By David Frum
Sunday, July 27, 2025
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 huge 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 were 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 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. 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 experts believed that, 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.
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 her stump
speech, 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 flagrantly disdainful of the travails of ordinary people, and
with grifters
who liked to live high on public expense.
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. 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. On the other hand, 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 in student debt a year after graduation. 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 socialist planning 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.
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
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?
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