U.S. markets closed

Jamie Dimon defends capitalism, says US socialism would be 'a disaster'

Javier E. David
Editor focused on markets and the economy

JPMorgan Chase (^JPM) CEO Jamie Dimon simultaneously defended free markets on Thursday while acknowledging that the aspirational American dream was “fraying” for many citizens as incomes stagnate and costs rise.

Dimon — a self-described Democrat at heart who has bemoaned the leftward drift of the party — has denied speculation that he may run for public office.

Still, a wide-ranging annual letter released to shareholders on Thursday tackled a number of politically charged themes that made him sound a lot like the latest CEO-candidate who has Oval Office aspirations.

IMAGE DISTRIBUTED FOR JPMORGAN CHASE & CO. - Jamie Dimon, Chairman and CEO, JPMorgan Chase, discusses Future of Work at JPMorgan Chase event on Monday, March 18, 2019 in New York. (Adam Hunger/AP Images for JPMorgan Chase & Co. )

With a debate underway about the merits of a market-based versus a government-run economy, the chief executive of the largest U.S. bank launched a defense of capitalism, while blistering socialism as a path to “stagnation, corruption and often worse” that would be a “disaster” for America.

A market-based economy “has been the most successful economic system the world has ever seen,” Dimon wrote. “It has helped lift billions of people out of poverty, and it has helped enhance the wealth, health and education of people around the world.”

He added: “I am not an advocate for unregulated, unvarnished, free-for-all capitalism. (Few people I know are.) But we shouldn’t forget that true freedom and free enterprise (capitalism) are, at some point, inexorably linked.”

Making a distinction between social democracies like Sweden and Norway, which combine generous social benefits with market economies, Dimon said those systems are “completely different from traditional socialism.”

The latter “inevitably produces stagnation, corruption and often worse — such as authoritarian government officials who often have an increasing ability to interfere with both the economy and individual lives — which they frequently do to maintain power,” Dimon added. “This would be as much a disaster for our country as it has been in the other places it’s been tried.”

‘True engine of growth’

His remarks come at a time when self-described socialists like Vermont Senator Bernie Sanders and New York Congresswoman Alexandria Ocasio-Cortez have risen in prominence.

Sanders is currently topping the polls for the Democratic presidential nomination, while Ocasio-Cortez (known as AOC) has become the standard-bearer of the party’s resurgent left. Recent polls also suggest younger voters are sympathetic to the idea of a government-run economy.

In his letter, Dimon staunchly defended private businesses, while issuing a rallying cry to CEOs that he said the world’s largest economy needed.

“Show me a country without any large, successful companies, and I will show you an unsuccessful country — with too few jobs and not enough opportunity as an outcome,” the CEO wrote.

“And no country would be better off without its large, successful companies in addition to its midsized and small companies. Private enterprise is the true engine of growth in any country.”

Meanwhile, Dimon also addressed a litany of hot-button themes such as immigration, income stagnation, and lack of health care.

Arguing that income inequality has “gotten worse” while costs have surged, Dimon said that “simply put, the social needs of far too many of our citizens are not being met.”

Read more about Dimon’s letter:

Jamie Dimon: Bad mortgage rules are holding back the economy

Jamie Dimon defends stock buybacks, calls them ‘an essential part of capital allocation’

Jamie Dimon: Cybersecurity threats may be the ‘biggest threat to the U.S. financial system’