There's Something About Mamdani

Last week, New York City's Mayor-Elect Zohran Mamdani visited the White House, and pundits on both sides were predicting an epic ideological showdown between, depending on who you follow, the unbridled opportunities of capitalism and the abject poverty of socialism, or vice versa.  Of course, nothing happened, except Trump oddly fawning over Mamdani, but that’s for another article.

American politics has revolved around left and right throughout its entire lifetime.  It’s largely been bipolar:  a good and a bad, an “us” versus “them”.  As politics evolved and increasingly complex economic theories were incorporated, there has been little room to manoeuvre.  The Cold War all but closed down debate between capitalism and “other,” with “other” encompassing basically every economic model to the left of laissez-faire.  This includes lumping socialism and communism into a giant, scary-ism, and immediately, everyone mentions the bread lines seen throughout Eastern Europe behind the Iron Curtain.  

With that in mind, consider this a straightforward Economic and Political 101 to clarify terms that get misused in every debate. If you’re feeling saucy and want to get in an online debate with a total stranger on why they’re wrong, feel free to copy and paste from here.  No citation required!  

Capitalism

The main difference between capitalism, socialism, and communism is who owns what.  Capitalism is built on the idea that people own everything privately and that the free market is the best determinant of what people need.  It’s the vox populi, vox dei model of economics, or the voice of the people is equal to the voice of God.  The people are never wrong and they need any intervention or regulation as they can protect themselves.

The political right often interprets this as a case for lighter regulation, as that would just get in the way of what people actually want. However, that ideal forgets several obvious constraints already in place.  There are legal rules outside of regulation that govern even the freest of markets.  There are courts, contracts, and currencies.  Capitalism thrives on the stability that stable governments provide through regulation.  The defence and a large portion of the agriculture industry’s largest customer is the government, and economies of scale mean their needs become the default.  

Critics on the left see it as a system that inherently produces inequality.  While it may be true that fewer total regulations increase inequality or instability, there is no 100% free market in the world.  The United States is incredibly free by world standards; however, the US Constitution granted Congress the power to regulate international commerce and trade between the states as far back as 1789.  The left also largely ignores that, on the whole, the free market of ideas drives innovation, which in turn drives entrepreneurship and, therefore, wealth.  Yet, in my mind, it’s hard to untangle the adage that capitalism itself raised millions from poverty from the broader forces of industrialisation and public health reforms that lifted millions out of poverty during the 19th and 20th centuries.

There are several different national models.  The United States is mostly a private market with a modest welfare layer on top.  The UK mixes a market-driven economy, yet many Britons are most proud of the state-run NHS. Singapore is one of the most capitalist states in the world, but there is an intense layer of state planning that governs everything.  All three are capitalist, but none is a 100% “free” market.  All have some safeguards.

Communism

At the other end of the economic spectrum is communism, which, at least in theory, is a classless society in which all property is owned in common.  I say “in theory” because it’s never actually been carried out.  Communism is classless but also stateless, so where communist models have been enacted, such as the Soviet Union, China, and North Korea, you have also seen a very powerful central state enacted to enforce it.  This is why many on the right consider communism as inherently authoritarian, even though it is supposed to be the exact opposite.

The left often uses this as proof that communism is valid because it’s never actually been tried before.  But they ignore that no complex economy can function without some form of governance if private ownership is removed.  At the same time, central planning cannot be flexible enough to follow consumer demand required to run a modern economy.  We see this in North Korea, which is forced to remain disconnected from the outside world to keep its market functional.  Otherwise, their consumers would simply satisfy their demands in China or South Korea.

Other states had other failings.  The Soviet Union mastered heavy industry but never solved consumer scarcity.  China’s agricultural collectivisation triggered a famine that killed millions.  These failures stem largely from central planning itself, which cannot keep up with market signals in large, complex economies.

The left also uses China as a communist success story.  However, like most other modern countries, it’s a hybrid model.  China under pure communism languished, with a GDP of only $150 billion in 1978.  Today, that number is $18.74 trillion thanks to decades of economic reforms.  While the Chinese Communist Party remains firmly in charge as the only player in the authoritarian, single-party system, the economy operates as a hybrid model: market competition coexists alongside powerful state-owned firms, industrial policy, and tight state control over finance. That mix — not a pure market pivot — drove China’s transformation.  Private companies, internal competition, and global trade are central to China’s success story over the past 30 years.  

Socialism

Socialism is the most misused word in politics, and in the United States, it is used as a synonym for communism since the Red Scare of the 1950s.  This is where things get tricky, and it rarely escapes academia because it’s not clear-cut (and social media hates nuance).  Socialism refers to social ownership of major industries, usually through the state, rather than private individuals.  It does not require high taxes or universal healthcare, nor does it automatically imply a generous welfare state.

This is where both the left and the right stumble.  They both call any social spending, like Social Security, socialist; it’s just that the left considers that a compliment, while the right considers it an insult, but these are both inaccurate.  None of the thriving Scandinavian economies, often labelled ‘socialist’, is actually socialist.  Major industries are still private.  

Where full state ownership has been enacted, the results have generally been weak, with chronic shortages and underinvestment. Cuba operates a system in which the state controls most sectors, resulting in rationing, underinvestment, and chronic shortages.  Trump’s target du jour, Venezuela, nationalised the oil industry, imposed rigid controls, and undermined private enterprise, resulting in economic collapse and astronomical inflation.  

What about Mamdani?

Zohran Mamdani has proposed increasing government spending in certain targeted areas. For example, his focus on expanding housing investment and public transit funding fits squarely within social-democratic thinking, not seizing the means of production. He is a self-described social democrat, not a socialist.  When people point to successful “socialist” states, they’re actually pointing to social democracy.  This model is a market economy with strong state intervention, built on the idea that capitalism can generate wealth efficiently, but the state must shape, regulate, and redistribute it to ensure social stability and prosperity.  It’s a middle ground between the wild west of perfect capitalism and the stagnation of perfect communism.  

Social Democracy recognises both the strengths and the weaknesses of both systems.  It recognises that private enterprise drives growth, but there should be guardrails to limit economic turmoil, even if it may dampen growth compared to freer markets.  These regulations may stifle innovation, but they replace it with predictability and resiliency.  

This, combined with a reliance on labour unions, results in a model that tries to take the best of capitalism while minimising the worst aspects.  The state doesn’t transform or control the economy, but steps in to correct failures if necessary.  Modern social democratic parties on the centre-left have long since abandoned socialism as the end goal.  Social democracy is, essentially, capitalism with a safety net.   True, it is harder to become a billionaire in Sweden, but it’s also impossible to face bankruptcy because you can’t pay your medical bills.  

However, where Mamdani is likely to face pushback is that citizens of European social democracies accept higher taxes in exchange for more government services, like what Mamdani is proposing.  The United States was essentially founded on, and I’m aware this is a gross oversimplification, a tax rebellion.  Even those who are sympathetic to more government intervention have a hard time accepting how to pay for it.  In social democracy, it’s understood that a more cohesive society is a more stable one, but American political culture has generally prioritised individualism over collective social guarantees, which makes European-style social democracy a harder sell. Our national identity has been built around this national mythos of being “young, scrappy, and hungry,” with rugged individualism and wide-open spaces.  

But if it is going to be supported anywhere in the United States, it will be in New York City.   If it can’t make it there, it can’t make it anywhere.