Socialism is celebrating a comeback
When I started writing my book “The Power of Capitalism”, one main objection I often heard was, “Why this book? Don’t we all already know that capitalism is the superior system and socialism doesn’t work?”
Skip forward just a few years and, wherever you look, capitalism is on the defensive and socialism is celebrating a comeback. And yet it’s not that long ago – the early 1990s in fact – that we were all celebrating the collapse of socialist systems in Eastern Europe and the Soviet Union. Even the Chinese struck out on the path to more capitalism – thanks to their market economy reforms, the percentage of people living in extreme poverty in China fell from 88% in the early 1980s to just 1% today. This is striking proof that private enterprise and freer markets are the best weapons in the fight against poverty.
But in Western countries, many people now see things differently. In Britain, politicians like Jeremy Corbyn and John McDonnell dream of giving the economy a socialist-style makeover. Fortunately, British voters decisively rejected such ideas in the country’s most recent elections. This is a sign of hope.
But socialist ideas are also gaining ground in two of the West’s other major countries, the United States and Germany. In the United States, a Gallup survey has revealed that 57% of Democrat supporters sympathise with socialism. Young Americans, in particular, are increasingly buying into socialist ideas. In 2010, 68% of Americans under the age of 30 still had a positive opinion of capitalism. Today it is only 45%. At the same time, more than half of young Americans say they are sympathetic towards socialism.
In the United States, the Democrat’s presidential candidates are racing to outbid each other with socialist ideas. The avowed socialist Bernie Sanders is no longer a lone figure. The influential congresswoman Alexandria Ocasio-Cortez, who has also described herself as a socialist, has called for a top marginal tax rate of 70%. And the Democratic presidential candidate Elizabeth Warren has proposed tax increases that, according to the Wall Street Journal, would push the tax burdens of many of the country’s wealthiest individuals over 100%.
Socialism is also enjoying a renaissance in Germany. On the 200th anniversary of the birth of Karl Marx, a larger-than-life statue was erected in Germany in honour of the communist mastermind. And regulation is turning one major Germany industry after the other into planned economies. First, it was the energy sector. Germany is the only country in the world that has decided to shut down both its nuclear and coal-fired power plants. The Federation of German Industries (BDI) has estimated that Angela Merkel’s “Energy Transition” will cost €2.3 trillion – and that was before the decision was taken to phase out coal as well as nuclear. Angela Merkel also set a target of getting one million electric cars onto German roads by 2020. Despite buyers being bribed with massive electric vehicle subsidies, the target was missed by a wide margin. Recognising its failure, the government has taken a different path – the EU has now set so-called “fleet-wide average emission” targets, forcing companies to ramp up their production of electric vehicles. It is not car companies and consumers who get to decide what is produced, but the EU.
All around the globe, capitalism is now being blamed for the world’s major problems – and many see the solution in a more expansive state. I fear that if the financial and euro crises flare up again, calls for nationalisations will become even louder because the market is being blamed for problems that are actually caused by the state. In most cases, nationalizations will not be implemented in the same way as they used to be in socialist states. There is no formal change in the ownership of the private property, but the owner’s rights are increasingly diminished as the state, not the owner, calls the shots and decides what happens with it.
The fact that every single socialist experiment over the past 100 years (more than two dozen in total) has failed does not seem to have discouraged proponents of the planned economy and nationalization. You can already hear them promising: “Next time, everything will be better, you’ll see”. It’s the same promise they make after every failed socialist experiment.
Dr. Rainer Zitelmann is a German historian and sociologist. His book, The Power of Capitalism (http://the-power-of-capitalism.com/), was published in 2019.