Contributor Post Created with Sketch. Could We Please Stop Calling it “Capitalism?”

 

shutterstock_237930475The moment we call “capitalism” capitalism, I’ve come to believe, we’ve already conceded far too much ground to the other side, which of course portrays capitalism as a coherent system, imposed on economic life, just as socialism represents a system imposed on producers and consumers from the outside. If we’re simply choosing between two systems, the socialists contend, why choose the one imposed on the rest of us by rich cronies, interested only in their own wealth and power, instead of the system imposed by the government on behalf of ordinary people?

In truth, of course, capitalism represents the absence of any imposed economic system. Instead, it is simply what arises in conditions of freedom — the organic order that establishes itself as people come together in markets, pool their capital, respond to price signals, and so forth. Our choice isn’t between two systems, imposed on the rest of us, one by the rich, the other by the government. Not at all. Our choice is between freedom and coercion. The term “capitalism” obscures that absolutely basic point.

Which is why I found myself struck by one phrase in an email from a friend. He was writing about the pope’s visit, but the pontiff isn’t the issue here. Words — that is the issue here:

Go ask the world’s poor what they want. They want to learn how to achieve a better live for their families. Capitalism is an information and collaboration system.

Information and collaboration. Lovely, no? That’s what we’re talking about when we’re talking about capitalism.

There are 64 comments.

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  1. Doug Watt Member

    Peter I will let Bono in two separate videos speak for me on how I feel about this issue.

    • #1
    • October 4, 2015, at 1:14 PM PST
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  2. EJHill Podcaster

    Respectfully, no.

    Do not surrender the language, ever. It is no coincidence that some of the worst enemies of liberty are linguists like Noam Chomsky.

    There are more important words to battle over. For those of us on the right “freedom” means a life where government has a minimum of involvement in our lives. For people on the other side it means maximum interference. Remember when Nancy Pelosi was arguing for ObamaCare? Paternal government, she noted to “artists”, means “freedom” to pursue an unproductive life and have the productive pay for it.

    • #2
    • October 4, 2015, at 1:24 PM PST
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  3. Capt. Spaulding Member

    Some words become tainted, through no fault of their own. Marx did a job on Capital. Piketty continues it. EJ, when you put quotes around artists and freedom, aren’t you acknowledging that taint?

    • #3
    • October 4, 2015, at 1:46 PM PST
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  4. EJHill Podcaster

    I am acknowledging only those are words whose meaning is in dispute.

    • #4
    • October 4, 2015, at 1:50 PM PST
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  5. Z in MT Inactive

    Capitalism may have a bad connotation with some people, but I think it coins what is different about capitalism from other economic forms such as socialism, communism, fascism, feudalism, mercantilism, syndicalism. That is, capitalism is the economic system where resource allocation is made by those who hold the capital.

    As George Gilder explains capitalism works best because resources flow to those people best able to create more wealth and resources (those that have a track record of creating wealth). Capitalism is the only system that maximally incentivizes the efficient use of resources* and the creation of wealth.

    The other economic systems try to optimize other things (usually the power and wealth of the few). Socialism and communism try to allocate resources and wealth equitably – but are doomed due to the simple fact that wealth is mutable. Wealth can be created and destroyed and socialism and communism inevitably end up destroying wealth rather than creating it.

    *This simple fact is why every environmentalist should be a capitalist. Unfortunately, most environmentalists are really just watermelons (green on the outside, red on the inside).

    • #5
    • October 4, 2015, at 1:51 PM PST
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  6. namlliT noD Member

    The word capitalism was coined and popularized by Karl Marx and others in the socialist movement for the purpose of attacking it. Presumably they chose the word to be an optimal target.

    We’re kind’a stuck with it now, though.

    On the topic of socialists defining the language, I would much prefer to get back the word liberal and the color blue.

    • #6
    • October 4, 2015, at 2:02 PM PST
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  7. Mark Camp Member

    Capitalism is from the outset purely a Marxist concept. It has no discernible meaning outside of the assumptions of that philosophy. It’s fine for two Marxists to use it in discussion, since they agree on the correctness of Marxism.

    For anyone else, it’s odd behavior. It is conceding the argument to those one disagrees with before one begins to present one’s view.

    If you think that those who defined the term mean nothing more and nothing less than you mean by “liberty”, you need to read a little more of what it actually means to them before you adopt it.

    If you want to argue truthfully and rationally for liberty, then don’t use your enemy’s loaded terms for it. Don’t say, ‘I would like to argue for this doomed, wicked system of class oppression.’ Say, ‘In fact, justice is not doomed but inevitable; it is virtuous not evil; it is based on the rejection of classes not the affirmation of classes; and it is liberating not oppressive. Almost every material accusation of my opponent about liberalism is demonstrably false, and every accusation observedly applies to his own ideology. Now let me prove this to you, based on basic human decency dictated by your own conscience; on reason; on logic; and on the conclusive verdict of history.’

    • #7
    • October 4, 2015, at 2:17 PM PST
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  8. James Gawron Thatcher

    Peter,

    Information and collaboration. Lovely, no? That’s what we’re talking about when we’re talking about capitalism.

    In its purest highest definition you are exactly right. Hayek would be very happy with your post. I do agree with EJ that we should not give up any ground. Not the language, not the Universities, not the media entertainment or news.

    In truth, of course, capitalism represents the absence of any imposed economic system. Instead, it is simply what arises in conditions of freedom — the organic order that establishes itself as people come together in markets, pool their capital, respond to price signals, and so forth. Our choice isn’t between two systems, imposed on the rest of us, one by the rich, the other by the government. Not at all. Our choice is between freedom and coercion.

    Boy that’s a beautiful song you’re singing Peter.

    Regards,

    Jim

    • #8
    • October 4, 2015, at 2:22 PM PST
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  9. Midget Faded Rattlesnake Contributor

    EJHill: It is no coincidence that some of the worst enemies of liberty are linguists like Noam Chomsky.

    I’m not convinced that this is an intrinsic property of linguistic understanding, though. It may have come about because we tend to imitate even the irrelevant habits of those we admire, and there’s no question that Chomsky is widely admired by other linguists.

    • #9
    • October 4, 2015, at 2:25 PM PST
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  10. I Walton Member

    Indeed it is an information system. Capitalism doesn’t mean anything because all economies are capitalist. They save and invest in capital. But freedom under the rule of law doesn’t mean much without explanation either nor does information system. It’s all ordered chaos and it is the simple rules we stumbled on that brings prosperity and human flourishing to that chaos. It’s an information system but the information that drives it can’t be known a priori and can never be known by central planners. What they do is clog the system, distort the information, reduce the prosperity and flourishing. Hayek was right about American economic school mistake in asserting that the data they work with is real and knowable. I don’t know what to call the abstraction we run around with in our heads. But perhaps, instead of tossing the word because it’s so empty, we build on it by making ourselves really insufferable with a taxonomy of differences. Maybe we start in our schools where kids have to sit and listen. Get rid of macro, jail Krugman et al, then explain why.

    • #10
    • October 4, 2015, at 2:54 PM PST
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  11. jonsouth Inactive

    I’d also prefer to see a clear distinction between ‘capitalism’ and ‘crony capitalism’, the latter of which describes our economic reality today. Bailouts for banks, subsidies for preferred industries, protection from competition through regulation – all of these bring elements of central planning into the natural order, and the result is not the prosperity we want from a truly free economy.

    (Of course, I also realize socialists like to tell us how no real-life example of a socialist or communist regime from history represents ‘true’ socialism – which sounds similar to my claims about capitalism – the difference being a socialist system is usually imposed by force, and flawed in its very theory.)

    • #11
    • October 4, 2015, at 3:02 PM PST
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  12. James Madison Member

    Bravo to you for seeing it and your friend for writing it. A difference with a distinction.

    • #12
    • October 4, 2015, at 3:02 PM PST
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  13. jetstream Inactive

    How about Liberationism, the little known Liberation Economic System .. Liberation Theology and the Pope have already done the PR ground work .. under the hood, it’s nothing but liberation-enterprise and liberation-markets all the way down, we won’t mention words like free or the ‘C’ word.

    Edit: There might be some advantage to use Liberation-Organizing in place of markets, markets sound like a place where a people are free to choose, don’t want the connotation of a society where everyone can make their own choices.

    • #13
    • October 4, 2015, at 3:05 PM PST
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  14. Tommy De Seno Contributor

    I agree that Capitalism is what develops naturally through commerce.

    Yet, as the Pope describes, unbridled pursuit of capital will bring problems, which is not a flaw in the natural system of commerce nor a problem with freedom itself.

    The problem is with human nature and money’s ability to drive behavior. Sometimes that drive, as productive and healing of ills as it is, can work contrary to ethics when applied by a bad actor. It can hurt people.

    Choose your weapon – regulation or lawsuits. Or a little bit of both. You will have to have those governors on the engine to control the bad actors, no matter how sad it is that it also slows the good actors to some measure as well.

    Having some controls doesn’t make us less capitalist. It makes us responsible capitalists. Social Security does not make us socialist – in a system where some win and some lose, ethics demands we care for those who can’t compete in the first place.

    It is the abuses of the controls that cause the problems and eventually has us listing toward socialism. Abuses of social security. Abuses of regulation. Abuses of lawsuits (as minor as those are). Socialism is the control of production and distribution of profits in society – the ultimate abuse of capital as experiment has shown.

    Yet it all comes down to a question of degree, does it not? Hayek didn’t disagree with Kaynes’ math on the effects of government spending to prime the pump of an economy. Only the degree and timing of its use.

    Capitalism and its controls, like all things in life, requires balance.

    • #14
    • October 4, 2015, at 3:13 PM PST
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  15. jetstream Inactive

    Choose your weapon – regulation or lawsuits

    That’s a false dichotomy, shows a lack of understanding of how free-market capitalism works.

    • #15
    • October 4, 2015, at 3:17 PM PST
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  16. Tommy De Seno Contributor

    jetstream:

    Choose your weapon – regulation or lawsuits

    That’s a false dichotomy, shows a lack of understanding of how free-market capitalism works.

    What else do you have to choose from to deal with bad actors.

    • #16
    • October 4, 2015, at 3:33 PM PST
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  17. Sabrdance Member

    Midget Faded Rattlesnake:

    EJHill: It is no coincidence that some of the worst enemies of liberty are linguists like Noam Chomsky.

    I’m not convinced that this is an intrinsic property of linguistic understanding, though. It may have come about because we tend to imitate even the irrelevant habits of those we admire, and there’s no question that Chomsky is widely admired by other linguists.

    Burke pointed out, though, that it was lawyers, sophisters, and calculators who brought about the French Revolution -because they were good with words, and because they believed their knowledge of words empowered them to run the world.

    On the main point -Marxist or not, capitalism is well named. Power is in the hands of those with capital -which is all of us. At minimum, we own and control our own labor. We own property that we purchase with our labor. And we can do with our labor and the property it provides us whatever we want. Perfectly sympatico with John Locke.

    No. In this, we should abide the wisdom of Michael Bolton.* Why should we change? They’re the ones that suck.

    *language warning if you watch the whole video, but the cued part is fine.

    • #17
    • October 4, 2015, at 3:45 PM PST
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  18. Jimmy Carter Member

    Tommy De Seno: Social Security does not make us socialist – in a system where some win and some lose, ethics demands we care for those who can’t compete in the first place.

    Newspeak:

    ethics: wealth redistribution by force of government.

    • #18
    • October 4, 2015, at 3:53 PM PST
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  19. jetstream Inactive

    Tommy De Seno:

    jetstream:

    Choose your weapon – regulation or lawsuits

    That’s a false dichotomy, shows a lack of understanding of how free-market capitalism works.

    What else do you have to choose from to deal with bad actors.

    In a free market everyone is free to choose .. no one is obligated to do business with a bad actor, so, bad actors by their actions take themselves out of a free market. Only in regulated markets can bad actors continue their nefarious activities, they do so by government fiat.

    Illegal behavior -stealing, fraud is not a free market activity. If you buy a horse from me and I deliver a goat, that’s not a free market transaction, you didn’t enter the transaction to get a goat. Even if my action is legal, I won’t sell many horses and will quickly be out of business. Only government regulations can force you to do business with me.

    • #19
    • October 4, 2015, at 4:03 PM PST
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  20. Man With the Axe Member

    What do you like about capitalism?

    Is it the property rights, the enforceable contracts, the free exchange, that regulation should be kept to a minimum, the private ownership of the means of production, the price mechanism as the method by which information is gathered on what should be produced?

    The problem isn’t so much the name given to this doctrine. It is that too many people don’t know what the term “capitalism” stands for.

    • #20
    • October 4, 2015, at 4:16 PM PST
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  21. Addiction Is A Choice Member

    “Since capitalism was named by its enemies, it is not surprising that its name is misleading. Despite the name, capitalism is not an ‘ism’. It is not a philosophy but an economy. Ultimately it is nothing more and nothing less than an economy not run by political authorities.”

    Thomas Sowell

    • #21
    • October 4, 2015, at 4:18 PM PST
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  22. Tommy De Seno Contributor

    Jimmy Carter:

    Tommy De Seno: Social Security does not make us socialist – in a system where some win and some lose, ethics demands we care for those who can’t compete in the first place.

    Newspeak:

    ethics: wealth redistribution by force of government.

    Or making sure the breaks on your car work over 30 mph. Could be that.

    • #22
    • October 4, 2015, at 4:26 PM PST
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  23. Tommy De Seno Contributor

    jetstream:

    Tommy De Seno:

    jetstream:

    Choose your weapon – regulation or lawsuits

    That’s a false dichotomy, shows a lack of understanding of how free-market capitalism works.

    What else do you have to choose from to deal with bad actors.

    In a free market everyone is free to choose .. no one is obligated to do business with a bad actor, so, bad actors by their actions take themselves out of a free market. Only in regulated markets can bad actors continue their nefarious activities, they do so by government fiat.

    Illegal behavior -stealing, fraud is not a free market activity. If you buy a horse from me and I deliver a goat, that’s not a free market transaction, you didn’t enter the transaction to get a goat. Even if my action is legal, I won’t sell many horses and will quickly be out of business. Only government regulations can force you to do business with me.

    You think no company would pollute, sell dangerous products or commit acts of fraud by nothing more than consumer choice?

    You wear rosier glasses than the utopian Marxists if that’s the case.

    • #23
    • October 4, 2015, at 4:29 PM PST
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  24. Man With the Axe Member

    jetstream: Illegal behavior -stealing, fraud is not a free market activity. If you buy a horse from me and I deliver a goat, that’s not a free market transaction, you didn’t enter the transaction to get a goat. Even if my action is legal, I won’t sell many horses and will quickly be out of business. Only government regulations can force you to do business with me.

    The reputational mechanism you describe works well when the bad actor intends to engage in repeat business in a market where others can find out about his badness.

    But there are plenty of real-world participants in markets who do cheat and manage to stay in business because the information about the cheating behavior is hard to acquire in a timely fashion.

    If a single deal is big enough it might pay to cheat even if it does injure your reputation. Imagine a builder cheating on a multi-million dollar project because he will make so much undeserved profit that he doesn’t mind taking a reputational hit.

    • #24
    • October 4, 2015, at 4:29 PM PST
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  25. Underwood Member

    Don Tillman:The word capitalism was coined and popularized by Karl Marx and others in the socialist movement for the purpose of attacking it. Presumably they chose the word to be an optimal target.

    As much as I’d like to pin this mischief on Karl, capitalism first appeared in the 1850s, a good ten years before Das Kapital.

    Emendation:

    The OED’s date of 1854 for the first use of capitalism cites Thackeray’s novel The Newcomes.

    It should have occurred to me, before commenting, that a novel that old would be in the public domain, and of course, it is — the entire text of the novel is available on Project Gutenberg.

    Thackeray used the term this way:

    The sense of capitalism sobered and dignified Paul de Florac…

    Thackeray’s use of the word seems to mean “being in the condition of having acquired capital” rather than referring to an economic system, so…

    Maybe we can pin this on Karl after all.

    • #25
    • October 4, 2015, at 4:32 PM PST
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  26. I Walton Member

    Underwood:

    Don Tillman:The word capitalism was coined and popularized by Karl Marx and others in the socialist movement for the purpose of attacking it. Presumably they chose the word to be an optimal target.

    As much as I’d like to pin this mischief on Karl, capitalism first appeared in the 1850s, a good ten years before Das Kapital.

    But not the word, and we’re talking about words and labels.

    • #26
    • October 4, 2015, at 4:45 PM PST
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  27. I Walton Member

    Man With the Axe:

    But there are plenty of real-world participants in markets who do cheat and manage to stay in business because the information about the cheating behavior is hard to acquire in a timely fashion.

    If a single deal is big enough it might pay to cheat even if it does injure your reputation. Imagine a builder cheating on a multi-million dollar project because he will make so much undeserved profit that he doesn’t mind taking a reputational hit.

    Yes, no about about it, but it happens only when there is no repeat business expected. The regulatory regime can’t find it, anticipate it, fix it, but what it does is make the 95% that does want repeat business, less efficient, represses competition that would make them all better, and once it has perch, bends the system against itself.

    • #27
    • October 4, 2015, at 4:49 PM PST
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  28. Man With the Axe Member

    John Penfold: The regulatory regime can’t find it, anticipate it, fix it, but what it does is make the 95% that does want repeat business, less efficient, represses competition that would make them all better, and once it has perch, bends the system against itself.

    That’s why you need court enforcement of contracts. I’m no lover of regulation.

    • #28
    • October 4, 2015, at 5:01 PM PST
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  29. Manny Member

    I prefer to call our economic system the free market.

    • #29
    • October 4, 2015, at 5:35 PM PST
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  30. namlliT noD Member

    Underwood:

    Don Tillman:The word capitalism was coined and popularized by Karl Marx and others in the socialist movement for the purpose of attacking it. Presumably they chose the word to be an optimal target.

    As much as I’d like to pin this mischief on Karl, capitalism first appeared in the 1850s, a good ten years before Das Kapital.

    I intentionally blurred it up by saying “and others in the socialist movement” as I don’t think it’s helpful to narrow down the precise moment of the first appearance of the term.

    Marx’s 1848 Communist Manifesto does refer to “capitalists” a lot.

    • #30
    • October 4, 2015, at 6:25 PM PST
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