Socialism is no longer a dirty word in American politics. Openly referring to oneself as a socialist was once political suicide. But with one avowed socialist, Bernie Sanders, running as a serious candidate for the presidency and another, Alexandria Ocasio-Cortez, achieving a high profile in the House of Representatives, American socialism has gone mainstream. And it has gone mainstream because of problems, both perceived and real, with capitalism.
While nowhere near a majority of the American electorate favors a completely socialist system, a Gallup poll from May indicates that more than four in 10 Americans think “some form of socialism” is a good thing. The ambiguity of that response, though, points to the difficulty in understanding what is happening in the electorate.
Among economists, the definition of socialism is clear: socialism is state control of the means of production. The intent is that these means are to be used for the public good. By contrast, capitalism is private ownership of the means of production. The intent is that these means are to be used to advance the interests of those who own them.
But few of our openly “socialist” politicians advocate government control of the means of production. So when Americans respond that “some form of socialism” is desirable, it is not exactly clear what they mean. For economists, at least, socialism and capitalism are binary possibilities.
It appears that what Americans really have in mind when they think about socialism is not an economic system, but particular economic outcomes. And their thoughts seem to focus most often on the question of what people should have. The answer they arrive at most often? More than people typically get in a system based on the pursuit of profit. Capitalism, they believe, is immoral because it is a system in which some do without while others have plenty.
Such people are not really advocating for socialism; they are advocating for what we might call “transferism.” Transferism is a system in which one group of people forces a second group to pay for things that the people believe they, or some third group, should have. Transferism isn’t about controlling the means of production, but about the forced redistribution of what’s produced.
But the system against which today’s transferists fight isn’t capitalism any more than the system they advocate is socialism. When they think of “capitalism,” transferists usually think of a monied class that defrauds customers, pollutes the environment, and maintains monopoly power, all because the monied class is in bed with government. That isn’t capitalism. It’s cronyism. Cronyism can arise in a socialist system as easily as it can in a capitalist one because cronyism is a function of the political system, not the economic one.
For current examples, look at North Korea, Cuba, and Venezuela. Socialists say that these aren’t examples of “true socialism.” And they are correct. Once upon a time, these countries were socialist, just as once upon a time the United States was capitalist. But cronyism has subsumed these countries’ economic systems. Life in those countries is good for the cronies who get special favors from those in power, but beyond miserable for those who are not so well-connected.
And this is where the dangers of transferism become clear. Transferism is simply a form of cronyism. Instead of the cronies being monied people who latch on to political strongmen, they are voters who latch on to politicians willing to buy the cronies’ votes by forcing others to pay for things the cronies want.
The way forward here is to step away from the now useless terms “socialism” and “capitalism” and to think instead of how much transferism we actually want. This is more complicated than it first appears. First, we have to come to terms with the fact that any transfer is a confiscation of wealth from the people who created it. That will decrease wealth creation in the long term. Second, we have to recognize that transferism is addictive. No matter how much we transfer, people will always want more. And that, played out over a few generations, gave us a $23 trillion debt.
In the end, we have polluted our political discourse with a couple of words that no longer have much meaning. The only winners have been the politicians who gather votes by keeping the electorate in a constant state of friction.