“I’m a capitalist, and even I think capitalism is broken”. This was the message from Ray Dalio, head of the world’s largest hedge fund, in April this year. Dalio is the founder of Bridgewater Associates, a company with assets of $17 billion, and like many other CEOs he is worried that more and more people are becoming critical of capitalism.
“Capitalism keeps CEOs awake at night,” was the headline when the Financial Times summarised the situation. “Why now, 10 years on from the global financial crisis, after seeing stock markets and profits hit new highs and a Republican president cut corporate tax rates and regulations at their urging, do America’s leading capitalists sound so uneasy?” FT asked.
One answer, according to some in the thick of the debate, is fear.
“I think there’s a real fear that it’s legitimate now to talk about socialists’ and the left’s ideas of much higher taxes, corporate regulation, corporate reform and the stifling of free market enterprise,” was one of the answers.
“What really scares them is when they look at the data showing younger people are increasingly comfortable with socialism as a way of organising the economy,” Darren Walker at the Ford Foundation answered.
A feature article in The Economist in February reported that 51% of those aged 18-29 in the United States have a positive view of socialism. In the US President’s State of the Union address in January Trump declared that the United States “will never be a socialist country”. And on launching his election campaign for 2020, he said: “We are going to war against some socialists”.
This anguish was clearly shown when the big bank chiefs were questioned by politicians in the US House of Representatives. “Are you a socialist or are you a capitalist,” asked Roger Williams, the Republican from Texas. The defendants did not falter in their defence of capitalism, but the remarkable thing was that this question was raised at all!
The new found sympathy many have with socialist ideas is a result of the capitalist crisis. The Economist concluded that this is a prevailing mood against inequality, environmental degradation and the elite’s undemocratic rule.
Capitalism survived the crisis of 2008-09 but the cost was huge budget deficits and debt mountains. This was combined with austerity measures for working people. As a result, large companies were “stimulated” with even greater profits than before.
But the “weaknesses in the system” that were supposed to be rectified have instead worsened and the capability to respond to a new crisis has deteriorated.
The working class was taken by surprise by the crisis and the union leaders in country after country were totally incapable of organising an effective fight against austerity measures. As a result, an opening for left and socialist ideas has developed.
Behind the CEOs concerns is their knowledge of the strong support for Bernie Sanders’ campaign against Wall Street and its politicians. In the 2016 primary race he got more votes among young people than Trump and Hillary Clinton combined.
The fact that Sanders calls himself a socialist, refuses to take money from big business, and stands for healthcare and free education for all is an important factor behind the increased interest in socialism in the United States. His successes mean that more Democratic party politicians are trying to follow in his footsteps, like Alexandria Ocasio-Cortez.
The Economist urges liberals to oppose the socialist upswing. The journal’s suggestions, for example that capitalists should go elsewhere if taxes are raised, shows that even good reforms have loopholes and are inadequate.
This was also pointed out by the super-rich trio Bill Gates, Charlie Munger, and Warren Buffett in a recent television interview. Gates actually said that the proposals from Sanders and Ocasio-Cortez are not socialism, but “capitalism with some level of taxation”.
The development in countries like Sweden – from a model of progressive reforms to counter-reforms – underlines that if the power and ownership of the capitalists are not challenged and replaced by democratic socialism, then they will strike back with privatisations, increased inequality and decayed welfare.
The resurgence of basic socialist ideas is a breath of fresh air, but they need to be developed. To save the climate and really tackle wealth inequality the big corporations and the banks that dominate the economy need to be brought into public ownership and under democratic control.
The fact that today’s newly awakened socialist interest could lead to such a development is exactly what frightens the CEOs and it should inspire us all to fight for a socialist future.
By Per-Åke Westerlund