Declining Faith in Both Capitalism and Socialism Leaves … What?

Americans don't much like each-other and many are willing to fight each other over their differences. But what do the opposing factions believe in? When it comes to economic systems and whether production and consumption should be dictated from above or guided by free exchange, a growing number of Americans don't seem to believe in much at all. Both capitalism and socialism are losing support, especially among Democrats.

"Today, 36 percent of U.S. adults say they view socialism somewhat (30 percent) or very (6 percent) positively, down from 42 percent who viewed the term positively in May 2019," Pew reports. "And while a majority of the public (57 percent) continues to view capitalism favorably, that is 8 percentage points lower than in 2019 (65 percent)."

Among Republicans, support for capitalism declined from 78 percent to 74 percent, and for socialism from a rock-bottom 15 percent to a slightly rock-bottomier 14 percent. With Democrats, capitalism became a minority taste, dropping from 55 percent support to 46 percent, while socialism's favorable standing eroded from 65 percent to 57 percent.

"Much of the decline in positive views of both socialism and capitalism has been driven by shifts in views among Democrats and Democratic-leaning independents," acknowledges Pew. That still leaves the GOP as a market-oriented political party (despite the oddball 14 percent lobby for adding Lenin to the partisan pantheon alongside Lincoln and Reagan). The Democrats have become a lukewarm socialist party, to judge by the sentiments of supporters.

"Americans see capitalism as giving people more opportunity and more freedom than socialism, while they see socialism as more likely to meet people's basic needs, though these perceptions differ significantly by party," Pew notes in partial explanation of the disagreement. OK, but that's aspirational; do Americans really understand the differences between the economic systems?

Fortunately, in 2019 Pew asked respondents more detailed questions about their opinions of capitalism and socialism. Unfortunately, that poll was also terrible about defining terms, but at least it allowed people to describe their impressions of the systems in their own words.

Supporters of free markets "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," the 2019 report offered. "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."

That's helpful because Venezuela's government has largely seized the means of production and dominates the economy; it's socialist. The country is ranked at 176 in the 2022 Index of Economic Freedom as a "repressed" economy. By contrast, Finland is ranked at ninth as a "mostly free" economy, along with Denmark (10th), and the United States (25th); all are countries where private enterprise prevails. Yes, both Scandinavian countries are considered somewhat more capitalist than the U.S.; but they have expensive welfare states and tax the hell out of their private economies to pay for them.

"I know that some people in the U.S. associate the Nordic model with some sort of socialism. Therefore I would like to make one thing clear. Denmark is far from a socialist planned economy. Denmark is a market economy," then-Danish Prime Minister Lars Lokke Rasmussen commented in 2015. "The Nordic model is an expanded welfare state which provides a high level of security for its citizens, but it is also a successful market economy with much freedom to pursue your dreams and live your life as you wish."

"So, what is the catch you might ask. The most obvious one, of course, is the high taxes. The top income tax in Denmark is almost 60 percent. We have a 25 percent sales tax and on cars the incise duties are up to 180 percent. In total, Danish taxes come to almost half of our national income compared to around 25 percent in the U.S."

In Reason, historian Johan Norberg pointed out that Sweden, in particular, dabbled with state economic control. The experiment was abandoned after the economy tanked. Then the country "deregulated, privatized, reduced taxes, and opened the public sector to private providers." Impressions of socialist Scandinavia are "stuck in the 1970s," he added. Sweden also has a welfare state and very high taxes.

Americans probably mostly understand capitalism because they live in a generally market-oriented society, even if it's often cronyist and overregulated. Flaws, including politically favored businesses, and companies supporting ideological goals under regulatory pressure, undoubtedly tarnish impressions of the system. It wouldn't be surprising if recent arguments over "woke" corporations explain mildly cooling enthusiasm for capitalism on the right. But when it comes to socialism, too many advocates want a unicorn; they ask for socialism but point to capitalist models. Other sources offer some insight.

"The vast majority of Republican voters—85 percent—believe anyone who works hard can get ahead, while 53 percent of Democrats feel that way," a recent Wall Street Journal poll reveals. "Democrats often say that hard work isn't sufficient for all Americans to advance, partly due to systemic hurdles based on class or race, and that the government should help. … Republicans, by contrast, say the government should as often as possible get out of the way of efforts by individuals, businesses and charities to help people advance economically."

Republicans, then, retain faith in individual effort, which is fundamental to free-market capitalism. Democrats want some sort of government thumb on the scale, which isn't socialist state control of the economy (and perhaps this helps explain declining support for socialism), but which is welfare-state-ish. So maybe they do want Scandinavia as a model—at least for favored groups.

"There are so many socioeconomic differences in the country," one Democratic voter complained to the Wall Street Journal. "It really depends where you were born on the strata."

But the same poll suggests grounds for more strife. The Journal found 61 percent of Republicans and 53 percent of independents agree they are "one of the people the elites in this country look down upon." Just 40 percent of Democrats concur. So, Democrats don't trust capitalism, are losing faith in socialism, but want government to play a bigger role. Against them are Republicans and independents who think the ruling class that would pick winners and losers despise them; they're unlikely to envision themselves among those a hostile government would help.

In terms of capitalism and socialism, Americans may not entirely know what they're talking about, but it seems clear that many of us have very different visions for the country in which we want to live. If there's one thing on which we can agree, it's that we'll continue to strongly disagree.