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In the 1980s, the world’s largest producer of shoes was the Communist Soviet Union. In his 1994 book, Dismantling Utopia, Scott Shane reported that the U.S.S.R. “was turning out 800 million pairs of shoes a year—twice as many as Italy, three times as many as the United States, four times as many as China. Production amounted to more than three pairs of shoes per year for every Soviet man, woman, and child.”
And yet, despite this colossal output of Soviet-socialist footwear, queues formed around the block at the mere rumor that a shop might have foreign shoes for sale: “The comfort, the fit, the design, and the size mix of Soviet shoes were so out of sync with what people needed and wanted that they were willing to stand in line for hours to buy the occasional pair, usually imported, that they liked,” Shane continued.
The Soviet economic system put millions of people to work converting useful raw materials into unwanted final products. When released from the factory or the office, those workers then consumed their leisure hours scavenging for the few available non-useless goods. The whole system represented a colossal cycle of waste.
For a younger generation of Americans, the concept of “socialism” is an empty box into which all manner of hopes and dreams may be placed. But once upon a time, some humans took very seriously the project to build an economy without private property and without such market rewards as profits. What they got instead was unwearable shoes. But memories fade; hopes and dreams endure.
Growing numbers of Americans feel that the economy does not work for them. Donald Trump’s stewardship of the economy has blatantly favored insiders and cronies. And so, in the 2020s, Americans find themselves debating ideas that once seemed dead and dusty, and in some cases, electing politicians who champion them. The new socialism addresses the problems that wrecked the old socialism only by denying or ignoring them. But if socialism is to be beaten back, and if market economics are to uphold themselves in democratic competition, exposing the unworkability of proposed alternatives won’t be enough. It will be necessary to reform and cleanse the market economics indispensable to sustaining Americans’ standard of living.
During socialism’s heyday, the world’s leading minds hailed the superior potential of a planned socialist economy. Albert Einstein wrote in 1949:
The profit motive, in conjunction with competition among capitalists, is responsible for an instability in the accumulation and utilization of capital which leads to increasingly severe depressions. Unlimited competition leads to a huge waste of labor, and to that crippling of the social consciousness of individuals … A planned economy, which adjusts production to the needs of the community, would distribute the work to be done among all those able to work and would guarantee a livelihood to every man, woman, and child.
In 1960, the Harvard economist Abram Bergson predicted that the Soviet economy was on a trajectory to overtake the U.S. economy. Bergson’s was not a crank opinion at all. Similar estimates underlay CIA analysis of the Soviet economy well into the ’60s. Americans might reject socialism for themselves as oppressive but, the theory held, as unlovely as Soviet socialism was, it could produce positive results.
The same overestimation of the U.S.S.R.’s productive capacity was also applied to Communist China. On the U.S. Senate floor in 1959, the future president John F. Kennedy gave a speech in which he accepted almost completely at face value China’s claims of a “Great Leap Forward”: “The mobilization of the unemployed mass of Chinese rural workers through economic communes, cottage industry, small pig-iron schemes, and all the rest is an achievement whose political and intellectual impact in less developed areas is bound to be immense.”
In actuality, the Great Leap Forward amounted to perhaps the deadliest self-inflicted calamity in human history. Mao Zedong’s forced industrialization program caused a famine that killed at least 23 million people, and perhaps as many as 55 million.
The Soviet economic statistics that so impressed the CIA were faked or meaningless. It did not matter how many pairs of shoes a Soviet factory made if nobody wanted to wear them. To escape Soviet sclerosis, Communist China began, in 1978, to open up first its farm economy, then its industry, to private management, market competition, and foreign investment. Communist Vietnam and other formerly closed and controlled economies followed the Chinese example.
Across the democratic West, socialist ideas went into eclipse. In 1995, under the new leadership of Tony Blair, the British Labour Party amended its party constitution to delete venerable language pledging “common ownership of the means of production, distribution, and exchange.” In Germany in the early 2000s, Gerhard Schroeder’s Social Democratic coalition government introduced the most dramatic reductions in decades to social benefits to push the long-term unemployed back to work. In the United States, Democratic President Bill Clinton declared in 1996, “The era of big government is over.”
The seeming triumph of market economics was not welcomed by all, of course. Those disgruntled by the seeming triumph rejected Margaret Thatcher’s taunt that “there is no alternative,” yet they could not articulate in any concise or coherent way what that alternative might be.
The anti-corporate activist Ralph Nader ran for president in part to challenge the Clinton-era pro-market consensus. In his 2000 campaign as the nominee of the Green Party, Nader assembled an array of grievances: over-lengthy commutes to work; unhealthy meals at fast-food chains; excessive CEO pay; young people getting too much screen time; the criminalization of narcotics; the demise of urban electric-trolley systems. He could not have been more specific about what he opposed. But what was he for? Nader could not say.
And so it went for one project after another to imagine an anti-capitalist future. Some who belonged to the era’s left glumly quoted a saying attributed to the American Marxist literary critic Fredric Jameson: “It’s easier to imagine the end of the world than the end of capitalism.”
Over the quarter century from early 1983 to late 2007, the United States suffered just two brief, mild recessions: one in 1990–91, and a second that lasted only from spring to fall of 2001. From the beginning of Ronald Reagan’s second administration to the end of George W. Bush’s first, the U.S. unemployment rate never once reached 8 percent. Over that same period, inflation was low and interest rates steadily declined.
[Read: The world economy is on the brink of epochal change]
Economists call this era “the Great Moderation.” The moderating influence was felt on politics too. For nearly 50 years, Gallup has surveyed Americans’ mood with a consistent series of questions about the general condition of the country. From 1983 to 2007, the proportion of Americans satisfied with “the way things are going in the U.S.” reached peaks of about 70 percent, and was often above 50 percent.
Then the long period of stability abruptly ended. Over the 15 years from 2007 to 2022, the U.S. economy suffered the Great Recession, the coronavirus pandemic, and post-pandemic inflation: a sequence of bewildering shocks.
You can see the effects in the Gallup polling. Over this period, the percentage of Americans who described themselves as generally satisfied rarely exceeded one-third and often hovered at about a quarter.
The era of moderation yielded to a time of radicalism: Occupy Wall Street, the Tea Party movement, “birtherism,” the wave of militant ideology that acquired the shorthand “woke.” In 2015, in the throes of this radicalism, Hillary Clinton announced her second campaign for the Democratic presidential nomination. In a stump speech some weeks later, she listed categories that described the American electorate as she saw it, offering a fascinating portrait of the politics of the 1990s meeting the realities of the 2010s. She dedicated her candidacy equally to “the successful and the struggling,” to “innovators and inventors” as well as “factory workers and food servers.” In other words, she addressed herself to Americans for whom the world was working more or less well, and to familiar and long-established blue-collar categories. She made no specific mention of gig workers, downwardly mobile credentialed professionals, or any of the other restless social categories that multiplied after the shock of 2008–09.
A few weeks after Clinton’s announcement, Senator Bernie Sanders of Vermont declared his campaign for the same Democratic nomination. Sanders was an odd messiah. He had spent a lifetime in politics with little to show for it. No major piece of legislation bore his name, and precious few minor pieces either. An independent socialist, he had stayed aloof from the Democratic Party without building a movement of his own. Few had considered him an inspiring personality or a compelling orator. Yet amid this new radical temper, he quickly gathered a cultlike following—and won 13 million votes, to carry 23 caucuses and primaries. When he ultimately lost to Clinton, the defeat left many of his supporters with resentments that divided leftists from liberals in ways that may have helped Donald Trump win the Electoral College in the general election in November 2016.
In 2002, toward the end of her public career, Thatcher was asked to name her greatest achievement. “Tony Blair and New Labour,” she replied. “We forced our opponents to change their minds.”
Sanders might say the same about Trump and his Republican Party. Goodbye to Reagan-era enthusiasm for markets and trade: Trump vowed much more aggressive and intrusive government action to protect American businesses and workers from global competition. He also offered a bleak diagnosis of America’s condition, for which the only way forward was to return to the past.
At the same time, Trump’s persona vindicated every critique Sanders might advance about the decadence of late capitalism. Here was a putative billionaire whose business methods involved cheating customers and bilking suppliers. His private life was one scandal after another, and he spent his money on garish and gimcrack displays. He staffed his administration with plutocrats who were flagrantly disdainful of the travails of ordinary people, and with grifters who liked to live high on public expense.
Then, beginning in 2020, the coronavirus pandemic intensified the anti-market feeling. The economic effects enriched those who possessed assets, especially real estate: The median house price in the U.S. had jumped from $317,000 in the spring of 2020 to $443,000 by the end of 2022. The federal pandemic response could also be gamed by business owners; the U.S. government estimates that as much as $200 billion of COVID-relief funds may have been fraudulently pocketed. But if you were a person who rented his or her home and lived on wages, you were almost certainly worse off in 2022 than you had been in 2019. Your wages bought less; your rent cost more.
The outlook was especially bleak for young college graduates. The average new graduate owes more than $28,000 a year in student debt. Hopes of repaying that debt were dimmed by the weak post-COVID job market for new graduates. Joe Biden’s presidential administration did relieve some student debt, but its most ambitious plans to help new graduates were struck down by the Supreme Court as exceeding executive authority.
In some respects, people born since 1990 are more conservative than their elders. Academic surveys find that Americans, male and female, who attended high school in the 2010s express more traditional views about gender roles than those who attended high school in the 1990s. But on economic questions specifically, an observable shift of attitude against markets and capitalism has occurred. Only 40 percent of adults younger than 30 expressed a positive view of capitalism in a 2022 Pew survey, a drop from 52 percent pre-pandemic. Older groups lost faith too, but not so steeply: Among over 65s, a positive view of capitalism dipped from 76 percent pre-pandemic to 73 percent post-pandemic.
This disillusionment has opened the door to self-described socialists in the 2020s. The most recent and most spectacular of this new cohort is Zohran Mamdani, who earlier this month won the Democratic nomination for mayor of New York City in an upset election.
Mamdani campaigned on promises to raise taxes on New York’s richest inhabitants to finance a bold new program of state enterprise: free bus service, government-owned grocery stores, a rent freeze for the 1 million apartments under city jurisdiction, and a vow to build 200,000 affordable-housing units over the next decade. After the tallies were boosted by New York’s ranked-choice voting system, Mamdani won 56 percent of the vote. He now tops polls for the general election in November. His agenda already is influencing Democrats nationwide.
Few if any of the Americans who use the term socialist would today defend Communist central planning. But as they criticize the many failings of contemporary American society, they tend to shirk the obvious counter-question: If not central planning, then what do they want? Liberals such as Bill and Hillary Clinton proposed to let markets create wealth, which governments would then tax to support social programs. If that’s out of style, if something more radical is sought, then what might that something be? Merely Clintonism with higher taxes? Or a genuine alternative? How can a society that aspires to socialism produce the wealth it wants to redistribute if not by the same old capitalist methods of property, prices, and profits?
The socialists of a century ago promised both a new way to create wealth and a new way to share it. The preeminent American socialist of the early 20th century, Eugene V. Debs, outlined that new system in speeches such as the one he delivered in Girard, Kansas, in 1908:
We Socialists propose that society in its collective capacity shall produce, not for profit but in abundance to satisfy human wants … Every man and woman will then be economically free. They can, without let or hindrance, apply their labor, with the best machinery that can be devised, to all the natural resources, do the work of society and produce for all; and then receive in exchange a certificate of value equivalent to that of their production. Then society will improve its institutions in proportion to the progress of invention. Whether in the city or on the farm, all things productive will be carried forward on a gigantic scale.
As soon as it was attempted, this breathtaking utopian vision bumped into a daunting challenge: Without market prices, how can any of those gigantic socialist enterprises know what to make or how to commit their resources? And without market institutions, including the profit motive, how can we have market prices? Socialist enterprises would blunder about in the dark, unable to communicate with one another, unable to respond to changing circumstances, because they severed the lines of communication that connect economic actors.
Much brainpower was invested over many decades to solve this riddle. Francis Spufford’s novel Red Plenty makes improbably poignant literature out of the desperate hopes of Soviet economists that the new technology of the computer might somehow rescue socialism from its own impossibility.
But there was no escape. There is no socialist way to create wealth. There is only a socialist way to spend wealth. The socialist revival of the past half decade no longer even pretends to worry about wealth production. It exists purely as a new set of claims on existing modes of production: socialist apartments funded in effect by taxes on nonsocialist apartments, socialist grocery stores that do not have to pay the taxes or rent paid by nonsocialist grocery stores.
The beneficiaries of these claims will not necessarily be society’s poorest. New York City distributes affordable-housing units through a process that begins with a lottery but rapidly transforms into a test of skill, savvy, and connections. In the first place, New York favors applicants who work for the city, in itself a step that advantages middle-class people over the truly needy. Then, once the lucky lottery winners get their good news, they must assemble a mass of documents to prove their desirability as tenants—pay stubs, lease records, birth certificates. As an expert on the process explained to a real-estate website: “Once you’ve been selected, it’s all about being organized and efficient.” The people most at risk of homelessness are those least likely to navigate New York’s system of nonmarket and submarket rents.
In 2022, Mayor Eric Adams—elected as a Democrat, though now running for reelection as an independent—cut the ribbon on a $120 million project in Far Rockaway. This outer-borough development offered studios starting at $522 a month, two-bedroom apartments for $809 a month. But the building contained only 224 units. For all the excitement of the lucky beneficiaries, this is the faintest replica of a housing solution—as well as a reality check to Mamdani’s grandiose vision of government-led housing abundance.
Given this disappointing record, why are so many New Yorkers signing up for more and bigger? The short answer is that the debate about socialism is scarcely about socialism at all. Socialism’s catastrophes are today obscure, relegated to a poorly remembered past. Dissatisfaction with the present-day economic system is felt urgently in the here and now.
[Read: Zohran Mamdani’s lesson for the left]
The progressive economist Joseph Stiglitz recently remarked, “Trumponomics is ersatz capitalism.” The president and those around him are accumulating huge fortunes by unashamedly preying on the credulity of their followers. Trump insiders have used political power to harass regulatory agencies and cripple tax enforcement. Trump’s big policy moves are accompanied by an avalanche of suspicious trades. “Of the stock and stock fund sales administration officials reported between Jan. 20 and April 30, 90% fell within 10 days of the tariff announcements,” USA Today reported last week. The New York Times suggested in April that if Trump seems to care little about crashing the stock market but a lot about the bond market, that may be explained by his own holdings: few stocks, many bonds. (Unlike most past presidents, Trump has not put his holdings in a blind trust.)
While Trump’s behavior discredits markets, his rhetoric vilifies markets. In April, the Trump administration imposed the most crushing tariffs on international commerce since the Smoot-Hawley Act’s regime of 1930. The Trump adviser Stephen Miller explained to Fox News the administration’s reasons: “Our leaders allowed foreign countries to rig the rules of the game, to cheat, to steal, to rob, to plunder,” he said. “That has cost America trillions of dollars in wealth.” Echoing his boss’s grievance-laden language, he said, “They’ve stolen our industries.” It’s not always phrased so vituperatively, but the message is consistent: free exchange is an illusion; there is nothing but exploitation. The only way to protect Americans from this exploitation is for the nation’s political leaders to subject more and more of the U.S. economy to state control. If this way of thinking is true, then the severest critics of capitalism are right.
Happily, this way of thinking is not true. Free exchange is a system of cooperation and mutual benefit, the most effective that humanity has yet discovered. But who in the Trump-led United States is arguing the case for free exchange? The most influential intellectuals of the left reject markets as too inequitable; those on the right reject them as too cosmopolitan. On one side, the professional politicians are intimidated by their most radical supporters; on the other, the politicians are under the sway of crooks and con artists, whose idea of capitalism is unregulated permission to bilk and defraud.
Marxists condemn capitalism as “organized robbery.” They could not be more wrong. But who will refute them when the government of the world’s largest capitalist democracy is in the hands of organized robbers?
