Politics

Biden Just Explained Why His Version of Capitalism Is Better Than the GOP’s

It’s more popular, too.

Biden speaking into a mic and standing in front of a US flag
US President Joe Biden speaks about the economy at the White House on Monday. Saul Loeb/Getty Images

Republicans love to accuse Democrats of socialism. That’s how Republican senators, House leaders, and Fox News hosts talk about President Joe Biden: They call him a socialist, a front man for socialists, a Marxist, or a communist sympathizer. This makes sense as a political strategy, since Americans oppose socialism and prefer capitalism. But the accusation is false. Biden is a capitalist, and his version of capitalism is stronger, fairer, and more popular than the Republican one.

On Monday, the president spoke about the economic recovery and the threat of inflation. He poked fun at the GOP’s warnings “that if I got elected, I’d bring the end to capitalism.” “Six months into my administration, the U.S. economy has experienced the highest economic growth rate in nearly 40 years,” he observed. “It turns out capitalism is alive and very well. We’re making serious progress to ensure that it works the way it’s supposed to work: for the good of the American people.”

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That last line is central to Biden’s worldview. Capitalism is a means, not an end. It excels at producing wealth, not distributing it. The goal of a capitalist society should be to improve people’s lives, not just to grow the economy, and to that end, the government should regulate capitalism and compensate for its excesses. In Biden’s words, the political system must “ensure that all working Americans benefit from the growth they’re helping produce.” That means we should measure the economy’s health by wages, not just corporate valuations. “I don’t look at the stock market as a means by which to judge the economy, like my predecessor did,” said the president.

In Biden’s version of capitalism, workers don’t just compete with one another for jobs; employers have to compete with other employers for workers. Right now, due to a labor shortage, “Companies across the country are giving workers a raise,” he noted. He tweaked Republicans for complaining about this trend, as though it’s “a problem if big companies have actually to compete for workers and offer them a fair wage.”

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In Biden’s version of capitalism, government spending can facilitate commerce and competition. “Investments in better roads, bridges, transit systems, and high-speed Internet, and a modern, resilient electric grid”—in Washington terms, infrastructure—can open “the bottlenecks in our economy,” he explained. “Goods get to consumers more rapidly and less expensively. Small businesses create and innovate much more seamlessly.” On this, some Republicans agree. But Biden went further. He argued that “quality, affordable child care, elder care, [and] paid leave,” which Republicans dismiss as unnecessary social spending, could “enhance our productivity” by enabling “more people [to] enter the workforce.”

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Biden understands that in an unregulated market, the first thing successful competitors will do is subvert competition. That’s why, earlier this month, he signed an executive order to tighten enforcement of antitrust laws, facilitate drug importation, require companies to disclose more information for comparison shoppers, and restrict anti-competitive employment, rental, and consumer contracts. The point of the executive order, he explained on Monday, was to promote “fair and open competition … the cornerstone of American capitalism” by helping new businesses take on “giant corporations who have been free to ramp up prices because they haven’t had any real competition.”

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Sometimes, progressive government intervenes too much in the economy. It overspends, overtaxes, or overregulates, and those mistakes can hurt people. On Monday, Biden assured the public that he recognized those risks. He acknowledged signs of inflation in some sectors. He blamed them largely on the pandemic and the disjointed recovery—in which demand has outstripped supply—and he noted that prices were beginning to fall as the discrepancies evened out. But he also pledged that his administration would “remain vigilant” and avert “unchecked inflation.”

In a political contest, Biden’s version of capitalism beats the Republican version. In February, a Navigator poll found that voters, including Republicans, overwhelmingly preferred regulated capitalism to unregulated capitalism. When respondents were asked which of two problems concerned them more, only one in four chose the libertarian answer: “There are too many rules and regulations, and they burden businesses.” Most voters chose the alternative: “There are too many rules and regulations that put corporate interests ahead of the public interest.”

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But in the long run, Biden isn’t trying to vindicate the Democratic Party. He’s trying to vindicate democracy. From the day he took office, he has called on Democrats and Republicans to unite against the global and domestic threat of authoritarianism. To win that fight, he must prove that democracies can improve their citizens’ lives. The danger of unregulated capitalism isn’t just that ordinary people will suffer. It’s that their suffering will drive them to turn, in exasperation, to authoritarianism.

That’s how Donald Trump got elected in 2016. As Biden noted on Monday, “It had been a long time since the government had worked for the people.” The challenge now, Biden explained, is to restore faith in capitalism and political freedom by proving that they can work together—to “show the world that American democracy can deliver for the people.”

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