Younger Generations are Capitalists

Their version of capitalism raises the bar on the downside of free markets. It does not lower the bar on the upside.

Kylie and I ask about capitalism from many perspectives. Capitalism is a relatively simple set of organizing principles, especially a right to private ownership. Culture and self-interested actors shape capitalist principles into economic systems that can look very different. I lived, studied, and worked (mostly illegally) in Mexico for five years beginning in the late 1980s. Mexico has gone through a much wider range of social and economic configurations than America. Later, I worked with state officials, researchers, and communities in communist countries including China, Laos, and Cuba. I also worked in Peru; a nation scarred by ideological warfare. These experiences led me to believe that asking Americans if they prefer some other economic system is not very informative. Neither is asking if America should be more like some other country.

Most Americans, especially younger ones, have no experience with some other economic system and cannot compare systems other than abstractly and ideologically. People who left countries with some other economic system to come to America prefer capitalism. Many younger people think countries such as Sweden and Norway are socialist although both, along with twenty-two others, currently rank higher than America on the Heritage Foundation’s index of economic freedom. America ranks below Singapore, Switzerland, Ireland, Taiwan, New Zealand, Estonia, Luxembourg, Netherlands, Sweden, Denmark, Finland, Norway, Australia, Germany, South Korea, Canada, Latvia, Cyprus, Iceland, Lithuania, Czech Republic, Chile, Austria, and the United Arab Emirates.

To get away from these approaches, our work asks directly about capitalism; the principles of capitalism; how capitalism should work with democracy; and the effects of capitalism. We use these data to create a baseline for comparing generations and to develop ideas about how younger generations are different.

Capitalism is here to stay (until it’s replaced by intelligent AI and/or we’re all dead)

Americans have no real interest in getting rid of capitalism. One of our survey tools, the Capitalism Satisfaction Barometer, asks directly about capitalism. Currently, 73% of Boomers and older generations, 67% of Millennials, and 62% of Gen Zs say it is the best system for America. Some of them think capitalism is great and others think it’s the worst system bar all others. Why, you might ask, do 33% of Millennials and 38% of Gen Zs say they are unlikely to support capitalism as the best system for America?  Figure 1 shows that most younger Americans in this category think the economic system isn’t working well. Note, too, that about 15% who think it’s working OK or well still don’t support capitalism. This group may be strong adherents of some other economic system. For the rest, it’s the economy (stupid).

Figure 1. Millennial and Gen Z ideas about capitalism as the best system for America in relationship to their ideas about how well the economic system is working.  

Another reason we say young Americans expect the individual freedom of capitalism and have no real interest in getting rid of free markets is that almost everyone in the same group of respondents says it’s important for individuals and business owners to operate as capitalists. Chart 1 shows around 90% of young people expect individuals to own property, make a profit on an investment, bargain for compensations based on skill, and similar capitalist behaviors. Chart 2 shows a similar outcome regarding the latitude entrepreneurs and business owners should have in accessing credit for investments, setting prices for goods and services based on supply and demand, deciding what to do with profits from the business, etc.

Chart 1. The percentage of Millennials and Gen Zs who say it is important for an individual to be able to (from left to right) own property; make investments with the goal of earning a profit; decide what to do with profits from investments; move from one job to another; bargain for compensation based on skill level and profession; access credit for personal needs, such as buying a house.

Chart 2. The percentage of Millennials and Gen Zs who say it is important for an entrepreneur or business owner to (from left to right) start and own a business; decide on what kind of business to create, such as a privately held business, a for-profit, a non-profit, or a cooperative business; access credit for investments such as buying equipment for manufacturing; set prices for goods and services based on supply and demand; decide what to do with profits from the business.

No matter how fairly we treat everyone, some people will turn out better than others.

Kylie and I were somewhat surprised to learn that young people of all ideologies, races, ethnicities, and genders agree with this rather tough fact of life. Younger Americans agree at the same rate, about 70%, as adults did fifty years ago.  

Americans understand that capitalism does not guarantee equal outcomes, cannot be engineered to do so, and is not responsible for all inequality. Capitalism assures a high level of individual economic freedom and creates unequal outcomes in the distribution of wealth. Among Millenials and Gen Zs, for example, only 12% disagree that a fair economic system rewards a higher salary to the person with more ability.  

American capitalism is democratic capitalism. Democracy, like capitalism, has its downside. It assures a high level of individual political freedom and creates unequal outcomes in the distribution of power. The American ethos of egalitarianism is one concept that mitigates these downsides. Americans believe in equality of status and support an individual’s right to shape their own life by having a voice in public affairs and participating in free markets. The emphasis is on opportunity, access, and rights, and requires a recognition that there is a role for choice, effort, and ability in determining outcomes.

You may have noticed that some countries ranked above America on the economic freedom index might not do so well if the same countries were ranked based on freedom of the press. Do younger Americans think democracy and capitalism are intertwined? Very few, about one in ten, do not believe “Political freedom and economic freedom depend on one another.” Fifty years ago, about the same number of Americans disagreed with “The free enterprise system is necessary for a free government to survive.”

Younger generations expect a high level of individual economic freedom and a high level of individual political freedom. Their views about how to manage unequal outcomes in the distribution of wealth and power matter for private enterprises. As an anthropologist, I’ve looked at thousands of ways people work to distort political and economic systems. A corollary statement to “No matter how fairly we treat everyone, some people will turn out better than others” is “Some people will work to distort any system for their gain and that of their families and friends.” Democratic capitalism is more flexible than other economic systems. You are welcome to set up a kibbutz or utopian commune as long as it’s a voluntary association and you pay your taxes.

Mostly, the unfairness younger Americans focus on is a belief that they are not well positioned to enter the market, and people who do enter and exert effort are not receiving enough support. They are, for example, lukewarm about opportunity. Only about half say they have as good a chance as anyone else to succeed in their career. About 60% say the only way to get ahead as an entrepreneur is to have family and friends who can fund you. Some of their ideas about a fair starting point and where the bar should be positioned on the downside of markets are rooted in ideas about need, the subject of the third and final post in this series.