Is American Capitalism Serving or Hurting the Working Class?
Philip Kotler
The latest Gallup poll (August 1–20, 2025) shows a real downward shift in American attitudes toward capitalism. In 2021, 60% of Americans viewed capitalism positively. Four years later, in 2025, only 54% view capitalism positively. This is the lowest recorded level since Gallup began tracking American attitudes toward capitalism in 2010.
Nevertheless, 54% still means that the majority of Americans still favor capitalism.
Let’s look further into the current Gallup numbers.
- Among Democrats, only 42% view capitalism favorably, while 66% view socialism positively.
- For Americans aged under 50, only 31% of Democrats favor capitalism.
- 37% of Americans view big business negatively.
- Small business and free enterprise, in contrast to big business, remain immensely popular.
What is Behind the Growing Skepticism toward Capitalism?
In 2015, I published Confronting Capitalism. I pointed out 14 weaknesses in current American capitalism, adding that each weakness could be overcome and lead to a better capitalism.
1. Proposes only a weak solution to poverty.
2. Fails to charge businesses with the social costs of their activities.
3. Capable of exploiting workers in the absence of collective bargaining.
4. Capable of exploiting natural resources in the absence of regulation.
5. Sees citizens as mainly consumers who are to be persuaded to buy more goods and services beyond their means.
6. Exhibits a growing high level of income and wealth inequality.
7. Emphasizes individualism over community.
8. Encourages greed + financial creativity + materialism.
9. Produces periodic business cycles and economic instability.
The major accusation against capitalism is that the rich continue to get richer while the middle class is getting smaller and the poor are remaining poor, living distressed from paycheck to paycheck. Let’s add that 28% of retired Americans have $0 savings when they retire; they rely primarily on Social Security. The occurrence of one new medical problem not fully covered by Medicare can destroy them financially.
Also consider that the working class has little or no voice in our political system. Unions are extremely weak and they are bitterly opposed by our corporations, Unions that lobby for worker rights are grossly underfunded compared to the big corporate lobbyists.
In the past, as the nation’s productivity increased, worker pay increased at roughly the same rate. Since the 1970s, worker pay failed to increase at the productivity rate, leaving most of the productivity gain to go to the owners of capital, namely the rich.
American workers have been fed a string of lies about what American capitalism offers to them.
First, that the wealth gains of the rich will trickle down to the middle class and the poor. Clearly this hasn’t happened, given the increased indebtedness of American workers and their inability to find and afford decent housing.
Second, that America is the land of opportunity and that anyone who works hard will achieve a growing income. And that Americans who get a college education will most probably achieve a growing income. Yet 65% of the U.S. labor force does not have a four-year college degree. Even those who have a college degree often find that jobs are scarce in their chosen field.
Third, that rich Americans are very generous in their philanthropy and give workers and the poor a lot of charitable support. Yet the majority of charity goes to other causes such as medical research and education that do not uplift low paid workers or the poor.
Fourth, that the poor are much better off today than the poor of the past. The poor have cellphones, television sets, modern kitchen appliances and can do their shopping using the internet without traveling to specific stores. Yes, today’s poor live a “richer” existence than the past poor but their lives are saddled with money worries and illnesses leaving them with despair.
Is Socialism the Solution?
If you asked conservatives, they see socialism as a terrible solution. They say that under socialism, Americans will lose free speech and the rights to protest. U.S. President Donald Trump said, “We are alarmed by the new calls to adopt socialism in our country.” Earlier former Vice President Michael Pence added more. “Under the guise of Medicare for All and a Green New Deal, Democrats are embracing the same tired economic theories that have impoverished nations and stifled the liberties of millions over the last century. That system is socialism,” he said.
Clearly these two leaders are indulging in the classic Red Scare. Their job is not to serve the citizens as much as to protect the wealthy and the powerful. Pence doesn’t mention the successful Nordic countries and Canada that have a social democratic system, not a Socialist system where government runs industry. The Nordic countries enjoy a higher level of happiness and wellbeing than found in Laissez Faire, Financial Capitalist or Welfare Capitalist economies.
We can’t answer this question unless we carefully define what socialism is. In a previous article, I distinguished among six different economic systems stretching from highly individualistic to highly collectivistic systems. (See Philip Kotler, “Which Economic/Political System Do You Favor?”)
1. Laissez Faire Capitalism
2. Financial Capitalism
3. Welfare Capitalism
4. Social Democracy
5. Socialism
6. Communism
The first four are different forms of capitalism. Let’s examine each in turn.
Laissez Faire Capitalism (also called Free Market Capitalism) leaves all decisions on product development, production, marketing, finance and distribution in private hands. Private property and ownership is paramount and are protected by the legal system. Persons possessing or borrowing sufficient capital can start legitimate businesses with the aim of profit-making. The most salient current manifestations include (1) avoidance of government action to regulate negative externalities such as air and water pollution, (2) avoidance of antitrust and other regulatory measures to prevent competitive capitalism degenerating into monopoly capitalism, (3) avoidance of progressive taxation and a preference for minimal taxation and minimal public services, (4) privatization of even the most popular social services such as social security, and (5) all avoidance of redistributive programs. This version also favors privatization of otherwise public functions such as prisons, schools, and the army (and its immense current reliance on private contractors). The government runs no industries and keeps regulations to a minimum. The government’s role is kept to what is necessary for Laissez Faire Capitalism to function. Government provides police, firefighters, defense, and courts. The government takes responsibility for roads, public transport, airline safety and public education. The government provides regulations regarding health, fair business practice and other issues. In a Laissez Faire economy, there is a tendency toward Monopoly Capitalism in the absence of strong government countermeasures. When led by a strong winning political party and a cultist leader, Capitalism could turn into Fascism, as it did in Hitler’s Germany.
The argument offered for laissez faire capitalism is that it maximizes individual liberty and the individual’s pursuit of happiness.
Financial Capitalism (sometimes called Casino Capitalism) is the next evolution stage of capitalism. Financial institutions — banks, private lenders, insurance firms, a stock market — assume a growing role in the economy. Financial firms make money charging interest on their loans, rent on owned property, and on speculative investments. Financial firms and individuals search for opportunities to enhance the value of their assets. They buy and sell stocks hoping to make a big gain. They lend money to ambitious entrepreneurs hoping for a big win. They hope for substantial gains that will cover the risks that they are taking. The major problem is overspeculation leading to periodic recessions. The public loses but the banks will gain because the government cannot let banks fail and many are saved through massive government intervention.
Welfare Capitalism is a third evolution of capitalism in which government plays some role in mitigating the tendencies of Capitalism to produce growing income inequality and some negative externalities in the realms of public health and safety. Capitalism produces both winners and loser and the government has to do something to help the losers who are paid low wages or who lose their jobs as industry fortunes change.
In Welfare Capitalism, the government builds a social cushion to help those who lose through no fault of their own or through poor personal decisions. The cushion consists of unemployment insurance, food stamps, food kitchens for the homeless, poverty assistance and grants, health care assistance, housing assistance and work projects initiated by the government. Welfare Capitalism adds “heart and humanity” into the lives of those who have been hurt by Capitalism’s shifting sands. The aim is to preserve the benefits of Capitalism by reforming and softening some of its features. One additional action is passing higher income taxes and/or wealth taxes on the rich to pay for the social cushion. Another additional action is to encourage more trade unions or workers’ councils to give a voice and power to labor to counter the dominance of capital.
Welfare Capitalism gives rise to the concept of Mixed Economy Capitalism — the idea that successful societies need both strong public and private sectors. and that the public sector often needs to have a larger role than just welfare and the regulation of major externalities. Often the government is the financier of most basic science and supports important technological advances such as the internet and space research. The government finances most education and health care which would otherwise be neglected by corporate interests.
Private enterprise is still in control of economic development. But the government might encourage businesses to invest in new industries that have a promising future (such as solar and wind energy). Japan’s government pushed its business community to develop the automobile industry and the electronics industry. The governments of France, Germany and Spain developed the Airbus to provide Europe with more transportation alternatives. Yet the U.S is normally highly averse to government guidance. and conservatives are quick to point to past failures. y.
Social Democracy is a more advanced stage of Capitalism where private enterprise runs most businesses but the State reserves the right to regulate business so that it is competitive and serves the public interest. The State also may participate or operate in a few industries that greatly impact the public’s welfare, such as health care or public education. The State might also provide universal health insurance. It might regulate prescription drug prices to balance the aims of affordability and of incentivizing innovation. The State might control prices on pharmaceutical drugs to be sure that citizens can afford the drugs that they need. The State also makes sure that the system provides a social cushion to help those who experience hardships beyond their control. The State also favors labor unions and work councils so that workers have a say in how business is conducted. In large German companies, about 40 percent of the directors are nominated by the trade union.
The Nordic countries — Sweden, Norway, Denmark, Finland, and Iceland — are the prime practitioners of Social democracy. These countries have less income inequality than other countries, higher livable wages for the working class, and less extreme pay for CEOs and top managers. The citizens in these countries score higher in national happiness and well-being.
Socialism involves the Marxian concept of public ownership of all major industries. This system came out of Marxist-Leninist theory about class conflict and the oppression and exploitation of the working class by capitalists. Marx and Lenin called for a revolution where the proletariat would take over the government, expropriate the wealth of capitalists, and run industry to meet the needs of the people, instead of profits for the capitalists. The aim was to produce eventually a classless and stateless society. All people would be equal and enjoy all the same rights and benefits. The system would run on the rule “From each according to his ability, to each according to his needs.” Marx explained his belief that each person would be motivated to work for the good of society because work would have become a pleasurable and creative activity.
Each major industry is run by a ministry devoted to that industry. A huge State bureaucracy determines what to produce, in what quantities, at what prices, and how the goods and services are to be allocated to different buying groups in the society. The aim is to make the goods and services that serve the Common Good.
Democracy is less likely to last in a Socialist economy. Management decisions tend to be highly politicized. There is a strong tendency to protect old industries and its many workers at the expense of emerging ones. Often it is hard to produce good consistent quality and quantity. Goods are often scarce or shoddy. Innovation is likely to be weak.
Communism is a system where all enterprise is owned and run by the State that itself is run by a powerful clique and leader. The self-selected group eliminates all opposition. The dictatorship of the proletariat becomes a tyrannical dictatorship run by a strong leader for whom total obedience and deference is expected and demanded. The leader may not be charismatic but nevertheless will be portrayed that way. if elections are held, the purpose is to select the leaders, officials and bureaucrats of the one party system of the State. Under Communism, individual liberties and rights are severely repressed or non-existent.
The State runs a propaganda system internally and externally to present a picture of a happy creative society. The educational system glorifies the state, its leaders and its history and produces an exaggerated official view of its accomplishments and its enemies. The State invests in a health care system and in science and technology. It also builds a strong defense force to protect the State from internal or external opposition.
The two strongest current examples of a Communist system are Russia under Vladimer Putin and China under Xi Jinping. The irony is that these two nations claim to be communist but they now operate large capitalist sectors. It seems that their system passed through the stage of full blown communism to a successor stage with Capitalistic features. In the case of Russia, several large companies are operated and partially owned by capitalists. What is common in China and Russia is that they are single party systems with totalitarian characteristics. There is a dictatorship component politically but the economy includes a substantial amount of capitalism subject to very close government oversight or supervision.
Which of these six types of economic systems are favored by young left-leaning Americans who say they leaning toward socialism?
I would conclude that those Americans who may vote socialist mean that they favor what we call Social Democracy (often called Democratic Socialism). They want more than the Welfare state which they have now. They want more of the benefits found in Nordic countries.
They favor the ideas of the “progressive” wing of the Democratic Party represented by such a figure as Senator Bernie Sanders.
Here are the main reform proposals that Senator Bernie Sanders supports, based on his longstanding platform.
- Healthcare / Medicare for All
Sanders is a major proponent of a single-payer national health insurance system (“Medicare for All”), which would treat healthcare as a human right. It aims to replace most private insurance with a public system providing universal coverage, including preventive care, prescription drugs, long-term care, mental health, dental, and vision. - Minimum Wage Increase
He supports raising the federal minimum wage to $15/hour, to help tens of millions of workers who are currently under supported. - Taxation / Fair Share
Sanders argues for taxing the wealthy and large corporations more heavily, in order to fund public services, reduce inequality, and ensure those with greater means pay a fairer share. He also supports taxing financial speculation and limiting credit card interest rates. - Social Security & Retirement Security
He supports expanding Social Security benefits (particularly for low earners) and ensuring the program remains solvent via increased taxes on high-income and investment income, so that no one in the U.S. is forced into poverty in old age. - Education Reform
Among his proposals are making public higher education tuition-free (or greatly reduced) for many students and reducing or eliminating student debt burden. - Labor & Workplace Democracy
He supports strengthening unions and workers’ rights, expanding collective bargaining, modifying labor laws to give more power to workers (e.g. through the Workplace Democracy Act), and reducing or eliminating “right to work” laws. - Campaign Finance Reform
Sanders favors stronger transparency and limits in campaign financing, public financing of elections, reducing the influence of corporate money and special interests in politics. - Regulation of Financial Sector / Wall Street
He has pushed for stricter regulation of banks, taxing financial speculation, curbing practices seen as exploitative (like high interest credit card fees), and making sure large financial institutions do not get bailouts or benefit unfairly. - Climate Change / Environment
Sanders supports aggressive action to curb carbon emissions, shift to renewable energy, fund clean energy infrastructure, and enact laws to reduce pollution from vehicles and power generation. - Workweek / Labor Time
He has promoted reducing the standard workweek to 32 hours (four-day workweek) without loss of pay or benefits, especially in light of increasing productivity aided by technology and AI.
As an American citizen trying to define your preferred economic system, which of the 10 reforms would you favor. If you publicly favor all 10 reforms, you are definitely a Social Democrat. Even if you favor fewer, but more of the 10, you are still mainly a Social Democrat.
All 10 reforms need debate. Questions of cost and feasibility need to be addressed. In the end, some of Bernie’s reforms will hopefully gain the highest support and need to get enough Congressional votes to be enacted into law.
Note that Bernie’s reforms are still relatively modest compared to what Europeans, and especially the Nordic countries of Sweden, Norway, Denmark, Finland and Iceland would prefer. They would favor longer maternal care for both parents of the new child and longer paid vacations for the working class.
Conclusion
Recent polling by Gallup indicates that only 54% of Americans view capitalism favorably. If this number falls further to say 49%, than we can say that most Americans favor a different system than capitalism.
I distinguished between six different economic systems:
1. Laissez Faire Capitalism
2. Financial Capitalism
3. Welfare Capitalism
4. Social Democracy
5. Socialism
6. Communism
I pointed out the main characteristics of each system. I defined socialism as a system where most industry is run by the government. I concluded that most Americans reject classic socialism. What some are leaning toward is Social Democracy (sometimes called Democratic Socialism). Social Democrats reject laissez faire capitalism, financial capitalism, and in many cases even welfare capitalism. They think that welfare capitalism doesn’t go far enough in improving American lives. Welfare capitalism softens the pain of inadequate income but doesn’t lift income and family well-being. Most Americans are living under Welfare Capitalism but the next political battle will be whether more Americans organize to press for Social Democracy.
