Does socialism work? Depends on who you ask

Eric Ventimiglia: Socialism doesn’t work, and history proves it

OPINION — Socialism gets rebranded every generation. New faces, a new hashtag and a catchy slogan, but the pitch stays the same: this time will be different. It never is, because socialism’s problem isn’t bad luck or bad leadership. It’s just a bad idea.

Socialism assumes that government planners can determine what millions of people need better than individuals, families and businesses can determine it for themselves. History offers little reason to believe that assumption.

Prices communicate scarcity. Profits reward businesses that create value. Competition pressures producers to improve quality, control costs and respond to consumers. When governments suppress those signals and replace them with political directives, shortages and stagnation inevitably follow.

Consider Venezuela. In the 1950s, it ranked fourth globally for per-capita GDP. As recently as the 1980s it ranked in the top 25. Then, socialist leaders Hugo Chávez and Nicolás Maduro nationalized industries, seized private businesses, and imposed sweeping price and currency controls.

The result? Under Maduro, economic output fell by more than two-thirds. At the height of the crisis, a leading national survey found that 96% of Venezuelan households were living in poverty.

A country with some of the world’s largest oil reserves could not reliably keep its lights on or its stores stocked. That’s not bad luck. That’s a very bad idea — socialism — in action.

Cuba offers another warning. Once the gem of the Caribbean, a 2026 study in the Journal of Development Economics concluded that Cuba’s economic performance deteriorated sharply after the 1959 revolution and that the loss of Soviet subsidies exposed the depth of that weakness.

The Soviet Union provides the clearest example of central planning’s inability to coordinate a complex economy. In 1990, bread disappeared from Moscow stores despite a record grain harvest. The problem was not a lack of wheat. It was a decaying system that could not reliably transport, process and distribute food.

By the first quarter of 1991, Soviet gross national product was 8% lower than it had been a year earlier, with declines spreading through nearly every part of the economy. Central planners could issue production targets, but they could not reproduce the information, incentives and coordination generated by markets.

Defenders of socialism often respond that these examples were not “real socialism.” The theory was sound, they say; only the execution failed.

However, execution is the point. An economic theory must be judged not only by its promises but also by the institutions and incentives it creates. Concentrating economic power in government repeatedly produces political allocation, weak accountability and resistance to correction. When failure comes, officials rarely surrender authority. They demand more of it.

The United States chose a different model. It protected private property, encouraged entrepreneurship and generally relied on markets to allocate capital and labor. The government established rules, funded basic research and built public infrastructure, but it did not replace the private sector as the economy’s principal engine.

That combination helped produce extraordinary prosperity and innovation. According to the National Science Foundation, U.S. knowledge- and technology-intensive industries generated $3.3 trillion in value in 2024, accounting for 11% of the nation’s gross domestic product.

The impulse to transfer more economic power to government has not disappeared.

California voters will consider a measure this year imposing a one-time “wealth tax” allowing the state to seize up to 5% on assets exceeding $1 billion. Washington state has enacted a 9.9% tax on income exceeding a $1 million deduction, effective in 2028. Michigan’s Democratic nominee for U.S. Senate, Abdul El-Sayed, won his primary while supporting a Medicare for All and higher taxes to finance expanded government benefits.

Each of these policies is a bad idea, an economically disastrous breadcrumb on the path to socialism.

Ronald Reagan warned in 1967 that “freedom is a fragile thing and it’s never more than one generation away from extinction.”

A new generation is being offered old ideas wrapped in modern language. It should not be asked to ignore what happened in Caracas, Havana and Moscow. Freedom and free enterprise must be defended in every generation, including this one.

Eric Ventimiglia is executive director of Pinpoint Policy Institute, Virginia-based bipartisan nonprofit. He wrote this for InsideSources.com.

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Chuck Collins: Pundits call it socialism, but many call it common sense

OPINION — The debate over capitalism vs. socialism often looks like a battle of cartoon caricatures: Monopoly Man versus the Marx Monster.

Across the planet there are countless flavors of capitalism and socialism, unique mashups of free markets and government policies. Into this muddle wade the right-wing ideologues who fear the red “socialist” demon hiding in every corner. 

If Fox News existed in the 1950s, they would’ve labeled Republican President Dwight Eisenhower a socialist for taxing the wealthy and making broad public investments to expand homeownership, enable debt-free higher education, and build infrastructure and technology that expanded the modern middle class. 

Yet, what do these labelers call modern-day China, a country that mints hundreds of billionaires a year and dominates global markets with private production? Are they socialist or capitalist?

 Meanwhile, social democracies, like Canada and the northern European countries, have progressive tax systems and strong social safety nets. Sweden, with its generous welfare state, has higher rates of entrepreneurship than the U.S. 

These countries also have higher rates of social mobility than the U.S. — meaning it’s easier for lower-income people to escape poverty and become stable. The American Dream, apparently, has moved offshore.

These welfare states, with their higher taxes on the wealthy, exist comfortably alongside healthy market economies. However, in the U.S., whenever a politician proposes that billionaires pay their fair share of taxes so we make public investments in opportunities for everyone else, they are labeled socialist or even communist.

These criticisms conflate a set of policy proposals, most of them quite popular, with an economic system where the government owns the means of production. However, this well-trod attack doesn’t seem to be working anymore, especially for younger generations.

Younger voters see the grotesque inequalities of wealth and power that distort the economy and block opportunity for the non-rich. They witness how large corporations have captured Congress and blocked popular reforms to defend consumers and counter monopolies. 

They watch with alarm as billionaire-backed private equity firms buy up healthcare facilities and squeeze consumers in every corner of the economy. They see how both major political parties have been captured by the billionaire donor class and failed to address stagnant wages and rising basic costs.

 All generations now understand that the old American Dream has expired, with seven in 10 experiencing economic insecurity. These folks still hope hard work could lead to a decent life — to own a home, take a vacation, pass opportunities to their children and retire before they die. They feel the constant stress of knowing they’re one job loss, illness, disability or divorce away from living in their car. 

Without a strong party representing working people’s concerns, political realignments are happening in both parties. A new generation of progressives and a handful of self-described democratic socialists argue the economy should work for everyone, not just the billionaire class. 

They believe new technologies — such as AI — should serve everyone, not just billionaire tech bros and their global conglomerates. They believe the government has an important role in expanding healthcare, blocking oligarchy and breaking up big corporations. 

They advocate for expanding affordable housing to aid people struggling to find decent housing in a hyper-speculative market. Instead of subsidizing private developers, they advocate for housing owned by nonprofit organizations, resident cooperatives and — egads! — government entities, like housing authorities.

These progressives believe we should stop subsidizing the fossil fuel industry and end tax breaks to the Jeffrey Epstein class. They support investments to help us transition to sustainable energy, lower energy costs and reduce climate disruption.

 The right-wing pundits — and some so-called moderates, too — are hoping that when they trot out the “socialist” bugaboo, your mind will freeze and you’ll start frothing at the mouth. They’re afraid that you will ask why the current system isn’t working and wonder if there are alternatives. Pay no attention to the man behind the curtain!

 When someone brandishes the word “socialism” like it’s a stink bomb, take a courageous look at the actual ideas — higher taxes on the rich? Medicare for All? A raise for working people? — being proposed. There might be more common sense than you thought. 

Chuck Collins directs the Program on Inequality and co-edits Inequality.org for the Institute for Policy Studies. He’s also author of the book, “Burned by Billionaires: How Concentrated Wealth and Power Are Ruining Our Lives and Planet.” He wrote this for InsideSources.com.