A spectre is haunting America — the spectre of socialism. The spectre of socialism past is Bernie Sanders, the veteran Vermont senator. The spectre of socialism present is Alexandria Ocasio-Cortez, or AOC, the novice representative from New York’s 14th congressional district. And the spectre of socialism future is some kind of hideous cross between Sanders, AOC and the Venezuelan tyrant Nicolas Maduro.
Who said the following? “I believe that all good things taken to an extreme can be self-destructive and that everything must evolve or die. This is now true for capitalism. The income/wealth/opportunity gap is leading to dangerous social and political divisions that threaten our cohesive fabric and capitalism itself.” If there is no reform, “we will have great conflict and some form of revolution”.
No, it was not Sanders or AOC. It was Ray Dalio, founder of Bridgewater Associates, the world’s largest hedge fund, which has about $160bn (£123bn) of assets under management. Dalio himself has an estimated net worth of more than $18bn. In a recent essay published on LinkedIn he tore into the system that has made him a billionaire.
You can see why the capitalists are nervous. Last week Sanders and AOC joined forces to propose new legislation (the Loan Shark Prevention Act) to “take on Wall Street greed” by capping credit card interest rates at 15%. AOC also recently endorsed Elizabeth Warren’s proposal to break up the big technology companies.
And let’s not forget February’s Green New Deal with its “10-year national mobilisation” to generate 100% of US power from “clean, renewable and zero-emission energy sources”, its state-led investment plan for high-speed rail “at a scale where air travel stops becoming necessary” and its guarantee of “economic security” for people “unable or unwilling to work”.
It used to be a favourite question of the political scientists: why is there no socialism in the US? The German writer Werner Sombart asked it in 1906. He attributed it to the unpolitical character of US trade unions; a national culture that revered capitalism and the constitution; the stability of the two-party system; and the American worker’s relatively higher standards of living compared with his European counterpart.
“On the reefs of roast beef and apple pie,” wrote Sombart, “socialistic utopias of every sort are sent to their doom.”
Writing nearly a century later, in 2000, the US sociologist Seymour Martin Lipset offered similar explanations. Without a feudal, class-stratified past and with a homegrown ideology of equality, liberty and egalitarianism, American society was less susceptible to socialist appeals. The western frontier offered new possibilities for the dissatisfied. And the American working class was too divided by ethnicity and race to feel the solidarity of Europe’s proletariat.
The best performance by a socialist candidate for the presidency was in 1912, when Eugene V Debs, of the Socialist Party of America (SPA), won more than 900,000 votes — 6% of the total. The party also secured the election of two members of the House of Representatives, dozens of state legislators and more than 100 mayors.
But its opposition to the First World War and the attraction of Franklin Roosevelt’s New Deal in the 1930s doomed the SPA to decline. It gave up running presidential candidates after 1956, when its nominee won fewer than 6,000 votes.
Yet something is afoot on the American left today. AOC is only the most famous member of the Democratic Socialists of America (DSA) to have been elected to the House last year; the Michigan congresswoman Rashida Tlaib is also a member. And there are now about 35 DSA members in state legislatures.
More striking is the polling data. A Gallup poll last August revealed that only 47% of Democrats viewed capitalism positively, down from 56% in 2016; 57% viewed socialism positively.
The big story here is the growing enthusiasm for socialism among younger Americans. Whereas only 27% of over-65s have a positive view of socialism, according to an Axios poll conducted in January, 61% of those aged 18-24 do.
Of course it all depends what you mean by “capitalism” and “socialism”. Ask Americans about “small business”, “entrepreneurs” or “free enterprise” and you get 79%-92% approval, according to Gallup. By “capitalism” they seem to understand something closer to “big business”.
In its original sense, socialism (as the Oxford English Dictionary makes clear) is a “system of social organisation based on state or collective ownership and regulation of the means of production, distribution and exchange for the common benefit of all members of society”.
That is not what young Americans think it means. They appear to associate socialism with government-provided healthcare and university education. (An ingenuous few think socialism means being sociable.)
As AOC put it in a recent interview: “What we have in mind and what my policies most closely resemble are what we see in the UK, in Norway, in Finland, in Sweden.” But how socialist is Sweden, a country often depicted as utopia by progressive types who have never been there? The country comes ninth in the World Economic Forum’s global competitiveness league table; 12th in the World Bank’s ease-of-doing-business rankings; and 19th (out of 186) in the conservative Heritage Foundation’s economic freedom rankings.
Not only do American socialists not know what socialism is; they don’t know where it is either. Socialism does still exist around the world in various forms. If you want to see state ownership in action, along with the corruption, inefficiency and poverty that invariably go with it, I recommend Caracas, Pyongyang or — more picturesque — Havana. Don’t look for it in Europe, where even Social Democratic parties have been haemorrhaging voters since the 1990s.
If you want to have a debate about the degree of redistribution you want to effect through the tax and benefits systems, don’t confuse yourself by talking about socialism. The democratic world is all capitalist now. Voters just choose how much they want to mitigate the inequalities inevitably produced by the market. At one end of the spectrum are the Chileans and Mexicans, who do very little redistribution; at the other are the Finns and the Irish, who do quite a lot. Everyone else is somewhere in between.
If Democrats are smart they will zero in on healthcare, which Republicans screwed up when they could not muster the votes to repeal and replace Obamacare. If Democrats are not smart, they will allow themselves to be associated with socialism. AOC and her followers may like the sound of that word, but most Americans retain their ancestral allergy to it. A new poll by Monmouth University, in New Jersey, has found that 57% of Americans think socialism is simply not compatible with American values.
Yes, a spectre is haunting America — the spectre of socialism. That spectre could prove helpful to Donald Trump next year.
Niall Ferguson is the Milbank Family senior fellow at the Hoover Institution, Stanford