America doesn't like socialism. So why are socialists winning?

Democratic socialists just had their biggest election night yet.

There’s just one complication: Most American voters don’t actually like socialism.

Six candidates backed by the Democratic Socialists of America won House seats Tuesday, giving the movement its largest foothold yet in Congress and greater clout in a Democratic Party already divided over how far left to go.

The victories, coming on the heels of New York City Mayor Zohran Mamdani’s rise to power, mark another milestone for a movement that has spent years challenging the party establishment. Now, with Democrats sweeping control of Congress, the question is whether those electoral gains will translate into actual political power.

The results of the new CNBC Voter Poll show the potential hazard of handing too much power to the party’s left flank. The survey of roughly 80,000 midterm voters found that 53% view socialism unfavorably, compared with 33% who viewed it favorably. Capitalism fared considerably better, with 56% expressing a positive view. Just 18% of voters identified themselves as democratic socialists.

That disconnect underscores both the opportunity and the challenge facing Democrats and their growing left flank. How the party reconciles the divide between reforming capitalism and fundamentally overhauling it could shape its legislative agenda in Congress, its economic message to voters and, ultimately, its direction heading into the 2028 presidential election.

The DSA’s presence in Congress will be quadrupled when Tuesday’s victors, all of whom won in safely Democratic districts, are sworn in.

But the projected Democratic landslide of more than 250 House seats could dilute their influence. Party leaders could afford to lose all eight DSA votes on most measures, leaving the group with far less bargaining power than it would wield in a narrowly controlled chamber.

Still, the movement is building financial muscle. While the DSA relies on membership dues, wealthy donors are now backing its candidates through outside groups. The 12 largest donors to American Priorities, a super PAC supporting some DSA-backed candidates, gave nearly $5.9 million this cycle, according to a CNBC analysis of Federal Election Commission filings through Oct. 31.

“We’ve had success with more donors but also we have an even stronger ground game to spread our message,” said Megan Romer, co-chair of the DSA. “Mailers and ads alone just don’t do it anymore. You have to knock on more doors and make more phone calls and talk to more people at work and in your union.”

The more revealing tests on Tuesday came outside of liberal enclaves.

In Florida, DSA member Angie Nixon came within three percentage points of an upset in a state where Democrats haven’t won a Senate race since 2012 and President Donald Trump won by 13 percentage points in 2024. But she lost by a wider margin than Democratic gubernatorial candidate David Jolly, who took a more moderate approach.

Michigan told a similar story. Progressive Abdul El-Sayed – backed by self-described democratic socialist Sen. Bernie Sanders, I-Vt., – won his Senate seat by seven percentage points. Yet he lagged nearly four percentage points behind Democratic Gov.-elect Jocelyn Benson‘s winning margin.

El-Sayed shares many DSA priorities but neither belongs to the group nor received its endorsement. He says he favors reforming capitalism over replacing it.

State ballot initiatives offered an equally mixed ideological verdict: Nearly two-thirds of voters in ruby-red Montana backed limits on corporate political spending, while deep-blue California rejected a billionaire wealth tax by roughly 10 percentage points, even as voters approved higher income taxes on the wealthy.

The results sharpen the dilemma over Democrats’ identity heading into 2028, as Rep. Alexandria Ocasio-Cortez, D-N.Y., the DSA’s most prominent standard-bearer, seemingly weighs a White House bid: Can left-wing populism expand the party’s coalition without alienating the swing-state moderates it needs to win a presidential election – especially in a less favorable political environment?

“I think a lot of people did vote for Democrats who would not ordinarily and who probably did it … with their teeth gritted,” Romer told CNBC.

But it’s clear that even voters who reject socialism aren’t satisfied with capitalism as it stands.

Three out of every four participants in the CNBC Voter Poll said the condition of the U.S. economy was poor or not so good, compared with just 2% who described it as excellent. And 70% said the economic system favors the wealthy rather than treating most Americans fairly.

That frustration helped fuel a populist message far beyond the socialist left, with victorious Democrats from Adam Hamilton in Kansas to James Talarico in Texas tapping into anger over rising costs, economic inequality and the political influence of wealthy elites. Eighteen Sanders-endorsed candidates also won, including in traditionally right-leaning states like Ohio and Montana.

“The real fight in this country is not left versus right. It is top versus bottom,” Talarico, who flipped a Senate seat for Democrats in the Lone Star state, said in his victory speech. “The people at the top work so hard to keep us angry and divided because our unity is a threat to their wealth and their power.”

Even politicians who weren’t on the ballot took note. Sen. Elizabeth Warren, D-Mass., said in a video posted to X Friday that “Democrats won by being populist economic fighters.”

Economists have pointed to measures showing increasing wealth concentration and a shrinking share of the U.S. GDP heading to workers in the form of pay as signs that the divide between the country’s rich and poor is widening. Coming out of the pandemic, the “K”-shaped economy has become a common descriptor for the unequal recovery seen by income classes.

Americans displayed their economic dissatisfaction well before they headed to the polls this week. The University of Michigan’s closely followed consumer sentiment index hit all-time lows this year.

“We have a rising tide that is not equally lifting all boats,” said Joe Brusuelas, chief economist at RSM, a tax firm. “That’s not what we used to tell ourselves when we were young.”

Rather than signaling a distaste for capitalism as a whole, Brusuelas said this week’s results show voters want a system that also includes populist policies like Medicare for all. Or, as he calls it, “capitalism with a human face.”

“These things are not mutually exclusive,” said Brusuelas, who regularly briefs members of Congress on policy issues. “We can walk and chew gum at the same time.”

Tuesday’s Democratic sweep left some on Wall Street racing to prepare their clients’ portfolios for potential policy shifts. Bank of America analysts detailed what heightened scrutiny of social media platforms or artificial intelligence data centers could mean for the shares of companies in those industries. CIBC built a basket of stocks that should benefit from a Democratically controlled Congress.

Still, the reaction of Wall Street veterans and New York City business moguls to this week’s election was relatively subdued compared with Mamdani’s victory in the mayoral race last year.

After Mamdani clinched his party’s nomination, Pershing Square CEO Bill Ackman said he was “a bit depressed.” Ahead of Mamdani’s victory, Kathryn Wylde, who leads the Partnership for New York City, a nonprofit group of business executives, told CNBC that “terror is the feeling” as he rose in the polls.

Wall Street magnates wondered how a city known as the epicenter of financial markets and global capitalism could survive under a self-described socialist. Some questioned if billionaires would flee the city or whether corporations would move their headquarters — fears that largely haven’t materialized since Mamdani took office.

With roughly 10 months of Mamdani’s term in the rearview mirror, Anthony Chan, the former chief economist at JPMorgan, said finance moguls have realized that politics don’t necessarily result in material policy changes. Chan said it’s a message they’ve carried with them exiting this week, with many understanding that any incoming lawmakers in Washington aligned with democratic socialist policies would be a small minority.

“Many of the people that I meet that were very adamantly against and opposed to his candidacy now are sending their kids to his free daycare centers,” Chan said, referencing Mamdani’s partnership with the state to expand no-cost programs for 2-year-olds in New York City.

“I thought you felt that the world was going to end if this mayor came in,” said Chan, who’s also an alumnus of Barclays and the New York Federal Reserve. “Now, you’re sending your kids to his free daycare centers.”

But the DSA has even bigger ambitions for 2028. With growing political clout, infrastructure and financial backing, the movement is looking to expand its influence nationwide, while one of its most prominent allies, Ocasio-Cortez, weighs a White House run.

“That infrastructure is there, and that will make a big difference for a potential left presidential candidate,” Romer said. “It’s really kind of do or die time. We really have to deliver.”