Yet almost every economy mixes elements of privatization (or capitalism) and collectivization (or socialism). A purely privatized economy with almost no public sector would be a tollbooth economy where individuals would pay to get on any road, visit a park, take a hike, go camping, fishing or hunting, and there would be no public schools, libraries, etc. Under this kind of economy, the lives of poor people, especially orphans and children, would be as they were centuries ago: “nasty, brutish and short.”

President Franklin D. Roosevelt (1933 to 1945) understood all economies were mixed, and that pure capitalism or pure communism was impossible; he knew the capitalist US would become more socialist and the socialist Soviet Union would become more capitalist and thus did not anticipate an intense conflict with socialism or the Soviet Union.

On May 19, 1943 President Roosevelt welcomed Nelson Rockefeller to the Oval Office. Roosevelt maintained: “Communism has gone 20% of the way towards capitalism and would go a total of 40%.” He maintained that since 1933, the US had moved 20% towards socialism and in the future would move another 20%. “This would bring us to a 40-60 relationship,” FDR concluded, “close enough that we could have a working understanding between the two nations.” Roosevelt foresaw the US would become more socialist and the Soviet Union would become more capitalist.

On a continuum, with socialism on the left and capitalism on the right, the US was much more capitalist in the 1800s than in the 1900s. The 1800s provide a glimpse into capitalism with minimal government involvement. In the mid 1830s the US government balanced its budget and income taxes did not exist. Because Andrew Jackson destroyed the Bank of the United States, state banks were largely unregulated and free to create money. The value of bank notes in circulation rose from ten million dollars in 1833 to one hundred and forty nine million dollars in 1837. In 1837 there was an economic panic and until 1843- for six years-million struggled to find jobs or food. In the 1800s, there was no social safety net.

On the eve of the Civil War, private banks issued their own paper money that had almost no backing: a Massachusetts bank issued $500,000 in paper money, which was only backed by $1.87 in gold and silver. Often paper money was primarily backed by land: a fortunate individual who had many thousands of acres would issue many thousands of dollars, and when he perceived the land was twice as valuable, he would issue twice as much. At some point, the value of the land would fall, and that currency would collapse. On the eve of the Civil War, it is estimated that there were 7,000 different types of bank notes circulating in this country. The bank notes had been issued by 1,600 different state banks; some of these notes were from insolvent, defunct banks. The value of these banknotes fluctuated wildly.

As the US absorbed the lessons of history, the government came to play an increasingly larger role in the economy. The US economy has not stood on its own two feet for nearly a century. The US economy collapsed in 1929 and stayed in a depressed state for 12 years until World War II in 1941. The war enabled the national government to have unprecedented economic powers; consumer goods were rationed and top tax rates went to 94% (no, that is not a misprint). The economic growth that occurred during the war was the fastest economic growth on this land since European settlers came over 400 years ago. Moreover, this phenomenal growth occurred while millions of young people were doing economically unproductive activities such as digging fox holes and charging at enemy machine gun nests. The war showed that the government could create economic growth, and since that time the US government has always had a bigger role in the economy than it did before 1929.

Just as there have been many versions of Christianity (the Christianity of earlier centuries burned heretics, scientists, and witches etc.) there are many versions of socialism. Some versions are democratic and some are not. The undemocratic Marxist- Leninists are considered the most extreme socialists. But both Marx and Lenin well understood the role and necessity of individual incentives. In 1875 Marx said that if one man could work twice as long as another, he could make twice as much. As a socialist, Marx opposed owners of land or capital (tools, and machinery) claiming the income produced by the land or capital. For Marx, that was as ridiculous as a husband of a stay-at-home mom claiming he did more laundry than his wife simply because he purchased the soap, water, the washer, the dryer, and the land they sit on. Lenin’s New Economic Policy of March 1921 was full of capitalist incentives.

According to the World Bank, between 1950 and 1980, the annual gross national product of communist countries grew 5-7%. The growth rate for non-communist, low income nations was 1-2% and the growth rate for advanced capitalist nations was 3.5 to 4.5%. The data suggests government involvement in the economy enhances economic growth.

Without government involvement an economy will lack an educated workforce and infrastructure.

To a large extent, capitalism is premised on the notion that because of the profit motive, the greediest of people, for the greediest of motives, will act a way that benefits the whole society. The US fear of “socialized medicine” has left it with the most profit driven and outrageously expensive healthcare in the world. The inordinately expensive healthcare of the US is a major reason why manufacturing left the US and why it will not return. Two decades ago, it was observed that each car built in the US required $1525 of healthcare; each car built in Canada required $197. In 2023, US per capita healthcare spending was $14,570; in China it was $900. Is it clear why Trump Bibles and other merchandise were produced in the nation run by the Chinese Communist Party, and not the capitalist USA? This country has paid a high price for villainizing and denigrating socialism, since only mixed economies are sustainable and thrive.

Rick Jones is a retired adjunct professor of economic history from Weber State University who now lives in West Haven.