In 2026, America will mark a remarkable convergence of anniversaries. It will be the 250th anniversary of Adam Smith’s The Wealth of Nations, which explained how free people, trading freely, could generate prosperity on a scale the world had never known. It will also be the 250th anniversary of the Declaration of Independence, the bold assertion that liberty, not power, is the rightful foundation of a just society. It will be a consequential midterm election year, shaping the direction of American policy for years to come.
That convergence should give Americans pause—because it arrives at a moment when the principles that undergirded both documents are no longer widely understood and increasingly taken for granted.
Smith understood something that remains deeply relevant today: that capitalism is not a system of exploitation, but one of mutual benefit. As he famously observed, “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.” In a healthy market, people serve others not because they are compelled to, but because doing so is the most reliable path to their own success.
Two and a half centuries later, that clarity is fading.
When Capitalism Loses Its Meaning
A December 9 Economist/YouGov nationwide poll finds that only 41% of Americans say capitalism is the better economic system. Just 21% choose socialism. But the most revealing figure is this: 38% say they are not sure what to think at all. Among young adults and independents, uncertainty rises even higher. That ideological softness should alarm anyone who cares about America’s future.
Nations do not abandon their economic foundations overnight. They lose them gradually—first by forgetting what those foundations were.
Gallup’s September 2025 survey confirms this erosion of confidence. Only 54% of Americans now say they view capitalism positively, the lowest figure Gallup has ever recorded. Yet Americans remain overwhelmingly supportive of free enterprise and small business, while confidence in big business has collapsed. In other words, Americans still believe in markets—but increasingly distrust what they think markets have become.
The higher share of Democrats expressing favorable views of socialism in both polls is less surprising, given the party’s more extended history of comfort with government-led economic policy and the recent electoral success of self-proclaimed democratic socialists such as Zohran Mamdani in New York and Katie Wilson in Seattle.
What Americans Are Seeing Isn’t Capitalism
That confusion is understandable, because what Americans increasingly encounter is not capitalism at all.
When federal officials take equity stakes in private companies, that is not capitalism. When state and local governments offer targeted tax breaks and subsidies to favored firms and industries, that is not capitalism. And when success depends more on political connections than on serving customers, that is not capitalism either.
Recent federal industrial policy offers a clear illustration of how capitalism is being misidentified. In the name of national security and supply-chain resilience, the federal government has moved beyond regulation and subsidies into direct ownership and control of private firms in strategic industries.
Through a series of transactions, Washington has, in effect, acquired minority equity positions in several publicly traded companies involved in semiconductors, critical minerals, and steel production, including Intel, MP Materials, Lithium Americas, Trilogy Metals, and U.S. Steel, in which the government now holds special governance rights. Whatever one thinks of the policy goals, this is not a market system allocating capital through competition and consumer choice; it is the state acting as shareholder and power broker—an arrangement that may look like capitalism from a distance, but operates on fundamentally different principles.
Adam Smith explicitly warned against this kind of economic management. “The statesman who should attempt to direct private people in what manner they ought to employ their capitals,” Smith wrote, “would not only load himself with a most unnecessary attention, but assume an authority which could safely be trusted to no single person.” Markets disciplined by competition allocate resources better than politicians armed with power and good intentions.
True capitalism is far simpler—and far more demanding. It allows people to benefit financially only by benefiting others. Businesses succeed not by currying favor with government, but by meeting real human needs more effectively than their competitors. Failure is possible. Loss is real. And that discipline is precisely what makes the system work.
Capitalism, properly understood, requires limited government interference, not its constant supervision.
What makes this moment especially troubling is that the confusion about capitalism now extends to the very party that once defined itself as its chief defender. The Economist/YouGov poll shows that roughly one-quarter of Republicans say they are unsure whether capitalism or socialism is the better system. That uncertainty is not merely philosophical; it reflects a deeper shift in how many on the American Right now understand the relationship between markets and government.
From Free Markets to State Capitalism
An October 2025 analysis from the Council on Foreign Relations documents the rise of what it calls “American state capitalism”—a system in which government increasingly acts not just as a regulator, but as an investor, deal broker, and rent extractor, taking equity stakes in private firms, steering capital to favored companies, and directly shaping corporate decision-making. While these interventions are often justified in the language of national security, industrial policy, or economic nationalism, the effect is to normalize government picking winners and losers—precisely the practice free-market conservatives once warned against.
In 2025, this has left the Republican Party caught between instinctive skepticism toward centralized power and a growing tolerance for state-directed capitalism, so long as it is wielded in the name of strength or in competition with foreign rivals. That tension helps explain why confidence in capitalism has softened even on the right. When markets are openly managed by political authority, voters are told it is capitalism, and many understandably doubt the label. A party that blurs the line between free enterprise and state control risks losing not only its economic coherence, but its moral authority to defend capitalism at all.
Meanwhile, younger Americans—facing high housing costs, student debt, and stagnant wages—are often told that capitalism has failed them, and many understandably listen. Rarely are they told how zoning laws restrict housing supply, how government subsidies inflate tuition, or how regulation protects entrenched interests from competition. Instead of explaining how markets have been distorted, many leaders abandon the language of markets altogether.
The result is not a generation of socialists, but a generation unsure of what to believe.
Confusion Has Consequences
This confusion carries real consequences. Global comparisons consistently show that when governments expand ownership, subsidies, and political control over markets, economic freedom declines—and prosperity follows it downward. The Fraser Institute’s Economic Freedom of the World index, which tracks these trends across more than 160 countries, finds that societies with less government direction of capital enjoy higher incomes, greater innovation, and stronger protections for individual liberty over time. The erosion of capitalism’s meaning is not just a semantic problem; it is a warning sign that the foundations of freedom itself are weakening.
That uncertainty is dangerous. History shows that when societies lose confidence in the moral legitimacy of their economic system, they invite ever-greater government control to correct perceived injustices. Those interventions create new distortions that invite still further intervention. Freedom erodes not with a revolution, but with a shrug.
Two hundred and fifty years after Adam Smith explained how free people could prosper by serving one another, America faces a choice. We can continue to blur the line between markets and power—or we can recover the clarity that made capitalism not just productive, but defensible.
Capitalism is not about protecting businesses from failure—or sparing them from competition. It is about protecting people’s freedom to create, compete, and choose. It is not about government managing outcomes, but about individuals earning success by benefiting others.
If we fail to remember that—especially on the eve of capitalism’s most important anniversary—we may discover that ideological softness is not a neutral condition at all, but the first step toward losing economic freedom itself.
