written 7 December, 2025
published 14 December, 2025
On November 19th and 20th, 2025, Daily Kos (dailykos.com) posted essays under the name Trenz Pruca, excerpted here, clarifying the conversation about capitalism and socialism. Specific definition of these words is important, as confusion comes from people using different definitions for the same words, talking past each other in circular debates, when trying to communicate.
A conventional business school definition of capitalism is: private ownership and free markets. But Adam Smith's theories were an idealized form, assuming such things as equal access to funds and information, which don't exist in the real world. So, capitalism can't be considered as just mindless commerce, independent of social impact. It needs human feedback if humans are to survive.
History shows that unrestrained capitalistic systems change over time. They begin with competitive growth, consolidating with maturity, become dominated by financialization with age, and eventually decay into oligarchy, with eventual collapse. This is a logical progression, not a defect.
In the early stages, capitalism is typified by small business, entrepreneurship, competition, risk and reward, and a rising standard of living. In the later stages capitalism is dominated by monopolies, financialization, rent extraction, political capture, and wealth concentration. Both can be called capitalism, but their impact on society is very different.
In a similar way, some people believe socialism means: governmental ownership of everything, a command economy, with bureaucratic central planning. This is properly called state socialism, and the failed former Soviet Union is an example.
Recognizing the natural life cycle of capitalism, and desiring to prevent oppressive oligarchy, societies can take actions to keep capitalism from digesting itself. This takes the form of taxing capital, regulating corporations, investing in public services and unions, and instituting strong anti-trust and anti-corruption laws. Such regulated capitalism is what the rest of the world calls democratic socialism. Examples include the Scandinavian countries, and certain eras in New Zealand, Canada, and even the US.
In the US, we have been taught to associate all socialism with authoritarianism, a result of Cold War polarization and business school indoctrination, a simplicity that benefits the wealthy. But democratic socialism is capitalism with guardrails.
The US is clearly in a late stage of unrestrained capitalism. Almost every sector of the economy has concentrated into monopoly control by a few large conglomerates. More than half of all rental housing is owned by a few corporations. The financialization of the economy is overwhelming, shifting from producing quality products to maximizing shareholder value. Wealth inequity is at a historic high, and labor unions are relatively weak. Regulatory agencies have been captured, and money influences politics to the level of corruption. This is not Adam Smith's capitalism, but a system near the end of its life cycle.
In contrast, Scandinavian countries are working examples of democratic socialism, with vibrant markets. Individual firms are privately owned, working in competition, encouraging entrepreneurship. However, essential services are publicly or cooperatively owned and universally available. Government regulates capital, limiting the concentration of wealth, protecting political equity from corruption by extreme wealth. Unions are strong, and nobody confuses human rights with "handouts". Capitalism powers the system, but democracy determines the direction.
Where we have monopolies and mega corporations, they have a mix of private, public, and cooperative businesses. Our profits are diverted into speculation and corporate buybacks, while their profits reinvest in social systems like healthcare, transit, and housing. While our firms regulate politics, their politics regulate markets. We see concentrated ownership of everything and they have broad based ownership. Our economy protects capital with public bailouts, they allow poor business to fail without destroying the society. America falls lower on measures of happiness than Scandinavia.
The issue is not about markets, but about power. Who controls the surplus, sets the rules, or avoids the risks? Who writes the laws, funds the politicians, or decides who fails? In late-stage capitalism, the answers are: capital, but in democratic socialism the answers are: citizens.
"Capitalism is like fire, brilliant, dangerous, and transformative, so societies have three choices: let it burn out unchecked (oligarchic collapse), extinguish it (authoritarianism), or manage it (democratic socialism). The United States choses the first, and Scandinavia choses the third. The societies that flourish will be the ones that treat economics not as theology, but as gardening: tending the healthy growth, pruning the dangerous overgrowth, and remembering that unchecked systems, like unchecked fires, consume everything."
Do we have the wisdom, and will, to change?
