Ricochet is the best place on the internet to discuss the issues of the day, either through commenting on posts or writing your own for our active and dynamic community in a fully moderated environment. In addition, the Ricochet Audio Network offers over 50 original podcasts with new episodes released every day.
Could We Please Stop Calling it “Capitalism?”
The 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.
Published in Economics
I was talking about the word, but after a little more research I’ve emended my initial comment.
Too many times I’ve seen big-“C” capitalism thrown around in cheap fashion. When they (the Left) use it in such a way, “capitalism” is a stand-in for more sinister terms like “oppression,” “exploitation,” “inequality,” and evinces a hatred of success and hard work free enterprise systems usually reward. They’d rather the State control the markets and snuff out innovation and productivity. Hatred of capitalist economies is in concert with the age-old liberal hatred of commerce and is, ironically, classist in nature.
Actually it’s because he’s a U Penn graduate. Given his considerable contributions to mathematics (the Chomsky Hierarchy in Automata Theory), are mathematicians (or at least the automata theorists among them) known for being haters of free markets? All the linguists I’ve ever encountered were remarkably apolitical and generally too busy looking for a counter-example to your proposed theory to give a rat’s ass about your politics. Although I do remember a professor going ballistic on nitwits who use the s/he circumvention of the clearly impersonal pronoun he. (I was saved because in my dialect the word is they, which other lesser dialects of English consider ungrammatical for some reason.) She also thought getting confused about the gender connotations of the suffix -man–there are none, which you would know if you were at all familiar with Germanic languages or the phrase “madam chairman”–was pretty damned dumb. Herstory? Don’t even ask.
On the OP: whatever happened to the phrase “free enterprise” in political discussions? It was big in campaign communications when I was a kid.
I prefer the term “free market” as well, but I like to emphasize that America falls short of having a free market in many ways.
I like to distinguish between socialist capitalism and free-enterprise capitalism. In both cases people are pooling resources (capital) to build big things that individuals or families couldn’t make on their own. Both produce the modern world we hate, with all its social ills, and both provide the material things we couldn’t do without. In both cases the managers of the capital hijack the organization and tend to get out of control, serving their own interests rather than the putative owners of the capital.
In the free-enterprise version the power of the state is not so confounded with the power of the corporations or their managers. There is a state capable of regulating disputes between and among the capitalists and consumers/workers etc. Because the state is not the owner or manager of the capital, it is free from the huge conflict of interest that exists under socialist capitalism. It can check the tendency of managers to hijack their organizations. And in free-enterprise capitalism you do not have the monopolistic control and coercion that exists under socialist capitalism.
I wish we had a system of free-enterprise capitalism. Under Obama we have made huge strides towards socialist capitalism, but even before Obama we were way too far along that path.
I’m not just playing word games here, because when people complain about capitalism, their complaints, objectively considered, apply double or triple to the socialist version of it.
Thanks!
I’ve met both highly apolitical linguists and highly political (and Leftist) ones. A few have directly modeled their politics off Chomsky’s. The apolitical seem content to benefit from his linguistics alone.
As far as I know, mathematicians aren’t known for hating free markets as mathematicians, though, as members of academia generally, they’re just as likely as anyone else to adapt to that political milieu.
It’s easy to come up with plausible reasons for why the academically brilliant would lean left, but how smart is it for conservatives to tar academic brilliance as such as innately leftist? Maybe I’m wrong and it is smart, but I hope not.
Because they give us no quarter in return. A Conservative academic who comes “out” without tenure will be driven from the academy regardless of one’s brilliance in one’s chosen field. Even then, look what they did to Sir Tim Hunt. A lifetime of academic brilliance brought down by the ignorant politics of the Twittershere.
It’s bad enough that these “brilliant” people have screwed up the humanities, they’ve even reduced science to politics. Conceding their “brilliance” gives them credence that they do not deserve.
I think that is a coincidence, actually. Just a pure coincidence. I’ve read Chomsky’s work in linguistics widely — he’s a towering giant in the field, without peer — and just by coincidence, he’s a political crackpot. His crackpottery gained wide attention because he’s a brilliant linguist; otherwise, he’d have been one of those billions of guys who writes long, lunatic political screeds that no one reads.
But it’s a coincidence.
And then there is the younger linguist, Asya Pereltsvaig, who is not a theoretician of the Chomsky type, but who is a friend of liberty. She has written a textbook, Languages of the World: an Introduction, and continues to weigh in (and publish) on controversies in historical linguistics, especially relating to the origins of Indo-European. She has been very responsive to my beginner questions on her blog, where I should usually just shut up and listen to the intellectual giants who weigh in.
And we share a love of Russian film. She weighed in with helpful information on a number of topics I raised on an old blog where I used to post on my early encounters with Russian film. Of course, she understands them at a different level since Russian is her first language and she once lived in the society they come from, while my understanding of the language is very meager.
I don’t know how they vote, but she and some of her colleagues seem quite conservative to me.
The question is not whether companies would cheat or make shoddy products – the question is whether you are better protected from that by the market or the government, and whether the government’s protection comes at too high a price.
But getting to your question: Why do you think companies don’t sell shoddy products as a rule? Forget government safety regs: let’s just talk quality. Why is it that so many companies seek ISO certification? It’s not a government regulation. Why do companies seek out UL approval? The government doesn’t make them.
The free market has developed numerous ways to protect consumers. Businesses that want insurance have to meet UL requirements. Businesses seeking to convince corporate customers to work with them seek out ISO 9000 certification not because the government makes them, but because quality has a market value.
Companies who have a reputation for quality build brands, and customers use brands as a proxy for quality. And of course, there are lots of information outlets out there, like Consumer Reports or Amazon’s rating system.
The vast majority of products you buy have quality factors that have nothing to do with government. Government doesn’t mandate that your TV have accurate color representation, that your car have lane avoidance or 8 airbags. It’s not the government crash tests that auto manufacturers worry about – it’s private testing and JD Power ratings.
For that matter, look at the high quality of most big sites on the internet. Not a government regulation in sight, but by and large we get high quality products, financial transactions are honest, and the customer’s voice is the loudest.
Tommy, I think you’ve been listening to the left’s talking points for too long. You don’t need to be a wild-haired libertarian to understand that the market is a mechanism for fulfilling human needs, and safety and quality are certainly part of it. Humans are plenty smart, and when left to their own devices they figure out how to find products of high quality and reasonable safety.
Tony: “in a system where some win and some lose, ethics demands we care for those who can’t compete in the first place.”
I ask you, how many people do you know who are trying, working, looking for work, frugal with their incomes, etc. who just can’t make it? Few, very few. We raised 4 kids on a single income (factory work, mostly) by being careful and judicious with that income, not by ‘needing’ the latest and greatest of everything that came along, etc. Those who have medical problems and maybe a bad run of luck deserve help and can get it from private charities and individuals, even more so if govt. would butt out.
Social Security would be a much better system if partially privatized, just make that an option. The return on investing 6% of ones income would far outweigh the return from the current system. The employers contribution could then be used to help the truly needy.
My point was not an either or. Balance is what I promoted.
Yet the bad actors persist despite the push toward quality and low price competition brings. I support what you say here, but note that if you are saying that the voluntary system of quality control is enough to eliminate the bad actors, that’s obviously not right because we still have bad actors.
Many humans will. A large enough number of humans will fall pray to cutting enough corners in the pursuit of increased profits to hurt us. They need some way to be held accountable. I can only think of two accountability measures – regulations and lawsuits.
You don’t disagree, do you? If so, how do you account for bad actors in the market being extant right now in our free market system?
When I say “those who can’t compete in the first place” I’m speaking of the very old, the very young and the very sick. They literally can’t compete, in a society based on competing. That is the very legitimate goal of social security. Since our government in theory is to respect the free market competition, I have no problem with the same government (through us who are reaping the profits of competition) taking care of those who can’t be in the competition.
I bring home a good paycheck. I work 55 to 60 hours every week for it. I’m not going to spike the football in the face of a 9 year old, a 90 year old and a quadriplegic and say I out worked them. I’m not going to leave them to the uncertainty of private charity, either.
Peter: I don’t know if others are correct that “capitalism” is too entrenched to remove from our common usage but I do love your formulation nevertheless:
“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.”
How wonderful it would be if we conservatives could frame issues in terms of liberty vs. coercion. Do we EVER talk about liberty anymore?
I did suspect you were blurring it intentionally.
I mildly disagree because I think it would be useful to be able to say (truthfully) to those who rail against “capitalism” that the very idea that there is some such thing as a capitalist system/ideology originates with the enemies of markets, private property, etc. But I admit that is a relatively minor point, and it will suffice to say what Thomas Sowell is quoted as saying back in comment #21.
I’ve calculated that if I had contributed all of my payroll deductions for SS along with my employers to a S&P index fund, I’d have a lifetime annuity about 5 times as much as I’m actually getting from SS.
Tony,
You are falling into the progressive trap that “government is just that which we all do together.” The libertarian utopia is as socially secure as the progressive utopia, just that the security is provided by non-state institutions. Why does it make you feel secure to get your safety-net at the end of a gun?
In the free enterprise version the owners have mechanisms to control the managers, if they choose to use them. For example, the CEO of United was fired recently.
Not so in the socialist version. In the latter version the managers are likely to have the putative owners (the workers) shot for complaining.
That was a distinction I was trying to make with my 250 words. If I didn’t do so clearly enough, it needs to be emphasized more. Thanks.
However, in the free enterprise version the managers will still try their best to disenfranchise the owners via golden parachutes and other mechanisms. The government ought to regulate this, but usually finds it in its own best interest to fake a concern for the shareholders but to dilute their power by introducing “stakeholders” into the mix and to maintain the hegemony of the managers, who are easier for the govt to coopt than are the hordes of shareholders.
Capitalism is a Marxist term. By using it we’ve surrendered the argument, by conceding that “capitalism” is a thing. It’s better to understand that it’s the natural order of things.
I reviewed a book called Bionomics, the Inevitibility of Capitalism years ago that argued, convincingly, that what the Marxists have labeled capitalism is commonly found in many biological systems, like bee hives.
It really is the natural order, literally.
Are you not suggesting that I be a beggar at the door of a charity instead? That charity has no obligation to me.
I hope to need neither government nor charity when I’m relaxing on the beach at retirement someday.
Capitalism is faulted for what is it’s primary virtue. It creates wealth. Free markets create the conditions under which people have the opportunity to become wealthier. Inevitably, some people will be better at taking advantage of these good conditions than others. This leads to prosperity and inequality. If people are more bothered by inequality than by poverty, they will reject capitalism no matter what it is labeled.
David, emphasizing freedom is great — but in the hands of politicians it can become an empty phrase like “growing the economy” and “job creation.” Worse, it sounds risky to those who don’t want to worry about a volatile economy.
Conservative politicians don’t often emphasize that the free market is the ultimate safety net. Not only does it provide more invention and lower prices on anything from smartphones to medical cures, but then there are intangibles: equality is better when poor have access to products that weren’t even around 30 years ago. Quality of life — whether choosing a career, where to live, and how to balance family and work — is hindered when it is driven by a panic to pay for the basics. Government can try to “make” jobs and set benefits, but would anyone want to turn this over to bureaucrats if it meant missing out on the last 15 to 20 years of progress?
All stuff that conservatives know, but politicians have trouble explaining.
Maybe the only way to get liberals to understand what capitalism (i.e., freedom) is is to put it in a context that matters to them.
When my daughter came home from her first year at Mt. Holyoke as a full-bore marxist, I tried to convince her that it would be a bad idea for the government to decide what should be made and who should have what job. She wasn’t buying any of it until I asked her if she favored the government deciding what sort of music should be made. “Heavens no,” she said. “They wouldn’t allow for any of the punk stuff I like.” She agreed it would be all patriotic music and Lawrence Welk. Therefore people need to be free or the music consuming public would not get what they want or need.
For most liberals it has to be about sex. “Do you think the government should decide who gets to marry? Who gets to have an abortion? What sorts of sex should be legal or prohibited? What sexy books or movies people should be able to see? How many sexual partners a person should be allowed to have at one time, or in a lifetime?” If not, why not?
They might see that allowing people freedom to manage their own sex lives leads to a better allocation of sexual resources, as it were. Each person knows better than the government does what sort of sex, and how much, makes him happy.
I apparently have been reading a different dictionary.
Here is how Webster’s defines the term: an economic and political system in which a country’s trade and industry are controlled by private owners for profit, rather than by the state. See: laissez-faire, self-regulating market and competitive system,
THIS (!)
Just as we don’t have a word for a mode of activity in which people’s actions are not driven primarily upon the concept of race (i.e. not racist), we really shouldn’t have a word for a mode of activity in which people associate freely in matters of commerce (i.e. aren’t coerced in some way – by the state or otherwise).
Removing a grossly soupy mess of a word like “capitalism” from the way in which we discuss matters related to coercive commerce forces a framing of economic discussions in terms of coercion – the absence of which becomes an ideal to which people out aspire.
It must be said that conservatives don’t generally pay as much attention to language as do the Marxists in our midst – to the great detriment of the quality (and outcome) of debate.
Peter, one of your favorite polemicists (I use the word “favorite” cautiously here), Christopher Hitchens, seemed fond of using a phrase along the lines of “…well, I’m afraid I don’t quite agree with the grammar of your question…” when language was used to frame a question in a way antithetical to his positions – we should all endeavor to be so attentive, and so forthright in framing debate…
Two things. First, “freedom” ALSO means an absence of coercion by non-government forces (i.e. organized crime – a non-trivial factor in human history). “…That to secure these rights, Governments are instituted among men, deriving their just powers from the consent of the governed…” also deals with this issue.
Second, the more insidious interpretation of freedom “on the other side” is not to do with maximum interference as an end so much as it is to do with a desire for freedom from certain basic truths, or risks. This is how you get to a “mob rule” interpretation of the word “rights” whereby everything that looks remotely like a burden (e.g. health care) becomes something that MUST be mitigated via the opening of other people’s pocketbooks. It is because of this warped interpretation of the word, itself based upon a fundamentally naive interpretation of reality, that “maximum interference” has become acceptable – but always as a means to an end.
I agree. I like to say that most people don’t realize that what they work for; a house, car, furniture, retirement, fixed assets, etc. can be capital. Many people have borrowed off their house, cashed in savings, or sold assets to start a business. They wouldn’t call themselves capitalists.
So let’s list the best possible alternatives.
1) Non-coercive economics
2) Free Exchange
3) Voluntary Work partnerships
4) Voluntary Exchange
By the way, I feel like non-coercive economics is cheating because it makes every other alternative sound bad. (Which it is but it’s sort of like setting up a PAC called the People for the American Way or something equally nice sounding)
But I notice that the disciples of Adam Smith and Thomas Sowell like to argue about Free Markets instead of Capitalism. Personally, I would prefer to argue about Free Markets. The terrain with which you are arguing about is easier because it starts with the word free. It doesn’t start with some odd economic thing.
Excellent point, P.R.. One of my favorite smart guys agrees with you:
Capitalism is an unfortunate name; a misnomer indeed, whose widespread use goes back only to about 1900. For what it describes is not an “ism” at all. It is not an ideology dreamed up by an economic philosopher and then put through parliament by political parties and enforced by law and armies. Industrial capitalism simply evolved, from the free and unco-ordinated transactions and unimpeded movements of countless unknown individuals. It was not a political creation at all. –Paul Johnson