Has Capitalism Failed the American Dream or Has Capitalism Been Corrupted?

The economic founding of the United States was based upon private property, a market economy, and limited government in economic affairs. The economic system most closely aligned with these ideals is capitalism. 

America became known as the “land of milk and honey” because it offered financial opportunity to anyone with an entrepreneurial spirit who was innovative and worked hard. Immigrants from around the world lined up seeking the chance to improve their lives and their families’ lives through hard work and self-sacrifice – a chance at “the American Dream” in this capitalist society.

Many blame capitalism for America’s financial woes, while the Democratic Socialists of America believe they have the answer.

Pure Capitalism

Capitalism is an economic system based on private ownership of property in which individuals and firms are relatively free to compete with others for economic gain. Profit motive is integral to transactions for both buyers and sellers.

During an appearance on The Conservative Voice recently, E.J. Antoni, Chief Economist from The Heritage Foundation, described capitalism’s moral imperative this way: Capitalism exists when the seller of labor serves his fellow man by producing a service that is in demand by his fellow man and the seller receives a benefit/pay in return.

Competition in the supply of goods and labor drives products, prices, services, and wages toward a natural equilibrium where buyers and sellers are satisfied with the price paid and the quality of the work or product.

The system worked well for over 100 years.

Quasi Capitalism

During periods of extreme uncertainty in history, such as the World Wars and the Great Depression, confidence in the capitalist system was shaken. The Federal Reserve was established under President Woodrow Wilson and expanded under President Franklin D. Roosevelt’s New Deal, giving the federal government authority over credit, loans, and interest rates which encroached on the private market.

New Deal laws expanded federal involvement in banking, agriculture, labor, housing, securities, and social welfare. Social Security became the first permanent federal insurance program and marked a major expansion of the federal government’s role in a predominantly privately-owned market economy.

Except for a short period of deregulation in the 1980’s, federal involvement in the “capitalist” system continued to grow through laws covering employment, housing, education, energy, securities, and health insurance. Large portions of the private economy were regulated including:  The environment, the workplace, pensions, and consumer finance. Regulations caused businesses to change production methods, purchase new equipment, obtain permits, adjust wages, and more.

Government intervention changed the U.S. capitalist system into something else – one that benefits no one but the regulators.

Democratic Socialism

As people look for an alternative to the economic system slowly put in place over the last 100 years, many are turning to Democratic Socialism.

The Democratic Socialists of America (DSA) is estimated to have approximately 80,000 members. Its most recent IRS financial filing from 2024 reported revenue of over $6.3 million. About 75 chapters nationwide reported less than $50,000 in revenue each, including the Philly DSA. The Philadelphia chapter has three suburban branches: Bucks and Montgomery County DSA, Chester County DSA, and Delaware County DSA. Their websites list meeting schedules, activities, and the issues that drive them.

The core DSA belief is that: “Capitalism is a system designed by the owning class to exploit the rest of us for their own profit. We must replace it with democratic socialism, a system where ordinary people have a real voice in our workplaces, neighborhoods, and society.” The DSA also promotes collective ownership of energy, production, and transportation; single-payer Medicare for all; the Green New Deal; and defunding the police.

The DSA claims it wants to move toward socialism, pushing past social democracy and leaving behind “authoritarian visions of socialism in the dustbin of history.”

E. J. Antoni believes that the “moral imperative behind socialism is: All power comes from the barrel of a gun, as the communists famously said. That is the reality. It is about power and exerting that power over your fellow man, dictating to them what they can and can’t do, what they can and can’t buy, what they do and don’t deserve, instead of them getting to decide for themselves on an individual level.”

Government’s Impact

Young people are listening to the DSA because they are frustrated by soaring housing, healthcare, and education costs. According to the Bureau of Labor Statistics, these industries have some of the fastest-rising prices. They are also among the economy’s most highly-regulated and subsidized sectors. Televisions, by contrast, are among the least regulated products. Advances in flat-screen technology over the last 20 years increased competition and dramatically lowered prices.

There is zero competition in the healthcare industry and no price transparency for doctor services, tests, or procedures. Patients cannot shop for better prices and are forced to purchase before knowing the cost. As a result, there is no downward pressure on prices. That is not capitalism.

Bottom line…

Look at the most expensive and swiftly-increasing market sectors, and they tend to be the industries most heavily regulated by government. Things that are less regulated tend not to be major cost concerns. Less regulation drives costs down and improves quality. Our current system is a perverted version of capitalism, so it is no wonder many want to move away from it. How do we convince a generation that socialism does not work?

The DSA views private ownership as a problem. Elon Musk sees things differently. And he’s doing something about it. Musk recently announced that in 2027, he will give every American child one share of SpaceX stock, deposited into their Trump accounts, a recently created vehicle to provide children with an investment nest egg. Rather than despise the “owning class,” as the DSA does, these children will become a generation of owners. They will learn that societal and economic value comes from builders, creators, and innovators, not from those who redistribute what others produce. This is the way.