Capitalism or Socialism? It’s not a binary choice.

Moderate Democrats are making a mistake.

by Bob Topper

1084 words

In an earlier essay on “Why Democrats Lost Voter Confidence,” I noted that the Democratic party’s approval rating was a dismal 33%. Nine months later their approval is still dismal, at 37.8%, only slightly better than Trump’s, and that is after the incompetence and corruption of his administration has become evident to all but the die-hard supporters. Still, Democrats hope to win the House and possibly the Senate in the midterm elections. 

But hope is not strategy and it risks blinding Democrats to a harsh reality. Despite widespread dissatisfaction with the current administration, the Democratic Party remains less favorable in voters’ eyes than the Republican Party. Criticizing Trump is not enough. To regain voter confidence, they must also reevaluate and change their own policies and positions.

Many moderate Democrats attribute this polling weakness to the party’s progressive wing. A recent New York Times article, Moderate Democrats Prepare for ‘War’ Against an Ascendant Left, reports that one moderate group views progressive victories as “deeply troubling” and is planning a $15 million campaign against democratic socialism. Another Times article argues that “Bernie Sanders is not doing the party any favors.”

The moderates are making a mistake. Rather than fighting the left, they should be listening. Their message connects with ordinary Americans who are fed up with the establishment, fed up with the vast amounts of dark money in politics, and fed up with government that prioritizes the interests of corporations and the wealthy over the common good. 

Not that the left of the party connects on every issue. The culture wars, which are largely financed by billionaires and corporate interests to deflect attention away from income inequality, will go on. But the people will not be fooled forever and, if focused on economic justice, the left and right can find common ground.

Abdul Sayed’s recent win in Michigan, Mamdani’s in New York city, and the enthusiastic following Bernie Sanders garnered in 2016 show the path that moderate Democrats should be on, a path that leads to regulated capitalism, a Social Democracy, i.e. a free-market capitalist economy that collects taxes to fund healthcare, education and social welfare, like the Nordic countries. 

Denmark, Sweden, Norway, and Finland practice social democracy. They have robust free-market capitalist economies combined with extensive public welfare programs, private property ownership, and high levels of regulation. And Nordic people rank significantly higher in democracy, happiness, and median income than the American people. 

On a path to Social Democracy, Democrats must be clear that this is not socialism. Socialism is a system in which the government owns and regulates major businesses rather than private individuals. The mainstream Democratic party does not support the nationalization of private companies. 

 But there is great irony in the fact that, while Trump and the MAGA Republicans rail against socialism, they contrive to make America socialistic. The Trump administration has taken equity stakes in 30 companies through 37 deals worth $27.6 billion. Most notable, under Trump, America now owns 9.9% of Intel. 

The devious labeling of Democrats as communists and socialists is nothing new. They labeled Franklin D Roosevelt a socialist during the Great Depression. But FDR was a capitalist who recognized the need to regulate markets and ensure a fair “New Deal” for ordinary Americans. His policies included Social Security and government funded or backed public works programs like the WPA and CCC, which helped ordinary Americans through the depression. Wealthy critics argued that higher taxes and federal market intervention would destroy free market capitalism. They were wrong. America moved on and thrived.

Roosevelt rejected the socialist label and defended his policies. He was a pragmatic reformer of American capitalism. He led the nation as it recovered from the Great Depression and arguably preserved American capitalism. His goal was not to change, but to repair America. Our nation is again in need of repair and a fair deal. The FDR model should inspire present day Democrats.

But Democrats abandoned their Roosevelt legacy during the Clinton Administration. In 1966, he signed the Personal Responsibility and Work Opportunity Reconciliation Act, which abolished Aid to Families and Dependent Children, a program created in Roosevelt’s first term, which became the cornerstone of the federal safety net. And, with NAFTA, Clinton championed free trade and he supported finance deregulation with the repeal of the Glass-Steagall act. 

Today’s moderate Democrats generally align themselves with Clinton’s approach to government. And, like their Republican counterparts, are swayed by the monied interests that have corrupted our government of the people, by the people, for the people.Rather than changing Washington, they think that if they take us back to the time before Trump and MAGA all will be well. But that will not be enough. Voters rejected the political theater of 2016 and want a better alternative. 

Democrats need to promote a different vision, one that focuses on the fundamentals – why we have government and what it should do. Government’s primary responsibility is to protect the safety, rights, and basic welfare of its people, not a preferred class or corporations. Government should serve the common good. 

Time Magazine estimates that between 1975 and 2020, $50 trillion moved from the bottom 90% to the top 1%. That does not reflect a government that serves the common good. It is time for Americans to recall FDR’s vision, as the Nordic countries have done. Their Social Democracies embrace regulated free-market capitalism and collect taxes to fund healthcare, education, and social welfare. Democrats can and should reclaim their Roosevelt legacy. 

Affluent Republicans will undoubtedly oppose and seek to discredit that vision through political labeling; such resistance is hardly unprecedented. But this is not a binary choice, capitalism or socialism. The question is, what form of regulated capitalism best distributes the gains from economic growth and technological change? What form of capitalism best serves the common good?

When companies cut jobs and automate work, labor costs drop while corporate profits and stock prices rise. This boosts the wealth of business owners and investors who hold shares, while displaced workers lose their primary source of income, widening the gap between rich and poor. This happened when manufacturing jobs moved offshore. 

It will happen again. Artificial Intelligence will displace both blue-collar and white-collar workers. And with our relatively unregulated capitalism the average income of ordinary American will decline. Wealth will become more concentrated and America’s long slide into oligarchy will accelerate. 

With a new form of regulated capitalism, like the social democracies of the Nordic countries, we can avoid that outcome.

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Bob Topper, syndicated by PeaceVoice, is a retired engineer.