I Wonder What They Mean?

The editors of the Wall Street Journal crow over a recent Gallup poll that Americans continues to prefer capitalism over socialism by a substantial margin:

Politicians and think tanks these days welcome the death of free markets as they support more power for the state. But a new poll from Gallup confirms that the American people still have more faith in capitalism than they do in socialism. Gallup further reports that this support for capitalism over socialism has held steady for more than a decade.

Asked in an October survey—“just off the top of your head”—whether they have a positive or negative image of six different economic and governmental terms, 60% reported “positive” for capitalism against 38% for socialism.

Gallup notes that the negative view of socialism has remained constant “even as Sen. Bernie Sanders and progressive Democratic politicians have pursued an expanded government role in addressing healthcare, poverty and early childhood education.” They might have noted that some of the push these days for more government control of economic life is coming from the political right as well.

I wonder what people mean by “capitalism” and “socialism”? I strongly suspect that most people including most elected officials think in terms of slogans rather having any informed views on the subject. In particular how do you reconcile the enduring popularity of Medicare, Social Security retirement income, and the military with support for capitalism?

In considering this let’s make one observation and then define our terms. In every country in the world there are only two basic forms of organizing an economy: a market system and a command economy. In a market system prices are determined by what people are willing to pay and what is bought and sold depends on the choices of individual buyers and sellers. In a command system the government determines what will be bought and sold and the prices that will be paid. There are very few pure market systems or pure command economies. Almost all countries are somewhere in between.

Now I’ve already defined “capitalism”. “Socialism” on the other hand means government control of the means of production. Some people blithely talk about “public control” or “popular control” but other than in very small communities such a thing does not exist in the wild. In practice all socialism is state socialism.

What would a pure market system look like? Just to make a little list under a pure market system there would be no government regulations, no patents or copyrights, no occupational licensing, no health or safety requirements, no Medicare or Medicaid, no Social Security, no public highways, and no standing army. I presume some will disagree with that last. The reality is that a modern standing army cannot be supported solely based on a head tax and anything other than a head tax is redistribution which is socialism. What most people forget is that money is the most important means of production and, if the government controls the money, it’s socialism.

Only the most doctrinaire anarcho-capitalists want such a pure market system. My observation is that most people, including the editors of the Wall Street Journal, square the circle by creating their own fuzzy definitions of capitalism and socialism. When you take such a post-modern view anything can be anything. Nothing has any meaning.

Which do I prefer? Both. Neither. My preference would be for a government focused intently on keeping everything including the government at a human scale. Corporations, NGOs, bureaucracies, all organizations would be limited in how big they could be. The federal government would remain large but it would be limited in its scope to that purpose, to the military, and to foreign policy. Every day my ideal system recedes farther and farther into the distance. I’ve learned to deal with disappointment.