conniving business owners will find ways to snuggle up to the people of power in order to earn favors and to gain an advantage in the market.

Back to capitalism

There are many more political and economic philosophies for you to explore than the three I listed above. These are just the most commonly referenced and have all been tried in some form or another in the last century. I encourage you to learn more about each of them and understand their history, their implementation in the past, as well as their strengths and weaknesses as political and economic theories. In that effort you will find that none of those systems can hold a candle to capitalism in its power to change the lives of those who play by its rules.

I will once again point out the propensity for human corruption and highlight the fact that regardless of the system, there will likely be iniquity amongst the people. This is primarily due to the fact that we are all different, have different motivations, interests, pursuits, etc. Not because the economic system in which we live is somehow designed to hold us back. 

What I am trying to point out is that capitalism gives the average person (you and I) the best opportunity to carve our own path, to follow our own dreams and be rewarded according to our individual efforts in doing so. It is why America, has surpassed the rest of the world in innovation to this point, and why we were able to come so far in this country while others stagnate for centuries.

America’s perverted versions of progress?

This article is not intended to be a defense of American Capitalism in its current state. I believe we have made –and continue to make– major mistakes in our economic and political behavior as a country. We’ve been printing money like it’s going out of style, and although we since stopped, we’ve yet to feel the effects of that increase in our monetary supply. Furthermore, look at the amount of money we let influence the decision making of the people we send to represent us in Washington.

We have completely bastardized the idea of a free and open market, and to pretend otherwise is intellectually dishonest.

The problem is that America is no longer a purely capitalist society. We have evolved into a corporate oligarchy. A system where corporate money pulls the strings of all of the puppets in Washington. A system where the government itself is just a paid extension of the corporate crony machinery. A structure that has created greatness over the years, but one which is also now killing itself by suffocating the people who support it.

A truly capitalist society would strive to provide a level playing field so that its citizenry can compete freely. It would protect our ability to innovate and take risks on new ventures. Not seek to limit or diminish our potential for success. This is where regulators seek to find balance.

But instead we find our government striving to pick the winners and losers. Making investments or restricting industries in ways where the long term results cannot be predicted. And to write off that lack in leadership as a failure in a basic economic system is why I can plainly call you stupid for not understanding the nuance. At the very least it makes you ignorant and naive to the real problems we face as a society.

So where do we go from here?

Would you rather have a dictator telling you what to do? A monarch? A tyrant? An out of control government? Wait, we might already have that one…

But seriously. Tell me when the other systems have ever worked? I’m waiting…

When has a nation ever given up their individual freedom and ended up better off because of it?

Actually, I could argue that we are moving away from the ideas of free market capitalism and fair competition, and moving towards a systematically skewed system of social equality in name only. Instead of working to protect equal opportunity and a fair shot at the pursuit of happiness, we are working to ensure equal outcomes on paper at the expense of freedom for all in practice.

Furthermore, we have seen time and time again that the road towards socialism, communism, or any economic model other than capitalism for that matter, inevitably lead to mass oppression, a military style police state, and total control of the people and ideas which might otherwise power a free society.

So if you ask me, I’d prefer to put my trust in the people and in the market itself. I would rather see more competition, more innovation, and less government interference. I would like to see less influence from the corporate elite in the lives of the average American, and more opportunity for each of us to pave our own path.

Because I would rather be in control of my own destiny –for better or worse– as opposed to surrendering control to someone who has never met me, yet somehow thinks they can make my decisions better than I can make them for myself.

I would rather be in control of my own fate. To be in control of my ability to not only fail, but to succeed beyond all of my wildest dreams.

And I’ll take that every day as opposed to putting my faith in a state controlled corporate machine.

In closing

America was –and still is– the most amazing place to live in the world. There is a reason people risk their lives trying to get here in order to escape their oppressive regimes.

We are what we are because we’ve allowed people to realize the benefits of risk and reward. Have we messed up along the way? Yes. Have we gotten it mostly right? You better fucking believe it.

And if we find a way to correct that path, as opposed to looking for ways to turn from it, then there is no limit to what we can accomplish. But, if we continue restricting capitalism as a principle and vilifying the producers of this nation, then we will ultimately drag the entire country down with them.

Imagine a teacher telling the “A” students to not try so hard because they were making the “D” students look bad instead of finding ways to bring the “D” students up a level or two. It’s a little simplistic but it is in essence what we are encouraging people to do by pretending that some other system might serve us better.

We must stop telling people that success and profit are evil. But we must also not teach them that profit is everything that matters. We must teach people to be accountable for their thoughts and behaviors. Teach them how to go out into the world and create value for themselves and others. Teach them to reinvest their intellectual capital in themselves in order to advance their own agenda as opposed to walking around blindly advancing someone else’s.

Because I personally hate the thought of being anything other than exceptional. I hate the idea of striving for just good enough.

So, what do you say? How about we go capitalize on everything that makes humanity great and remember that we are after all, just people. Let’s remember that the slave masters keep the slaves uneducated for a reason. And let’s all set the shackles of societal stupidity aside and go build something beautiful.

People Love To Criticize Capitalism. Here’s Why They’re Wrong.

In capitalist societies, the poor get richer.

Screen Shot 2021-06-16 at 5.46.49 AM

(Stossel TV)

Everywhere, people trash capitalism.

But what they think they know about capitalism is usually wrong.

My new video debunks some myths about capitalism.

“No one ever makes a billion dollars,” complains Rep. Alexandria Ocasio-Cortez (D–N.Y.). “You take a billion dollars.” In other words, capitalists get rich by taking money from others.

That’s nonsense, and Myth Number One.

People believe that myth if they think that when one person wins, someone else must lose. It’s natural to believe that if you think there is a finite amount of money in the world. But there isn’t.

Free markets increase total wealth. Competition encourages entrepreneurs to find new ways to release more value from both people and resources.

Because capitalism is voluntary and consumers have choices, the only way capitalists can get rich is to offer us something that we believe is better than we had before.

That creates new wealth.

Steve Jobs became a billionaire. But by creating Apple, he gave us more: millions of jobs and billions of dollars added to our economy.

Research shows that entrepreneurs only keep 2.2 percent of the additional wealth they generate. “In other words, the rest of us captured almost 98 percent of the benefits,” says economist Dan Mitchell of the Center for Freedom and Prosperity.

“I hope that we get 100 new super billionaires,” he adds, “Because that means 100 new people have figured out ways to make the rest of our lives better off.”

But former Labor Secretary Robert Reich says we should “abolish billionaires.” He wants some form of wealth tax to hold their wealth down. “Entrepreneurs like Jeff Bezos would be just as motivated by $100 million or even $50 million,” Reich claims.

But Mitchell points out that if their income is limited, “maybe they just take it easy…retire…sail a yacht around the world…consuming instead of saving and producing.”

I want them saving and producing! Billionaires have shown that they’re good at cutting prices or improving products or both.

As Michell puts it, “I’m not giving Jeff Bezos any money unless he’s selling me something that I value more than that money.”

Even if they don’t—even if they run out of ideas—their wealth is useful.

One reader called me “a complete moron” for saying that. He argues that “more money in the richest hands means money sitting in the bank doing nothing.”

But that’s an ignorant view of banks. Because banks loan that money out, they enable other people to buy homes, start new businesses, and get educated.

Still, I hear that “the rich are getting richer, while the poor get poorer!”

That’s Myth Number Two. Yes, the rich got lots richer, but the poor and middle class got richer, too.

“The economic pie grows,” says Mitchell. “We are much richer than our grandparents, and our grandparents were much richer than their grandparents.”

Capitalists helped everyone, including the poor.

The media suggest that today’s wealth gap proves that’s no longer true. But they are wrong. Capitalism’s gradual progress continues. Census Bureau data shows that the average family today is almost a third richer than 40 years ago (yes, adjusted for inflation).

The media also say, “The middle class is in decline.”

It’s true, Mitchell points out. “It’s shrinking because more people move into upper-income quintiles! The rich get richer in a capitalist society. But guess what? The rest of us get richer as well.”

Is capitalism bad?

Capitalists have a bad moral reputation. People see them as bad because their economic theory is based on self-interest. Even though I am an unrepentant capitalist, I totally agree many people who are capitalist are not good moral humans and lack love and compassion. Further, many are just plain jerks and think this economic system is some new-found religion and are rigid in their thinking.

The rich are stereotyped as greedy and heartless because of a large amount of earnings they make and yet no clear value to society. They are almost seen as parasites off the sweat of others.  However, this is where people get confused.  Capitalism itself is not bad, nor are all capitalist. Capitalism is good. People confuse capitalism with corporate America and do not consider the alternative socialism for what it is, fake.

Jealousy is the cause of people thinking capitalism is bad, not compassion

People think capitalist lack compassion and an alternative system like socialism will bring more peace and justice to the world. In fact, people think they are better people just believing in anti-capitalism. Wrong. The real poverty in the USA is spiritual poverty, not material poverty. The poor in America would be super rich in most places in the world. If you think capitalism is wrong, live in a post-communist country for a few years.

Socialism capitalism’s alternative

  • I live in Poland a post-communist country. How many anti-capitalists do I meet here? Hmm none, well one but she is American and rich. Polish people know socialism is all fake. It is the government and those in power taking power from the productive.
  • Capitalism has transformed the world I live in from poor to rich. Not just some people most people. What about the poor? The poor live better than they did under socialism.

What about greedy capitalists? You know what, some people are. Really they are heartless people. But most people who make a lot of money give a lot to charity and are kind gentle people. I know, I lived around them most of my life growing up in preppy Connecticut.  They are not rich and greedy, rather they are rich and live very modestly. Look at Warren Buffett he practically wears the same shoes he was married in, and did not he and Bill Gates give away all their money basically?

People fill their heart with resentment towards capitalist because they feel somehow when someone else wins someone else must lose. The reality is life is not a zero-sum game. To understand and meditate on what this means is important. It means that when someone wins someone else wins. Always, except in extreme cases.

Who is bad in the capitalist world?

I would say large corporations are pretty scummy.  I am an unrepentant capitalist, but I believe that corporate America does not uphold the ideals of Adam Smith. Adam Smith was a moral philosophy and believed in enlightened self-interest, not Ayn Rand selfishness.  It is too complex to explain in a short post, but there is a big difference from being a capitalist and working for working for corporate America. A capitalist is creative and risk-taking and wants to add value to society. Corporate warriors are more about a paycheck and bonus, two different things.

Next time you ask the question is capitalism good or bad, consider the capitalist vs the large corporation (corporate socialism). Consider Capitalism as we have in free America and the socialism that Poland or Russian had during communism. I think you will see the answer that capitalism is not bad at all.

What capitalism does

It allows you to express yourself and give you the freedom to choose. It does not promise to make everyone equal but rather lets you decide what you want to do with your life.  Is capitalism bad? No. The self-expression does not sound too bad to me. This means whether it is setting up a yoga school or writing a book or being an electrician like Lech Wałesa.

Why Do U.S. Colleges Hate America And Love Socialism?

George Orwell wrote that “England is perhaps the only great country whose intellectuals are ashamed of their own nationality.” Today’s America has also earned that distinction.

Look around our colleges and universities and you’ll find few displays of patriotism. Instead, anti-American ones abound. School newspaper op-eds routinely excoriate the United States,  students burn American flags, and almae matres are considered improper to play. In Zoom lectures, no one minds virtual backgrounds with progressive slogans. Show something pro-American and that’ll raise eyebrows. Apparently being proud of one’s country on campus is as anachronistic as free speech.

Much of this has to do with a failure of education. Within the humanities and social sciences, some majors no longer require any courses whatsoever on the United States. Those still offered tend to have little or nothing good to say about our country.

The notion that America, despite its past sins, shines as the “land of opportunity” is verboten unless qualified with “land of opportunity for some.” Though students should learn about American history’s ills, to learn nothing about its triumphs gives them a remarkably one-sided perspective. Students graduating today can be forgiven for concluding that slavery and discrimination—not individual liberty and free enterprise—are the exceptional features of America’s past.

What they’ve been taught has given tomorrow’s leaders a far less bright view of America than yesterday’s. According to a 2019 Gallup poll, just 50 percent of Americans aged 18-29 are either extremely or very proud of their country. Those of us who spend time on campuses might be surprised the number is that high.

No doubt there has always been a vocal anti-American contingent in the academy. Rallied by the likes of Noam Chomsky, these professors used the American shortcomings exposed during the Civil Rights Movement and the Vietnam War as grounds to condemn everything about the United States. Revolution, not reform, was their remedy. Yet this was a minority view, even on the Left, throughout the Cold War.

With the dissolution of the Soviet Union came the dissolution of a viable alternative system. Rather than uniting academics around capitalism, this had another effect altogether. Since the 1990s, a growing number of neo-Marxists hostile to the American project have overrun higher education. Most nationwide attention has gone to their imposing politically correct nostrums like safe spaces and speaker disinvitations. All this mollycoddling, however, shouldn’t make us lose sight of the anti-Americanism that accompanies it.

Take UC Berkeley, where an experiment by filmmaker Ami Horowitz found students were happy to voice displeasure with pro-America statements and support of ISIS’ anti-Western ones. In seminars nationwide, the few willing to go to bat for America are seen as backwardly chauvinist in comparison to the enlightened anti-imperialists. These people, to quote the intrepid Jeanne Kirkpatrick, blame America first.

Do they appreciate that the American capitalist system they decry lets them criticize it freely? And that it pays them high salaries?

No matter. There’s a better model out there, our socialist sages tell us. In that case, one would expect them to be clamoring to teach in Caracas or Pyongyang rather than Cambridge or Philadelphia. But as the waves of people trying to flee Venezuela and North Korea show, those who live under socialism don’t care for its attendant poverty, censorship, and repression. Our cognoscenti should take note.

For those of us who like our country, the way forward is to keep fighting. This means defending American ideals when no one else will and working with the academics who want reform, not revolution. Breaking with the ivory tower altogether will concede defeat and embolden the radicals over the moderates. Instead, activists and scholars should offer an uplifting patriotic message that will challenge the anti-American one they get elsewhere.

Orwell’s remark is as true today as it was when he made it, for British universities have become hotbeds of self-loathing. Let’s make sure our own reverse course.

Woke Capitalism: How Huge Corporations Demonstrate Status by Endorsing Political Radicalism

It’s a rather strange claim of the American far left that their interests are opposed to that of corporate America, because there’s virtually no evidence to support it. Quite the contrary: During the wave of Black Lives Matter rioting that took place during the early summer of 2020, American corporations marched in lockstep. Not only did they use social media to swear fealty to this political movement, but they also made massive internal changes in conformity with BLM propaganda.

It’s called “woke capitalism” and while it’s not necessarily new, it’s certainly more prevalent than it ever has been. The term itself was coined by conservative editorial writer Ross Douthat in 2018. He succinctly summed up what woke capitalism is: superficial nods toward cultural leftism that allow the company to do what it really exists to do – make money.

You might be confused or think that there’s something ironic or askew about major corporations backing supposed “rebel” ideologies. However, this stems from a very surface understanding of the topic. When we delve deeper into it, the motivation for large corporations siding with ostensibly “anti-capitalist” groups will come clearly into focus.

What is “Wokeness?”: Understanding “Critical Theory” and The Frankfurt School

Before going any further, we should spend some time defining what “wokeness” means.

Wokeness is a kind of shorthand for an area of the American political left that is obsessed with identity politics. This is, as the name would imply, the politics of identity. Thus, people are not rational actors, nor are they necessarily economic units. Rather, they are little more than a collection (or, in the parlance of this ideology, the intersections) of skin color and séxuality.

Socioeconomic class might enter into this, but if it does, it’s generally as an afterthought. While Marxism might play some influential role, the wokeists are far more likely to locate the revolutionary subject in, for example, trans-identified black men than it is the working class.

One can understand the hostility of the “woke” to the Bernie Sanders campaign in this context: it is much more revolutionary under the guidelines established by wokeism, to put more racial minorities with unusual séxual identities on the board of Lockheed-Martin and Goldman-Sachs than it is to provide for greater economic equality on behalf of their workers.

The bedrock of wokeness is not classical Marxist socialism, but something called “critical theory” and in particular its variant “critical race theory.” This has its roots in the Frankfurt School and an early 20th-century Italian philosopher and politician named Antonio Gramsci. Gramsci’s big idea was that cultural power preceded political power. Thus, to have a Marxist political revolution, one first needed a Marxist cultural revolution. This was to be accomplished by a “long march through the institutions.” What this means is that leftists were to infiltrate every institution of significance and gain power within them.

We can see the result of this idea today. While American leftists bear little, if any, resemblance to Marxists of old, they have penetrated our institutions and dominate culturally – in academiain entertainment and increasingly in the economic sphere as well. If one were to read the Communist Manifesto, there are a series of demands at the end, most of which have come to fruition such as universal public education, a progressive income tax, a national bank, and the industrialization of agriculture.

This isn’t to say that there is a massive Gramscian conspiracy with thousands of members. Such a thing would be completely impossible to prove or disprove. However, the kernel of the idea has taken root, in part thanks to bona fide promotion in academia, and in part because it simply seems to have largely been a successful operation.

Thus “critical theory” is effectively a sociological philosophy and method that involves constant ideological attacks on Western civilization. Its guiding principle is that Western civilization is based on subjugation, dominance and tyranny. This takes many forms including “racism,” “patriarchy,” “heteronormativity” and “cisséxism” – all of which are predicated upon weaponized guilt.

Weaponized guilt is essentially taking those elements of Western and Anglo-Saxon culture, which prize even-handedness and “fair play,” and turning them against the culture itself. Indeed, the selection of the name “Black Lives Matter” is a masterstroke in weaponizing guilt: The only possible disagreement (or so say the advocates and allies of the movement) is that you don’t think black lives do actually matter. But, of course, except for extremely isolated, marginalized and numerically insignificant pockets, virtually everyone agrees that all lives have the same value. Indeed, it is a cornerstone of Western civilization and Christian teaching that this is true. It is nearly axiomatic. The Declaration of Independence declares that the basic equality of men is “self-evident.” No one would even know where to begin “arguing” this, simply because it is so accepted as a fact.

It’s worth noting that wokeness largely entered the American political vernacular after the fall of the Occupy Movement. This is not an endorsement of either the Occupy Movement specifically, nor economic reductionism and confiscatory tax redistribution schemes more generally. However, it is worth noting that the corporate affinity for a seemingly “radical” form of politics requiring nothing in the way of actual financial sacrifice began after the death of a political movement demanding corporate accountability and economic redistribution starting at the very top.

The Business Side of Things

Almost all of the income growth in America over the last ten years has been concentrated in cities in Southern California, Silicon Valley and the Pacific Northwest, hotbeds of leftism in general and wokeism in particular. However, even places outside of these regions that have seen income growth tend to be far left-leaning. Examples include Austin, TX, Denver, CO and Nashville, TN.

What this means is that the larger companies in America, including the big banks in New Yorkthe tech companies in Silicon Valley, the entertainment industry in South California and the cable news companies that cover the goings on in Washington, D.C., are all interested in chasing after the dollar of urban wokes. Increased wealth concentration, including the massive transfer of wealth that happened under the COVID-19 panic and subsequent lockdown, have made big companies increasingly the only game in town, with smaller, more responsive Main Street America businesses becoming more and more marginalized where they continue to exist at all.

It’s not that big companies think they’re too good for your money – they just know that you don’t have anywhere else to go.

The Colin Kaaepernick sneaker incident is an excellent example of woke capitalism in action. In times past, companies generally avoided wading into controversial social issues. After all, in the words of Michael Jordan, “Republicans buy shoes too.” But in an attempt to appeal to Generation Z (also known as “Zoomers”), many companies are deciding that it’s worth alienating rural and exurban flyover people in favor of courting the woke dollar.

For Nike and many other companies, this commitment to “social justice” doesn’t run much deeper than marketing. Nike knows it has a disproportionately black customer base. But only 8 percent of their vice presidents are black. What’s more, the company is notorious for using sweatshop labor in the third world to produce its expensive sneakers.

Some other quick notes on the purchasing power of the woke left: While there is certainly no direct overlap between a college education and being a radical wokeist, the woke are certainly clustered around America’s college campuses and the cities that they move to after graduation. (The average college graduate is going to earn over $1 million more than their less educated counterpart over the course of their life.)

There is also the spectre of the unmarried and the childless: these people will also have significantly greater disposable income than married couples with children living in smaller flyover cities.

All of this adds up to a very lucrative market, both for catering to the woke and pillorying the unwoke. There is no shortage of examples of either on your television during commercials.

Wokeism’s Radical Evangelism: Diversity Training Seminars

One of the most disturbing elements of wokeism is its evangelistic quality. As we saw during the riots of 2020, it was not enough simply to not be racist. One was now required to be an active “anti-racist” under the definition and terms established by the woke. Those who failed to comply were often attacked in a way that went far beyond simply being hassled online. People’s jobs and livelihoods were attacked in a manner befitting a Communist dictatorship.

The very notion of dialogue and civil debate isn’t just missing. There’s a deep hostility to the notion that there is any point of view other than the most woke possible. There is a line in the sand: On one side, there are the people who believe that America is a profoundly racist country and that this colors every aspect of our history. On the other side, there’s anyone who is even mildly skeptical of this – and the people on this side are “white supremacists.” By the logic of wokeism, these people deserve anything that happens to them (including being “cancelled”).

What this means is that wokeism does not simply operate in the background of the rest of society. You cannot simply ignore the cringe-inducing woke commercials on your television and not click the frankly hateful and racist articles of the woke online. Your compliance is a required aspect of wokeism. Think back to the social media phenomenon of large companies denouncing alleged “white supremacy” with a black square. Compliance with this was required, as if one were painting blood over their threshold to avoid the plague of the firstborn in ancient Egypt.

Corporations have begun echoing this rhetoric on social media, but there is a far more insidious element of wokeism’s radical evangelism: the “diversity training seminars” that are now de rigueur in the workplace. While often positioned as some kind of politically neutral gathering to increase workplace cohesion, these are in fact little more than Maoist struggle sessions – for all employees. We categorically reject the assumption that these are any more comfortable for non-white employees than they are for the white ones.

So what goes on at these seminars? There was a taxpayer-funded seminar in Seattle that acts as an excellent exemplar of such.

It was called “Interrupting Internalized Racial Superiority and Whiteness.” This has nothing to do with eliminating racism as is commonly understood. If we’re being frank, we can probably agree that individual racism has largely been eradicated in America, especially among educated people. This seminar and others like it are about pillorying whites and eroding workplace solidarity – and also about cushy little gigs for those giving the seminars, which aren’t cheap.

The seminar includes instruction in qualities that allegedly represent “white supremacy.” These include objectivity, perfectionism and comfort. They also ascribe some rather insidious qualities to whites in toto: arrogance, violence and anti-blackness. These are the exact words used by the seminar.

Employees are urged to engage in “self-talk” that “affirms complicity in racism.”

As is often the case, there is not really a “right” answer for whites taking the seminar. Talk too much at one of these events and you’re imposing yourself and dominating the conversation. Talk too little and “silence is violence.”

The Seattle seminar was only for white employees. So to be clear, the City of Seattle used taxpayer dollars to propagandize at and pillory white employees in a segregated forum. While investigating the seminar using public records requests, City Journal editor Christopher F. Rufo was unable to find any information about who ran the seminar or how much it cost the taxpayers.

While the seminar might sound extreme, it’s not. In fact, these are happening all across the country in America’s workplaces and on our college campuses – and many times even in elementary schools. They are totalitarian in nature but are increasingly a requirement of continued employment. Employees who push back against them can expect disciplinary measures up to and including termination of their employment. There is also the specter of “racism” hanging above anyone with even the slightest opposition or skepticism: they must be secret racists or else they’d be as gung ho as everyone else.

Many have noted the religious aspects of wokeism that go beyond its evangelical zeal. This includes a concept of “original sin” (whiteness), holds blacks and (to a lesser degree) indigenous peoples as a sort of “holy” race, and has a process for confession. However, one aspect of religious thought is missing – there is no process for redemption in the world of the woke. One may “do the work” as the saying goes, but there is no way to complete it and be redeemed. The fallen are simply fallen and constantly repaying their debt in a sort of state of karmic bankruptcy.

White Fragility: The Communist Manifesto of Woke Capitalism

DiAngelo’s critics are not restricted to the right. Socialist journalist and podcaster Matt Taibbi has described her writing as espousing a “Hitlerian race theory.” Others have criticized the book for robbing black people of agency or condescending to them in other ways.

The term “white fragility” itself works a kind of magic for DiAngelo and the proponents of this theory. It is, for them, axiomatic that all white people are racist simply for existing. Any words or actions whites take in their defense is de facto evidence of white fragility.

While $12,000 a day might sound like a lot of money, we should compare the corporate cost of a DiAngelo seminar to increasing wages for workers, or offering additional benefits, or providing mentoring programs for new employees or literally anything that might benefit employees in the long term. Such programs would be extremely costly in comparison to the piddling cost associated with a day of lost productivity spent on indoctrination, which also has the important side benefits of eroding worker solidarity and providing a cheap and easy PR win for woke consumers.

Woke Capitalism and Governance

It hardly seems worth explaining how much power large corporations have over the United States. However, we should take a moment to examine the power that woke capitalism wields over public policy.

Consider the proposition, totally uncontroversial within living memory, that biological séx is a real thing. Note that this does not require some rigid enforcement of social expression of gender: one does not need to believe that “boys wear blue and girls wear pink” to accept the existence of biological séx. But states have been targeted by large businesses for the crime of codifying this belief, again, totally uncontroversial in recent times. North Carolina was brought to heel by a coordinated corporate boycott of the state after it passed a law barring trans-identified men from women’s bathrooms. All told, the boycotts cost the state nearly $4 billion.

The 2017 boycott of North Carolina is hardly the only example of woke corporations bringing state governments to heel. For example, when Georgia passed a law defending the rights of the unborn, Hollywood leapt to action. Because a lot of television shows and movies are filmed in Georgia – for the cheap labor and tax incentives – the entertainment industry quickly declared that it would boycott Georgia if it passed a law restricting abortion.

Even state flags aren’t safe from the attack of woke capitalism. The SEC and the NCAA publicly discussed a boycott of the state of Mississippi, as did other companies. This was during the moral panic about “racism” that followed the death of George Floyd in Minnesota.

One political entity that woke capitalism does not see fit to challenge? The People’s Republic of China. Indeed, the NBA brought a general manager to heel over his support of Hong Kong democracy protesters. The normally outspoken coach Steve Kerr was strangely silent on the topic. And while the NBA has now approved political statements on jerseys, “Free the Uighurs” isn’t one of them.

The Woke Corporate Stasi

If the only problem were state governments being undermined, woke capitalism would still be a serious problem. However, there are numerous examples of private individuals being targeted by woke mobs with quick compliance from their corporate overlords. Indeed, socialist podcaster Aimee Terese has likened the woke mob to a sort of HR department vigilantism. The language of these totalitarian mobs is often remarkably similar to that which is used by HR departments, particularly when they roll out diversity training seminars.

A graphic designer at the Washington Post was fired after it was revealed that she attended a 2018 party in blackface. She was confronted at the party, left in tears and apologized to her hosts the very next day. None of this was enough for the woke mob. The designer was fired after a large – and largely manufactured by the Post itself – outrage. Many editors at the Post found themselves deeply uncomfortable with the decision to run an article outing the woman. Around the same time, a 62-year-old communications chief at Boeing was fired for comments he made in 1987 at the age of 29. The man was very clear that these were not his opinions today. For reference, Barack Obama opposed same-séx marriage until 2015, which means he opposed it during both of his presidential campaigns.

In what is perhaps the most outrageous example of woke mobs getting a man fired, a truck driver was terminated after he flashed an “OK” hand sign, which is claimed by many to now be a symbol of white supremacy. Even after an investigation into the matter by his employer, he was fired.

Why Woke Capitalism?

The best part is that this kind of progressive posturing comes at absolutely no cost to the company. They don’t have to pay their younger workers in expensive cities higher wages, thus opening up the possibility of employment to those whose parents cannot subsidize the first few years of their career. They don’t have to offer onsite childcare or other tangible – and expensive – benefits that might actually address some of the issues that these corporations feign concern about. Instead, they can pay the relatively inexpensive annual fee for a diversity training seminar, throw out some woke branding on social media and be done with the matter.

But don’t expect the Washington Post to demand that Amazon start paying taxes anytime soon.

There is a sort of cliche online about corporate wokeness: “get woke, go broke.” But the Quilette did some research into this and found it to not be true: In fact, all metrics point toward wokeness having absolutely no impact on the company’s bottom line either way. So why do they do it?

We’ve hinted at the reason for woke capitalism throughout this article. It is a form of misdirection whereby huge companies can avoid dealing with thorny labor relations issues by throwing a bone to leftist cultural interests. Remember that the left and the Democratic Party are formerly fixated on issues of economics and class rather than social issues and race. The former is a much more expensive position for large corporations than the latter.

But we should also mention that there are potentially toxic unintended consequences of woke capitalism. It’s not our contention that whites in America are an oppressed class, but it’s clear that anti-white racism is socially acceptable: You’re not going to get banned from Twitter for tweeting out “I hate white people.” What’s more, whites believe that they are increasingly the target of racism.

Whether or not this is true is entirely besides the point. The perception is far more important than the reality when discussing this topic. Inflaming racial animosity between whites and everyone else will have dire consequences for the nation as a whole, especially during a time of declining wages, increased political instability and eroding social solidarity. The end result of goading the American public into viewing their problems as largely stemming from race, rather than economics, might well have profoundly dire consequences for both the social fabric and for the individuals that constitute it.

Finally, it’s worth noting that woke capitalism is very much the free market in action. There is a benefit to the erosion of certain social values that have maintained Western civilization for hundreds of years. Woke capitalism is an attack on the nuclear family and Western civilization while providing nothing in its place. After all, who makes for better consumers than childless atoms whose only values are the prevailing cultural diktats of the day?

Why are millennials burned out? Capitalism.

“If Millennials are different, it’s not because we’re more or less evolved than our parents or grandparents, it’s because they’ve changed the world in ways that have produced people like us.”

That’s how Malcolm Harris, an editor at the online magazine the New Inquiry, begins his book Kids These Days: Human Capital and the Making of MillennialsIt’s a smart, contrarian look at the social and economic problems plaguing millennials — defined as people born between 1980 and 2000.

But it’s not a typical defense of millennials. Harris, who is a millennial (as am I), makes no attempt to undercut the complaints of baby boomers — namely, that millennials are anxious, spoiled, and narcissistic.

Instead, he asks: What made millennials the way they are? Why are they so burned out? Why are they having fewer kids? Why are they getting married later? Why are they obsessed with efficiency and technology?

And his answer, in so many words, is the economy. Millennials, he argues, are bearing the brunt of the economic damage wrought by late-20th-century capitalism. All these insecurities — and the material conditions that produced them — have thrown millennials into a state of perpetual panic. If “generations are characterized by crises,” as Harris argues, then ours is the crisis of extreme capitalism.

I spoke to Harris about the case he lays out in the book, and why he thinks millennials will have to overthrow the system and rewrite the social contract if they want to meaningfully improves their lives — and the lives of future generations.

A lightly edited transcript of our conversation follows.

Sean Illing

The core thesis of your book is that millennials were made, not born. So what are the major forces or institutions that made millennials what they are?

Malcolm Harris

Well, I take a very Marxist perspective on the world, so I’m looking at the dynamics of the labor market, the relationship between employers and the employed, basically the entire economic environment — these are the dominant forces shaping life in my view.

What I focused on is millennials as workers and the changing relationship between labor and capital during the time we all came of age and developed into people. If we want to understand why millennials are the way they are, then we have to look at the increased competition between workers, the increased isolation of workers from each other, the extreme individualism of modern American society, and the widespread problems of debt and economic security facing this generation.

Sean Illing

The key variable you emphasize in the book is the divergence between productivity and compensation — or the fact that people are working harder while wages aren’t going up. Why is this such an important data point for you? And how has it altered the day-to-day life of millennials?

Malcolm Harris

I think it’s crucial. Marxists would refer to this as an increase in the rate of exploitation, meaning workers are working longer, harder, and more efficiently but are receiving less and less in return. I reference Marxism here (even though his name never appears in the book) because conventional American economists don’t really have a term for this — it’s not something they like to talk about because they don’t recognize that capitalism is built on exploitation.

But it is a defining shift in our society, and millennials have been forced to grow up and enter the labor market under these dynamics, and we’ve internalized this drive to produce as much as we can for as little as possible. That means we take on the costs of training ourselves (including student debt), we take on the costs of managing ourselves as freelancers or contract workers, because that’s what capital is looking for.

And because wages are stagnant and exploitation is up, competition among workers is up too. As individuals, the best thing we can do for ourselves is work harder, learn to code, etc. But we’re not individuals, not as far as bosses are concerned. The vast majority of us are (replaceable) workers, and by working harder for less, we’re undermining ourselves as a class. It’s a vicious cycle.

Sean Illing

Class exploitation is hardly new, right? That’s as old as capitalism. What is it about this moment that seems different to you?

Malcolm Harris

It’s a matter of scale, right? The levels of inequality we’re seeing now are pretty extraordinary. One of the big things I allude to in the book is this question of human capital. The burdens of capital production have been shifted more and more onto workers and their families — they get fewer benefits and less support. The state helped with many of these things in the 1960s and ’70s, and before that, corporations actually picked up a lot of the slack.

But now you have individual workers, individual students, taking on this burden of making themselves into the workers the economy needs them to be and taking on all the expenses of that. Which is why so many millennials are drowning in so much student debt, while at the same time their educations are becoming less valuable in the market, which is hyper-competitive, heavily pro-business, and constantly changing.

Sean Illing

Part of what you’re saying is that modern capitalism (often referred to as “neoliberalism”) has created a world in which everything is about competition and self-interest and productivity, and as a result, corporations are squeezing more out of workers and making it harder for individuals to even think of themselves as part of a community.

Is that more or less the picture you’re painting?

Malcolm Harris

I mean, that’s what neoliberalism is, right? We’re all individuals, not members of a class or a community. We’re all economic agents pursuing our self-interest. This is the basis of our whole society right now, and both Republicans and Democrats have signed on to it.

In the book, I talk about an Obama-era education policy that basically seeded this idea that education was all about job preparation. There was no other real justification for it. That puts you on a really dangerous course because that’s all about human capital production, and then you have a system where the schools set out to produce skills in children based on what people who own companies say they want those kids to have, what skills they’ll need from their workers.

So our entire lives are framed around becoming cheaper and more efficient economic instruments for capital. That, taken to an extreme, has pretty corrosive effects on society, particularly young people.“IT’S NOT FOR ME TO SAY WHAT MUST BE DONE, BUT PEOPLE CAN LOOK AT THE WORLD AND DECIDE FOR THEMSELVES”

Sean Illing

You talk a lot in the book about how millennials are burned out, that we’ve been conditioned to worship productivity and efficiency. Is that just a function of living in the cutthroat, hyper-competitive world you’re describing?

Malcolm Harris

I think that’s part of it. When I went into this project, I thought I was going to be very critical of helicopter parents, but then I realized that the parents doing this are doing it for pretty understandable reasons.

Most of these are working-class parents who are looking at an economy where the gap between the haves and the have-nots, between workers and capitalists, is growing bigger and bigger every day, and where the middle class is basically disappearing. So they feel like they have to give their kids the best shot they possibly can, just so they can catch up and not fall even further behind.

Sean Illing

I’ll offer a little pushback here: One could read your book as saying that millennials were promised a version of the American dream and simply didn’t get it. Or someone might read this and say that you’re assuming a certain level of material comfort is a kind of birthright for Americans, when in reality that’s never been the case, particularly for nonwhite Americans.

Malcolm Harris

Well, the promise that hard work will lead to a better life was definitely not just sold to white Americans. That has been sold to black Americans, to Hispanic Americans, to everyone. The American dream is not a product that is only sold to white people.

I’m not interested in arguing that millennials didn’t get what they were promised. It’s a question of exploitation. This is a fundamentally capitalist story. Workers have always been exploited, but that rate of exploitation — measured by the productivity wage gap we talked about earlier — is increasing exponentially for millennials.

Sean Illing

Do you think millennials are at all complicit in their own fate? After all, many of the economic forces — I’m thinking of Silicon Valley in particular — that are undermining our own happiness and security have been engineered by millennials.

Malcolm Harris

Oh, absolutely. They’re exploiters like any other. They might even be better at it, in fact. When I talk about millennials, it’s not, like, a metaphor whereby millennials are the working class and boomers are the ruling class or something. The capitalist millennials are going to be just as bad, if not worse, than their predecessors, because they’ve inherited this exploitative system.

Sean Illing

You write at the end of the book that history asks different things of different generations. What will it ask of millennials?

Malcolm Harris

That’s a great question, and one I’ve been thinking about a lot. I wish I had an answer at the end of the book, but I honestly didn’t — at least not a good one.

Sean Illing

Well, to the extent that you’re right, I’d say we have to get out of this frame of generational conflict and think much bigger, but that opens up a whole new set of challenges.

Malcolm Harris

I totally agree. The more I think about it, the more convinced I am that the historical task confronting us may be larger than we ever imagined. It may well be that America dies or the world dies, or that this global economic order dies or our problems just get worse.

Sean Illing

So I want to make sure I’m clear on what you’re saying here. You’re essentially arguing that the system is fundamentally flawed and thus there is no ultimate solution short of overthrowing it. In other words, the only solution is revolution. But that’s a very difficult thing to control or predict.

Malcolm Harris

It is. A much smarter Malcolm than I, Malcolm X, said you don’t have revolutions without bloodshed, and he was probably right. But we’re in a situation now where the ruling class feels so powerful and I’m not sure what it will take to change things.

I mean, we have thousands of Americans dead in Puerto Rico, and that’s an attack by the ruling class. You had all these vulture funds that swooped into Puerto Rico, threw them even deeper into debt, and eviscerated the public services, and people died because of it. That’s an attack by any definition.

Sean Illing

It’s hard to read your book and not walk away with a sense of fatalism about our situation. Do you see no value in pushing for meaningful social change within the system? Do you see any value in political movements that are seeking practical policy shifts that won’t overturn capitalism but might nevertheless reduce suffering?

Malcolm Harris

I definitely have a sense of fatalism about this system. I don’t think capitalism can last forever (or even much longer), and I think if you asked a bunch of ecologists, they’d agree with me. That doesn’t mean what comes next will necessarily be better, but if by “within this system” you mean liberal capitalist democracy, then no, I don’t see any real strategic possibilities there.

That said, I’m not committed to only doing the most correct things. I voted for Hillary Clinton, I volunteer with groups in my neighborhood that are focused on harm reduction, etc. I’ve even helped put on a training for the DSA [Democratic Socialists of America].

Revolution is hard, and that’s not an excuse not to participate in your community. But we have to be realistic about the possible near- and medium-term outcomes for this system, and there aren’t any good ones. We have to deal with capitalism soon, or it will deal with us.

Sean Illing

The very last thing you say in the book is that millennials will have to become either fascists or revolutionaries. Is the choice really that binary? Are you convinced revolution is the only answer, knowing all that that implies?

Malcolm Harris

Yes, is the very simple answer. It’s not for me to say what must be done, but people can look at the world and decide for themselves. What I can tell you now is that we appear to be running out of options for reform.

As a society, we have done millennials a disservice. An entire generation of young people in America came of age during a decade of sluggish economic growth, and as a result, many are skeptical of free enterprise and capitalism. A stunning 2016 Harvard University survey of young adults between the ages of 18 and 29 found that 51 percent of respondents do not support capitalism. Millennial support for avowed socialist Bernie Sanders in the Democratic presidential primary was proof that young people today aren’t enamored with capitalism.

During the Obama years, the 18-29 age group heard countless presidential speeches railing against the evils of “crony” capitalism. President Obama told impressionable young voters if only the rich paid more taxes, everyone would be better off. But Obama’s tax and spend policies produced a predictably stagnant economy that stifled economic opportunity for young people.

This is also the first generation raised by “helicopter parents,” who did their part, however well- intentioned, to undermine personal responsibility. Too many of today’s parents do everything for their children and shield them from learning life’s hard lessons.

Then they went off to a higher educational system that produces an oversupply of the white-collar soft-science and humanities majors, many of whom have no marketable skills. Not able to put their expensive educations to use, they became unemployed or underemployed. Being highly educated and yet working at Starbucks, waiting tables or living in your mom’s basement can indeed make you cynical about the benefits of hard work and free enterprise.

That cynicism was also fueled by the very humanities and social sciences courses they took in college. The curriculum of too many educational institutions is rooted in anti-capitalist, socialist philosophies that paint free enterprise as inherently unfair. In fact, our very founding principles of freedom of assembly and freedom of speech are under withering attack on politically-correct university campuses all across America.

But capitalism and free enterprise, not socialism and welfare, have proven to be the key to prosperity and to reducing global poverty and inequality. As recently as 1980, the World Bank estimated that 50 percent of the global population lived in abject poverty. But with the collapse of Soviet communism in 1988 came the global spread of free market institutions, abetted by freer flows of international trade and private capital. By 2015, the World Bank estimated that less than 10 percent of the world’s population was living in extreme poverty. Capitalism has demonstrably improved the lives and general welfare of millions of people.

With such empirical proof, why aren’t more leaders, academic and otherwise, putting forth a spirited defense of free enterprise? We have the evidence to dispel the notion that socialism is inherently fairer than capitalism in its ability to create jobs and reduce poverty. We can show that success lies with individual opportunity, which in turn leads to wealth creation.

As I said, we have done millennials a disservice. Perhaps a booming economy eventually roaring along at 4 percent growth and churning out jobs by the hundreds of thousands will change the minds of America’s youth when it comes to capitalistic free enterprise. Perhaps not. But socialism is certainly not the answer to America’s woes.

Why don’t millennials like capitalism? Blame parents. Blame schools. Blame Obama.

As a society, we have done millennials a disservice. An entire generation of young people in America came of age during a decade of sluggish economic growth, and as a result, many are skeptical of free enterprise and capitalism. A stunning 2016 Harvard University survey of young adults between the ages of 18 and 29 found that 51 percent of respondents do not support capitalism. Millennial support for avowed socialist Bernie Sanders in the Democratic presidential primary was proof that young people today aren’t enamored with capitalism.

During the Obama years, the 18-29 age group heard countless presidential speeches railing against the evils of “crony” capitalism. President Obama told impressionable young voters if only the rich paid more taxes, everyone would be better off. But Obama’s tax and spend policies produced a predictably stagnant economy that stifled economic opportunity for young people.

The Obama agenda also attacked the notion of personal responsibility, killed on the altar of universal “rights” and the politics of victimhood. The Left preached that everyone has a “right” to free child care, free health care, a free college education and a roof over their head. And that the State will provide no matter what, so there’s no need to save, no need to work hard or pay your mortgage or student loans.

This is also the first generation raised by “helicopter parents,” who did their part, however well- intentioned, to undermine personal responsibility. Too many of today’s parents do everything for their children and shield them from learning life’s hard lessons.

Then they went off to a higher educational system that produces an oversupply of the white-collar soft-science and humanities majors, many of whom have no marketable skills. Not able to put their expensive educations to use, they became unemployed or underemployed. Being highly educated and yet working at Starbucks, waiting tables or living in your mom’s basement can indeed make you cynical about the benefits of hard work and free enterprise.

That cynicism was also fueled by the very humanities and social sciences courses they took in college. The curriculum of too many educational institutions is rooted in anti-capitalist, socialist philosophies that paint free enterprise as inherently unfair. In fact, our very founding principles of freedom of assembly and freedom of speech are under withering attack on politically-correct university campuses all across America.

But capitalism and free enterprise, not socialism and welfare, have proven to be the key to prosperity and to reducing global poverty and inequality. As recently as 1980, the World Bank estimated that 50 percent of the global population lived in abject poverty. But with the collapse of Soviet communism in 1988 came the global spread of free market institutions, abetted by freer flows of international trade and private capital. By 2015, the World Bank estimated that less than 10 percent of the world’s population was living in extreme poverty. Capitalism has demonstrably improved the lives and general welfare of millions of people.

With such empirical proof, why aren’t more leaders, academic and otherwise, putting forth a spirited defense of free enterprise? We have the evidence to dispel the notion that socialism is inherently fairer than capitalism in its ability to create jobs and reduce poverty. We can show that success lies with individual opportunity, which in turn leads to wealth creation.

As I said, we have done millennials a disservice. Perhaps a booming economy eventually roaring along at 4 percent growth and churning out jobs by the hundreds of thousands will change the minds of America’s youth when it comes to capitalistic free enterprise. Perhaps not. But socialism is certainly not the answer to America’s woes.

Millennials Hate Capitalism Almost as Much as They Hate Socialism

Seize the means of production? Meh. Millennials love private enterprise-as long as you don’t call it “capitalism.”

Large image on homepages

(Mr Munnings on Tour/Flickr )

Mr Munnings on Tour/Flickr

It was all over my Facebook news feed yesterday: “A majority of millennials now reject capitalism, poll shows.” Libertarian friends shook their heads in scorn or lament while the socialists gloated or posed some variation on, “well can you blame them?” But just like the last half-dozen surveys on millennial economic philosophy, this new poll finds young people torn between “capitalism” and “socialism,” with perhaps little—or, to be more charitable, an ahistorical—understanding of what either means. 

The Washington Post piece people were sharing starts off with a dramatic statement: millennials are rejecting “the basic principles of the U.S. economy.” The base for that claim? A new poll of 18- to 29-year-olds, conducted by Harvard University. Researchers found just 42 percent say they support capitalism, while 51 percent do not. 

But twenty-somethings aren’t exactly clamoring for the government to seize the means of production, either. Just 33 percent said they support socialism, while 59 percent said they do not. 

“The results of the survey are difficult to interpret,” writes the Post’s Max Ehrenfreund. Not really. In a recent survey question about feminism, 53 percent of young women said they would not label themselves a feminist, but only a third of this group said it was because they’re at odds with feminist goals; nearly half just took issue with the term feminism. A 2014 poll from the Public Religion Research Institute found 65 percent of millennials say the term pro-life describes them “at least somewhat well,” while 74 percent say the same for “pro-choice.” These seeming contradictions lie in the fact that words—especially big, emotionally-laden words describing controversial or complicated concepts—connote different things to different people. 

When pollsters probe young people further about socialism and capitalism, they tend to find that respondents don’t have clear concepts of these economic philosophies. To many millennials, “socialism” doesn’t mean a government-managed economy but something like what we have now, only with more subsidized health care, student-loan forgiveness, and mandatory paid parental leave. Millennials were small children, if they were even born yet, when the Soviet Union dissolved. “Socialism” isn’t Romania and Yugoslavia but Scandinavia, not Karl Marx and union halls but Bernie Sanders and Twitter. 

“Capitalism,” meanwhile, doesn’t simply mean private, for-profit enterprise. It isn’t a category that has anything to do with the family-owned bodega on their corner or their friend’s new artisanal cupcake business or the proliferation of legal weed shops, with Tom’s shoes or their local grocery or that Uber they took last night. Capitalism is Big Banks, Wall Street, “income inequality,” greed. It’s wealthy sociopaths screwing over the little guy, Bernie Madoff, and horrifying sweatshops in China. It’s Walmart putting mom-and-pop stores out of business, McDonald’s making people fat, BP oil spills, banks pushing sub-prime mortgages, and Pfizer driving up drug prices while cancer patients die. However incomplete or caricatured, these are the narratives of capitalism that millennials have grown up with. 

Takeaways for fans for free enterprise?

Reason-Rupe poll

We need to do a better job marketing capitalism, probably. We certainly need to consider whether and how the word can be reclaimed, or if we’re better served talking about the “market economy,” “private enterprise,” “free trade,” or “entrepreneurship.” Millennials love the word entrepreneur, with some surveys finding that more than half of young folks aspire toward entrepreneurship.

Millennials also love the idea of “social entrepreneurship”—doing well in business while doing good for others. Unlike anti-capitalists of yore, young people today don’t seem to see a tension between turning a profit and living righteously. It’s just a matter of making that money in an ethical manner, and “giving back” in some way, be it by donating a portion of proceeds or creating a product or service that provides a social good. (For more on all this, see my 2014 Reason feature, “Rise of the Hipster Capitalist.”)

As John Della Volpe, polling director at Harvard, puts it, millennials aren’t “rejecting the concept” of capitalism. “The way in which capitalism is practiced, in the minds of young people—that’s what they’re rejecting.”

The Reason-Rupe Millennial Poll, a national survey of 18- to 29-year-olds undertaken in 2014, found 56 percent of respondents had a favorable view of capitalism, making it slightly less popular than socialism, which was viewed favorably by 58 percent. Asked about “free markets” and a “government managed economy,” however, markets won big time. Only 28 percent of those surveyed saw socialized business positively, compared to 74 percent who view free markets positively. What’s more, 64 percent said they prefer free markets to a gov-managed economy, while only 32 percent said the opposite.

“Young people like free markets and the technology, products, and wealth [capitalism] creates,” wrote pollster Emily Ekins, “but they also want to feel confident the poor have access to what they need. In their minds socialism might simply connote a social safety net rather than government ownership.” 

In the new Harvard poll, economic-policy preferences were pretty evenly split between those who want more government intervention and those who want less, with large numbers of respondents unsure what course of action they preferred. Nearly half had no opinion on whether “our country’s goal in trade policy should be to eliminate all barriers to trade and employment so that we have a truly global economy.” Some 27 percent said it should, while 24 percent said it should not.

More respondents agreed that “cutting taxes is an effective way to increase economic growth” (35 percent) than disagreed with this statement (22 percent). Thirty-eight percent neither agreed nor disagreed. 

Ultimately, only 27 percent of millennials in the Harvard poll said they think the federal government should play a “large” role in regulating the economy, while 42 percent prefer it play a “moderate” role, 18 percent a “minimal” role, and 9 percent “no role” at all. The breakdown was similar for regulating Wall Street, with 30 percent wanting Uncle Sam to play a large role, 37 percent a moderate role, and 28 percent a minimal or no role. 

How Capitalism Broke Young Adulthood

Boomers have socialism. Why not Millennials?

With Senator Bernie Sanders rising in the Democratic-primary polls, it is becoming not just thinkable but even plausible that the United States could, for the first time, elect a self-described socialist to the White House.

Instead of relying on the party’s graying voters, Sanders has galvanized a younger coalition by promising a profound expansion of the welfare state, which would include free health care, free college, and the elimination of outstanding student debt.

Skeptical older voters might see little here but a list of fantastical promises that are utterly out of step with American traditional and modern capitalism. Socialism remains deeply unpopular among Americans born before 1975. Even in the Democratic Party, Sanders polls 30 points better among Americans under 45 than among those over 65.

But the irony is that these old anti-socialists already live in a wonderland of government generosity that bears a passing resemblance to the socialism they so dread.

The federal government already guarantees single-payer health care to Americans over 65 through Medicare. Senior citizens already receive a certain kind of universal basic income; it’s called Social Security. While elderly Americans might balk at the idea of the government paying back hundreds of billions of dollars in student debt, they are already the grand beneficiaries of a government debt subsidy: The mortgage-interest deduction, a longtime staple of the federal tax code, effectively compensates the American homeowner (whose average age is 54) for their mortgage debt, thus saving this disproportionately old group approximately $800 billion in taxes owed to the federal government each decade. The economist Ed Glaeser has likened these policies to “Boomer socialism.”

In this framing, Sanders is not offering his more youthful constituency a radically new contract. Instead, he is extending the terms of an existing social contract to cover more—and, necessarily, younger—Americans.


Social Security and Medicare were the product of a consensus that the economy had broken the process of growing old. Today’s progressives argue, in part, that the economy has broken the process of growing up.

In the early 1900s, half of America’s senior citizens lived in poverty and more than half were uninsured. Over the next few decades, the federal government passed several laws—most importantly Social Security, Medicare, and Medicaid—that had the effect of making old age more comfortable and equitable. The senior poverty rate fell from about 50 percent in the 1930s to less than 10 percent today. The expected life span for elderly Americans increased by several years.

It would be hyperbolic to suggest that young Americans face the similarly dire circumstances of an impoverished 70-year-old in 1931. Quite the opposite: Some will claim that, with the unemployment rate under 4 percent and a record-low share of Americans saying the economy is the country’s most important problem, the 2020 environment is just dandy.

But this general optimism conceals an important divide. In November, the Conference Board, a nongovernmental research organization, reported that the economic-confidence gap between consumers under 35 and those over 55 was the largest on record. For the past 40 years, younger Americans have historically been the most optimistic, but that relationship has dramatically inverted over the past five years. Some of that inversion surely reflects partisan differences, since young Americans are more liberal than the rest of the country. But political polarization doesn’t explain it all.

The simple fact is that young people live and work in a very different economy from their parents. And one good way to see this is to walk, beat by beat, down the road to adulthood.

Start with college. Millennials are the most educated generation in U.S. history to date. They “did what they were told,” as Sanders once said. “They got an education and worked hard. But instead of being rewarded, Millennials are now being punished with crushing student debt.” According to a study commissioned by Sanders and written by the Government Accountability Office, 45 percent of Americans ages 25 to 34 have student loans, compared with just 16 percent of Baby Boomers at the same age. Millennials’ loan-to-income ratio is more than double that of previous generations.

Next, there’s the labor force. While the unemployment rate is low, wage growth has fallen behind its historical trend line, putting the American dream at risk. In 1970, a 30-year-old had a 92 percent chance of earning more than her parents did at the same age. But today, she has just a 50 percent chance of outearning her parents. In these 40 years, this version of the American dream has gone from a near-certainty to a coin flip. Meanwhile, the cost of many necessities has gone up. Medical coverage is expensive, even for the full-time employed, and child care is often unaffordable, even when both parents are working.

Finally, and perhaps most important, there’s housing. Even dutiful penny-pinchers who make their own morning coffee and avoid avocado toast may still find homeownership out of reach. Young people in their late 20s and early 30s today are about one-third less likely to own a house than their parents were at the same age, according to the Federal Reserve. The homeownership rate among young black Americans has fallen below 30 percent, its lowest rate in 60 years.

This gap is crucial, because houses account for almost all wealth for the bottom 50 percent of Americans. Without a home, Millennials are cut off from their most important source of wealth building. The Federal Reserve summed up their plight in seven words: “lower earnings, fewer assets, and less wealth.”


One question that remains is whether the Sanders agenda addresses the crisis of adulthood as directly as Social Security and Medicare addressed the crisis of old age. In other words, is Bernie socialism as directly effective as Boomer socialism?

Some, but not all, of the problems facing young adults would be well addressed with an expansion of government. Universal health care—either through a single-payer system or a federally managed network of private and public insurance—could reduce needless suffering and financial ruin for millions of uninsured and underinsured Americans.

For young Americans, there is a mounting sense that whatever the ladder to adulthood is—or whatever traditional or normative markers of financial independence have been historically associated with adulthood—it’s been shattered by modern American capitalism. This is why Sanders appeals to young voters when he says, “If we don’t fundamentally transform our economy, we are facing—for the first time in the history of this country—the possibility that our young people will suffer a worse future than their parents had.” Whatever you make of their argument, it’s rich hypocrisy for beneficiaries of Social Security, Medicare, and housing subsidies to argue that a little socialism cannot help the U.S., when it has so obviously helped Boomers become the most financially secure generation in history.

Conclusion

Well I did not intend this article to become so large, when I started writing it. As I stated from the beginning I will let the facts guide me in the writing of each article. I have included several inserts in the addendum section, that did not quite fit in the the main portion of this article, but I found them to be interesting and relevant to this discussion. I hope you find them informative. Every since the time of John Dewey and Woodrow Wilson, there has been an attack against our way of life or capitalism. The most insidious attack is by Dewey. He fosters the attack to be made at the most basic part of our culture, education of our children. Every generation becomes less capitalistic and more socialistic. I may be a bit of a conspiracy theorist about this subject, but I believe this to be the case. Back in the 50’s most families were one income families. The wife/mother staid home and discussed with her children what they learned at school and helped them with their homework. They also sat down for dinner and discussed current events. This is very important, because I think the family should be where children learn their morals, not the school system. Unfortunately our country became a country of toys. It became as time progressed too costly for a family to be raised with just one income. So now both parents work, so who is raising our children? The schools and day care have taken over. Families have no more time for that wonderful grounding process at the dinner table. Besides children were just too busy with video games and eventually the internet.

The internet has become the de facto parents in today’s society. With Woke culture and cancel culture and fake news, children and even adults are no longer getting truthful information on our country’s history and our economic system. There is also so much alarmist information about the environment being publicized as well. Unfortunately nothing in this world is what it seems. By that I mean, everybody has an agenda. Very few people are altruistic. Take me for instance, you may ask why I do these blog articles? They are very time consuming, so what is my reason for doing it< I must have a reason? First I love learning, these articles force me to increase the reading and research that I would normally do. Every article I write, I learn more. I also want to find out what is real and what is fake. So I do a lot of research so that I can get my facts straight. Also, I love this country. While we have a lot of faults, WE ARE STILL THE GREATEST COUNTRY IN THE WORLD. I cap locked that sentence on purpose. So by writing these articles for this blog, I am being truly selfish, because I want to save our country. I happen to like my life, and I have worked very hard to get where I am today.

There is a war being waged against our capitalistic country today. Part of it is our fault, we are making it too easy for our detractors. There is simply too much greed and avarice today. This is nothing knew, but the internet n, social media and 24 hour news shows make it very visible. We have mega billionaires flying into space and basically rubbing in our noses activities that over 99.95% of the population will never be able to do. Movie stars and professional athletes are making millions of dollars and are now speaking out against our country and way of life, now that their fortunes are secure. There is just too much incorrect and divisive information out there for our consumption, it is no wonder that people hate our country and our way of life. Our system is not broken, it just needs a little tweaking. Unfortunately greed and envy are very strong traits in a lot of people. Too many “true believers” feel that the only way to live or believe is their way. The more entrenched you become in your beliefs the more inflexible you become. Unfortunately, people also have short memories. I see it at work all the time. I see people getting promoted and just a few months later they have already forgotten what it was like to be the worker bee. This is also true in millionaires and the elite. Now that they are rich, popular and powerful, they have forgotten what allowed them to become so. They fail to realize that the riches that they have amassed would never have been possible in a socialistic and communistic society.

Our country is one of the cleanest countries in the world. We have some of the lowest emissions anywhere. This has all been made possible due to our capitalistic society. But our children are not being told this. I have written two articles on Russia and China and the environment. These two countries produce more pollution and fewer environmentally safe practices and safeguards in place.

Remember every one has a hidden agenda. Nothing is what it seems. Don’t take anything for granted. Remember people in power, want to stay in power. It has been shown that lying, stealing and cheating are effective tools in maintaining power. Just look at our third world country neighbors. Everything you need to know about what is happening here is quite obvious, all you need to do is look.

Resources

counterpunch.org, “Top 10 Reasons to Hate Capitalism,” BY GARY ENGLER; dangerousminds.net, “10 REASONS TO HATE CAPITALISM” By Gary Engler; wealthdaily.com, “The Real Reason Millennials Hate Capitalism,” By Jason Stutman; raymmar.com, “Why People Who Think Capitalism Sucks Are Just Plain Stupid;” reason.com, “People Love To Criticize Capitalism. Here’s Why They’re Wrong: In capitalist societies, the poor get richer,” By JOHN STOSSEL; political-economy.com, “Is capitalism bad?” By Mark Biernat; 19fortyfive.com, “Why Do U.S. Colleges Hate America And Love Socialism?” By Daniel Samet; ammo.com, “Woke Capitalism: How Huge Corporations Demonstrate Status by Endorsing Political Radicalism,” By Sam Jacobs; en.wikipedia.org, “Criticism of capitalism,” By Wikipedia editors; vox.com, “Why are millennials burned out? Capitalism: Author Malcolm Harris on why millennials need a revolution,” By Sean Illing; pewresearch.org, “In Their Own Words: Behind Americans’ Views of ‘Socialism’ and ‘Capitalism’: Socialism’s critics say it weakens work ethic; those with positive views say it fosters equality”; thestate.com, “Why don’t millennials like capitalism? Blame parents. Blame schools. Blame Obama,” By Frank Dowd IV;

city-journal.org, “How to Talk to Millennials About Capitalism: Polls show that young people embrace socialism—but they also distrust government regulation and admire entrepreneurialism and small business,” By Edward L. Glaeser; npri.org, “Middle-class Americans are thriving, thanks to capitalism!,” By Robert Fellner; newideal.aynrand.org, “The Dishonesty of ‘Real Socialism Has Never Been Tried’,” By Ben Bayer; reason.com, “Millennials Hate Capitalism Almost as Much as They Hate Socialism: Seize the means of production? Meh. Millennials love private enterprise-as long as you don’t call it “capitalism.” By ELIZABETH NOLAN BROWN; theatlantic.com, “How Capitalism Broke Young Adulthood: Boomers have socialism. Why not Millennials?” By Derek Thompson; news.uchicago.edu, “How Google and Facebook Are Ruining Capitalism, with Luigi Zingales,” By Luigi Zingales; sahistory.org.za, “Differences between Capitalism & Communism and why did it start in Russia?”;

Addendum

In Their Own Words: Behind Americans’ Views of ‘Socialism’ and ‘Capitalism’

Socialism’s critics say it weakens work ethic; those with positive views say it fosters equality

Some with negative views of ‘socialism’ say it undermines work ethic and has failed elsewhere; many with positive views say it will make society more equitable
Those who are positive about ‘capitalism’ say it fuels prosperity and is linked to the nation’s success; many with negative opinions link it with inequality and corruption

For many Americans, “socialism” is a word that evokes a weakened work ethic, stifled innovation and excessive reliance on the government. For others, it represents a fairer, more generous society.

Critics of socialism point to Venezuela as an example of a country where it has failed. People with positive views of socialism cite different countries, such as Finland and Denmark, as places where it has succeeded.

Earlier this year, Pew Research Center found that 55% of Americans had a negative impression of “socialism,” while 42% expressed a positive view. About two-thirds (65%) said they had a positive view of “capitalism,” and a third viewed it negatively.

But what’s behind these opinions? To find out, we asked people to describe – in their own words – why they had positive or negative impressions of socialism and capitalism.

Some who view socialism negatively portray it as a serious threat to capitalism in the U.S., while others who view it positively say the opposite – that it builds upon and improves capitalism. And some who have a positive view of socialism express an explicit preference for a system that blends socialism and capitalism.

The survey found that Republicans, in particular, viewed socialism and capitalism in zero-sum terms. A large majority of Republicans and Republican-leaning independents (68%) had both a positive impression of capitalism and a negative view of socialism. However, Democrats and Democratic leaners were more likely to view both terms positively; a plurality (38%) had a positive impression of both socialism and capitalism.

While many of the open-ended impressions are revealing, a sizable share of people either did not share their views or articulated their reasons in simple terms, stating that socialism or capitalism is “good” or “bad,” or that one is better than the other. A quarter of those with a negative opinion of socialism – and 31% with a positive view – declined to offer a reason for their opinion.

But others mentioned history, the experiences of other nations, personal experiences or their own understandings of the terms in explaining the reasons behind their opinions of socialism and capitalism.

Socialism’s critics say it weakens work ethic; some point to Venezuela

Why do you have a negative view of socialism?

Among the majority of Americans who have a negative impression of socialism, no single reason stands out. About one-in-five (19%) say that socialism undercuts people’s initiative and work ethic, making people too reliant on the government for support. As a 53-year-old man put it: “I believe in individual freedoms and choice. Socialism kills incentives for people to innovate and climb the ladder of success.”

About as many critics of socialism (18%) refer to how socialism has failed historically or in other countries, such as Venezuela or Russia. A comparable share of those with negative impressions of socialism (17%) say it is not consistent with democracy in the United States or is simply not right for the U.S.

Many with positive views of socialism say it fosters equality

Why do you have a positive view of socialism?

About four-in-ten Americans (42%) have positive views of socialism. Among this group, the most frequently cited reason is that it will result in fairer, more generous society (31% say this). This includes 10% who specifically express a belief that it is important for the government to take care of its citizens or for fellow citizens to care for each other.

A smaller share of Americans who have a positive view of socialism say it would build upon and improve capitalism (20%). Some in this group say the U.S. already has socialism, in the form of government programs. Others specifically say they prefer a blend of socialism and capitalism. “A blend can ensure a thriving productive society for all,” said a 42-year-old woman.

Just 2% of those who have a positive view of socialism explicitly mention the phrase “democratic socialism” as the reason.

While some who express a negative view of socialism link it with countries like Venezuela, some of those with a positive view point to different countries – such as Denmark or Finland – as models. Among those with a positive impression, 6% say it has been a historical or comparative success, with most of these people citing how it has worked in European countries.

‘Capitalism’ viewed positively by about two-thirds of Americans

Among the 65% with a positive view of capitalism, many give reasons that contrast with criticisms of socialism. For example, while many who hold a negative view of socialism say it undermines initiative and makes people too dependent on government, nearly a quarter of those with a positive view of capitalism say it promotes individual opportunity (24% say this).

And while those with a positive view of socialism say it could bring increased equality, a common theme among critics of capitalism is that it has led to unequal distribution of wealth in this country.

Why do you have a positive view of capitalism?

Nearly a quarter of Americans who have a positive view of capitalism (24%) say they hold their views because the system provides opportunity for individual financial growth. A similar share (22%) expresses general positivity towards capitalism, saying that the system works.

One-in-five adults with positive views of capitalism associate the system with the foundation of America: They mention that capitalism has advanced America’s economic strength, that America was established under the idea of capitalism, or that capitalism is essential to maintaining freedom in the country.

Another 14% say that although they view capitalism positively overall, the system is not perfect. This includes 5% who say capitalism has caused economic inequality and corruption and 4% who express a desire to see more regulation or a mixed system with socialism.

“Capitalism is the worst way to set up a society, except for all the other ways,” said a 44-year-old man. “Free markets allow for more innovative solutions and for more people to succeed.”

Why do you have a negative view of capitalism?

When those who hold negative views of capitalism are asked why they hold this view, about a quarter (23%) say that capitalism creates an unfair economic structure, mentioning that the system only benefits a small number of people or that wealth in this country is distributed poorly.

A similar share (20%) says that capitalism has an exploitative and corrupt nature, often hurting either people or the environment.

A smaller share of Americans who have negative views of capitalism (8%) mention that corporations and wealthy people undermine the democratic process by having too much power in political matters. And 4% of those with a negative view say that capitalism can work, but to do so it needs better oversight and regulation.

How to Talk to Millennials About Capitalism

Polls show that young people embrace socialism—but they also distrust government regulation and admire entrepreneurialism and small business.

For generations, younger Americans found Communists just as scary as Count Dracula, the Wicked Witch of the West, and Darth Vader. Socialism, so strongly associated with Marx and Lenin, never caught on in the United States. To modern millennials, however, fear of socialism seems as ancient as a rotary phone. In March 2019, Axios released results from a Harris poll showing that about half of millennial and Generation Z respondents believed that “our economy should be mostly socialist.” That result is no outlier, but rather a consistent finding over recent years. In 2018, Gallup found that 51 percent of 18- to 29-year-old Americans view socialism favorably; only 45 percent look at capitalism positively. An August 2018 YouGov poll revealed that only 30 percent of 18- to 29-year-olds had good feelings toward capitalism, while 35 percent regarded socialism positively. Bernie Sanders, an avowed Democratic Socialist, nearly captured the Democratic presidential nomination in 2016, thanks in part to youth support. Another Democratic Socialist, newly elected House member Alexandria Ocasio-Cortez from New York, herself a millennial, has achieved overnight celebrity, accumulating more than 3 million Twitter followers while trumpeting a 70 percent marginal tax rate.

Just 25 years after the collapse of the Soviet Union, how can socialism have made such a comeback? The likeliest answer: the Great Recession left millennials looking for alternatives to capitalism, without the Cold War ideological guideposts that positioned older generations. Both the Right and the Left have redefined socialism, moreover, so that many young supporters now think that it just means a cuddlier, more equitable government.

Yet even if socialism has been redefined, its rising approval among the young is still a problem for proponents of economic liberty. For decades, apostles of free markets could condemn bad economic ideas merely by branding them “socialist,” because real-world Marxists did such a good job of showing how much evil could radiate from a state-controlled economy. But those negative examples are mostly vanquished now. The task ahead is to convince today’s young people that society requires liberty as well as compassion. The private ingenuity that generates new products and new jobs needs both incentives and reasonable regulation. If our current politics tell us anything, it is that this case must be made again, with arguments that resonate among Americans who’ve probably never heard of Lavrentiy Beria.

In 2009, Fox News host Sean Hannity mocked the Obama administration’s vast stimulus bill as “the European Socialist Act of 2009.” Hannity joined a long line of conservative critics who’ve hurled the term “socialism” at liberal opponents, seeking to discredit their plans to expand government. Hannity’s tag didn’t derail the stimulus, of course, and a week later, a Newsweek cover story blared: “We are all socialists now,” heralding a new era of government intervention in the economy. That headline to Jon Meacham’s nearly decade-old story is even truer today, as those recent poll numbers of younger Americans suggest.

The trend line is striking. Gallup polling data show that the share of Democrats holding a positive view of socialism increased from 53 percent in 2010 to 57 percent in 2018, while the share who held a positive view of capitalism fell from 53 percent to 47 percent. The shift is particularly dramatic among the young. In 2010, according to Gallup, 68 percent of 18- to 29-year-old Americans felt favorably toward capitalism; 51 percent felt favorably toward socialism. Eight years later, only 45 percent of that age group view capitalism positively, while 51 percent still liked socialism. YouGov polling found even starker figures, with just 39 percent of 18- to 29-year-olds viewing capitalism favorably in 2015; by 2018, that figure had fallen to 30 percent. The comparable numbers for those over 65: 59 percent and 56 percent. The figures differ from poll to poll, but the direction is clear: for millennials, “socialism” is a viable option.

Socialism’s comeback has been helped along by a change in meaning. Merriam-Webster defines socialism as “any of various economic and political theories advocating collective or governmental ownership and administration of the means of production and distribution of goods”—pretty much the traditional meaning of the term. The 1912 election was the high-water mark for American socialism in this sense, with Socialist Party presidential candidate Eugene Debs winning 6 percent of the popular vote. That year, the party’s platform called for “collective ownership and democratic management of railroads, wire and wireless telegraphs, express service, steamboat lines, and all other social means of transportation and communication and of all large scale industries”—as well as the banking and currency system and land, too, “wherever practicable.” In a 1949 Gallup poll, 46 percent of Americans with an opinion on socialism thought that it meant government ownership or control of business.

In 2018, by contrast, Gallup found that only 22 percent of respondents understood socialism to mean government control. Thirty percent thought socialism meant equality, and another 13 percent equated it with benefits and services, like free medicine. Three times as many Democratic and Democratic-leaning respondents thought socialism meant either equality or free benefits and services than thought it meant government control.

If socialism is just about higher tax rates and more generous health care, then perhaps the cause of freedom doesn’t have much to fear. Few of the new socialists seem to want industries nationalized outright. Ocasio-Cortez’s preferred marginal tax rates are lower than those that President Dwight Eisenhower—a Republican—found acceptable.

Yet I’m not so sanguine about the popularity of “socialism,” even if the word has lost its harder edge. If today’s self-proclaimed socialists merely want to champion postwar Democratic ideals, why adopt an “ism” that many older Americans still regard with alarm? And while total nationalization of industries is hard to imagine, many ideas gaining currency with left-of-center politicians would significantly extend state control over private companies. Elizabeth Warren doesn’t call herself a socialist, but her Accountable Capitalism Act expects all large firms to obtain a “new federal charter” obligating them to pay heed to the interests of “corporate stakeholders”—from employees to surrounding communities. Who could know whether a company was adequately considering such dispersed interests? Presumably, a Warren administration would make that determination. This may not be socialism in the strict sense, but it’s heading in that direction.

Writing in the New York Times last August, Corey Robin, a political scientist at Brooklyn College, attempted to sum up the worldview of the “New Socialists”:

The socialist argument against capitalism isn’t that it makes us poor. It’s that it makes us unfree. When my well-being depends upon your whim, when the basic needs of life compel submission to the market and subjugation at work, we live not in freedom but in domination. Socialists want to end that domination: to establish freedom from rule by the boss, from the need to smile for the sake of a sale, from the obligation to sell for the sake of survival.

This characterization does not suggest a slightly more generous Medicaid program or higher capital-gains taxes. It represents a wholesale rejection of the market and its purported cruelties.

The increasing popularity of socialism—however defined—among the young has many plausible causes. The trend might just be the latest example of the old line, often mistakenly attributed to Winston Churchill: “If you’re not a liberal when you’re 25, you have no heart. If you’re not a conservative by the time you’re 35, you have no brain.” The idealism of the young is timeless, even a bit charming—at least when it doesn’t lead to the guillotine or the gulag—but opinion polling from the 1960s and 1970s shows no equivalent fondness for socialism among twentysomethings.

Perhaps it’s all about the indoctrination of the young by left-wing professors. A 2007 study found that more than 60 percent of college teachers identified themselves as being somewhat liberal and under 20 percent as somewhat conservative. A more recent study suggests an even greater leftward skew in certain disciplines. Among historians, there were 33.5 registered Democrats to every registered Republican. The ratio was 20 to one among journalism professors and 17.4 to one among psychology professors. But left-leaning views have long been prevalent on college campuses, so it’s unclear why indoctrination would suddenly generate a far more socialist generation.

Even if the leftward tilt is undeniable, moreover, it doesn’t prove that professors have been trying to convert students. I tend to believe that most teachers, like myself, try to keep their politics out of the classroom. Moreover, most teachers—again, like me—lack any skill in the black arts of political propaganda. And while I share the concern that America’s campuses might be too ideologically monolithic, I’m skeptical that professors have much power to shape opinion. Many Americans don’t even go to college, and many who do go aren’t paying much attention to their teachers; those paying attention are the least likely to be ideologically indoctrinated.

“In 2018, Gallup found that only 22 percent of respondents understood socialism to mean government control.”

A strong left-wing bias among high school teachers might be a more credible explanation, since their influence comes earlier and is more widespread. But high school teachers are far more balanced politically than college professors. One recent Education Week survey of K–12 educators found 23 percent identifying as conservatives, 24 percent as liberals, and 43 percent as moderates. Fifty percent of the responding teachers voted for Hillary Clinton in the 2016 presidential election, and only 29 percent pulled the lever for Donald Trump. Still, could what seems a moderate liberal skew in high school classes really produce a generation that likes socialism more than capitalism?

A simple test of the influence of high school teachers is to look at views of the Vietnam War, which would surely be presented extremely negatively by left-wing instructors. Somewhat surprisingly, a 2013 poll of 19- to 29-year-olds discovered that only 43 percent thought the Vietnam War was a mistake—compared with 69 percent of respondents over 50. If left-wing high school teachers managed to produce a generation broadly sympathetic with American military action in Southeast Asia, it’s hard to see how those teachers could also be responsible for turning out young socialists.

No, the socialist surge is new, and it marks a shift in American politics away from the Cold War norm. It is rooted, I believe, more in the events of the past 15 years than in the biases of educators. I’ve taught at Harvard since 1992, and the changes in the students as they arrive seem far more profound than any changes in the classroom. Incoming students have reacted to events by rejecting the political status quo.

A wave of campus activism began with the post-9/11 wars of the George W. Bush years. Unlike the Vietnam War, the conflicts in Afghanistan and Iraq empaneled no draft boards. For most college kids, the wars remained far away. In 2005 and 2006, young Americans were more likely to support the Iraq War than were older Americans; as late as 2013, 19- to 29-year-old Gallup respondents split almost evenly on the war’s merits. The Iraq War nevertheless mobilized a hard core of campus protesters, who gathered—in one case, within earshot of my office—to relive the glories of their parents’ (or grandparents’) fight against the Vietnam War. Thousands marched in Washington to protest the Iraq conflict on the day of President Bush’s second inauguration.

Further, the muddled outcomes of the post-9/11 American military interventions, together with the end of the Cold War, weakened the national-security case for being on the right. In 2002, according to Gallup, 50 percent of Americans thought the GOP was better at protecting Americans from military and terrorist threats, with only 31 percent giving the edge to Democrats. By 2007, the Republican advantage was gone.

Then the Great Recession struck. Over the past 12 years, America’s economic travails have had a far greater impact on the young than has any national-security concern. The Republican Party, which embraced capitalism, was in the driver’s seat when the financial meltdown and subsequent recession began, but that would change. Financiers, some drawing large paychecks amid a collapse that they helped trigger, proved easy to vilify. The crisis thankfully didn’t spiral into a second Great Depression, but it didn’t end quickly, either. The generation that turned 21 in 2006 had a rough decade. In 2010, the jobless rate for 25- to 34-year-old men stood at 21.8 percent. Two years later, the rate had fallen only to 19.8 percent. Even by 2018, after almost a decade of recovery, joblessness among young men remained alarmingly high: 13.9 percent. This long period of high joblessness coincided with wage stagnation. Real median wages for men over age 16 were lower from 2010 to 2016 than they had been in 2009 or 2001—or 1982. At the same time, younger Americans could see wealthier, older people getting richer. The stock market enjoyed an almost unremitting rise from 2009 to 2018. Housing markets recovered nicely from the financial crisis, especially in coastal America.

Faced with this reality, many younger Americans began to listen to left-wing critics of President Obama, who argued that the crisis lingered because the administration was too timid in its reforms, in part because it was too friendly with Wall Street. In 2011, the Occupy Movement came to Wall Street and to colleges. Though movement speakers were often incoherent, they made clear their dislike for capitalism and their dislike for the need for compromise that the Founders had built in to America’s political system.

Regnant orthodoxies often come under fire during moments of economic and political crisis. If President Obama had possessed the political skills of Franklin Roosevelt, he might have articulated a worldview that captured the imagination of the young. But while his personal approval remains high among Democratic voters, Obama never championed a clear philosophy of government.

In the absence of ideological leadership, new voices found listeners among economically struggling millennials. Some rejected globalization, embracing a populist economic nationalism. Others voiced the radical view that markets themselves were to blame for economic stagnation and that capitalism needed replacing. Since the status quo seemed to be performing poorly, especially for the young, why not try socialism?

Nevertheless, many younger Americans remain fundamentally uncommitted—they’re not die-hard socialists. If the friends of freedom want a way into their hearts and minds, however, they’ll need an updated message that speaks to millennials’ hopes and fears. With the caveat that I’m no political strategist, here are my suggestions on what might work.

We should recognize that millennials like entrepreneurship. A 2016 Gallup survey found that 90 percent of 18- to 29-year-olds viewed entrepreneurs positively. Ninety-eight percent looked favorably on small businesses. In fact, the youngest respondents had the most enthusiasm both for socialism and for small businesses and entrepreneurship. Even with their socialist sympathies, millennials have not lost sight of the dynamism that comes from private enterprise.

This makes sense. After all, children born in 1992 have lived through a series of public-sector failures—and private-sector successes. Apple’s iPod arrived when they were nine, enabling them to listen to a library of music that they could carry in their pocket. The iPhone appeared in 2007, just in time to turbocharge their teenage social life. Facebook, Twitter, Instagram, Amazon—all became mass phenomena during their lifetime.

A group with so much exposure to the power of entrepreneurship should be open to the notion that private-sector energy, not government control, opens a better path to widespread employment, less expensive housing, and superior medical care. But millennials won’t fall for a pure laissez-faire pitch. The teens of the Reagan era, like myself, may have believed that the Republican program of shrinking bureaucracy was exactly what was needed to liberate the economy. For millennials, Republican stewardship brought financial chaos and economic underperformance.

My more libertarian friends point out that the GOP’s passion for economic liberty rarely translated into action. They argue, too, that the 2007 housing crash would’ve been far less devastating if the government hadn’t been subsidizing gambling on the housing market with the home-mortgage interest deduction and the loose mortgage underwriting of quasi-governmental entities Freddie Mac and Fannie Mae. Yet for many millennials, the call to scale back government’s role sounds like an excuse for inaction rather than a real plan to reduce their economic frustrations.

A better approach might be to channel a mixture of Supreme Court Justice Louis Brandeis, free-market icon Milton Friedman, and recent Nobel-prizewinning economist Edward Phelps, and call for a “New Freedom” that would be guided—intelligently—toward solving social problems. When Woodrow Wilson, campaigning for president in 1912, evoked Brandeis by saying that “if America is not to have free enterprise, then she can have freedom of no sort whatever,” his supporters heard a call for muscular reform, not a defense of the status quo. In our day, empowering small businesses could mean slashing onerous regulations that stop small shops from opening in immigrant neighborhoods. A Brandeis-style reform agenda could include rewarding pharmaceutical companies for lifesaving innovations in ways that don’t grant them lengthy monopolies, or discouraging local governments from giving favored treatment to large companies to get them to relocate or stay.

Milton Friedman was a champion of free markets, but one of his most successful ideas—school vouchers—envisioned public incentives that would encourage entrepreneurs to solve social problems. Friedman understood the failure of state-monopoly provision of public schooling; he wanted to empower parents and startups to create better schools. Friedman’s vision could be extended to other pressing social problems—from inner-city undereducation to the reintegration of newly released convicts. In the Friedmanite vision, the public sector establishes the financial incentives, but private entrepreneurs come up with the ingenious solutions.

Silicon Valley moguls seem to think that they can solve any puzzle—except, perhaps, the chronic underemployment of less skilled Americans, including millennials. That’s where Phelps comes in: he proposes using the tax code to subsidize job creation. A policy that encourages entrepreneurs to employ more workers could include tax subsidies to firms and workers (like the Earned Income Tax Credit) and reforming public policies, like disability insurance and food stamps, so that they did less to discourage work.

Millennials came of age during the Great Recession, which left many of them struggling to find work. (ASHLEY GILBERTSON/VII/REDUX)
Millennials came of age during the Great Recession, which left many of them struggling to find work. (ASHLEY GILBERTSON/VII/REDUX)

The case for liberty is about more than material gains, which the defenders of markets must remember more often. For most of the past quarter-century, the advocates of economic freedom have made their case primarily by arguing that low taxes lead to economic prosperity, both in the immediate sense that families get to keep more of their earnings and in the systemic sense that strong economic incentives generate higher levels of output. The moral argument has been less prevalent. By contrast, the left-wing case, at least at times, has combined castigation of apparent economic injustices with a call for empathy and compassion. Bernie Sanders declares that his “very strong spiritual feeling” is that “when children go hungry, when veterans sleep out on the street, that impacts me.” This cri de coeur resonated with younger Americans.

In the past, effective promoters of liberty, like Ronald Reagan, have emphasized that the case for economic freedom is more spiritual than material: “Socialists ignore the side of man that is the spirit. They can provide you shelter, fill your belly with bacon and beans, treat you when you’re ill, all the things guaranteed to a prisoner or a slave. They don’t understand that we also dream.” Reagan’s argument remains a potent condemnation of leftist chimeras, including growing enthusiasm for the Universal Basic Income—particularly among Silicon Valley elites, who see artificial intelligence and robotics as potentially obliterating millions of jobs. What kind of nation would America be if, say, 40 percent of adults subsisted entirely on government handouts? The data on joblessness show the broken spirits of those lacking the sense of purpose and social connections that come with work. The make-work public-employment guarantees advanced by Democratic senator Kirsten Gillibrand and other politicians seem almost as soul-killing.

The fight for economic freedom must instead celebrate the ordinary Americans who bring a smile to their customers’ faces while serving them a coffee, or employers who generate jobs for the less skilled. We are indeed in a race of man against machine, as new technologies threaten to replace many forms of ordinary work. Entrepreneurial imagination is the best way to ensure that workers laid off today will be able to find new, productive jobs tomorrow. Satisfaction comes from doing, not from having; and freedom—not socialism—empowers doing.

Any New Freedom narrative should also point out that many nonprofit leaders, like Geoffrey Canada of the Harlem’s Children Zone educational organization, are also entrepreneurs. Habitat for Humanity and Teach for America are just two entrepreneurial nonprofits that struggle with excessive government regulation.

Socialism’s current appeal rests partly on the fact, as we’ve seen, that for many, it stands for caring for the poor. It needs to be defined again as what it truly is. My former student Laura Nicolae, of Romanian descent, offered a powerful counterargument to our intellectual carelessness about socialism in a recent Harvard Crimson op-ed. She writes: “After spending four years on a campus saturated with Marxist memes and jokes about communist revolutions, my classmates will graduate with the impression that communism represents a light-hearted critique of the status quo, rather than an empirically violent philosophy that destroyed millions of lives.” Nicolae chose to combat this ignorance by telling how her “father ran from a government that beat, tortured and brainwashed its citizens” and how “his childhood friend disappeared after scrawling an insult about the dictator on the school bathroom wall” and that “his neighbors starved to death from food rations designed to combat ‘obesity.’ ”

It’s vital to remember that socialism, the ideology of Marx, meant state ownership of the means of production. Such a system creates a government so powerful that abuse of citizens is practically guaranteed. Scandinavian social democracies, like Sweden and Denmark, are not socialist in any meaningful sense; they’re capitalist societies with extensive welfare states. If you think Swedish pensions are too generous, you can argue against them; but don’t argue—as many on the right do—that they are tantamount to socialist control of the economy. Similarly, when Obamacare is demonized as socialism, then millions of young people who want a more inclusive safety net start thinking that they must be socialists, too.

This is no mere misuse of language. Calling themselves socialist, the young open themselves to Orwellian notions like “socialism means freedom”—freedom, say, from “the need to smile for the sake of a sale,” as Corey Robin put it. That markets incentivize kindness is a good thing. One great evil of socialist states is that they eliminated any financial reason to be friendly, yielding generations of dour apparatchiks, whose success came from subservience to their political masters, not pleasing the public.

Another step: let freedom serve the young. The unhappiness that many millennials have with the status quo reflects an economy that has too often protected insiders at outsiders’ expense. In manufacturing firms, older unionized workers earn far more than similarly skilled younger workers. Occupational licensing restricts the competitive chances of new workers. Economic freedom will become much more compelling to 25-year-olds when they see how often public interventions have benefited the entrenched at the expense of the young.

The regulatory bias toward the old is particularly evident in housing policy. Consider California’s Proposition 13. Passed overwhelmingly in 1978, the measure may have struck a blow against rising property taxes, but by ensuring that home-value assessments cannot rise more quickly than the rate of inflation unless the house is sold, it glaringly favors the old over the young. As California’s housing prices have risen steadily since 1976, old homeowners wind up paying a tiny fraction of the taxes paid by younger, more recent buyers. An additional downside of Prop. 13 is that it tends to lock older homeowners in place; if they move, they lose the tax advantage that comes from their ultralow property assessment.

California’s onerous housing regulations add to the dysfunction of the state’s housing market by making it hard to build. Some limits originated with the state courts, in cases like 1972’s Friends of Mammoth, which mandated extensive environmental-impact reviews for all large building projects. In other instances, local regulations have limited new construction, with policies like the 60-acre minimum-lot sizes that exist in parts of Marin County. This creates housing shortages that drive up prices.

Recent research that I’ve conducted with Wharton’s Joseph Gyourko looks at the generational accumulation of housing wealth. In 1983, the 75th percentile 25- to 34-year-old had $45,000 in home value. Thirty years later, that same group had only $21,000 of net housing wealth. Among 65- to 74-year-olds, by contrast, the 75th percentile household’s net housing wealth rose from $150,000 to $225,000 over that period—and the 95th percentile’s climbed from $427,000 to $700,000. Housing is the main store of wealth for most Americans, and regulations have clearly helped redistribute wealth from young home-buyers to old home-sellers.

The tendency of government regulation to entrench incumbents is hardly limited to housing. Elizabeth Warren has proposed that employee representatives make up 40 percent of all corporate boards. Such representatives might look after the interests of incumbent employees, but they would have little incentive to care about new workers. A pervasive feature of labor markets in social democracies is a large gap between insiders and outsiders—and the young inevitably begin as outsiders.

The case for socialism starts with anger against a system that seems to increase inequality and leave the most vulnerable unprotected—but we can enhance upward mobility and create a better safety net by empowering entrepreneurship and redirecting existing funding. The connection between entrepreneurial freedom and mobility is easy to make. Social insurance is harder to fit within the case for a New Freedom, but to succeed today, the case for liberty must also make peace with reasonable protections against economic and physical calamity.

Entrepreneurship can improve social mobility because so many new Americans make their own futures by starting businesses. We could do much more to help them. Appallingly, America regulates the entrepreneurship of the wealthy far less stringently than it regulates the entrepreneurship of the poor. If a Harvard undergraduate wants to launch an Internet firm in his dorm, it might accumulate 1 billion users before regulators start paying attention. If a Haitian immigrant wants to start a grocery in Harvard Square that, say, sells milk, he must cut through a dense thicket of local regulations.

We should apply more rigorous cost-benefit analysis to local regulations and set up one-stop permitting for local entrepreneurs, with permitting offices fluent in several languages. Mentoring programs, with older entrepreneurs providing guidance to young protégés, would also help spark business creation. We should experiment with after-school programs that teach entrepreneurship-relevant skills. Entrepreneurship fires job creation, which we will need more than ever. We must ensure, too, that our tax policies encourage firms to hire new workers—and that our wage and labor regulations don’t discourage firms from hiring them.

“Entrepreneurship can improve social mobility because so many new Americans start businesses.”

Finally, entrepreneurship can also be part of providing better schooling and cheaper health care. Not all charter schools, which operate free from sundry labor restrictions of traditional public schools, are great, but in many communities, they provide a successful alternative to conventional schools. I would also like to see vocational training provided after school, on weekends, and over the summer.

But entrepreneurship isn’t enough. On its own, the most entrepreneurial economy in the world won’t provide insurance against mental illness or ensure that every person gets a steady income. The advocates of liberty have often turned their backs on social insurance, but if they want to be relevant to a new generation, they can’t keep doing that.

Nevertheless, the New Freedom should emphasize that social insurance in the U.S. today represents a massive transfer from young to old. Medicare and Social Security are vast government programs funded by taxes on the young and that benefit people over the age of 65, who are often wealthy. A proposal compatible with the cause of freedom is to make our social-insurance system fairer, even if total spending remains constant. Means-testing benefits would be a great start. Cost-containment for Medicare and Medicaid would provide trillions of extra dollars. We can offer more meaningful social insurance for the poor and young if we stop spending so much on the wealthy and old.

The current vogue for socialism among the young does not mean that most twentysomethings want the government to run pizzerias and gaming platforms, but many do want more government control over sectors of the economy. Old ideological tethers have largely dissolved, and America is at risk of moving in a far more statist direction. In this new, wide-open world, the cause of capitalism has struggled. Republicans won the 2016 elections primarily due to older, whiter voters, many of whom were suspicious of markets. The future could increasingly belong to the radical Left—even socialists, in the true sense of the term.

The global shift to the left after World War I and the Great Depression called forth a generation of legendary scholars—Friedrich Hayek, Karl Popper, and Friedman, among others—who used their voices to advocate for freedom, not only because of its economic benefits but also because all humans deserve a chance to chart their destiny, free from the overweening grip of the state. Today, a new generation must make the case for liberty again. The free market is far from perfect, but the track record of state-dominated economies is far worse.

Middle-class Americans are thriving, thanks to capitalism!

Candidates in the Democrat presidential primary are united around a single message: middle-class Americans are not benefiting from the enormous gains in wealth and prosperity created by capitalism and, as such, government needs to play a much larger role in the economy.

This narrative is objectively false.

The unemployment rate is currently at 3.6% — the lowest level seen in 50 years. The 11.8 percent overall poverty rate is approaching an all-time low, with the rate for both African Americans and Hispanics having already hit that mark.  

At nearly $66,000, the median household income is up 15 percent since 2012, after adjusting for inflation, and is now at an all-time high:

Job creation is likewise producing record numbers, with the number of job openings having now surpassed the number of those seeking employment, another historical first.

This abundance of job opportunities was recently reflected in the January 2020 Consumer Confidence Survey, which reported a more than 4 to 1 difference between those who say jobs are “plentiful” compared to those who say jobs are “hard to get.”

Those arguing for greater government control of the economy respond to such impressive economic numbers by claiming that these macroeconomic indicators fail to fully capture the plight of the working class, who allegedly have been left behind by this economic boom and are unable to keep up with the cost of living.

So, what does federal wage data have to say for those at the middle and lower end of the income distribution?

Median wages for full-time workers in the second quartile, which comprises the bottom 25-50 percent of the distribution, are up more than 30 percent since 1980, after adjusting for inflation, and are now at an all-time high:

Middle Class Wages are up 30 percent, after adjusting for inflation

But if the good news reflected by the unemployment rate, poverty rate, median household income, and median wages for low- and middle-wage workers still isn’t enough to convey how well things are, why not ask the people themselves?

A record-high 59% of Americans are satisfied with their financial situation and 74% expect to be better off financially next year, according to a just-released poll from Gallup.

When asked to consider their personal life as a whole, not merely their financial situation, 90% of Americans said they were satisfied — the highest number ever recorded by Gallup.

Normally, this would be the end of the story. The data convey a clear narrative that aligns with the findings of reputable polling organizations.

Unfortunately, this hasn’t stopped the steady stream of news reports and analyses claiming that the middle class is being crushed by capitalism — a thesis which is then used to justify massive state intervention. Yet, such claims typically fall apart under further scrutiny.

A recent analysis featured in the Washington Post offers a prime example. The report claims to show median male earnings failing to keep up with the rising cost of necessities like health care, housing and transportation. That analysis, however, erroneously treats employer-paid health insurance costs as an expense borne by the employee, while also operating on the assumption that the used car market simply does not exist, among other errors.

As the great economist Andrew Biggs pointed out recently, if lower and middle class workers were really struggling, we would expect to see reduced spending on purely discretionary items, like entertainment and charitable giving.

Once again, the data sharply contradicts the narrative that Americans are doing worse today than they have in the past. From 1984 to 2018, American households in the second quintile, which are those among the bottom 20-40 percent of the distribution, increased their real spending on charitable contributions and entertainment by 40 percent and 98 percent, respectively:

Both the second and middle quintile family spent over $1,000 last year on charitable gifts, which was much higher than I would have guessed, given the modest average incomes of both units. Moreover, it’s a great reminder of just how charitable our fellow Americans are, regardless of their income levels.

Contrary to the narrative being pushed by advocates of government intervention, capitalism remains the most effective mechanism for producing widespread wealth and prosperity ever discovered — and the evidence is right in front of us.

The Dishonesty of ‘Real Socialism Has Never Been Tried’

Only wordplay and fantasy speculation can rationalize the idea that the Soviet Union and other brutal regimes weren’t really socialist.

The recent film by Agnieszka Holland, Mr. Jones, portrays the Soviet Russians’ attempt in the 1930s — with the assistance of sympathetic Western journalists like Walter Duranty — to cover up the famine caused by collectivization of agriculture in Ukraine. The film is a heart-wrenching and damning account of the Soviet experiment — and of the dishonesty that enabled it.

And yet, 87 years after Gareth Jones showed the world the crimes of socialism, there are still Western enablers who engage in a different kind of coverup of the same facts. As a result, a growing number of young people consider themselves socialists, and socialist politicians have risen in prominence. One was almost nominated as the Democratic Party’s candidate for president of the United States.

It is only thirty years since socialist regimes collapsed economically around the globe, leaving in their wake a death toll of tens of millions. We have seen the same pattern repeated in Venezuela in only the last twenty years. How do today’s defenders of socialism try to cover up this history and justify the ideology that supported such murderous regimes?

One tactic that today’s socialists employ is to portray the lessons of history and world affairs as irrelevant to their cause. They claim that the Soviet Union, Communist China, Communist Cuba, and today’s regime in Venezuela are not real examples of socialism at all. Real socialism, you may have heard them say, has never been tried. 

What makes people think this is true? What do they mean by “socialism” and is their view even plausible?

What is “socialism”?

Socialism, in a standard definition, means public ownership of the means of production, which implies the abolishing of private property and ending the capitalist system of free trade and free markets. This is often understood to mean state ownership of the means of production.The economic failure, famine, and bloodshed suffered by each of these countries flowed directly from the same policies advocated by today’s socialists.By that standard, the Soviet Union, Communist China, and other authoritarian regimes all count as “socialist”: in every case, insurgents seized control of governments which then expropriated private farms, factories and shops from their capitalist owners — many of whom lost not only their property, but their lives. What’s more, these insurgents were led by figures (Lenin, Mao, Castro, etc.) that were explicitly committed to socialist ideology.

The economic failure, famine, and bloodshed suffered by each of these countries flowed directly from the same policies advocated by today’s socialists. Just as socialists demand, businesses were torn from the hands of their creators, those who both knew how to produce and who had a personal financial stake in improving their ability to produce. These businesses were then managed by bureaucrats who lacked both of these qualifications, and who also lacked the tool of the free market pricing system to calculate how much of which goods to produce. Production decisions were determined not with an eye to creating value above cost, but to the demands of arbitrary edicts from central planners. It is no accident that this system created shortages and starvation, and that regimes had to crush the resulting dissent to retain power.

Socialists try to insulate the system they advocate from this evidence of failure by using a talking point that (as we shall see) they have used since the beginning of their movement. They put a spin on the “public ownership of the means of production” definition. Real socialism, they say, doesn’t mean state control of the economy; it means control by “the people,” especially by the workers.

For instance, Bhaskar Sunkara, editor of Jacobin and author of The Socialist Manifesto, claims that real socialism means “democratic” control of the workplace by worker collectives. He claims that the Union of Soviet Socialist Republics was not a socialist society because it did not involve democratic control.1 Likewise, Nathan Robinson, editor of Current Affairs and author of Why You Should Be a Socialist, claims that, for similar reasons, none of the authoritarian socialist regimes of the twentieth century were socialist, and claims to “hate government and capitalism alike.”2 Richard Wolff, who has been described as “America’s most prominent Marxist economist,” agrees.3 He argues that the Soviet Union was really an example of “state capitalism”: while the nominally socialist party controlled the state, the state was “still capitalist in the employer-employee organization of its economy” because “a minority of persons . . . [the central planners] functioned as employers of an employee majority.”

Using their definition of “socialism,” these thinkers would have us believe that since state control of the economy is not control by “the people,” no full-scale socialist political system has ever existed in history. If true, this would allow them to excuse their ideology from any responsibility for the murder and oppression of the brutal, allegedly “socialist” systems of the twentieth (and twenty-first) century. It also allows them to pose as the torchbearers of a noble ideal that has simply been corrupted by political operators of the past.

Is there any plausibility to the claim that “socialism” doesn’t really mean state control of the economy, but something else? Are today’s socialists really envisioning a wholly new system than what the revolutionaries of the past actually implemented? Or are they simply playing games with the word “socialism” to avoid the obvious facts?

Fantasy speculation about the role of the state

Not everyone proposing a novelty is indulging in fantasy. A newly envisioned invention, like an airplane, can be based on known facts about birds, kites, and gliders. But even then, experiments are needed to prove the efficacy of the idea. And if the proposal is, say, a perpetual motion machine, which has no experimental basis and goes against the laws of physics, the proposal is selling a fantasy.

Although the proposal that “real” socialism doesn’t require the use of state power might sound new or innovative to the uninitiated, a few questions and a little knowledge of history are sufficient to show it is just as much a fantasy as a perpetual motion machine. Using their definition of “socialism,” these thinkers would have us believe that since state control of the economy is not control by “the people,” no full-scale socialist political system has ever existed in history. First, note that the socialists paper over the coercion and even violence that would obviously need to happen to expropriate private property from peaceful citizens to set up their system in the first place.  (The mask drops when they start advocating “lawbreaking and sabotage” as worthy tactics in revolutionary social change.) By itself this calls into question any assertion that socialism can be implemented without bloodshed: socialist ends cannot be detached from socialist means.

But even if we could imagine that private property holders were simply persuaded to give up their holdings peacefully, the notion that the ideal socialist system would work without coercion or oppression is hard to imagine, if it is even coherently meaningful to begin with. Consider Richard Wolff’s explanation for how a system of worker co-ops would gradually wean itself from the need for a state:

An economy based on worker co-ops would revolutionize the relationship between the state and the people. In their capacity as a self-employed collectivity, workers would occupy the spot traditionally held by the workplace in state-workplace relations and interactions. . . . The workers would collectively and democratically hold the purse strings to which the state would have to appeal. The state would thus depend on citizens and workers rather than the other way around. . . . The state would have fewer ways and means to impose its own momentum and goals upon citizens or workplaces. To that extent, the state’s “withering away” would become more immediately achievable than in any other variety of socialism known thus far.6

As I’ve argued elsewhere at greater length, the allegation that “democratic control” ensures freedom from coercion and oppression is an old fallacy that turns on an equivocation between a government with elected representatives and a society run by majority rule. The latter is what socialists advocate when they claim that factories should be run by workers, regardless of what the factory’s original creators have to say about it. This constitutes a direct violation of the rights of a minority of individuals. So if workers really do end up holding “the purse strings” of the factories and the power to make the state appeal to them, it makes little sense to say that the state would “wither away” as an entity independent of the workers. Rather, the workers would in effect be running a state. Lenin and Stalin and the other founders of the brutal Marxist regimes justified their actions using the exact same fantasy as today’s socialists do. They promised that the system they advocated would eventually eliminate state oppression as well. We saw what it actually delivered. When Wolff is pressed to provide a real-world example of the system he envisions, he and other socialists often point to the Mondragon Corporation, a Spanish worker-owned manufacturer of a variety of industrial and consumer goods. But Mondragon is an international corporation that sells its products to private firms all over the globe, and employs an increasing number of foreign workers who are not members of the collective. At the same time, its workers increasingly depend on pensions from the Spanish state. Invoking the Mondragon example evades the question of whether a company like Mondragon could survive in the absence of a more general capitalist system that buys its products and provides market prices by which to calculate resource allocation, and the system of state-sanctioned private property rights that makes this possible. It also evades the question of whether a company run “democratically” (unlike most corporations) could exist in the absence of a coercive state that taxes capitalists to fund worker pensions. The idea that real socialism involves social control of the economy without the state is not new, but you need to be aware of some history to realize this. It goes back at least as far as 1877, when Frederick Engels claimed in Anti-Dühring that after the proletariat seizes control of the state and thereby the means of production, the state would “wither away” or “die out.” Evading the important role of a state in protecting peaceful coexistence among individuals by protecting their rights, Marx and Engels held that the only role of a state is to enforce the exploitation of one class by another. Working from this fantastic premise, they deduced without evidence that once the state comes to represent the proletariat, class distinctions would disappear and, with them, the need for the state. Lenin toed the same line in a lengthier work of no greater depth, but since he was himself a political operative who needed to rationalize his revolutionary actions, he argued that state control of the means of production was necessary as a transitional measure on the way to the achievement of real socialism. The same argument was then invoked for years by Stalin as he continued to starve and murder people in the name of eventually achieving the ideal of real socialism.

All of this means that Lenin and Stalin and the other founders of the brutal Marxist regimes justified their actions using the exact same fantasy as today’s socialists do. They promised that the system they advocated would eventually eliminate state oppression as well. We saw what it actually delivered.

Why should we believe socialists today who also claim that their proposals to nationalize industries will take us further from and not closer to the specter of the Soviet catastrophe? They offer no better evidence than hucksters who sell perpetual motion machines. In fact what they’re doing is much worse, both because they actively evade the evidence, and because what they sell isn’t just dysfunctional — it’s deadly.

The real meaning of socialism

Socialism means public ownership of the means of production. But to understand what this means in practical reality — and why it cannot mean what the socialists propose — we must appreciate what “public ownership” actually refers to.

There is no magical entity called “the public.” A society is composed of individual human beings. In reality, the only mechanism by which the actions of an entire society can be coordinated is by means of a government. And so the only way for anything resembling “the public” to systematically deprive capitalists of private property and to abolish capitalist free trade is for the state to do it.  Every socialist acknowledges this, whether they advocate violent revolution to establish a collectivist state or a majority vote to establish the same.Today’s socialist intellectuals are doing something especially inexcusable. They know all of the journalistic facts about the horrors of the 1930s that intellectuals then did not. But still they defend the same policies that led to these horrors.“Socialism” can only mean state ownership of the means of production. There is simply no evidence that there is a way of implementing or maintaining a universal system of worker co-ops without state enforcement. (Without a state, there is no way of maintaining any kind of social system. Anarchy is incompatible with even the semblance of a peaceful social coexistence.) This means that the Soviet Union, Communist China, Cuba, and the other catastrophic regimes of the twentieth century are the real meaning of the concept of “socialism” — as is the democratically elected but now dictatorial Chavista regime in today’s Venezuela. Socialists cannot escape this reality through wordplay or fantastic speculation.

It is no surprise that socialism evades facts about the nature of the political system it works to achieve. The whole idea that animates the drive for socialism, the idea that human life would be improved by eliminating capitalism, is itself founded on similar evasions of basic facts.

I believe that those who are willing to study the facts carefully will realize that the entire edifice of socialist thought evades everything we know about human social and economic life. It evades that the root of production is the individual human mind, not the labor of brute muscle or blind “economic forces.” It evades that capitalists add value to workers’ labors by conceiving of new goods and services and coordinating the capital, labor, and marketing necessary to produce them. It evades that individuals have free will and can accept the opportunities capitalists offer, or not (whether the invitation to work with them, or to consume their products). And, as a consequence, it evades that the violent expropriation of private property and vestment of it in the state cannot create a peaceful and prosperous society.READ ALSO:  The Anti-Intellectual Case for SocialismEvading all of these facts, the Soviet Union openly declared its intention to centrally plan the lives of its citizens. Western intellectuals of the 1930s who knew these basic facts really had no excuse for apologizing for the Soviet experiment — regardless of the poor reporting coming out of Russia. But this means that today’s socialist intellectuals are doing something especially inexcusable. They know all of the journalistic facts about the horrors of the 1930s that intellectuals then did not. But still they defend the same policies that led to these horrors. Their sophistry asks us to discard these facts as irrelevant. It should not take a Gareth Jones to expose their cover up. It should only take a commitment to intellectual honesty.

How Google and Facebook Are Ruining Capitalism, with Luigi Zingales

University of Chicago economist Luigi Zingales often says that only an immigrant like himself can really appreciate American capitalism. In his native Italy, Zingales says what you know and what you do are far less important that who you know and what you do for them. 

But in the last decade, Zingales says the United States has started to look more and more like the country he left. Now, he’s trying to save American capitalism from itself—and big businesses including Amazon, Facebook and Google.

Transcript: 

Paul Rand: University commencement speeches don’t often get headlines in the New York Times. But the 2019 University of Chicago commencement speech from Economist Luigi Zingales did.

Luigi Zingales: In the Chicago tradition, I wanted the commencement speech to be a speech about research, about my research because, for those of you who don’t have the fortune to be Chicago alumni, you should know that Chicago is unique in having convocation speeches delivered by faculty and not by celebrities.

Convocation Speech: I’ve participated in enough commencements to know that I’m just the person between you and your well-deserved graduation party. 

Luigi Zingales: You know, I was facing the competition of Angela Merkel at Harvard. That was not an easy thing to deal with. So I wanted it to be about research, but also that is in contrast with something that other Chicago faculty before me said.

Convocation speech: In true Chicago spirit my goal is to deliver a speech that is provocative, research based and relevant to you in this moment. 

Paul Rand: Zingales’ speech was certainly provocative. It focused on many ideas and questions from his research, mainly, is American capitalism working or failing?  

Luigi Zingales: If you grew up in Italy. But then I realized a lot of other countries, I know a lot of colleagues who grew up in different parts of the world, and they all at some point face this question of capitalism vs socialism, and what is right in capitalism, how do you create a better capitalism? It is a question that is basically with you all the time.

Paul Rand: The debate over American capitalism is shaping up to be one of the defining arguments of the coming decade. It is already one of central themes of the current presidential race. Democratic candidate Bernie Sanders have explicitly called for the country to move toward socialism, while candidates like Elizabeth Warren say capitalism is still worth saving, it just needs to change. Like Warren, Zingales wants to save capitalism and, as he said in his commencement speech, he thinks we have a shot.

Convocation speech: You want to save the planet, eradicate poverty, end racism but you find yourself working 10 hours a day for a company who’s only proclaimed goal is maximizing profits. Many of you feel powerless. Fortunately, this is not true. 

Paul Rand: From The University of Chicago, this is Big Brains. A podcast about the pioneering research and pivotal breakthrough reshaping our world. On this episode, Luigi Zingales and saving capitalism from the capitalists. I’m your host Paul Rand.

Paul Rand: Love it or hate, when you grow up in America, you grow up under capitalism. It’s in the bedrock of the country. There’s no debate about it. But with presidential contenders like Bernie Sanders, that may be changing.  

TAPE: Senator Bernie Sanders is making his case for democratic socialism.

TAPE: Economic rights are human rights.

TAPE: Tonight, we renew our resolve that America will never be a socialist country.

Paul Rand: But this tumultuous debate is nothing new to someone like Luigi Zingales, who grew up in Italy. What Zingales saw growing up in Italy was a dangerous marriage between the economic elite who used their wealth to gain political power, and the political elite who used their economic strength to control government. In a system like this, what you know and what you do doesn’t matter, only who you know and what you do for them.

Luigi Zingales: To me what was very revealing is, in my generation there have been a lot of Italians who came and studied here and all of them came here as super, super leftists. And when I say leftists, I don’t mean Elizabeth Warren leftist, I don’t even mean Bernie Sanders leftist, I’m talking about to the left of the Communist Party. I joke that you need a GPS in the United States to figure out how far left these guys are. So all these people came here, and all of them turn into the most extreme free marketeers. And I don’t think was just being exposed to economics and studying economics etc. I think was also a system that at the time appeared and it probably, at the time, was much more fair.

Paul Rand: As a young adult Zingales saw freedom from the elites in Italy through American capitalism. And for many years he studied and wrote about this system’s ability to create jobs, lift people out of poverty and inspire immigrants the world over. Then things started to change.

Luigi Zingales: I saw that if you look in the last 40 years, the system has not delivered for everybody. While on average there was a huge increase in wealth, this increase was disproportionately concentrated in a small minority. And actually, the most scary fact is if you look at the salary of the median male worker in the United States, that salary and has not gone up in real terms for the last 40 years.

Paul Rand: Concentration started to make the country he had come to love look more and more like the country he had left. His research and writing started to interrogate a new question, what’s wrong with American capitalism and how can we fix it? The result was his 2012 book “A Capitalism For The People”.

Luigi Zingales: There is a natural, and in a sense, a healthy tension between a democracy and a capitalist system. A capitalist system does tend to reward disproportionately a few and reward more the more talented and the one who work harder. And so it does create inequality and that doesn’t sit down very well with a democratic system that where you want to kind of redistribute and equalize. And I think that this tension is very healthy, but it is balance only under a number of conditions. And one condition is that the system delivers some benefits to everybody. There is as an opportunity to everybody to move up in the ladder and that the system is can consider relatively fair. It’s particularly painful to be left behind in the game of life, It’s intolerable if you have the perception that the game is rigged. 

Paul Rand: You hear that system is rigged and just about every political commentary these days, don’t you?

Luigi Zingales: Absolutely, but the irony I  I think I said it before anybody else said it. And not only that, in my book it’s written pretty clearly, that given this populism is going to be inevitable. And then the question is, which kind of populists you’re going to get? And I have to say, so far, we didn’t get a good one. The irony is this, my book, as you pointed out, is partly autobiographic because it’s the story of an Italian coming to the United States, seeing the United States as the model of the success of capitalism, etc. and seeing over the years this model deteriorate and getting worse and looking more and more similar to his country of origin, Italy, and not for the good aspect, the food and wine and the beauty that is around it.

Paul Rand: But the Berlusconi aspect.

Luigi Zingales: Exactly. You said the right word, the Berlusconi aspect.

TAPE: Mafioso, thief, go away. After supporting him at the ballot box for nearly two decades, the Italian people had nothing but anger for Berlusconi.

Paul Rand: For those of you who don’t keep up with Italian politics, Berlusconi was an Italian real-estate tycoon turned media mogul turned politician who became the Prime Minister of the country for nine years. Sound familiar? 

Luigi Zingales: And so it was a natural evolution to say, look, if the United States are going to get along this this path, the natural outcome is a Berlusconi like figure. And I saw what, of course, everybody else later saw because for the Italians, it’s so obvious, this similarity between Berlusconi and Trump. They are both phenomenal salesman, phenomenally egotistic, obsessed with woman, obsessed with hair and a lack of and with a very distorted view of capitalism because they both started their business in real estate. Real estate is the least competitive system in the world, least competitive business in the world, it is most about connections at the local level and most about monopoly.

Paul Rand: And that’s the key idea for Zingales: competition. Almost everything in his work comes back to the way competition creates growth and disperses power to everyone. 

Convocation Speech: For example, last year Google let a lucrative Pentagon contract expire because its key engineers did not want to help develop a technology that could be used to wage war. LGBT community rights were recognized first the business world not because of the open mentality of business leaders but because of their desire to attract the best talent. In a competitive labor market companies are fast to adopt if adaptation is required to attract the most qualified workforce. 

Luigi Zingales: There was a brilliant and pathbreaking idea that Adam Smith brought with a wealth of nation. Is the fact that competition is the genius that makes sure that the pursuit of self-interests delivers the common good. And a lot of people have misinterpreted and mischaracterize Adam Smith by saying Adam Smith say that greed is good, that’s absolutely wrong. Adam Smith was a moral philosopher, in his other book he was pay a lot of attention to other feelings like empathy and etc. So he was very aware of morality. What his contribution is to say, look a system that does not rely on everybody being good is a more reliable and resilient system. And you know, in a world where everybody is a saint. We don’t need the law. We don’t need economics. But unfortunately, it doesn’t exist.

Convocation Speech: Law firms have a tobacco career track for those lawyers willing to defend tobacco companies. Tobacco lawyers earn more and make it to partnership faster. While this may seem wrong it’s essential for the market system to work. Your reluctance to defend tobacco companies reduces the supply of talented tobacco lawyers thereby increasing their wages. When it becomes too expensive to hire defense lawyers, tobacco companies are forced to settle. It’s precisely because it becomes too expensive to behave immorally that companies without a conscience end up behaving as if they had one.

Paul Rand: So today if you’re a young man in Italy or somewhere else, are you still looking at the United States and admiring the capitalistic system or are you looking at and saying that is not working?

Luigi Zingales: I fear, and this is hard to put yourself in the feet of a young kid today in a different part of the world, but I think that it is more difficult to sell that image. As a financial economist, I witness the financial crisis with particular attention and care because was part of my main area of expertise. And so I saw the devastation, I saw the effect, I saw all the distortions. And, you know, after the financial crisis, for a long time, most of the media attention was focused on beating on the financial sector. And after awhile I said okay, a lot of people are doing the job. They don’t need me to beat on the financial sector that doing. I want to see what the next problem is. And I realize that a lot of what I saw in the financial sector was actually assembling in the tech sector and with some additional twist that made it even more dangerous to some extent.

Paul Rand: Why does one of the world’s leading economists think the tech sector is the new big threat to capitalism? That’s coming up after the break.  

Paul Rand: If you blame a lack of competition for the decline of American capitalism, there’s one industry that’s going to draw your attention more than any other: the tech sector.

Convocation speech: There are some corporations, very small in number, but very relevant in size that do not face real competition. These are monopolies. It’s easy to see what a monopoly is. How many people in this audience use Bing as their main search engine. Please, don’t be shy. And how many people use Google?

Luigi Zingales: These entities, while they’ve been around for a while, they started to be studied as a different entity in economics only in the beginning of the new millennium. 

Paul Rand: So we’re talking about Google, Facebook, Uber, 

Luigi Zingales: Uber, Amazon, all this platform. And one of their characteristics is they naturally tend to become monopolies unless people can easily use multiple of them at the same time. So what is calling jargon multi-homing. I want to be where most of my friends are. And so I’m going to go where most of my friends are and that tend to be Facebook and that tends to reinforce the importance of Facebook, but also Facebook is very actively trying to make it impossible to multi-home. Ten years ago, there was a little company called Power Ventures whose business model was to help you manage multiple social media at the same time. So you will give the login and password to all your social media to Power Ventures and then you login in Power Ventures. You post your picture into Power Ventures and it goes on Snap, Instagram, WhatsApp, but you tell them they do it. So Facebook sued Power Ventures claiming that they were hacking and because they have good lawyers and Power Ventures do not have good lawyers, they end up winning and establishing that if I give you my login and password of Facebook and you enter my Facebook account with my permission you are committing hacking, which is a federal crime. So they really use this power of the law to block multi-homing. And then when you don’t have multi-homing, you naturally tend to add these networks externalities,  I want to be when other people are, and so you end up having enormous concentration like we have in Facebook today, which of course, has been exacerbated by the fact that they bought Instagram and they bought WhatsApp.

Paul Rand: It’s easy to see the concerns and issues these digital platforms present. It’s harder to come up with solutions. In 2019, Zingales convened a conference of economists, lawyers, journalists, venture capitalists and data scientists to do just that. After months of research and debates, they devised a list of possible solutions and even submitted that list to congress.

Paul Rand: So the interesting thing that I thought as I read some of this, is you guys came through with some pretty practical, applicable recommendations, i.e. let’s come up with a new digital regulatory agency or a digital authority. Can you talk about that and maybe some of these other very practical systems.

Luigi Zingales: So are you surprised that academics can come up with something practical that we are not just dancing on a pin head and saying crazy stuff.

Paul Rand: Economists are never known for that.

Luigi Zingales: But actually, I would say that the idea of creating a new agency is probably not the most original idea is right, but it’s not the most original idea. When there is a problem, you create a committee. And then I think there are potential risk involved in that, too. But the thing that, in my view, emerged the most and it’s something that we need to pay a lot of attention is the power is in the data. These platforms control their own data. There is no regulator that has access systematically to those data. So we don’t even know the facts. In the old days when there was TV, when TV was the thing. First of all, you add a Federal Communications Commission that actually look at the TV and oversee the TV sector. But also there were like, what, three channels? Everybody watch the same channels. Everybody could see if there was something wrong or if that something distorted in in those channels. Today, with digital platforms, I don’t know what you see because what you see is different than what I see. And so if we have some ads that target a particular vulnerable sector of the population, unless you belong to that sector, you’re never going to see that ad. So you don’t know the problem. And there is nobody watching this. So is as if we have the best techniques to sell alcohol to the alcoholic or drugs to the drug addicts. And there is nobody watching.

Paul Rand: In addition to a regulatory authority, they also recommend extending campaign disclosure obligations to digital platforms, imposing a fiduciary duty towards society on the boards of monopiles, and tightening many US antitrust rules. And that last point about antitrust, was a little controversial coming from a University of Chicago economist. We’ll find out why after the break.

Paul Rand: As we said at the beginning, Zingales’ commencement speech made headlines in the New York Times. And it was specifically because of his views about antitrust enforcement. Antitrust laws deal with how monopolies are regulated. When you hear people talking about stronger antitrust enforcement for tech companies, they’re usually talking about breaking them up. Split Instagram from Facebook, Youtube from Google. Zingales thinks this is a good idea. To understand why that caused such a stir, you need to understand the history of the “Chicago School of Economics”. 

Luigi Zingales: So first of all, there was an evolution over time. So, in the 30s and 40s, the position was dominated Henry Simons, who wrote a very important pamphlet called the Positive Program for Lez A Faire, where antitrust and antitrust enforcement played an extremely important role in keeping the market competitive and making the system work. And ironically, some of his students, George Stigler, Milton Friedman and Aaron Director, who started from those positions, over the years became increasingly disillusion about the role of antitrust 

Tape: The issue of anti-trust is long standing. The basic anti-trust legislative was enacted in 1890 and we’ve had many ups and downs in its applications. The law is supposed to promote competition but on the whole it probably does more to promote monopoly than it does competition. Moreover, it involves a very inefficient interference by the government into the dynamics of the economy. 

Luigi Zingales: This was the position of Chicago in the early 50s. And I think over the late 50s and 60s, the disillusion with the antitrust enforcement, in particular, number one, the aggressiveness of the enforcement and the lack of a coherent idea of what the antitrust was trying to achieve. At the time, economics was expanding in other areas. And Aaron Director was crucial in bringing economic methods into the law. He said we need to have a very clear objective of what the law wants to achieve and we need to apply rigorously. And in particular, he was saying and I think it was absolutely right on this, who enforces this law? The judges. The judges are not particularly trained in this. So you need to have some principle very clearly spell out to have a consistent law, because the worst thing is to have it completely adhoc. And so this is where the use of economic methods in the law started to become important. One of the student here, Robert Bork, started to say the goal of the antitrust is just to maximize consumer welfare, to benefit consumers at large and a series of tools to measure this consumer welfare and to measure whether this wouldn’t be maximized or not where develop they became the standard in antitrust. And this became known as the Chicago School of Antitrust. That ended up dominating the world. This is not just in the United States, but where you go to Europe, you go to Latin America, you go to Asia. Everybody knows the Chicago school and Chicago approach, I think was a fantastic innovation. But in economics, we learn that there are always tradeoffs so what they traded off is to be more precise, but less broad. And so the result was very strong attention on consumer welfare, ignoring other considerations and two, I think that they W\were so successful that basically, antitrust stopped to be enforced and for awhile was fine; I think we’ve gone too far. So the pendulum changes and my view is changes depending on the circumstances. There are some areas where concentration is a big problem and you have to fight it hard and some other times in which the opposite is a problem. iIn the 1960s, companies were becoming conglomerates buying unrelated line of businesses because they couldn’t expand horizontally and the conglomerate acquisitions were terrible. So I think that there was a sense that maybe at the time things would have gone too much in one direction. I think that stuff has gone too much in the opposite direction now. So I don’t see myself in in contradiction with the Chicago tradition. Quite the contrary. I see a tradition that is evolving and changing, like all good traditions, because we’re not frozen into the 20th century.

Paul Rand: Zingales often says that only an immigrant like himself can appreciate how rare Americana capitalism really is. He still views it as the only system that can really spread wealth, power and opportunity. And he considers this battle against monopolies and the lack of competition they bring to be the central struggle of his work and his adopted country…

Convocation speech: This is not a republican or a democratic battle. It is an American battle. This country was born fighting monopolies. The Boston tea party was not, as often repeated, a revolt against higher taxes but a revolt against the unfair advantage enjoyed in America by Britons East India Company. The connection between American democracy and the fight against monoploidies was not lost on senator John Sherman who in the 1890s brought us the first antitrust law: if we will not endure a king as political power, he wrote, we should not endure a king over the production, transportation, and sale of any of the necessities of life. If there is one sentence from my speech I hope you will remember, this is the one.

Differences between Capitalism & Communism and why did it start in Russia?

Differences between Capitalism and Communism

Capitalism

  • System of government is democratic
  • Property is privately owned
  • Driven by free enterprise
  • Wealth distributed unevenly
  • Education and health care provided by private entities
  • Freedom of the press Class distinctions: upper class, middle class and working class
  • Focus is on the individual and his/her own progress in life

Communism

  • System of government is totalitarian
  • Property is owned by the state
  • No free enterprise is allowed
  • Wealth distributed equally
  • Education and health care provided by the state
  • Press controlled and owned by the state
  • Classless society: all members of society are considered to be equal
  • Focus is on the progress of the community as a whole

Following this Capitalism and communism have the following opposing sets of ideas:

The ideology of capitalism

  • People need freedom
  • When people compete against one another, they achieve greater things
  • Some people have more than others because they make better use of their abilities
  • Governments should not interfere with the rights of individuals to make their own living
  • The government should interfere in the economy as little as possible

The ideology of communism

  • People need one another
  • When people work together as equals, they achieve greater things
  • No-one should have more than anyone else – everybody’s needs are equally important
  • Governments should make sure that everyone’s needs are being met
  • There is central control of the economy

Totalitarian: A political system in which the government has total control over the public and private lives and actions of that state’s citizens.

Free enterprise: The freedom for private businesses to operate for a profit without interference from the government.

Why did Communism start in Russia?

The start of Communism in Russian can be attributed to the harsh inequalities of 19th century life. Communism developed from the ideas of Karl Marx and Friedrich Engels, and became popular amongst the workers of Russia due to the many difficulties experienced through tsarist rule.

It was an ideology that seemed to guarantee workers an end to hardships and a chance at political and social equality. It was for this reason that workers supported this ideology, that the tsarist regime was overthrown and that the course of Russia’s history was changed for ever.

This section is detailed so we have broken it up into 3 pages:

Use the page navigation on the right or bottom of the page.

Background

Abdicate: Step down from the governing position; give up one’s crown.

By the early 20th century, Russia was one of the most backward countries in Europe. It was still ruled by a Tsar under the Old Order and the majority of the population lived in poverty.

In 1905, an attempt was made to overthrow the Old Order but with limited success. Dissatisfaction escalated especially after the Tsar’s decision to enter the First World War. The Russian army was ill prepared and the war effort made matters worse. In March 1917 workers riots forced the Tsar to abdicate

The new Provisional Government proved unable to stabilise the country. Vladimir Ilych Lenin led the November 1917 revolution that replaced the Provisional Government with the communist Bolshevik Party.

The Soviet Union (as Russia came to be known) developed into one of the strongest nations in the world and entered into a protracted power struggle with America in the Cold War, as Russia challenged America and the rest of the capitalist world. This standoff ended in 1990, with the fall of communism and the disintegration of the Soviet Union.

The Old Order

Before the Revolution, Russia was a large empire under an absolute monarch, the Tsar. It was large in both land size and population. By 1914, Russia had a population of 165 million. It was a mostly an agricultural country, as industrialisation only began in the late 1800s and was slower to take place than in many other European countries.

Russian society was divided loosely into four groups. These were the ruling class (nobility), the upper class (clergy), the commercial or middle class, and the masses (workers and peasants). Tsar Nicholas II was an absolute emperor with unlimited political power.

The upper class owned much of the land but had no political say. There was no parliament, and political parties were not allowed. The press and books were subject to state censorship. This served to force all opposition underground and in the 19th century there were a large number of secret societies dedicated to political reform or revolution. The Tsar’s secret police, the Okhrana, frequently infiltrated and spied on these organisations.

Serf: A medieval farm worker who belonged to his landlord and could not leave the land he worked on.

The majority of the Russian population were peasants who were uneducated, poor and powerless to change their conditions. The state and the higher, privileged classes exploited them harshly. A large portion of the peasantry was made up of serfs.

These were farmers or peasants who worked the land of the nobility and were the legal property of the landowner for whom they worked. They had no rights and were forbidden to leave their landlords, who could order them to do whatever he chose.

In the 1860s, Tsar Alexander II freed the serfs so that they became free peasants, and could move about in search of different work. Some stayed in the rural areas as farmers or peasants, but others chose to go to the urban areas to become wage labourers in the developing factories.

However, according to tradition, serfs had to be bought in order to free them. The state held that as it had freed the serfs, it had bought them from the nobility, and demanded repayment. For many serfs, this demand was impossible to meet. They never earned enough, and large numbers of them continued to live in desperate poverty. Without land of their own, they were still compelled to work for others to survive.

These figures from the 1897 census give a good idea of what the social structure in tsarist Russia looked like:

  • Ruling class (Tsar, court, government) 0.5%
  • Upper class (nobility, higher clergy, military officers) 12%
  • Commercial class (merchants, factory owners, financiers) 1.5%
  • Working class (factory workers and small traders) 4%
  • Peasants 82%

Industrialisation

Although Europe had begun a process of industrialisation since the beginning of the 19th century, Russia lagged far behind. A big reason for this was the lack of available labour for factories. Serfs were still bound to the land and were therefore not free to be used as labour for the new industries. Only when the serfs were freed to move and work in the urban areas was real industrialisation possible. For this reason, Russia’s economic development fell far behind the rest of Europe.

The Russian government took steps to catch up. Millions of roubles were borrowed from European banks to set up state industries, and a large number of British and French companies were invited to build and operate factories in Russia.

As the freed serfs provided an increasing pool of cheap labor for the factories, a small but significant working class began to develop. They lived in appalling conditions and were paid very little. Coupled with the oppressive rule of the tsarist regime, this exploitation created fertile ground for unhappiness and strikes.

The revolution

The Tsarist regime was unable to deal with the pressures of popular dissatisfaction. The Tsar tried to divert attention away from internal problems by launching imperialist wars to increase Russia’s size and influence. The first such war took place in 1904-1905 and was followed with another in 1914.

The wars were disastrous, and instead of distracting the masses, made them even unhappier with the Tsar. In both instances they propelled the country into revolution.

In the 1904-1905 war, Russia suffered a severe military defeat against the Japanese. The economy slumped, prices rose and labour unrest increased.

On 20 January 1905, a church-led procession of workers marched to the Tsar’s winter palace in St. Petersburg to hand over a petition requesting amnesty for political prisoners, a meeting of the Constituent Assembly, and an 8-hour working day. Fearing an attack on the palace, guards opened fire on the marchers. Several hundred people were killed, and the incident became known as Bloody Sunday.

Duma: The Russian parliament called into being by Tsar Nicholas II after the 1905 Revolution.

Amnesty: Official pardon or forgiveness, usually for political crimes.

Following the Bloody Sunday massacre, civil unrest and strikes erupted throughout the country. In St. Petersburg (renamed Petrograd in 1914), a soviet or workers’ committee took power. In October, Tsar Nicholas II was forced to offer some reforms, which were laid out in the October Manifesto. These reforms included the formation of a parliamentary government along European lines, which would be called the Duma. The opposition then backed off.

However, Tsar Nicholas was not prepared to let go of power so easily. He constantly manipulated the Duma, disbanding it when it displeased him and gradually reduced the number of people able to vote until the Duma was comprised only of unrepresentative conservatives and nobles.

Nevertheless, between 1906 and 1911 there were some improvements. The economy grew and led to a gradual improvement of living standards and wealthier farmers were offered bank loans.

Yet most reforms brought about by the October Manifesto were quite short-lived, and overshadowed by the misery of Russia’s experience of the First World War. War weary and hungry Russians were ready for the 1917 Revolutions. After the failure of the 1905 Revolution to bring about real reforms, it had become clear that there was to be no parliamentary road to freedom in Russia.

Opposition to the Tsarist Regime, 1881-1914

Although the Tsars of Russia ruled autocratically and political parties were not allowed, this did not prevent organised opposition to them. Repression in Russia simply forced political resistance underground.

The opposition to the Tsar can be divided into three main groups:

  • The peasant revolutionaries made up of the Populists or Narodniks, and the Social Revolutionaries who wanted power in the hands of the peasants.
  • The socialists or the Social Democrats who wanted power in the hands of the urban workers.
  • The reformers or liberals who wanted to keep the Tsar, with his power limited by elections and a constitution.

1. The Populists (Narodniks)

Russian Populism dates from the 1870s. It was a revolutionary movement that believed that the peasant mass of the population represented the future of Russia.

The Narodniks opposed both the Tsar and industrialisation, and rather than following the capitalist system of Western Europe, they wanted Russia to build a cooperative system based on agriculture.

The Narodniks were unable to persuade the peasants to adopt their revolutionary programme. As a result of the failure of their campaign, many Narodniks turned to violence as the only means of getting rid of the Tsar, which also failed.

2. The Social Revolutionaries

In 1902, the peasant revolutionaries formed another party, the Social Revolutionaries. They combined the violent actions of the Narodniks’ extremist group, the People’s Will, with their own efforts to mobilise the peasants into mass action.

With the slogan “All land to the peasants”, they were hugely popular with the peasantry and became an important political force in the Russian Revolution.

3. The Social Democrats

The Socialists followed the ideas of Karl Marx. They believed that working class interests should guide society, and their goal was to overthrow the capitalist system for this purpose.

The socialists wanted workers to control the factories and share the profits fairly among themselves, rather than industries being owned by a wealthy minority who paid their labourers exploitative wages to make ever bigger profits for themselves.

The leading Russian socialist party, the Social Democratic Party, was established in 1898 under the leadership of George Plekhanov, the “father of Russian Marxism”.

Serious differences soon emerged among members and in 1903 the party split in two. The majority group was the Mensheviks, and the minority group the Bolsheviks, led by Vladimir Ilych Lenin.

5. The Mensheviks

Literally, the majority. When the Social Democrats split in 1903, the minority group was called the Bolsheviks and the majority was the Mensheviks.

The Mensheviks believed that a socialist party should be a mass organisation open to anyone. They did not want push out the government by force, but thought that conditions of workers could be improved by driving changes within the existing state framework. In this way a socialist society would develop or evolve peacefully from a democratic republic.

6. The Bolsheviks

Literally, the minority. When the Social Democrats split in 1903, the minority group was called the Bolsheviks and the majority was the Mensheviks.

The Bolsheviks wanted to overthrow the government in order to establish a dictatorship of the proletariat (masses, the workers), a society where the masses (workers and peasants) held control.

The Bolsheviks were well organised, and Lenin was an outstanding spokesman. Despite this, they were caught by surprise by the March Revolution of 1917, which had begun spontaneously. Lenin and other leaders were overseas, and the Bolsheviks were unable to seize the opportunity to take power. By the time the next revolution broke out in November, they were prepared under Lenin’s leadership to take the lead.

7. The Reformers (Liberals)

The middle class was not a strong force in Russia, but it had a strong enough political voice to put pressure on the Tsar. The policy of liberalism centred on achieving political and social change through reform, rather than destruction of the tsarist regime. The Tsar would still be in power but there would be a constitution and elected parliament to keep prevent tsarist rule in check. The parliament would share at least some of the political power held by the Tsar.

In 1902, the reformers came together to form a political party known as Liberation. This party helped form the Constitutional Democratic Party, or Kadets, in 1905. The Kadets became an important political force in Russia.

Failure of the 1905 Revolution

Despite the establishment of the Duma after the 1905 Revolution, the Old Order and the Tsar’s autocracy remained. Although political parties that had been banned were acknowledged and newspapers allowed, real political power still lay with the Tsar. He manipulated the Duma to do as he wanted and so restricted any democratic power it might have had. It became clear that freedom would only be achieved through drastic measures, even violence.

Soviet: Originally striking/revolutionary committees elected by Russian workers during the 1905 Revolution. In 1917 a Soviet was again established by peasants, workers and soldiers to represent them in the Provisional Committee of the Soviet. Later years, the term was used to indicate a district controlled by an elected board or soviet. The whole state was seen as a union of these smaller soviets, and was therefore called the Soviet Union.

Between 1905 and 1917, the Mensheviks and the Bolsheviks were politically active. They participated in the soviets, published revolutionary newspapers and developed their understanding of Marxist ideology. During the same period, the workers movement staged hundreds of strikes throughout the country. Peasants also began to engage in actions to lower tax and gain more land.

The lot of the masses had not improved after the 1905 Revolution, and increasing frustration led to the rise of dissidents’ intent on overthrowing the Old Order. The Tsar’s decision to involve Russia in the First World War was the last straw, and before the War was even over, the Russian Revolution broke out.

The First World War

In 1914, the First World War broke out. The Tsar believed that Russia’s participation in the War would help to establish it as a great nation. Russia joined Britain and France in the war against Germany. More than 6 million soldiers were mobilised and the economy was reorganised to support the war effort.

Much of the food, clothing and livestock of the country also went to the army. For a short time, the war united the Russian people in a burst of patriotism (they called the First World War the Great Patriotic War).

Within 12 months the elation gave way to despair. Between 1915 and 1916 more than 4 million Russian soldiers were killed or wounded in action. Incompetent leaders, corrupt administration, shortages of weapons and other war supplies left the Russian army shattered. By 1917, the army was retreating from the advancing Germans and thousands of soldiers deserted their ranks.

The war aggravated the domestic problems of the country. Since most production was directed at the war effort, peasants and workers bore the brunt of the sacrifice. Livestock and grain grown by peasants was sent to the army, leaving them to go with very little.

Food was often difficult to find in the urban areas and working and living conditions were cruel. As food prices continued to soar, hunger and suffering grew. While the war had at first united the Russians, they now only craved peace. Unhappiness among the peasants and workers exploded and across the country strikes and riots were staged.

When the war broke out, the Bolsheviks, led by Vladimir Ilych Lenin, had started an anti-war campaign. They saw that the workers and peasants had nothing to gain from the war. They called upon the masses to use Russia’s involvement in the war as an opportunity to attack the Tsar.

By 1916, the campaign had gained substantial support. So, while the Tsar had entered the War to help build Russia’s image as a Great Power, the war now spelled disaster for his rule. His unpopularity increased even further as he and his wife (the Tsarina) proved ineffective as leaders during the War.

In the midst of the War, Tsar Nicholas and Tsarina Alexandra (a German by birth) took some decisions that seriously damaged the position of the government. Firstly, the Tsar decided to take over military command himself, not realizing the risk in being held personally responsible for Russia’s defeat and suffering. Secondly, his military engagements meant that he left the Tsarina in charge of all other political affairs.

The Tsarina was widely unpopular. Not only was she German and therefore associated with Russia’s great enemy in the War, but her close relationship with a bogus “holyman” Gregory Rasputin, of peasant origin, was feared and despised.

Rasputin was regarded as evil and immoral, following a religion of sinning in order to obtain forgiveness. Rasputin captured the Tsarina’s blind devotion after proving capable of treating her only son and the crown prince and heir to the Romanov dynasty, Alexei, of his haemophilia, a hereditary disease where the blood does not clot.

The grateful Tsarina came to depend on Rasputin, who manipulated her to serve his own interests and political ambitions. This became disastrous after the Tsarina was left in charge of the country while the Tsar was leading the war effort. Rasputin proceeded to fire those he did not like and hire his own followers. Fearing his growing influence and the support he had from the Tsarina, he was murdered by two blood relatives of the royal family in 1916. Rasputin proved not easy to kill. He was poisoned, shot, beaten and eventually thrown into an icy river where he finally drowned.

It was clear that Russia lacked an effective leader capable of real reforms. Russia also lacked a leader who could obtain the support of the revolutionaries and the liberals, and stabilise the economy and the chaos caused by the disgruntled Russians.

The dissatisfaction that the Russians felt over their poverty, suffering and lack of political rights reached a climax during the years of the First World War. Overthrowing the tsarist regime seemed the only way out, and revolution was not far off.

The March revolution

Note: Some books refer to the February/October Revolutions of Russia while others talk about the March/November Revolutions.

The reason for the discrepancy is that Russia did not follow the Western calendar. The traditional Russian Christmas is celebrated in the first week of January. Before 1918, Russia followed the Julian calendar. In accordance with this calendar when the 1917 Revolution took place, it was February in Russia. So the February/October and March/November Revolutions are the same revolutions. The one is named according to the Russian and the other, the Western calendar. The important thing is to be consistent regardless of the calendar being used. This lesson refers to the March or November Revolutions.

Today, Russia also follows the Gregorian calendar that the West uses, and that we use in South Africa.

Although the climate for revolution was ripe by 1917, the March Revolution nevertheless took people by surprise. Not a single Bolshevik leader was in Russia when the revolt broke out, as many of them were exiled because of their anti-war campaign. Lenin himself was in Switzerland at the time.

Since 1916, workers had held strikes and protests against the Tsarist regime. In January a mass strike was planned to commemorate Bloody Sunday, the event that had sparked the 1905 Revolution. The following month more strikes were held, and the Tsar did not react, unsuspecting of the danger posed by them.

Later in March, when the strikes had become bigger and more widespread, he tried to suppress the protesters who were anti-war and rejected his rule. Confrontations with the police led to injuries and arrests. The Duma requested the Tsar to respond to the revolt with reforms, but their appeals were ignored. He dismissed the Duma, who refused to obey his orders.

The protests turned into full blown mutiny and one of Russia’s biggest cities, Petrograd, was taken over by the resistance movement- which freed the political prisoners there. The Tsar lost all control of the country, and it became necessary for a provisional committee to rule Russia until a new government was established.

Two governmental bodies were put in place: the Provisional Committee of the Duma, and the Provisional Committee of the Soviet. The Duma represented the aristocracy (the conservatives), and they had to negotiate with the Tsar for the establishment of a constitutional monarchy. The Soviet represented the workers and soldiers, and was to look after the interests of these people.

There were serious differences between the two bodies, but they were forced to work together to prevent the Tsar from suppressing the revolution. Out of these two bodies, a first Provisional Government emerged in March 1917, was led by the Duma. This meant the end of the Tsar and the 300-year old reign of his family, the Romanovs.

The first stage of the Russian Revolution, namely the March Revolution, was over. The tsarist regime was overthrown, and in its place was a Provisional Government. The revolutionary parties (Social-Revolutionaries, Mensheviks and Bolsheviks) did not play a big role in the March Revolution. Those who did play a role were the conservatives, namely the Kadets and the Octobrists (those who believed in and supported the October Manifesto). This would mean that the conservatives would have a great influence in the Provisional Government.

Provisional Government

The Provisional Government was instituted in March 1917, and consisted mainly of middle class liberals. It had no real power without the support of the soviets. The soviets comprised workers’ strike and revolutionary committees during the 1905 Revolution, and after the March Revolution included all peasants, soldiers and workers.

By this stage, the soviets formed the majority of the Russian population, without their support the Provisional Government could not be effective. The Provisional Government had legal power but the soviets had the real political power. They stayed in the background, not taking obvious control and leadership of Russia but were able to influence and reject government decisions and actions.

At first, the Provisional Government enjoyed great support, especially among political groups like the Social Revolutionaries, Mensheviks and Bolsheviks, as long as the interests of the peasants, workers and soldiers were protected. The government was unable to keep this support, because they could not meet the most basic needs of the masses- peace, food and land.

The workers wanted bread, or relief from poverty, and the hunger that they had suffered for so long. The soldiers wanted peace, but Russia’s involvement in the First World War continued. The Provisional Government failed to withdraw Russia from the War. Land and autonomy, the major concern of the peasants and minority groups, could not be addressed while there was a war effort.

The Provisional Government was also dragging its feet on the issue of elections for a Constitutional Assembly. Its role had been intended to be temporary, but the new leaders were no keen to lose this power.

These factors seriously damaged the Provisional Government’s credibility, and they lost a great deal of public support. The Russian masses wanted someone who could solve their problems and provide peace, bread and land. A new leader promising them this arose. He was Vladimir Ilych Lenin and he became the first communist leader of both Russia and the world.

Lenin

Lenin was a leader in the Bolshevik Party who was exiled to Europe during the March Revolution. He returned to Russia soon after the revolution and soon realised that the Provisional Government was ineffective and deaf to the people’s demands.

In April 1917, the Bolsheviks, influenced by Lenin, withdrew their support from the government. Lenin then released several statements in which he revealed his aims. These ‘April statements’ would become his plan of action. He called for an end to Russia’s involvement in the First World War, the disbanding of the Provisional Government and its replacement by the Bolshevik led soviets, as well as the release of land to the masses.

At first the reaction to him was negative, as many felt his aims were too radical. But Lenin’s statement spoke to the hearts of the masses, and in promising to address the issues of peace, bread and land he gradually gained more and more support.

Lenin wanted the Bolsheviks to gain control of the great network of soviets all over Russia. The soviets were an established instrument of authority and power and if the Bolsheviks had control over them and their vast support base, the Provisional Government could be overthrown. Lenin was therefore in favour of a new revolutionary phase to force real transformation in Russia.

Meanwhile, the Provisional Government made some attempts at reforms. They invited the soviets to form a coalition with them, but the Bolsheviks refused to have anything to do with the government and the middle classes leadership. The Bolsheviks were nervous of being blamed for the government’s mistakes, and this choice gained even more support for Lenin and his Bolshevik Party.

November Revolution

Towards Revolution

Coup: Short for Coup d’état, the violent and illegal seizure of power in a country, usually through revolt.

The months leading up to the November Revolution were marked by growing unrest. By July 1917, Bolshevik supporters were hankering for a revolution. They pressured the Bolshevik Party to move faster than planned, and in July they attempted a coup.

But the Bolsheviks had not gained enough support, and in June only received support from 105 of the over 600 soviets. The coup failed miserably, and the government reacted by imprisoning the Bolshevik leaders, whom they believed responsible for the coup. Lenin escaped imprisonment by fleeing to Finland.

The Provisional Government still refused to withdraw from the First World War, and the Russian army continued to experience defeat after defeat. In September, the conservatives staged a counter-revolution against the Provisional Government. Sensing the danger, the government asked the Bolsheviks for help against the counter-revolutionaries.

This was a significant event because the Bolsheviks could keep the moral high ground claiming that without participating in the ineptitude of the government, it had managed to prove it was needed. After this, support for the Bolshevik Party grew considerably.

Where they had been a minority party in June, they now gained the majority of seats in some soviets, most notably those in Moscow and Petrograd. From Finland, Lenin began to urge Bolshevik supporters to prepare for the next revolution. He was convinced that the time was ripe for a revolution and exploited the Provisional Government’s mistakes and weakening position to gain support for the revolution.

Although the Party’s central committee was not yet convinced, Lenin visited Petrograd on 22 October where he persuaded the workers to follow him. A week later, the Petrograd Soviet formed a military revolutionary committee, led by Bolshevik member, Leon Trotsky.

Revolution

The Provisional Government saw this as a direct challenge to their authority, and acted against Bolshevik newspapers. The Prime Minister, Alexander Kerensky, asked the Russian people what they wanted. The answer was peace, bread and land. But Kerensky had left it far too late.

On 6/7 November 1917, Lenin and his supporters staged a second revolution. Key state buildings were taken over, such as the Winter Palace in Petrograd where the Provisional Government was at the time. The government gave little resistance and was overthrown.

Lenin issued a proclamation declaring that Kerensky was no longer Prime Minister and that the Provisional Government was no longer in place. He promised to immediately begin to fulfil the nation’s demands for peace, bread and land. He also promised that the soviets would govern, and so grant power to the masses.

The Aftermath of the Revolution

Shortly after the revolution, the Bolsheviks gained the majority of the seats in the main umbrella Soviet body. They refused to cooperate with the other parties and to share power with anyone else within the soviets.

Lenin announced that the new government would begin peace talks with Germany to end Russia’s involvement in the First World War, and that the land of the Church and aristocracy would be confiscated and given to the landless.

When the new government was formed, the Bolsheviks had almost 62% of the seats. The other seats went to the Social Revolutionaries and the Mensheviks, and the leadership was shared between Bolshevik leaders Lenin, Leon Trotsky and Joseph Stalin. In less than a year, however, Lenin succeeded in consolidating power and seizing leadership alone.

Consequences and Importance of the Russian Revolution

After the Bolsheviks seized power in the November Revolution (also known as the Bolshevik Revolution), they began turning Russia into a communist state. When it became clear that the Bolsheviks had no intention of sharing power over Russia, anti-Bolshevik elements rose against them.

The result was a bitter civil war fought between the Red (Bolshevik) Army and White (imperial counter-revolutionary) Army. The Red Army eventually crushed its enemy, but only after more than 100 000 people had lost their lives in the war.

The Bolshevik Party changed its name to the Russian Communist Party and began to consolidate its power. Control was taken over other, much smaller states bordering Russia and the whole new state came to be known as the Union of Socialist Soviet Republics (USSR) or the Soviet Union.

When Lenin died, he was succeeded by Joseph Stalin, who introduced several five-year plans to speed up the process of making the Soviet Union a true communist state.

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