Lets Talk Bogeyman: Here’s What Social Is (And Isn’t)

Donald Trump declared that America will never be socialist. He’s beating up a strawman, since there has never been a fully socialist country. That’s because, throughout history, every country, whether it considers itself socialist or capitalist, engages in capitalism to some degree, which is essentially the existence of a marketplace, where goods, services, information, and labor are exchanged. 

Regardless of what is exchanged, everything exchanged becomes a commodity whose value shifts in line with the demand for it. The dynamics of the market also result in the gradual accumulation of wealth for some while denying essential items, such as housing and food, to those who cannot afford them.

While Wikipedia identifies two dozen different kinds of socialism, two primary approaches support socialist goals of upholding a society’s welfare. One approach is to realistically regulate the marketplace to ensure it provides everyone in society with basic needs, allowing them to lead satisfactory lives. The other is pursuing the ideal communal society without a marketplace that forces competition for obtaining basic needs. 

Capitalism: an unavoidable dynamic of the marketplace
Socialism: the inevitable response

Capitalism’s active practice is maintaining a marketplace to exchange goods and services, and access to them through a price system. Money has the greatest exchangeability value because it allows for the acquisition of various types of resources, one of the most critical being political power. However, exchanges can be made through a barter system, in which tangible items, including human labor, can be directly exchanged between seller and buyer. This was the dominant system before the advent of written history. 

Capitalism’s belief system is limited to preserving the marketplace because it results in greater accumulation of resources that can be used for many purposes. There is no aspiration to create a new society; rather, it is to protect the current market-based one. It is a continuation of Adam Smith’s philosophy, as presented in An Inquiry into the Nature and Causes of the Wealth of Nations, which appeared just as the Industrial Age was dawning in the late 1700s. He believed that individuals pursuing their self-interest in the marketplace would benefit society through increased productivity and wealth.

Socialism as a practice can be seen as a popular response to the marketplace system that replaced the barter system.  It aimed to regulate the marketplace so that no concentration of material or social advantages occurred to the extent that it disrupted a community’s cohesion.

Socialism, as a pronounced belief system challenging the marketplace, emerged in the 19th century, when the term “socialist” was introduced. It was first used to describe the effort to create cooperative businesses and communities as an alternative to capitalism’s marketplace economy.

The marketplace created civilization.

Although the term “socialist” was not used before 1800, some scholars argue that the marketplace spurred civilization. It also stratified the population along divisions of labor and the ability to obtain resources that could be converted into political power.

Christopher Ryan, author of Civilized to Death – The Price of Progress, argues that the development of agriculture led to the rise of civilization based on individual competition for personal gain through institutions that benefit from expanded commerce. Without directly mentioning marketplace dynamics, he describes them when he notes that the decline in community health resulted from its division into hierarchical groups based on resource accumulation, such as individual land ownership rather than communal ownership. 

Ryan is among the philosophers who believe that prehistoric societies were cooperative communities where classless norms and practices prevailed because the marketplace did not exist. That view of pre-historical society supports the socialist ideal that egalitarian societies can exist by adopting economic practices that improve the welfare of everyone. 

The rise of socialism has been a natural response to the exponential growth of the marketplace, destabilizing societies.

The first major socialist practice in direct response to capitalism emerged in the 19^th century, with Robert Owen, a textile manufacturer. He was the first in this era to establish communities based on cooperative ownership and production, aiming to alleviate poverty and inequality resulting from the marketplace. However, since it was confined to only a small portion of the population, it was never considered a direct threat to the capitalist market and tolerated by capitalist governments. 

Philosopher Karl Marx transformed his version of socialism into a belief that communism was an inevitable destination of capitalism. Marx considered Owen and other socialists who advocated for cooperatives as “utopian socialists” because they aimed to achieve a socialist utopia without resorting to a class struggle or revolutionary action to overthrow capitalist governments. However, Marx never provided a plan on how communism would operate, so he too aspired to see a perfect world created much like Owen’s utopia.  

Marx concluded that capitalism would inevitably result from internal conflicting forces within the capitalist marketplace that would ultimately bring about its demise. Marx popularized the concept of communism with his 1848 pamphlet, The Communist Manifesto.

V.I. Lenin, the founder of the Russian Communist Party and the Soviet Union, believed that socialism was a transitional stage between capitalism and communism, in line with Marx’s view that it would ultimately lead to a perfect society.  However, to reach that stage, a strong centralized government was necessary to continue the process and ultimately arrive at a communist society.  

Ironically, one of the first to warn against this enforced transformation of society was the socialist-anarchist revolutionary Mikhail Alexandrovich Bakunin. He argued that applying Marx’s theory would lead to one-party state dictatorships ruling over all workers, but not by the workers. 

The governments of Joseph Stalin and Mao Zedong were the most committed to creating a communist society. Soon after gaining power, they became one-party autocracies instead of worker utopias, with the communist party controlling both the government and the market. The most valued asset was party membership, which granted access to material goods and social benefits. The cost was loyalty to the party’s beliefs and practices.  

The utopian socialists failed to establish a worldwide cooperative community. However, their ideas and actions contributed to the growth of political parties that worked to regulate the marketplace, addressing the socialist goal of creating a socially conscious economy. Their legacy is reflected in current countries that are social democratic or considered democratic socialist by providing social welfare within the framework of the marketplace economy. 

The Scandinavian countries exemplify how a socialist approach has reshaped the marketplace to benefit the entire population (see Scandinavian Model & Bernie’s Socialist Message). For example, they have no minimum wage, and they have either no or minimal inheritance taxes, unlike the US’s much higher rate. However, they offer subsidies and “social housing” to ensure everyone can afford housing, and medical care is mostly free. As a result, the GINI coefficient, which measures inequality within a country, is close to 3.0, while the US experiences significantly greater inequality, rated at about 4.5.

Social Democrats didn’t have a revolution; their marketplace remains, along with its unresolved flaws, but the overall comfort level for their citizens is the highest in the world. 

Capitalism’s marketplace can undermine a society’s stability if left unregulated, risking social upheaval.

A common marketplace issue is that those with the most invested in the market are rewarded by manipulating it to earn more than those with little or no influence. This imbalance creates divisions within the community between the haves and the have-nots. As a result, those who have accumulated the most resources have the power to undermine the entire community’s orderly functioning. 

Examples of a domestic market fracturing a society’s cohesion can be observed as far back as the Roman Republic. Over time, as Rome grew richer, the wealthy purchased land from the small plots of land of Roman farmers who had fewer resources. The wealthy would consolidate the lands, thus being better able to farm them with unpaid slave labor provided by Rome’s conquest of other tribes. Consequently, more Romans demanded an interventionist state to meet their basic needs. 

The Roman Senate, dominated by large landowners, refused to make land affordable for the average Roman to buy. As a result, proto-socialist leaders such as Gaius and Tiberius Gracchus emerged to advocate for agrarian reforms that would redistribute land from the wealthiest Romans. They were killed by the rich, and historians see their deaths as the beginning of the Roman Republic’s decline and eventual collapse, as the Senate remained indifferent until Julius Caesar became Consul and gained power as a dictator. 

This event is not an outlier. A historical pattern can be observed when a market becomes unable to serve the populace, leading to the decline of the institutions maintaining it and the emergence of a strong central power to meet the populace’s needs.  Political economist Karl Polanyi described this process in “The Great Transformation”, where unregulated market activity inevitably leads to fascism (or authoritarianism) because it undermines the ties that bind people together in society.

The marketplace promotes the accumulation of wealth, which concentrates political power to materially benefit the few at the expense of the majority.

The marketplace is the engine for capitalism, and the fewer restrictions on it, the more it is considered an “open market.”  The United States, Canada, Western Europe, and Australia are considered prime capitalist countries due to their relatively open markets. 

For instance, the US, like other countries, established a central bank, the Federal Reserve System (also known as the Fed), to regulate the open market by setting restrictions. This helps the market operate efficiently. In the US, the Fed is tasked with meeting the social goal of preventing excessive unemployment and the economic goal of keeping inflation stable. 

The Fed was created as an independent government agency that does not serve any politician’s interests but aims to maintain a functioning capitalist system for the benefit of the public and investors. 

President Trump wants the Fed to lower interest rates. Politically, it’s a smart short-term move because it would give the economy an immediate boost, helping Republicans win the next congressional elections. However, economists who report to Fed Chair Jerome Powell see it as potentially causing significant long-term inflation if implemented too quickly. Powell, whom Trump appointed, disagrees with Trump on who should make that decision. Trump wants control over the Fed’s economic policies, while Powell wants it to remain independent from political influence, so the public believes that economics, not politics, guides the Fed.

Trump’s approach to the Fed is more like socialist tactics than capitalist ones because he seeks to directly control the market. However, he differs from the socialist goal of promoting equality for everyone, as his actions would mostly benefit investors rather than the general public.

Trump also tried to influence the independent judicial system by limiting his federal court appointments to those who supported a religious group’s beliefs on abortion. This could have a profoundly negative economic impact on families who are forced to have children. By restricting access to the marketplace to benefit a particular community, access to abortion has fractured America’s social bonds. 

Protecting a dysfunctional marketplace out of fear of a dystopia caused by regulating it leads to a dysfunctional republic, if not its end.

Republicans have made a slogan of fearing “radical socialists” ruining this nation if they are elected. They imagine an authoritarian government if a government prioritizes a community’s welfare over a wealthy minority. This fear is based on repeating the attempt by Stalin and Mao to create a communist society. It does not reflect the gradual socialism practiced throughout history, nor how many nations have sought to reasonably modify the marketplace rather than eliminate it.

Over the past 100 years, a new form of government has emerged: democratic republics based on universal suffrage. They are not meant to create a utopia, but they better reflect the people’s desire for change than other types of government. They have enabled the formation and election of social democratic parties to mitigate the negative impact of marketplaces on the population.

Capitalism’s survival relies on meeting society’s needs through the marketplace. Socialism naturally emerges as a response to correct the imbalance caused when the market favors the wealthy at the expense of the rest. 

This brings us back to America today and the specter of Trump, republicans, and conservatives loudly attacking all socialists as threatening our nation. They fail to recognize that socialist practices and the capitalist marketplace have coexisted throughout history when the marketplace meets the community’s essential needs.  

Trump campaigned on making the marketplace work better for Americans. He publicizes his Big Beautiful Bill as fulfilling that promise. Economists have shown that it will disproportionately hurt the lower half of voters based on their wealth. Voters can respond in three ways: they could advocate for regulating the marketplace to meet their needs; they could vote out the representatives who refuse to make those adjustments; or they could turn away from what they deem as a seemingly ineffective democratic process and seek a “strongman” autocracy to deliver what they want. 

To sustain a democratic republic, citizens must participate in rational public discussions on how to navigate the marketplace without relying on fear-mongering slogans to shape our future. It doesn’t require an insurrection or revolution. However, it does demand hard work to find solutions through an open democratic process. Nevertheless, that is far better than living in a country run by a one-party state.