Socialist Capital
December 3, 2025
by William P. Meyers

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Or Capital Under Socialism

Generally, socialists hate capitalists, and vice versa. Seattle is one of the capitalist hubs of the world, yet it recently elected (barely) a mayor, Katie Wilson, who claims the socialist label. She will take office on January 1, 2026. In this essay I will be looking more at economics than politics. Keep in mind that both the capitalist and socialist labels are used for broad spectrums of social and economic policies. Note I am already on record as believing that a mixed system, of socialist programs with some free market economics, is most likely to work out to the good of most citizens. The trick is getting the right mix.

I remind readers that capital is what already exists, particularly if it was made or is owned by humans. Buildings, roads, and factories are capital. Intellectual property (trademarks, patents, copyrights, and trade secrets) is capital. Broader definitions of capital are possible, perhaps including social organization, certainly including business organizations.

Capitalism, in ordinary political discussion, usually means free-market capitalism, but in the natural order of things free-market capitalism usually comes to be dominated by monopolies. In the 1800s, to maintain free markets, anti-monopoly legislation was passed in the U.S. and other advanced industrial nations.

Socialism, in ordinary political discussion, usually means sharing, which involves redistribution of income and sometimes even capital. However, there are many versions of socialism. There is the political governance aspect, usually divided into the authoritarian version, or communism; the democratic version, or democratic socialism; and the minimal government version, anarchist socialism.

In classical theories, under communism the state (or government) owns all capital. In Democratic Socialism, the state owns certain types of capital, often utilities, public housing, hospitals, and some other types of businesses. The selection is supposed to take place through the democratic process. In anarchism there are two schools: in one individuals can own things (libertarianism). In the other, the workers own the means of production through their unions (anarcho-syndicalism).

A building is a building is a building. A factory is a factory, no matter who owns it. So why get so upset at a transition from capitalism to socialism (aside from private loss of wealth)?

Two crucial realities: accumulation and depreciation. Their importance for capitalism does not disappear under socialism.

Using buildings as an example: buildings are not made with magic wands. Accumulation of capital involves making new things (not, in this case, hoarding old things). Buildings, even modest ones, are complex. Consider creating a modern apartment building (perhaps for the private market, perhaps as social housing). It is a complex project. You need land, and it must be zoned properly. You need an architectural plan and building permits. You need a variety of materials (concrete, steel, wood, glass, piping and electrical appliances and wiring) that come from a variety of sources. You need labor, mostly skilled labor, and good supervision. You need to pass government inspections. And you need a different form of capital: financial capital. You have to pay for all the things needed to build, usually with a combination of your own financial capital plus loans from an entity like a bank.

In order to have the capital to build the apartments, you (or your lender) need to have accumulated capital in advance. Looking more broadly, and to history, failure to accumulate capital keeps people and nations poor. Accumulating capital requires some sacrifice. When you make money, you need to save some of that money. That is your financial capital accumulation. Things you (or the socialist government) own, like the apartment building, are physical capital that you have accumulated.

There is no general rule as to which type of economy, socialist or capitalist, will accumulate capital faster over the long run, and therefore be richer and more prosperous. During the 1928 to 1938 the U.S.S.R. accumulated capital rapidly, though on a small base, while the U.S.A. was in a severe contraction. Some capitalist economies go through periods of rapid accumulation, like South Korea after the Korean War or Japan during several periods of its history. Other languish for long periods of time, like Great Britain after World War II. Socialist economies have similarly been mixed, with China since about 1980 accumulating capital rapidly, while Cuba and Venezuela are examples of failure to accumulate, in fact going downhill due to depreciation. Many factors affect the rate of capital accumulation or loss at the national level, just as two people who get like incomes will have very different long term outcomes if one lives paycheck to paycheck and the other is a serious saver and eventually investor.

Depreciation is the natural tendency of physical capital to go bad over time. In our building example, there is wear and tear, the need to fix plumbing, aging materials, and various forms of destruction. If a building is run down the owner may not be able to charge as much to renters. Sometimes, when an area is growing in population, the sale price of buildings may go up as they age, even if they become somewhat run down. So again, depreciation can be complicated. It involves anything that causes the value of capital to go down. This may happen with financial capital as well. When a loan is not paid back in full, we can say that the financial capital in the loan has depreciated. Accountants have set standard rates of depreciation for various types of property, but actual depreciation can vary greatly.

Humans make the decisions in both socialist and capitalist economies (and in mixed economies like we have in most modern nations.) Humans make good, bad, and mediocre decisions for all sorts of reasons. Capitalists often argue that private ownership makes for better decisions. Private owners are supposed to look out for themselves (and their heirs), and so focus on accumulating capital and minimizing depreciation. In reality rich families are often heading to the poor house, spending more than they make, and making bad investment decisions. Failing to spend money on building repairs, so that the rental income can be spent on personal consumption, is a phenomena that can be found in any American city. In addition capitalist governments (and socialist, for that matter), may fail to maintain roads and other infrastructure, resulting, over time, in poor economic outcomes.

Ideally a society should put some focus on making sure depreciation is dealt with and capital is accumulated at a good rate. The specifics are critical too. Factories need to be built to meet specific demands. Housing needs to fit the needs of the people living in it.

In trying to decide between socialism, capitalism, and the perfect mix of both, there are other factors besides capital accumulation and depreciation. Socialism seems to have a tendency to demotivate some people, though there are exceptions. Capitalism tends to create a class of poor people who are more destructive than productive, though it energizes those people who want to climb the ladder of wealth.

The New Deal legislation of the Great Depression era in America was an attempt to strike an appropriate balance. Socialist programs like Social Security, welfare, and jobs programs certainly helped many people. Capital accumulation continued. The addition of Medicare and Medicaid in the 1960s also took care of some bad side-effects of pure capitalism.

On the other hand, in Seattle, we have perhaps 10,000 people living outside, unhoused. We also have a much larger number of people who already have various subsidies for housing. The truth is Mayor Wilson will not have much power, beyond the power to persuade the City Council to perhaps tax a bit more, perhaps allocate some funds a little differently. Many rules and budgets are made at the state, national, and even King County level.

High housing costs certainly contribute to homelessness in Seattle, though they are largely compensated for by a high minimum wage. Hard drugs (including alcohol and marijuana products), mental health, and culture all contribute to people ending up homeless. For a surprising number of unhoused persons I have talked to it is a lifestyle choice. For many of the temporarily homeless it is a direct result of paycheck-to-paycheck culture, the inability to save emergency funds, much less save enough to escape from what some leftists call wage-slavery.

Socialists of the Seattle type, and many preferring the Progressive label, say just give every homeless person a nice apartment. But if you are working 40 or 60 hours a week, and see some bum get a free apartment, why not go live in a tent a few weeks until a social worker gives you a free apartment? If you like to party, why not party all the time, on the taxpayer dime?

People living in the Seattle streets vary in their level of destructiveness. Same for people living in apartments (and single family housing). Public housing needs to have rules or it will depreciate quickly. And society needs work requirements, because not working means consuming without contributing to production, much less capital appreciation.

I do believe the rich could pay more taxes (Washington State has no income tax, but therefore it has high property and sales taxes). But I don't believe Socialism should be reduced to a method of punishing the rich, much less those who work hard. I believe it is okay to take away the alcohol, take away the fentanyl, and say tents are not allowed under our urban building codes. The City Council, if it wants a social form of socialism, rather than the anti-social one often advocated for these days, could take meaningful action. It could reverse mistaken actions of the past, like the destruction of single-room occupancy hotels and boarding houses. It could encourage building (or conversion to) cheaper housing (more tenants per room) for the homeless, to get them immediately off the street, off drugs, with mental and social counseling, so that they can rejoin the High Holy of Socialism: the working class.

I think good Socialism as a whole must be done on a national level. We have seen about 200 years of contests between socialism and capitalism. We should try applying rational thought and learning from experience. There is a lot of capital in the United States, it is very poorly distributed, and smart redistribution could greatly improve our economy (and help moderate the environmental crisis that is threatening to depreciate just about everything.)