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Capitalism or Socialism? There’s an Even Better Option

Bernie Sanders’ popular campaign suggests that many Americans aren't afraid of socialism anymore. But real democracy is an even better alternative to capitalism.

David Korten

 by YES! Magazine

Politics and polling data reveal a remarkable shift in American attitudes toward socialism. More Democrats now view socialism favorably (42 percent) than unfavorably (34 percent). Among young adults, socialism does even better with a 43 percent favorable view vs. only 26 percent unfavorable. Presidential candidate Bernie Sanders, a self-described Democratic Socialist, has surprised the establishment with the strength of his campaign. He is especially popular among Millennials, the generation positioned to define America’s future.

So is the United States turning to socialism?

Proponents of capitalism assure us we have only two choices: capitalism (big business) or socialism (big government). As we see the self-proclaimed capitalist regime’s incapacity to address growing economic desperation and accelerating social breakdown and environmental collapse, socialism, for all its own evident faults, becomes the only option.

I grew up in a prosperous small town in Washington state. Our main street was populated by thriving, mostly local, businesses. My dad owned and managed a successful retail music and appliance store located in the heart of the business district in the heart of a vibrant community. He loved making money but often said, “If you are not in business to serve your customers and community, you have no business being in business.”

I assumed that my life growing up was the result of the happy confluence of capitalism, democracy, and a market economy. Given that socialism was represented as the antithesis of these things, I accepted the view that socialism is anti-American and a threat to freedom and democracy.

Of course, my early hometown experience bears little relationship to the capitalism we know today. Over time, I realized that it’s not so simple.

Debating the relative merits of two failed and ill-defined ideologies is a diversion from the real issues. In the United States, we face the inherent disabilities of both big government and big business. And the unholy alliance between the two that renders democracy—the voice of the people—mute.

Assuming that capitalism is about the economy and democracy is about governance, we fail to recognize an essential truth: There is no political democracy without economic democracy.

In any economic system, power resides with the owners of the means by which people make their living. The power of kings resided in their ownership of the lands and waters from which their subjects harvested their food and quenched their thirst. Under socialism, government owns these assets in the name, but not necessarily the interest, of the people.

"There is no political democracy without economic democracy."

Under contemporary capitalism, the rights and powers of ownership reside with global corporations that control jobs, resources, and markets. They own land, water, intellectual property, mining concessions, manufacturing, banks, schools, prisons, health care facilities, media—and politicians. They lavishly reward their board members and top executives for maximizing short-term profit without regard to social and environmental consequences—and replace them if they don’t.

Capitalism cultivates an illusion of freedom while consigning all but the few at the top to lives of wage and debt slavery. It is a far cry from either democracy or Adam Smith’s vision of local markets governed by a shared moral code and populated by local farmers, artisans, and merchants who own their own land and tools, care about their neighbors, and come to the market to exchange goods and services. Thomas Jefferson recognized Smith’s economic vision as an essential foundation of democracy.

Democracy is a governance system in which power resides in the people. That power cannot be limited to voting for political representatives every few years. It must be rooted in economic structures that distribute power equitably and link it to the interests of communities of place. Such structures can come in many forms: Individual and family enterprises, community-owned enterprises, cooperatives–large and small—and even governmental and quasi-governmental bodies.

Democracy is the life-serving alternative we seek to the life-destroying capitalist tyranny under which we now live. Democracy, not the false dichotomy of capitalism or socialism, should be the election’s framing issue.


This article was written for YES! Magazine, a national, nonprofit media organization that fuses powerful ideas and practical actions. Licensed under a Creative Commons Attribution-Share Alike 3.0 License.
David Korten

David Korten

Dr. David Korten is the author of "Agenda for a New Economy,"  "The Great Turning: From Empire to Earth Community," "Change the Story, Change the Future: A Living Economy for a Living Earth," and the international bestseller "When Corporations Rule the World." He is board chair of YES! Magazine, co-chair of the New Economy Working Group, a founding board member of the Business Alliance for Local Living Economies, president of the Living Economies Forum, and a member of the Club of Rome. He holds MBA and Ph.D. degrees from the Stanford University Graduate School of Business and served on the faculty of the Harvard Business School.

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