Don’t miss this excellent piece about the term “Capitalism” from Ofer at Free Manch:
I don’t mean that in the sense that poop is a bad word. I mean bad as in poor, suboptimal, tragically flawed – worse than useless, in fact.
The Words
Capital
The term capital refers to a store of value (like gold), or supplies and equipment that can be used to produce goods and services (like a hammer or a pile of wood). If you get stranded on a deserted island, and go find and sharpen a stick to use to spear fish with, that sharpened stick is capital, and you’re now a capitalist— congratulations!
Capitalist
Every human being, from the beggar on the street to Warren Buffet, is in this sense a capitalist, because they employ capital to produce; even the beggar uses shoes to stand on while begging. Capitalist essentially means tool user, and we all use tools — it’s one of the defining characteristics of human beings. (Honorable Mention: Beavers)
Not Gravitationlists
To call someone a capitalist is about as semantically useful as calling someone an oxygenist — because they breathe oxygen. To say we live under a system of capitalism is about as meaningful and revelatory as saying we live under a system of gravitationalism — because we all use the force of gravity to act. To criticize capitalism or capitalists is about as insane as criticizing breathing, or standing up.
It’s hardly surprising to learn that the terms were popularized by Karl Marx in Volume 1 of his book Das Kapital (1867). Even if you agree with communism, you have to admit Marx was hardly incentivized to use language clearly and accurately when characterizing his ideological opposition. The very use of the terms reveal how poor was his understanding of reality, and hence what concepts conform to reality.
The Associations
Conservatives generally use the term capitalism to mean free market (where government does not interfere in commerce). Liberals generally use the term capitalism to mean fascism or corporatism (the merging of big business and government). Same term, opposite meanings — not surprisingly, these two groups rarely seem able to communicate with each other productively.
Not the Free Market
I get the feeling sometimes that when liberals attack capitalists or capitalism, they have in mind a caricature of an evil, wealthy person who is indifferent to or even takes pleasure in benefiting himself at the expense of others, often using governmental power as a tool to that end. Certainly there are actual examples of such a caricature in real life, and it’s natural and just to despise and denounce such a person. But to lash out in righteous anger at scapegoat people and scapegoat concepts is irresponsible.
Free market simply means an absence of institutionalized coercion — of government. After all, the market is people — is us. Free market simply refers to the sum total of voluntary exchanges among free individuals. To equate free market with unbridled evil is destructive to the clarity of economic discourse, with real, negative consequences in the form of less freedom and a lower quality of life for all.
Good Words
Let’s stop using capitalist and capitalism entirely, and start saying what we mean.
If you’re referring to voluntary exchange (free of coercion) use the term free market. If you’re referring to a system of exchanges forcefully controlled by a monopoly institution of coercion (government), use the term unfree market.
If you’re referring to a person who allocates money and other capital goods (either saved or borrowed) to produce goods and services, use the term entrepreneur. If you’re referring to a person who lends or invests money or other capital goods to an entrepreneur, use the terms lender or investor. If you’re referring to a person who uses violence (government or otherwise) to benefit themselves, use the term asshole.
If you’re referring to money, say money. If you’re referring to equipment and supplies, use capital goods (or producers’ goods if you’re an Austrian economist). To refer to the category of money and capital goods combined, say capital. It’s the only etymological family member with a legitimate usage.
Relevant Links
- Zaxlebax – a four minute clip of Roderick T. Long explaining how ‘capitalism’ and ‘socialism’ are anti-concepts that corrupt the clarity of communication
(‘According to Ofer’ is a series of weekly columns by Ofer Nave featuring his musings on liberty-related themes.)
