Gen Z's Hatred of Capitalism is Misplaced
A new poll shows that support for socialism among young Americans is at an all-time high.
The future of free markets in the United States is in danger, as support for capitalism among younger generations has fallen to an all-time low. According to a poll conducted by the Cato Institute in 2025, 62% of Americans aged 18 to 29 say they hold a “favorable view” of socialism. Perhaps even more troubling, 34% of young Americans say they hold a “favorable view” of communism.
This is a stark contrast from previous generations. Baby Boomers overwhelmingly hold a positive view of capitalism at 68%. Only 32% of our elder generation holds a positive view of socialism.
Many older Americans are baffled by the fact that so many Gen Zers could favor a system that has failed so horribly in the past. Baby Boomers and Gen X grew up during the Cold War, when socialist and communist ideologies spread across Eastern Europe and Asia. They witnessed, in real time, the authoritarianism, human rights abuses, and economic stagnation stemming from socialist policies that plagued entire countries.
When the Soviet Union fell on December 26, 1991, many thought that would be the end of the support for socialism and that free-market capitalism would dominate the Western Hemisphere for eternity.
However, the rising support for socialism among young Americans, the recent election of democratic socialist Zohran Mamdani in America’s biggest city, and the Democratic Party’s gradual embrace of policies once considered fringe, proved that hopeful sentiment wrong.
So, what happened? Why are the youngest Americans so pessimistic about their economic future and demand an overhaul of our free-market system?
Many older generations gripe that the reason why so many Gen Z are rallying against the capitalist system is due to a newfound sense of laziness and distaste for those who work harder than they do.
Ludwig Von Mises, a famous free-marketer and Austrian School economist, articulated this view in his book The Anti-Capitalistic Mentality.
Capitalism, he says, is a system in which everyone is given the opportunity to achieve the most desirable positions in society. However, these positions and wealth can only be attained by a few.
According to Mises:
“What makes many feel unhappy under capitalism is the fact that capitalism grants to each the opportunity to attain the most desirable positions which, of course, can only be attained by a few. Whatever a man may have gained for himself, it is mostly a mere fraction of what his ambition has impelled him to win. There are always before his eyes people who have succeeded where he failed.”
The result is that people feel dissatisfied as they see people who have worked hard and attained the things they wished for themselves. This feeling of resentment leads people to cast blame on the system rather than take responsibility for the way their life has turned out.
While this explains why some socialists have a distaste for capitalism, it certainly does not explain the bulk of people who are going further and further left. Nor does it help to explain why there has been a recent uptick for socialism in the last decade, as it is unreasonable to believe that an entire young generation has a newfound sense of laziness and jealousy.
The Gen Z socialists are right about one thing: our “free-market” economy is not doing well, especially when compared to previous generations.
Gen Z grew up during an interesting economic time, with some of their first memories of economic impact coming from the Great Recession, where they saw parents lose their jobs and their homes and struggle to afford basic necessities in a stagnant economy.
Then, as many Gen Z were finishing their education and beginning to look for full-time jobs, the Covid-19 pandemic hit, halting the economy to a stop.
The Covid economy was first marred by rapid job loss, then historically high inflation, followed by surging home prices.
The post-Covid housing market has made the dream of owning a home unattainable for many young Americans. In 1985, the median home price was $84,300, which was 3.5 times the median income at the time. In 2023, the average home price was $428,600, which is 5.3 times the median income.
There has been a growing sentiment that earnings have been stagnating. One commonly cited statistic is that real wages have only grown by 0.7% since 1973. CEO pay has also undoubtedly outpaced worker wage growth, with top CEOs now making 281 times the amount of an average worker.
However, while many members of Gen Z are correct that there is a sickness in our economy, they are misdiagnosing the disease and are attempting to prescribe a dangerous treatment.
Many ascribe the perils discussed above as being by-products of an overly-free capitalist market. Gen Z socialists say wages are stagnating and CEO pay is increasing as a result of a corporate oligarchy wielding power over workers, which free-market capitalism has bred and allowed to continuously grow.
Therefore, they say, the only solution is embracing a democratic-socialist system where aggressive wealth redistribution, emboldening the welfare state, and implementing extensive regulation can keep greedy corporations and the billionaire class in check.
However, this is not the case. The actual culprit behind the lagging economy is not an overgrowth of the free market, but rather an encroachment of government power and regulation.
The reason why home prices are more than 5 times the median income is almost entirely the result of money that was artificially pumped into the economy during the Covid-19 pandemic. From February of 2020 to February of 2022, the U.S. money supply increased by an unprecedented 40.4%. This, coupled with the Federal Reserve’s choice to bring mortgage rates to an all-time low, caused housing prices to soar 54.9% between 2020 and 2025.
Additionally, heavy government regulation on the housing sector left builders unable to keep the housing supply up with demand, further pushing prices up.
This stimulus check that drastically increased the money supply during Covid is also the reason why we haven’t seen any gains in terms of real wages since the start of the pandemic. Inflation ticked up to a 40-year high, climbing to over 8%.
Data from a non-partisan organization, the Hamilton Project, has found that real wage growth since 2020 has been flat due to high inflation eating up nominal wage gains. Furthermore, the lowest levels of wage growth occurred in low- to middle-income jobs.
Regulatory capture is also driving market consolidation and increased corporate power as large corporations have successfully lobbied and influenced government officials to shape regulations in their favor. This tends to hurt small businesses and reduce competition by creating large regulatory barriers that only large incumbent corporations can overcome.
Again, this is not the result of the free market at work but rather crony capitalism, which is a direct result of the government becoming even more intertwined with our economic system.
Many progressives also tend to overstate the degree of economic stagnation or the issues that come with rising inequality.
For instance, the statistic that real wages have only grown by 0.7% since 1973 is misleading. 1973 was a previous peak for real wages, a bit of an anomaly, so to speak. This statistic also uses the Consumer Price Index (CPI) to adjust nominal wage growth and put it into real terms. As a report from the American Enterprise Institute points out, using 1973 as a base year and CPI to measure real wages greatly underestimates real wage growth.
If you use 1990 as the base year, which was another business cycle peak, and use Personal Consumption Expenditures (PCE) as the price index, real wages grew by 39% from 1990 to 2022.
Rising economic inequality is also often miscategorized and overstated. An article written by Senior Fellow Scott Winship points out that there are many issues with how think tanks calculate income inequality, such as the fact that they don’t take into account non-wage employee benefits or non-wage government benefits.
The Gini Coefficient (produced by the Congressional Budget Office), Winship argues, is a much better measure of income inequality, as it takes more factors into account. The Gini coefficient has only risen from 0.41 in 1989 to 0.43 in 2017. The Gini coefficient is 0 when everyone has the same income and is 1 when a single family has all of the income in a country.
Most of the growth in income inequality post-WWII actually occurred in the 1980s. Recent data has suggested that income inequality peaked in 2021 and has been dropping ever since.
Additionally, a piece on income inequality from the Hoover Institution points out that income inequality is not what we should be most concerned about. Rather, we should be looking at how many people are able to make their way out of poverty and have a good standard of living. According to the report, worldwide extreme poverty has fallen significantly in the past couple of decades, reaching an all-time low of under a billion people.
Moreover, the wealth that we are seeing concentrated among those in the top 1% is mainly driven by technological innovation. That technological innovation, which has flourished in the United States’ free-market system, has also translated to unprecedented growth within America’s middle class.
Winship’s article also highlights the massive growth that the middle and even lower classes have encountered in recent decades. “It is not the case that the poor are getting poorer while the rich are getting richer, contrary to the ‘falling behind’ rhetoric,” he says.
The Covid-19 pandemic also left a lot of people in isolation, closed-off from outside human interaction and experiences. Many began to fill the void by scrolling on social media for hours on end.
While social lockdowns removed people from real-world conversation and political discourse, the social media algorithm was pushing out flashy political content from creators who had little credibility but a huge incentive to gain virality.
Much of the political content on platforms such as TikTok and Instagram was intentionally inflammatory, expressing radical views from both the left and the right. The more users engaged with this kind of content, the more the algorithms continued feeding it to them.
Being isolated from their classmates, neighbors, and community members, many members of Gen Z forgot what political views and conversations looked like in real life and became consumed by the political jungle on social media.
As a result, these online platforms began to normalize radical views, such as support for tearing down capitalism, and were rarely ever challenged due to the lack of face-to-face conversations.
This was especially problematic since social media quickly became the main source of news for many Gen Zers. The Genesis 2021 report showed that cellphone and social media usage surged during the pandemic, with 46% of adolescents saying they used their phone more than three hours a day, with 62% of this usage going to just TikTok. Additionally, 50% of Gen Z used social media networks as their daily news source as of 2022.
This only further fueled the echo chamber effect. Many young Americans were being presented with radical and sometimes even non-factual content that was being packaged up as “news.” With little outside influence, many turned towards socialism, thinking it was a legitimate and necessary step towards solving our nation’s economic and social perils.
Lastly, another reason why support for socialism may be rising among Gen Z has to do with their changing definition of it, or at least of what they think socialism could be.
This could help explain why a poll from 2019 done by Gallup found that while 49% of millennials and Gen Z had a favorable view of socialism, 83% still had a positive view of ”free enterprise.”
When many Gen Z say they advocate for socialism, they do not necessarily mean securing the means of production and having a centrally-controlled economy like in the Soviet Union. Rather, they just want things like higher taxes on the wealthy, universal health care, and universal childcare, among other things.
To them, “socialism” more commonly means the democratic-socialist policies commonly associated with Scandinavian-style welfare states than traditional Marxist theory.
Samuel J. Abrams, another senior fellow at the American Enterprise Institute, points this out in his op-ed titled Capitalism Isn’t the Enemy—What Young Voters Really Want. This can be seen with the many democratic-socialist politicians that Gen Z is rallying behind, such as Zohran Mamdani and Alexandra Ocasio-Cortez. Neither ran on the platform to have an economy entirely controlled by a central, authoritarian government. Rather, they mainly advocate for things such as free health care, lower prices, and higher wages.
However, it is important to note that politicians like Mamdani and AOC have also advocated for more explicit socialist policies, such as government-run grocery stores and price controls, which can quickly lead to serious economic problems.
Venezuela is a prime example of this, where government overreach, corruption, and central planning all contributed to the rapid downfall of a once prosperous Latin American country.
Part of Gen Z’s shift in attitudes may stem from the fact that they are decades removed from the worst horrors of socialism, where the older generations watched the economic system play out in full scale during the Cold War.
Gen Z is too young to have been alive to witness the devastating effects of the Soviet Union and the communist bloc’s eventual collapse. They only read about it in school, where even then it is inadequately taught.
The reality is that preserving personal freedom and democratic institutions is very difficult when a government is allowed to endlessly expand its power in the name of economic justice and equality.
Additionally, “well-intended” policies that focus on government-run enterprises, central planning, and aggressive wealth redistribution can quickly slide into an all-out-socialist economic system like in the Soviet Union. Many of the “democratic socialists” of Generation Z have yet to learn that.
The growing support for socialism among Gen Z in the United States did not come out of nowhere, nor did it simply come from a sudden change in mindset. It was the result of changing economic conditions, social media radicalization, and a new attempt to package up socialist ideas as being compatible with a free and prosperous society.
Many young Americans feel pessimistic about their ability to achieve the same American dream that was promised to previous generations and are turning to socialism to address rising costs and inequality.
Gen Z needs to be better educated about the historic failures of socialism. We need to make sure that the future leaders of the world are willing to embrace the economic system that has brought more wealth and prosperity to this world than any other economic system in human history.
In order to restore Gen Z’s faith in free markets, we must ensure that every young American understands that the current economic issues that we face today are not driven by capitalism, but rather government overreach in the form of corruption, mismanagement, inflation, and crony capitalism.
In other words, they need to understand that the blame assigned to capitalism really belongs to the growth of socialism.
This article was originally published by the MacIver Institute.