Via Economic Policy Journal

By Randall G. Holcombe 

The Cold War, which effectively ended thirty years ago with the collapse of the Berlin Wall, was a contest between the capitalist democracies of the West against the socialist dictatorships of the East. The result was a decisive victory for capitalism and democracy. Now, with the rise of self-described socialists like Bernie Sanders and Alexandria Ocasio-Cortez, socialism is increasingly popular, especially among younger Americans. Why?

Most explanations point toward those who look upon socialism favorably as not understanding what socialism really is. There is much truth in that explanation. For example, Sanders points toward Sweden as an example of socialism, but Sweden has a capitalist market-oriented economy, but with a big welfare state. Venezuela, Cuba, and North Korea are examples of socialist economies.

Another factor in the rising popularity of socialism is that those who support socialism do not understand what capitalism really is. In terms of the twentieth-century tension between socialism and capitalism, people may be inclined to favor socialism because they have a mistaken perception of capitalism.

What are those ideas? The president champions protective tariffs, closed borders, and nationalism as opposed to globalism. While he hasn’t championed big budget deficits, deficit spending has increased during his term in office, and he’s supported that deficit spending. He’s demonstrated a willingness to go around Congress, and to go around the Constitution, to promote his xenophobic agenda. In fairness to the president, so have his predecessors, but that just makes his attempts to avoid accountability look more like a characteristic of government under capitalism.

So, while a popular misunderstanding of the nature of socialism surely explains some of its newfound popularity in the United States, so does a popular misunderstanding of capitalism, and it looks like the president is partly responsible for that misunderstanding. His policies, supposedly in support of our market economy, are mostly anti-free market and, more generally, are anti-freedom.

I make this argument somewhat reluctantly because one of the defenses that supporters of socialism make against the claim that the former Soviet Union, Venezuela, Cuba, and North Korea show the effects of socialism is that those countries are not real socialism. Real socialism has never actually been tried. Here I am, making a similar argument about capitalism: that the policies President Trump supports are not real capitalism.

My defense of this criticism goes back to the end of the Cold War era and the decade that followed. Look at the crumbling Soviet Union and Eastern bloc socialist economies in the 1980s compared to the Western bloc countries at that time. Setting aside what ideal socialism or capitalism might look like, the reality is that capitalist economies have higher standards of living and are better places to live.

President Trump wants to build a wall to keep foreigners out. Throughout history, socialist economies have built walls to keep their own citizens from leaving. But that wall the president wants to build is not consistent with capitalism, which is based on freedom of exchange, and free movements of both people and goods.

One rarely recognized reason that socialism is becoming more popular is that the president’s anti-capitalist policies are too easily perceived as a part of capitalism.

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