Facebook co-founder says free markets are a myth, U.S. needs new capitalism so everyone can prosper

Facebook co-founder Chris Hughes told CNBC on Wednesday he believes the U.S. government should take a more active role in building an economic system that delivers broad prosperity.

In an interview on “Squawk Box,” Hughes said the new kind of capitalism he envisions is hardly an outlier position following decades of widening disparities between rich and poor Americans.

“What I’m trying to do is describe the broad common sense in America, which, I think, believes that capitalism can work but that there are many varieties of capitalism,” Hughes said, adding the way it has been operating “has not worked for most people.”

“Instead, we need to have a capitalism where markets are managed, where we have smart regulation, where we have public investment, where we have macro economic management,” said Hughes, who left Facebook more than a dozen years ago to work for Barack Obama’s 2008 presidential campaign.

Hughes is now co-chair of the Economic Security Project, which is focused on advancing projects and research around a guaranteed income and tougher antitrust enforcement in the U.S.

Hughes said antitrust is actually an area where some elements of the capitalist system he’s describing are already embraced by people on both sides of the American political spectrum.

“There’s a new majority on the left and the right that says government has got to step in, not to penalize any big company for doing something wrong but to create a fair market in the first place so that small businesses can flourish,” said Hughes, who two years ago called for Facebook to be broken up.

He has said he liquidated his Facebook stock in 2012 and acknowledged he made a fortune from his time working at the company. However, he wrote in a 2018 LinkedIn post that his ability to “make half a billion dollars for three years of work” demonstrates that something “is profoundly wrong with our economy.”

Hughes said he sees Americans from various backgrounds “throwing out the idea that markets were ever free.” The concept of a truly free market in the U.S., he added, is really just “a turn of phrase. It’s an idea. It’s a myth that’s sort of dominated the discourse.”

People in the U.S. also are recognizing “we need to have public investment to create the kind of prosperity that the country needs to see,” he said. As evidence, he pointed to the government’s crucial support for the U.S. economy in response to the coronavirus pandemic and the Great Recession before it.

“The idea that if you can just let markets go that they’re sort of natural or beautiful or chaotic, that just doesn’t work,” Hughes said. “Government steps in every time that they come apart.”