You’re a Socialist! No, I’m a Capitalist!
The name-calling in this year’s political debates often centers on differences in economic philosophies. Donald Trump is continuing the refrain from his 2020 campaign, “a vote for Joe Biden and Kamala Harris is a vote for the “radical far-left,” “anarchy” and inevitable "socialism." [Link 1.] Biden’s consistent response is, as he told a group of union workers in Michigan, "I'm a capitalist.” "I think you should be able to go out and make a million or a billion, but just pay your fair share." [Link 2.] “Socialism? Give me a break, what idiots.” [Link 3.]
Republicans and Democrats alike use socialism and capitalism as if they were household words that everyone understands. The people who use them may know what they intend, but it’s doubtful that most people fully understand what distinguishes socialism from capitalism. As with fascism, some people redefine socialism and capitalism in any way they choose to suit their political purpose. However, a lot of honest confusion results from the fact that nearly all economic systems in the world have some characteristics of both capitalism and socialism.
Capitalism is an economic system based on private ownership of property and the means of production (land, labor, factories, equipment, tools...). Capitalism also relies on market incentives (prices resulting from supply and demand) to determine what is produced, how it is produced, and who produces and consumes it. In capitalist economies, individuals benefit in proportion to their willingness and ability to work and earn money—to contribute to the economy. [Link 4.]
Socialism is an economic system based on government or public ownership of property and the means of production. Socialism relies on central planning by the government to determine what is produced, how it is produced, and who produces and consumes what is produced. In socialist economies, economic benefits are distributed equitably to all, regardless of individual contributions to the economy. [Link 4.]
Virtually all economies that are called socialists allow some private ownership of property, typically including consumer goods, automobiles, houses, some farm equipment, and land for small gardens. They also rely on markets to determine prices and provide economic incentives for some types of production, typically including the things produced on private property and a wide range of consumer goods and services. Socialism that relies heavily on markets is typically called market socialism. When China formally amended its constitution in the 1990s, it adopted the "socialist market economy" as the country's economic system.
Virtually all economies that are called capitalism rely on some public ownership of property. Government ownership is typically not limited to public lands but also includes public roads, highways and bridges, government buildings, public schools, and public transportation systems. Private property and profits are typically taxed by governments to achieve a more equitable distribution of economic benefits.
In the US, socialist benefits include National Defense, Homeland Security, Social Security, Medicare, Medicaid, and Food Stamps or SNAP benefits. Capitalist countries that rely heavily on social programs are typically called social democracies. Denmark, Finland, Iceland, Norway, and Sweden are typical examples. Canada, France, the Netherlands, and New Zealand also have many of the characteristics of social democracies.
The political question of 2024 is not whether the next president will change the US economy from capitalism to socialism or will keep it capitalism. The U.S. economy is already a mixed economy with strong characteristics of both capitalism and socialism, and neither candidate is advocating either pure socialism or pure capitalism
A return to Donald Trump’s previous economic policies would resume the trend of the past 40+ years of making the economy less socialist and more capitalist. This process began with the Reagan administration in the early 1980s and is characterized by reducing government spending on social programs, deregulating corporations, and shifting government spending from supporting the public sector to the private sector of the economy.
A continuation of Joe Biden’s economic policies of the past three years would reverse the trend of the past 40+ years by increasing government spending on social programs, re-regulating corporations, and shifting government spending from supporting the private sector to the public sector of the economy.
Americans have been “overwhelmingly dissatisfied with the state of things” in the U.S. for more than 20 years—under both Democratic and Republican administrations. [Link 5.] Biden’s economic policies represent a dramatic change from those of the Clinton and Obama administrations, as well as previous Republican administrations. Biden has promised a return to the economic philosophy of the Roosevelt administration, which was more socialist and less capitalist—but still far more capitalist than the social democracies of Europe and even Canada.
In summary, Trump’s policies would simply make capitalist policies of the past 40+ years more capitalist and Biden's policies would reversed the economic policies of the past 40+ years by making them more socialist. Biden is not a socialist and neither Biden nor Trump are capitalist. They just disagree on the appropriate balance of economic policies between socialist and capitalist.
Since Americans have been “overwhelmingly dissatisfied with the state of things” for more than 20 years, particularly dissatisfied with the economy, it seems a logical time to refocus government policy on a more equitable distribution of economic benefits. The alternative is to continue facilitating and promoting the concentration of income and wealth, hoping that something will “trickle down” to those who need it most.
We are not going to become a socialist or capitalist nation, regardless of who is elected president. There is no evidence of a slippery slope in either direction. In fact, the tendency if toward balance. Capitalism addresses our self-interests and socialism our concern for the needs of others. Both are essential for a life of quality--for happiness. We can't afford to let political name-calling distract us from the logical conclusion that it is time for U.S. economic policies to swing back to a point of balance where we can realize the benefits of both socialism and capitalism without going too far in either direction.
John Ikerd
[Link 1.] https://www.palmbeachpost.com/.../joe-bidens.../3450313001/
[Link 2.] https://www.foxbusiness.com/.../biden-insists-he-is-a...
[Link 3.] https://www.foxbusiness.com/.../biden-insists-he-is-a...
[Link 4.] https://www.investopedia.com/.../what-are-differences...
[Link 5.] https://www.fticonsulting.com/.../americans-dissatisfied...