The New American Socialist Movement

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by Svetozar Pejovich

For more than two centuries, socialism could not find a place under the sun in the United States. The most prominent failure heretofore was by Eugene Debs (1855-1926), who founded the Social Democratic Party of America. Yet socialism is on the rise in the 21st century United States. Numerous studies have been written about why socialism is on the rise in America but almost nothing about the transformational roadmap to American socialism. Is American socialism anchored in one of the established socialist doctrines or is it a case of sui generis socialism?[1] To this end, the paper identifies three pressure groups that are active in defining the roadmap to socialism in America.

The Intellectual Elite argues that American capitalism is an immoral social system for at least two interconnected reasons. For one, because it evolved from slavery, and, second, the distribution of income is highly unequal (Gini coefficient is about .42). Pulling both arguments together, the Intellectual Elite replaced the traditional class struggle between property owners and wage laborers with the conflict between the privileged whites and oppressed minorities. The Intellectual Elite uses the inflammatory term racism, as the code word for this conflict.

Historical records are not supportive of the immorality of American capitalism. Why are thousands of minorities trying to get into the racist America?[2] Are Asians an oppressed minority in the U.S.? In 2018, the median household incomes of Asians and non-Hispanic Americans were  $87,000 and 71,000 respectively – an amazing statistic in an America of alleged white privilege. Moreover, an arguably significant number of whites arrived in America long after the Civil War ended. Those immigrants and their descendants have neither business nor cultural links going back to the time of slavery. Finally, Karl Marx, in a series of columns published in the New York Daily Tribune and European newspapers, rejected any relationship between capitalism and slavery as follows:

The present struggle between the South and North is, therefore, nothing but a struggle between two social systems, the system of slavery and the system of free labour. The struggle has broken out because the two systems can no longer live peacefully side by side on the North American continent. It can only be ended by the victory of one system or the other.

The number of actual slaveholders in the South of the Union does not amount to more than three hundred thousand, a narrow oligarchy that is confronted with many millions of so-called poor whites, whose numbers have been constantly growing.

On learning of Lincoln’s re-election, the New International Workingmen’s Association wrote a congratulatory letter to Lincoln penned by Karl Marx himself:

If resistance to the Slave Power was the reserved watchword of your first election, the triumphant war cry of your re-election is Death to Slavery. From the commencement of the titanic American strife the workingmen of Europe felt instinctively that the star-spangled banner carried the destiny of their class…The working men of Europe feel sure that as the American war of independence initiated a new era of the ascendency of the middle-class, so the American Anti-slavery war will do for the working class.

The Intellectual Elite roadmap to socialism has no anchor in Marxism. Its view of privileged whites is incomplete at best and misleading at worst. Absent a well-defined anchor, sui generis socialism in America could only generate ad hoc policies.

The Street Crowd includes peaceful and violent protestors. Peaceful protestors carry BLM signs, condemn capitalism, ask for social justice without defining it, and advocate defunding police. By burning American flags, destroying cars, and looting private shops, violent protestors provide on-the-job training for the revolution here and now. The Street Crowd treats American whites (a convenient scapegoat) like the Brownshirts treated German Jews in the early 1930s. The American blacks, who disagree with the Street Crowd, are Uncle Toms.

The Street Crowd moved racism from the scholarly debate into the streets. Its call for the end of capitalism is at a variance with Marx, whose name they use. Angela Davis, an active Marxist in the 1970s, came out of the cold to tell the Street Crowd: ’There is no capitalism without racism.”  Indeed, Marx and Engels failed to oblige the Street Crowd. In Critique of the Gotha Programme, they came out against income equalities in socialism; the essence of their argument was that equal pay for unequal performance means unequal rights. Marx and Engels also criticized French socialists for believing that socialism has only to be discovered by reason to conquer the world.[3]  Marx and Engels considered all systems as both preordained by the laws of history and independent of man’s will. Socialism (a transitory stage to communism), they argued, will happen after capitalism has performed its historical function. According to Marxism, capitalism will end when the rate of profits approaches zero and the rate of unemployment becomes sky-high. Neither condition has yet been satisfied in America. Thousands of desperate people trying to get into the land of racist America are the best evidence of that. In the Communist Manifesto, Marx and Engels spelled out in some detail the historical accomplishments of capitalism in a way that even Milton Friedman never did:

The bourgeoisie [in the days of Marx, bourgeoise meant capitalists], during its rule of scarce one hundred years, has created more massive and more colossal productive forces than have all preceding generations together….It has accomplished wonders far surpassing Egyptian pyramids, Roman aqueducts, and Gothic cathedrals ….The bourgeoisie, by the rapid improvement of all instruments of production, by the immensely facilitated means of communication, draws all, even the most barbarian, nations into civilization. The cheap prices of commodities are the heavy artillery with which it batters down all Chinese walls, with which it forces the barbarians’ intensely obstinate hatred of foreigners to capitulate.

The Street Crowd ‘Agitprop’ calling for Socialism and ‘Revolution Now’ has no anchor in Marxism. It is ad hoc conjecturing.

Finally, Democrats for Socialism seek gradual changes from the right of individuals to pursue their private ends into the top-down control of the allocation of resources and income distribution – this objective is close to the one pursued by Clement Atlee in the post-war United Kingdom. In that sense, the Democrats for Socialism have their anchor in a watered-down Fabianism.[4]

In the 20th Century, Democrats were the party of blue-collar workers. In the 1970s, Democrats protected Chavez’s union of agricultural workers from the South of Border immigrants. The House of Representatives vote on NAFTA in 1993 saw Republicans cast 132 votes for the freer trade plan and 43 against it, while 102 Democrats voted for the agreement and 156 opposed it.  As late as 2006, Obama and Schumer argued that immigrants are taking jobs away from American workers and lowering their wages

Taking advantage of freer trade, American corporations took their businesses abroad. In the aggregate, free trade made Americans better off than they would have been otherwise. However, the lunch was not free. The cost was borne mostly by Midwestern cities and blue-collar workers, especially the workers over 45 years of age. Then socialists, led by Bernie Sanders, made an about face. They shifted their support from the shrinking class of blue-collar workers to a growing number of immigrants, both legal and illegal. Seeking the support of this new and growing number of voters, other democrats quickly joined Sander’s socialists promising a number of benefits to the new and old (DACA) immigrants. Those promises include the amnesty for DACA, free legal help upon entry into America, free education for their children, free health care,  government-guaranteed jobs (AOC’s specialty), and sanctuary cities for the illegal immigrants.

The Democrats for Socialism are not hiding the multitude of policies they plan to enact; some to raise money and some to spend it. In doing that, they revealed their conviction that (1) there exists a just society, and (2) that they are qualified to discover and enact the formal rules required to bring about such society. Hence, the Democrats for Socialism have their anchor in a diluted Fabianism. Thus far they have not included the wholesale nationalization of  private business establishment into their program. However, they eventually might.

Summary. The roadmap to American socialists is sui generis socialism with some features of Fabianism. The Intellectual Elite, the Street Crowd and the Democrats for Socialism support a number of new taxes and environmental regulations. The same three groups also believe that those fiscal policies should generate sufficient revenues for the state to carry out their redistributional programs such as free college education, cancelling student loans, free medical care, government-guaranteed jobs, and even a guaranteed minimum income. That might be true. In any given year, the ruling elite can redistribute already-produced incomes according to its preferences. Yet incomes are created not found. Thus, the redistribution of income via government programs and environmental regulations tends to dis-incentivize entrepreneurship, raise the cost of innovating activities, and reduce economic growth.

The roadmap to socialism in the United States means that a top-down control of the allocation of resources and income distribution replaces a system of bottom-up choices of individuals pursuing their private ends in free markets. The 21st century roadmap to American socialism would turn the United States into a Rule Through Law country. The rule through law prioritizes government and politics over law, and the community’s common good (as defined by rulers) over the right of individuals to pursue their private ends.


[1] One-of-a-kind set of rules enacted for specific purposes; they wiggle around known systems.

[2]  During a seminar in Moscow, 1984, a very political Russian lady asked me: Why did you leave Socialist Yugoslavia to be exploited in America.”  I said “of course, I am exploited in America; I am also well paid and I love it.”

[3] Frederick Engels, “Introduction,” Socialism: Utopian and Scientific. Chicago: Charles H. Kerr Publishing Co., 1908.

[4] Fabianism advances socialism via gradualist reform of capitalism, rather than by revolutionary overthrow. It was put to practice by Nehru in 1950s India. A variant of Fabianism (collectivization of villagers) was also tried in East Africa in the 1960s.


Svetozar Pejovich, an emeritus professor of economics at Texas A&M University, is a senior research fellow at the International Centre for Economic Research in Torino, Italy.


The views expressed on austriancenter.com are not necessarily those of the Austrian Economics Center.

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