Both Bernie Sanders and Alexandria Ocasio-Cortez, the new Democratic nominee for Congress in New York, describe themselves as socialists. But, in fact, there is no evidence they actually are.

What is socialism? Merriam-Webster defines it as “any of various economic and political theories advocating collective or governmental ownership and administration of the means of production and distribution of goods.” If someone is going to call him or herself a socialist, then, at a minimum, he or she needs to advocate for government ownership of the means of production, i.e., industry. One is only a socialist to the extent that he or she does this.

Historically, the foundation of every socialist economy has been the nationalization of key industries. This was, of course, the case for dictatorial regimes in Cuba, Russia, Venezuela, North Korea, etc.. But it also happened after World War II when the socialists took control in Great Britain. The first thing they did was to nationalize major industries, including iron, steel, coal, and health care.

So, when will Bernie or Alexandria declare an intention to nationalize General Motors, Apple, or ExxonMobil? In fact, they are not even calling for the nationalization of industries that they openly repudiate, such as coal or banking.

One might argue they are advocating socialism in health care given their overt push for a single-payer system, politically advertised as “Medicare for all.” But, in fact, neither Medicare nor other single-payer programs like Medicaid is really socialized medicine. No one is advocating for an actual government takeover of hospitals or turning doctors into government employees, as happened in Britain under the socialist government. A model for such socialized medicine here in the United States would be the Veterans Health Administration (VA) system, not Medicare. If the Sanders-Ocasio-Cortez wing of the Democratic Party really wanted socialized medicine, their cry would be “VA for all,” not “Medicare for all.”

If the self-proclaimed socialists of the Democratic Party are not socialists, what are they? First and foremost, they are unshackled welfare statists, directed by a morality that values, above all, a form of outcome-based egalitarianism. As a result, they favor all-encompassing government programs thought to minimize income inequality and the outcomes that flow from such inequalities. As we have seen, this includes a steeply progressive income-tax system, government control of payments for health-care services, tuition-free higher education, guaranteed employment, etc. But note that none of their proposed programs seeks to nationalize any industries. What they do seek is to equalize the benefits these industries provide through one or another kind of government payment scheme.

In the area of economic policy, these self-proclaimed socialists embrace, not socialism, but what is called “dirigisme,” which Merriam-Webster defines as a system that embraces “economic planning and control by the state.” Wikipedia offers a more refined definition that I think captures the essence of what is advocated by Sanders, et. al.:

Dirigisme or dirigism (from French diriger, meaning ‘to direct’) is an economic system where the state exerts a strong directive influence over investment. It designates a capitalist economy in which the state plays a strong directive role, as opposed to a merely regulatory one.

According to the Encyclopedia Britannica, “Dirigiste policies often include centralized economic planning, directing investment, controlling wages and prices, and supervising labour markets.”

Dirigisme is considered to have been “an inherent aspect” of the fascist economies of post-WWI Italy, Spain, and Germany. These economies, according to Wikipedia, were “based on private individuals being allowed property and private initiative, but these were contingent upon service to the state.”

While the ideological goals of Bernie Sanders and his followers are obviously quite different from those of Mussolini in Italy or Franco in Spain, dirigisme itself is an ideologically neutral economic system, allowing those in power to advance whatever goals they happen to have. What needs to be emphasized is that dirigisme is neither socialism nor capitalism. It is a system where industry is privately held but governmentally directed to advance the interests and goals of the state, regardless of what those goals might be.

A 2016 article in The Atlantic titled “Sanders is Not a Socialist and America isn’t Capitalist” made much the same point, though not using the term dirigisme. Its author, Marian Tupy, states: “Sanders is not a typical socialist. Sure, he believes in a highly regulated and heavily taxed private enterprise, but he does not seem to want the state to own banks and make cars.” He describes Sanders as being in favor of what the author calls a “social democracy,” which fits squarely within the broader concept of dirigisme discussed here. According to Tupy,

In a social democracy, individuals and corporations continue to own the capital and the means of production. Much of the wealth, in other words, is produced privately. That said, taxation, government spending, and regulation of the private sector are much heavier under social democracy than would be the case under pure capitalism.

It is unlikely that the rather arcane term “dirigisme” will catch on anytime soon as a description for the set of policies being offered by the so-called socialist wing of the Democratic Party. But it is important to understand those policies are not, in fact, socialist but represent an approach to economic policy that has been adopted, historically, by both far-left progressives and far-right governments, albeit with differing goals in mind. Nor can these policies be defined as capitalist, despite the fact that they maintain the institutional infrastructure of private property.

When it comes to private property, dirigisme separates control of property from its legal title. While legal title to the means of production may remain in private hands, use of that property, particularly when it comes to what and how goods and services are produced, distributed, and paid for, is directed by the state to advance the goals of the state. Upon close examination, it is this principle — dirigisme — and not the outright ownership of the means of production by the state which democratic socialists like Bernie Sanders and Alexandria Ocasio-Cortez stand for.

Dr. Roy Cordato is Senior Economist and Resident Scholar at the John Locke Foundation, and editor of “Political Economy in the Carolinas.”