Capitalism has been the engine driving our economy since the earliest settlers arrived to colonize the New World under charters from the Virginia Company of London and the Massachusetts Bay Company. The colonists set about farming, trading and engaging in commerce to create a modest economy that was the beginning of American capitalism.

With America’s abundant supply of natural resources, labor, capital and entrepreneurial spirit, the free-market economy has been wildly successful. Modern capitalism grew with each of the industrial revolutions – steam, electricity, electronics and digitalization – and led to the United States becoming a world economic superpower with a GDP of $20.93 trillion at the end of last year.

Modern capitalism is not without problems, such as crony capitalism which makes it possible for an elite wealthy class to build personal fortunes through connections with power players in business and government. Opportunities for graft come with government grants, bailouts, tax breaks and lobbying. Modern capitalism must combine a free market with government regulation to keep corruption in check.

Capitalism is the boogeyman in a divisive political climate and is blamed for all of society’s ills – greed, exploitation and social inequality. Many see socialism as the answer. This debate played a prominent role in the 2020 election with 77 percent of Democrats supporting socialist ideas compared to 17 percent of Republicans. According to a Gallup poll, 50 percent of young people, ages 19 to 29, say they would like to live in a socialist country because they think socialism means equality for everyone with the government providing needed social services.

Supporters disavow the brutal and failed socialism of Nazi Germany, Uruguay and Venezuela. Instead, they point to Democratic Socialism as their economic model. According to the Democratic Socialists of America website, “large concentrations of capital in industries such as energy and steel may necessitate some form of state ownership, many consumer-goods industries might be best run as cooperatives.” The DSA also believes “all people should work as equals cooperating for the common good.” They strongly support the need for social justice.

Sen. Bernie Sanders, Rep. Alexandria Ocasio-Cortez and others point to the Nordic countries as examples of successful Democratic Socialism. However, according to Forbes magazine, the economies of Norway, Sweden, Finland and Denmark are not Democratic Socialist; they are capitalist with free markets and extremely high taxes that provide generous government entitlements.

During the 2016 primary campaign, Danish Prime Minister Lars Rasmussen said he was not flattered when Bernie Sanders referred to his country as socialist. He said, “… I would like to make one thing clear. Denmark is far from a socialist planned economy. Denmark is a market economy.” He further clarified, “The Nordic model is an expanded welfare state which provides a high level of security to its citizens, but it is also a successful market economy with much freedom to pursue your dreams and live your life as you wish.”

Simply putting the word, “Democratic,” in front of the word, “Socialist” does not make it any less authoritarian. The classic definition of socialism is, “A system run by the collective or governmental ownership and administration of the means of production and distribution of goods.” The DSA website is in sync when it promotes a government takeover of energy, steel, and industry.

Capitalism, on the other hand, is, “an economic system in which industry, trade, production and other means of securing wealth are privately owned and controlled for the purpose of making a profit.” It operates according to the law of supply and demand and depends on innovation, competition, efficiency and entrepreneurship.

Companies in a free market must be innovative to stay one step ahead of the competition. This leads to new and better products for the consumer and more choices in the marketplace. Consumers influence prices by choosing which products to buy and how much to pay for them. Companies must be efficient to keep prices competitive.

Innovation and competition encourage entrepreneurs to invest in opportunities to make a profit. This keeps the economy moving forward with new ideas and products. With a robust bottom line, owners can pay higher wages which, in turn, stimulate the economy with more discretionary spending. As all sectors of the economy grow, a wider tax base provides the government with more funds for necessary services. Society benefits because everyone has a higher standard of living.

Democratic socialists think the government can solve our problems. They think the government can run the public and private sectors. They think the government can regulate the market. They think the government can end inequality. History tells us otherwise. Socialism is the little engine that can’t. Democratic or otherwise, socialism fails because it doesn’t account for human behavior and our basic need for incentives and freedom. Capitalism is the engine that drives the American Dream because it runs on freedom. It provides happiness.

Bonnie Ewoldt, of rural Milford, is a retired teacher, news junkie and freelance writer. Her opinion pieces have appeared online and in newspapers across Iowa and neighboring states. Visit her blog at http://www.bonniesblogbox.wordpress.com.