Socialism Versus Capitalism: Clashing Beliefs on Campus

Divided We Fall

Misperceptions About Socialism and Capitalism Lead to Confusion Among College Students

By John Bitzan Ph.D., Professor of Management, North Dakota State University, and Stathis Gourgouris, Professor of Comparative Literature and Society, Columbia University

Empirical Data Challenges Misguided Support for Socialism 

By John Bitzan Ph.D. – Professor of Management, North Dakota State University

In today’s highly polarized political climate, socialism remains a contentious topic that is often misunderstood. The NDSU Challey Institute’s 2023 survey of college students across the United States reveals a startling disconnect in student understanding of socialism and capitalism. This disparity reflects broader societal shifts and underscores a significant challenge facing higher education today.

The Consequences of Diverging Definitions 

Over the last three years, we surveyed 2,250 undergraduate students at 131 four-year colleges and universities in the U.S. to gauge their understanding of socialism, capitalism, and free speech. While 28 percent of students have a favorable view of socialism, surpassing the 25 percent who view it negatively, just 23 percent of students haev a positive view of capitalism and 38 percent have a negative view.

When given a choice between the classic definitions of socialism as central planning, collective ownership, or resource redistribution that includes an active government to ensure equitable distribution, 44 percent of students chose the redistribution definition, 35 percent chose the central planning definition, and 21 percent were unsure. Among students who define socialism as central planning, only 23 percent have a positive view compared to 43 percent with a negative view. For students who characterize socialism as redistribution, 42 percent have a positive view, and 18 percent have an unfavorable view. This lack of consensus on what socialism entails makes meaningful debate difficult, if not impossible.

Furthermore, our surveys reveal a need for greater awareness about human progress under different economic systems. Only 47 percent of students believe the world has improved over the last 50 years in terms of extreme poverty, life expectancy, hunger, and literacy. In reality, there has been a vast improvement in all these areas. This incongruity highlights a critical gap in the understanding of economic freedom’s promotion of societal advancement.

The Need for Improved Economic Education 

The implications of these findings are clear: Universities must do more to foster a balanced and informed understanding of economic systems. This includes challenging students’ preconceptions, providing diverse perspectives, and highlighting the empirical data on the real-world impacts of socialism and capitalism. A large amount of economic literature has shown that the economic features associated with socialism—such as larger government, less private property, more regulations, and higher taxes—are negatively associated with positive outcomes, as measured in prosperity, reduced conflict, and stronger human rights. 

As we move forward, the need for comprehensive economic education in our universities has never been more apparent. Universities must provide their students with an accurate understanding of socialism and its effect on socioeconomic systems. Only then can we hope to bridge the divide and foster a more informed, less polarized society.

Debunking Misperceptions About Socialism 

By Stathis Gourgouris – Professor of Comparative Literature and Society, Columbia University

I appreciate the empirical research Dr. Bitzan provided and I agree that socialism is misunderstood in America. However, I do not agree on where this misunderstanding stems from, what it is ultimately about, or what conditions it fosters on American college campuses.

Dr. Bitzan’s point that varying views of socialism are influenced by how people (not just students) define it, is true. But he then espouses his definition as the only true one and interprets his statistics from that perspective.

A Blurred Narrative of Socialism 

Socialism has a bad reputation because of its association with the so-called “existing socialism” of Soviet-era countries: central planning and collective ownership. But history has shown that the Soviet sphere operated as an economic system of state capitalism and elite bureaucracy, which favored a select few over the broader population and never implemented redistribution of wealth and privilege. On this basis, there is little difference from so-called capitalist democracies—so-called because they are democracies in name only. In reality, they are societies run by elites, with centralized bureaucracies and elections controlled by money, maintaining a status quo of extreme inequity in wealth and power. Strictly speaking, both types of society are oligarchies and certainly not socialist.

Socialism is the only economic system that strives toward equality in both wealth and power, even if it has yet to achieve it. The reason why it has not succeeded is because capitalism, which is an anti-democratic system by definition where inequality is necessary to its sustenance and growth, ultimately prohibits any attempt to rectify the inequities (say, the redistribution of wealth).

Differences Between Socialism and Capitalism

The fact that human progress is attributed to the virtues of capitalism is deceptive. Even Cuba, a poor and undemocratic country (although not socialist in my terms), developed a better healthcare system than the United States. In fact, most advanced countries in the world have better and more affordable healthcare than the U.S. where healthcare is at the mercy of the capitalist market, whose profit-making impetus hardly cares about care.

It’s unsurprising that the majority of American students favor wealth redistribution or that about half doubt the world has improved in terms of the basic attributes of decent living. When student debt has reached $1.8 trillion; when healthcare spending is nearly $5 trillion; when it can take almost a quarter million dollars to get a decent college education; when 1 in 500 Americans is homeless; and when the richest 1 percent gained nearly twice as much wealth as the rest of the world combined in the last two years; it is no wonder young people favor wealth redistribution and doubt progress.

This innate understanding is not a problem on American campuses. It may lead to debates or protests, but it is not responsible for polarization. Although democracy thrives on dissent and contestation, the phenomenon of polarized society is the default mode of capitalism, which pits citizen against citizen in relentless, ruthless antagonism.

Socialism Obstructs Freedom and Progress 

By John Bitzan Ph.D. – Professor of Management, North Dakota State University

In my opening, I argued that misconceptions about socialism are a problem on college campuses, primarily due to the lack of a common definition and an understanding of the real-world impacts. This misconception often results in a falsely favorable view of socialism. While Dr. Gourgouris’ response sheds light on concerns about inequality, political freedom, democracy, and polarization, it also perpetuates misunderstandings by not offering a clear definition of socialism.

Dr. Gourgouris, while acknowledging that views on socialism are influenced by definitions and arguing against the central planning definition, equates socialism with equality in wealth and power. However, he fails to define the mechanism to achieve this equality, which is a prime example of why students on campus are left confused. A comprehensive understanding of socialism necessitates a clear description of its components and how they contribute (or don’t) to desired outcomes.

Socialism Curtails Innovation and Economic Growth

Irrespective of socialism’s definition, it necessarily encompasses elements that curtail economic freedom—the freedom to use one’s own property and engage in voluntary transactions without infringing on others’ property. Socialism limits individuals’ choices over the types, quantities, methods, and timing of goods and services produced and consumed. Government intervention impedes the crucial role of the price system in signaling the demand for goods and services and the most efficient ways to produce them. High taxes and limited private property dampen incentives for innovation and improvement in production methods. Restrictions on free trade and excessive regulation hamper business opportunities, including those for new businesses. These consequences result not only in stagnation but also in reduced economic mobility—a key solution to inequality.

The Fraser Institute’s Economic Freedom of the World’s 2023 annual report highlights the stark differences in measures of well-being between economically free and unfree countries: economically free countries are much richer, poverty is less extreme, and they have significantly higher life expectancies and lower infant mortality rates.

Economic Freedom Increases Intergenerational Mobility

Contrary to Dr. Gourgouris’ assertions, socialism, by its nature, requires a level of coercion incompatible with the core tenets of democracy, which thrives on individual freedoms. Political and civil rights are consistently higher in more economically free countries, and research supports the relationship between political freedom and economic freedom.

In addition, there is no clear evidence that income inequality increases with economic freedom. In fact, research shows economic freedom has a positive impact on intergenerational mobility that is greater than inequality’s negative effect on mobility. The diversity and dynamism of capitalist systems have historically been conducive to societal advancement and conflict resolution for all.

Finally, there is no strong evidence that capitalism leads to polarization. Instead, the pluralistic society of the U.S., which has fostered the competition of ideas and led to innovation and progress, has flourished under capitalism. 

The Economic and Democratic Merits of Socialism

By Stathis Gourgouris – Professor of Comparative Literature and Society, Columbia University

In our first exchange, Dr. Bitzan and I agreed that the problem in addressing socialism arose from the different ways to define it. It appears these definitions are not only different but contrary and, perhaps, irreconcilable.

I’m afraid we’re both caught in paths determined by our different points of departure. Dr. Bitzan is convinced socialism is basically illiberal. It curtails economic freedom and individual initiative by privileging governmental intervention and excessive regulation that results in stagnation and reduced economic mobility. This is a standard account of socialism, still influenced by Cold War perspectives.

Dispelling Myths About Socialism’s Impact on the Market

The world has moved beyond this framework. Many such assertions have been disproven in practice. Higher taxation does not produce stagnation if properly used to return valuable benefits to citizens. Lower-cost medical care in sustainable healthcare systems not only produces healthier and happier citizens but also relieves their pocketbooks of insufferable strain. Sure, part of the pharmaceutical industry will lose some profits, but other industries will benefit.

We need to liberate ourselves from the myth that regulation harms the market. There has never been a market without regulation since the inception of capitalism. As I’ve often written, so-called “deregulation” is actually regulation in favor of some and against others. A free market is only free to the degree that laws exist to preserve it from being relegated to theft. Such laws are not always efficient and may need to be revisited, but without them, there is no market.

Lessons from Student Demonstrations   

But our focus here is on educational institutions and our own work spaces. As we conduct this exchange, universities worldwide are exploding from extensive student mobilization. Although the impetus may be the Israel-Palestine conflict, what crucially drives student demands is quite relevant to our conversation. Everywhere, students are demanding their universities to disclose and divest from markets that profit from war and destruction.

These demands are perfectly reasonable. An educational institution may need to invest in the market to cover its increasingly inordinate expenses, but it cannot do so to the extent that its investments run contrary to its purpose. What is the purpose of universities? Surely not just to facilitate the market by producing more efficient workers or inventing technologies and conducting research that will only benefit the market. A university is not a technical school. In a democratic society, the university’s singular purpose is to educate young people for the task of responsible citizenship: to respect and enhance the basic freedoms of a democratic polity, which is freedom of critical opinion and equality before the law—for all, without exception.

From my standpoint, these values are fundamental to socialism, which cannot exist without democratic freedom and equality. These values cannot be granted by a market that, in the name of individualism that privileges hierarchy and economic disparity. Nor by a polity that serves this market, instead of the other way around.