Socialism seems to be all the rage these days. Multiple polls show that a majority of millennials (55%), Democrats (57%), and working-age women (55%) view socialism positively. 

What drives otherwise reasonable people to embrace a failed ideology that has left death and despair in its wake wherever it has been tried?

Socialism’s newfound popularity among Americans arises from a fundamental misunderstanding of what socialism means, in both theory and practice. Socialism entails government ownership and control over the means of production in an economy, yet a 2018 Gallup poll found that only 17% of Americans define socialism that way. Instead, one-third of respondents understood socialism to either mean equality (23 percent) or the provision of social services (10 percent). 

Equality, like socialism, is a loaded term. Many Americans conflate inequality with unequal outcomes—financial or otherwise. Others conflate it with inequity, an unfairness in the system that violates equal rights and that treats similar people very differently without fault of their own. Yet these are quite different concepts.

The free enterprise system is equitable. Entrepreneurs and business owners reap profits from their labor and investments only by serving the needs and desires of others. Good decisions lead to profits and flourishing businesses. Bad decisions lead to losses and the possibility of going out of business. 

At the core of the free enterprise system is the idea of voluntary exchange. Individuals are free to engage with each other on mutually agreed-upon terms – be it in buying and selling goods and services or negotiating the terms of employment. This is an exercise in liberty, with individuals free to choose whether and how to serve their fellow members of society. 

That very freedom, secured by government that provides for just laws that protect property and the enforcement of contracts, leads inevitably to unequal outcomes. Every day, people make choices about how much to work, how much to save, and how much risk to take. All these choices profoundly affect their financial outcomes. 

A student studying conscientiously for an upcoming exam might earn an A for his efforts. Another student choosing to study less and party more may end up with a C in that exam. For the teacher to equalize outcomes by giving both a B would be unfair to the student who studied for the test, while rewarding the irresponsible behavior of his neighbor who enjoyed himself instead.

Similarly, the only way to achieve equality of outcomes in an economy would be for the heavy hand of government to redistribute income after it was justly earned. Though most will agree that we have a responsibility to provide for the most vulnerable in society, taking from those who work hard to give to those who sit idle, despite being able to support themselves, is unfair. 

One appeal to socialism is based on the perception that the system is increasingly rigged in favor of the well-connected and powerful: namely, crony capitalism. Among the same millennials, 55% of whom viewed socialism positively, 90% held a positive view of entrepreneurs, and 98% viewed small business favorably. 

They get that individuals innovating and establishing businesses are earning an honest living. What they’re concerned about is that big and established corporations have manipulated the rules in their favor, crushing the little guy, and securing their positions of power and wealth in an unjust manner. 

What they fail to realize is that more government is not the answer. When government steps in with excessive regulation (no matter how well intended) and monopolizes services better provided by private companies, it crowds out small operators and opens the door wide to cronyism. This is how the oligarchs of Russia get rich, and how freedom and prosperity for the little guy die.

The superiority of the free enterprise system to generate economic wealth and prosperity is not so much in question. Yet, capitalism’s economic success fails to satisfy those intent on providing equal prosperity for everyone. 

The free enterprise system is not only the greatest wealth engine the world has ever known, it is also the most just, fair, and least coercive way to organize our affairs. By appealing to higher values of individual liberty, fairness, and the freedom to create and reach our highest potential by serving each other, we can tap into the spirit that motivates socialism’s increasing appeal.