'capitalism' is a reclaimed word
April 23, 2008 13 Comments
Ludwig von Mises wrote,
The system of free enterprise has been dubbed capitalism in order to deprecate and to smear it. However, this term can be considered very pertinent. It refers to the most characteristic feature of the system, its main eminence, viz., the role the notion of capital plays in its conduct.
I think Robert Murphy’s summary is even better:
Capitalism was originally a smear term for the system of free enterprise, meant to imply that this system only serves the narrow interests of the capitalists. However, the term is a good one, for the very notion of capital — of summing the market prices of the resources available for a project — is inextricably linked to monetary calculation, which itself can only occur in a capitalist society.
I was a free-market advocate before I became an advocate of capitalism. The free market is an ethical concept, not an economic one; it is merely the recognition that nonaggression needs to apply to exchange as much as it applies to anything else. (Robert Nozick summarized this idea as “capitalist acts between consenting adults.”)
Capitalism is a separate issue and a separate agenda — a positive agenda, in contradistinction to the negative agenda of nonaggression, a utilitarian concept rather than an ethical one — but the more I learned of economics, capital theory, and economic history, the less I could understand the left-libertarian position of embracing the free market while rejecting capitalism.
The free-market anticapitalists define capitalism as any system of political privilege for current capitalists, especially as it suppresses bottom-up competition, entry-level entrepreneurship, and the rights of labor. But we already have plenty of other terms to cover that idea — mercantilism, corporatism, even fascism — but what alternative is there to indicate the universal benefits of capital accumulation, capital structure, and capital calculation — all of which result from the private ownership of the means of production?
In fact, private ownership of the means of production (that is, of capital) was the technical definition of capitalism, even among the anticapitalists who coined the term! The idea of political privilege for capital owners was just an assumed consequence, a conflation of definition and theory.
The only advantage I see to accepting this linguistic conflation is to conciliate the heirs of the New Left, to tease out of them a more consistent individualism without tripping their anticommercial reflexes. But aside from what I consider its intellectual dishonesty, this strategy, it seems to me, does more than postpone anti-economic prejudices; it implicitly promotes them.
Faced with these same prejudices, many anti-anti-capitalists adopted the label of “free enterprise,” but that term, taken literally, tells us nothing more than “free market” does. It certainly indicates nothing about the structure of ownership or of the means of production.
Until a free-market anticapitalist can offer me a useful alternative label for the utilitarian economic concept Mises called “capitalism,” I’ll stick with his reclaimed word.