Baltimore and Boston
You might say that it was in a bread line where economics came into focus for Bernardo Vigil Rendon. He was employed, actually, at a bread factory.
One day, word came from on high: A new client needed the loaves packed in a different kind of box. The workers would be packing the same amount of bread, but the job would now be more difficult, and there would be no extra time allowed to do it. No extra pay.
“We just have to do this” was the message that filtered down, he recalls.
What Mr. Vigil Rendon could see, along with fellow workers and even his immediate manager, was that, at about 15 cents extra per loaf, it meant a substantial new chunk of profit for the bread factory but nothing for those on the line.
“It was exceedingly hard” for the workers, he says, and “quite a windfall for the owners.”
Today, Vigil Rendon has moved on to a workplace he likes much better, a bicycle store that’s owned by the workers collectively. The pay isn’t huge, but the job comes with perks that are unusual for such a small shop: a retirement savings plan, no staff cuts in the off-season, and a familial atmosphere that sometimes brings the shop’s adopted cat, Falkor, into an amiable nose-to-nose encounter with another worker’s towering dog. And in weekly meetings, everyone has a voice in decisions.
Now, as Baltimore Bicycle Works looks to open a second store (after 10 years in operation), it’s also hoping to be a harbinger of a wider transformation in the US economy. The workers here want to prove, one employee-owner at a time, that an egalitarian business model is a viable step up from a corporatist system that too often enshrines profit and greed, not workers and customers, as the overarching reason for existence.
The bike shop, tucked under the brightly painted Howard Street Bridge in central Baltimore, is just one example of a leftward stirring on economic issues across the United States, especially among the young:
• In a shift since 2016, young Americans today view socialism more favorably than capitalism, according to a Gallup poll this year.
• The public has been embracing ideas like “Medicare for all” (59 percent support, according to a Kaiser Family Foundation poll) and a federally guaranteed job (46 percent, says a Rasmussen survey), tilting the energy in the Democratic Party toward its left wing.
• Labor unions have been edging up in popularity and scored a ballot-initiative win this year even in Republican-dominated Missouri.
• Worker ownership – both partially and through full-fledged worker cooperatives – is growing.
If Occupy Wall Street back in 2011 was a relatively short-lived protest, its spirit seems to be persisting and even expanding.
All this hardly means that a Marxist revolution is imminent. But, beyond a mere symptom of polarized politics, it reveals a discontent with the economic system that’s echoed even by some economists on the conservative end of the spectrum.
“Clearly US capitalism failed in providing what it promised,” says Luigi Zingales of the University of Chicago’s Booth School of Business, referring to the benefits delivered by truly competitive markets. “Either we fix capitalism to provide what it promised, or we might end up losing capitalism or ... democracy, or maybe both at the same time.”
That’s a stunning assessment since the economy, by many measures, is not just strong but thriving. Unemployment is approaching half-century lows. Consumer confidence has revived. Economic growth topped 4 percent in the second quarter. Yet many Americans still feel fearful or disillusioned. Why?
In some ways, capitalism is a victim of its own success. When Soviet socialism essentially collapsed in 1989 and China started opening up its economy, both caused a surge in the pool of global labor to compete with Western workers. And the sheer magnitude of technological innovation, while widely cheered as capitalism’s biggest triumph, feeds insecurity as machines threaten jobs across the economy.
Still, in other ways capitalism’s flaws are on display. Experts say moneyed interests have encouraged trends that fuel inequality and resentment. These include attacks on organized labor, rising concentrations of corporate power within industries, soaring pay for executives, and trade policies that have protected elites while putting blue-collar workers at risk.
A “Trump effect” may have added some fuel. The Gallup-tracked attitude shift among Millennials since the 2016 election reflects a decline in their affinity for capitalism (not rising support for socialism), and the change comes alongside negative views of a billionaire president who has cut taxes for the rich.
All this, coupled with the legacy of the Great Recession, has helped shape a young generation eager for economic change and whose collective voice may be large enough to have some impact. Many Millennials appear to have more interest in tempering capitalism than replacing it. Still, the questions they’re raising are consequential, touching on values such as freedom and fairness and the viability of the American dream.
In short, while the travails of the economic system aren’t the sole cause of America’s political disarray, they’re a piece of it. Where citizens take that system next will do much to define America’s strength and social cohesion as a nation.
If you summed up what rankles Elena Botella about US capitalism today, it might boil down to two issues: equality and opportunity. Even in a land of abundance, she says a lot of people will “never have enough in savings to stop worrying,” let alone to fulfill their larger potential.
“I don’t think we’ve done a good job at all of sharing the dividends from growth in a way that’s either fair to workers or good for society,” says Ms. Botella, a Millennial in Washington, D.C., who has worked in the credit-card industry and is now doing research for a possible book.
For Botella, like many other younger Americans, the financial crisis and ensuing recession was a defining event. Back in 2011, as a college student, she was part of the Occupy Wall Street protests.
But her view now is a nuanced one – a search for better ideas, not a firm commitment to socialism. “I think it’s clear that capitalism has done a good job of creating a lot of abundance and prosperity,” she says.
That statement is a reminder that Millennials are hardly lockstep foes of capitalism. She’s also voicing an assessment that’s widely shared among economic historians. By the early 19th century, in Europe and America, forces coalesced that helped spur a historic rise in living standards. Specific breakthroughs and discoveries played a role. But undergirding it all was the interaction among shopkeepers and consumers, investors and inventors, that Adam Smith had glorified as the “invisible hand” in his 1776 work, “The Wealth of Nations.”
Note that Smith didn’t use the word “capitalism” in his paean to free markets. Yet as industrial organization scaled up, the term emerged and quickly became a magnet for vilification as well as praise.
In suburban Los Angeles, Asma Men is a young mother who can relate to both responses. Her parents came to America as refugees: Her father fled Vietnam when Communists took over the south; her mother is Khmer from Cambodia.
“[Socialism] sounds good on paper,” she says, “but knowing the trauma of such political environments based on where my family comes from, it’s easier said than done.”
Yet “when we talk about the economy, I do feel a little bit disillusioned in the sense of just how the middle class is getting really strapped and the rich are getting richer,” says Ms. Men, who has a master’s degree in public policy.
In fact, some of the earliest concerns about capitalism are the very ones that remain salient today: that the system fuels inequality, degrades the environment, and tears the social fabric with disruptive change.
Ben Packer, a young technology worker in New York City, has no qualms about identifying as a socialist.
“I think people in my generation have had a pretty profoundly negative experience with capitalism,” he says, citing student debt burdens, high rents, and the nation’s faltering progress on things such as poverty.
Mr. Packer says you can preserve a market system of producers and consumers even with state-owned enterprises involved. Already, he adds, a lot of innovation comes from the public sector – from biomedical research to computers and the internet. “You really get innovation when the government subsidizes the costs and the risks.”
Packer is a member of the modest but growing Democratic Socialists of America. The DSA has expanded its ranks from 6,000 in 2016 to about 50,000 today. He works in politics, using his computer skills to help elect left-wing Democrats.
For now, few people who proudly accept the socialist label hold elective office. Sen. Bernie Sanders of Vermont is a self-
described democratic socialist, and two DSA members appear poised to win House seats this fall, including Alexandria Ocasio-
Cortez, who made national headlines by ousting a longtime Democratic representative in a primary in New York.
But already, even without socialists wielding much power, ideas such as worker ownership and transcending the profit motive have been making inroads in the US economy. Companies organized as worker cooperatives are on the rise. Some 32 million Americans have at least some equity in their workplaces through employee stock ownership plans, stock option plans, and 401(k) plans. Publix Super Markets, with 190,000 employees, is the nation’s largest employee-owned company.
Another growing realm is “social enterprises” or public-benefit corporations – businesses that seek to earn profits but also frame their mission around benefits to society or the environment.
Some economic research suggests employee ownership can enhance a company’s performance. And depending on the details, it’s an idea that can draw support from both liberals and conservatives.
“Capitalism works best when normal people can freely participate in the economy, when they are rewarded for hard work, when they have a stake in the company that they work for, and when they can easily start a business,” says Andrew Kidd, a conservative economist and a Millennial in Columbus, Ohio. “It just leads toward innovation.”
The presumption is often that young people will naturally migrate toward more conservative views, including about economic issues, as they age. But will that happen this time?
For a hint of why that may not be the case, meet Alison Macrina. Like many people, her political attitudes didn’t spring forth fully formed. As a high school student in the early 2000s, she was a vocal opponent of the US-led wars in Afghanistan and Iraq, but her critique, she says, didn’t expand beyond that.
“I had only really identified those problems in their own little bubble,” she says. “I hadn’t really connected [the wars] more deeply to capitalism as a global economic structure.”
But the economy was very much on her mind after she received her master’s degree in library science in 2009, when employment was scarce. “Saying that I was having trouble is a massive understatement,” she says. “It took me, I think, a whole year to find a job.”
Ms. Macrina wasn’t alone. “There was this great influx of people who were moving back home,” she says of her peers. “People were working multiple jobs.” Everyone was “freaking out” about student loans.
Macrina had initially placed her hopes in President Barack Obama. “I thought he was going to take care of us,” she says.
But she was quickly disillusioned by the bailout of a few Wall Street firms and auto companies and Mr. Obama’s failure to prosecute the bankers. “The Democrats are not going to help us, let alone the Republicans,” she says, “so we have to do our own thing.”
Macrina went on to found the Library Freedom Institute, which trains librarians in online privacy. Along the way, she joined the DSA.
Macrina’s trajectory is typical of many people her age, says Ruth Milkman, a sociologist at the Graduate Center, City University of New York. “These are kids who did everything they were supposed to. They graduate from college or whatever, and then comes 2008,” she says. “That, combined with the economic restructuring that’s creating all these horrible jobs for everybody, that feeds your disdain for capitalism pretty personally.”
Professor Milkman argues the past 10 years have turned Millennials into a “political generation.” Their outlook, she and others say, may continue to be influenced by these experiences.
Of course, many Millennials never became disillusioned by what they saw as the collapse of the American dream because it wasn’t promised to them in the first place.
Joshua Ham was born in South Central Los Angeles in 1995, when the neighborhood was known for poverty, drugs, and crime. “The gentrifiers [now] call it SoLa,” he says, laughing at the moniker.
Mr. Ham’s political awakening came at the age of 15, when he received a three-day suspension for talking in class. The harshness of the punishment, along with the Los Angeles Unified School District’s policy of handing out $250 tickets for truancy, opened his eyes to the links between the severe punishments given to black public school students and the disproportionate incarceration rates of black adults. “They funnel you to the prison-industrial complex basically,” he says.
Forty-four percent of Millennials are, like Ham, nonwhite, making them the most ethnically diverse generation in US history – a factor that contributes to their liberal tilt.
Today, Ham works for the Brothers, Sons, Selves Coalition, a youth organizing nonprofit. And he’s politically active on the issue of prison reform. “What saved my life was youth organizing,” he says, “and having mentors that looked like me.”
If the US economic system needs some repair or reinvention, what are the options? And what might the electorate support?
The public at large isn’t calling to ditch capitalism. Gallup this year found that 56 percent of Americans have a positive view of capitalism, compared with just 37 percent for socialism. Even younger US voters show a mix of conservative and liberal traits.
At the same time, younger voters are pressing for change. They’re more likely than their elders to embrace things such as government-provided health care and greater help for the poor. And to many Millennials, the change they seek is not so much bigger government as a power shift away from wealthy and privileged elites.
“I’d love to live in a world that is just democratic in every sense,” says Nick Fuller Googins, a fiction writer and solar-panel installer who lives in Mount Vernon, Maine.
An older Millennial who’s done a range of jobs from auto repair to teaching, he says too many people today lack the opportunity to reach their potential because they’re just grinding out a living or trying to hang on to a job with health benefits.
“Capitalism ... is having the opposite effect of creating freedom,” he says. “A more equal society could unleash these amazing waves of creativity and entrepreneurship.”
His views reveal how, on the political left, the affinity for socialism doesn’t mean espousing the central planning of yesteryear.
More often it means strengthening social-welfare programs and addressing perceived flaws in the private sector through new regulations and incentives. And although the prescriptions vary, it’s hardly just avowed socialists who are calling for major changes.
Darrell West, a Brookings Institution expert on governance and technological change, writes in a new book (“The Future of Work”) about how America adapted to the wave of industrialization and dislocation that spanned from the late 1800s Gilded Age through the Great Depression. The nation’s response included antitrust laws, major commitments to public education, and the adoption of safety net programs such as unemployment insurance and Social Security.
In the same way, Dr. West and others argue, fresh responses are needed for today’s era of inequality and technological disruption. Among Democrats, some likely aspirants for the 2020 presidential nomination are embracing universal health care and government-supported college or technical school. They also aim to rebalance capitalism through proposals such as higher taxes on the wealthy or requiring big corporations to give workers 40 percent of boardroom seats – a plan sought by Sen. Elizabeth Warren of Massachusetts.
While Republican leaders are hesitant to expand entitlement programs, some are considering worker-oriented themes. These ideas include expanding the earned-income tax credit, which can bolster lower-income bank accounts without discouraging work.
For both government programs and corporate reforms, economists caution against assuming there are simple fixes. New government spending, for example, can mean higher taxes or boosting public debt. Still, they see the potential to reduce inequality without harming growth.
Dr. Zingales, the Chicago economist and author of the 2012 book “A Capitalism for the People,” urges a restoration of well-functioning markets, not socialism, as the answer to concerns about fairness and prosperity. To foster more competition, he suggests, for example, antitrust reforms, taxes on corporate lobbying, and a school-voucher program with extra support for less-privileged students. “[Socialism is] such a defeated concept that only young people who don’t remember enough of history can find that appealing,” he asserts.
At the Baltimore bike shop, whether you call it socialism or not, workers say their collective-ownership model could benefit small and large companies alike. On a recent Thursday, the employee owners have just finished a staff meeting. Some are busy checking on inventories while others help customers or fit a bike with new fenders.
As co-owners, “Are we all best friends?” asks Bernardo Vigil Rendon. “No, but ... we know at the end of the day, if I have an idea, everyone’s going to vote on it. We’ve all made common cause here.”