Capitalism can coexist with a socialist democracy

When asked if he’s a capitalist, Senator Bernie Sanders says he is not. He doubled down on that claim during the Democratic debate last night when he reasserted it. Instead, Sanders claims to be a democratic socialist.

I think this is a tactical error on Sanders’ part. There’s nothing inherently wrong with being a democratic socialist but Sanders should not disavow capitalism. Sanders should more explicitly recognize that the two philosophies are not mutually exclusive.

He implied as much when Sanders stated that:

“Everybody is in agreement that we are a great entrepreneurial nation. We have got to encourage that. Of course we have to support small- and medium-sized businesses.”

Capitalism is defined as an economic and political system in which a country’s trade and industry are controlled by private owners for profit, rather than by the state. But this system can exist side-by-side with Bernie Sanders’ view of democratic socialism. Neither has to be (or even should be) an all-or-nothing system.

Sanders only proposes socializing those sectors that capitalism does not do well. For example, private health insurance companies (like those used in Obamacare) have almost a 25% overhead because of the cost of advertising, executive salaries, stock holder dividends, and administrative overhead. Medicare, which is a single-payer system like Sanders proposes, has only a nine percent overhead.

He also proposes using tax dollars to rebuild America’s aging and crumbling infrastructure. If the federal government didn’t do it, no capitalist company would rebuild our highways, bridges, sea & airports, power grid, schools, and telecommunications networks. But without rebuilding the national infrastructure, American companies will be unable to be compete globally in the heart of the 21st century.

While Sanders proposes socializing those sectors and a couple of others, he does not advocate eliminating free enterprise. He explicitly says that we need to support small- and medium-sized companies, calling them the backbone of our economy. He does not call for eliminating investment banking. He just thinks investment banking needs to be regulated like it was under the Glass-Steagall Act because it was the deregulation of the banking industry that led to its near collapse in 2008. Sanders demonstrates that he is a believer in capitalism.

The countries that Bernie Sanders cites as examples of successful socialist democracies all have robust capitalism in their economies. Too bad Sanders doesn’t clearly state that they do. It’s fine for him to say that he is a socialist democrat because he is. But Americans would be more accepting of it if he also said that a foundation of capitalism that builds a strong middle class is critical to a healthy socialist democracy.