Is the Name “Capitalism” Worth Keeping? Part I
One of the more interesting developments in the wake of the Great Recession is the use and abuse of the word “capitalism.” You know something strange is going on when you can read articles and op-eds that blame the entire boom and bust on “capitalism” right next to ones that claim “capitalism” had nothing to do with it. Obviously both can’t be true, so a common reaction is to say that one writer or the other is simply wrong about the facts or his interpretation of the facts.
But another possibility should be considered: Both are using the same word (“capitalism”) to mean two different things. The confusion the word generates is a good reason for freedom lovers to consider abandoning it, along with its terminological counterpart–socialism.
There are at least three reasons that the terms “capitalism” and “socialism” are problematic: 1) “Capitalism” was coined by its opponents; 2) Both terms are etymologically loaded in a way that biases them against capitalism; and 3) Because no existing economic system matches either one consistently, the meaning of both has been polluted by being connected with real-world systems that have elements which are not necessarily features of the ideal. This is particularly true of capitalism.
The first and second points are interrelated. The modern usage of “capitalism” dates back before Marx, but it was Marx who popularized it. One will look in vain through the works of the great classical-liberal writers of the eighteenth and much of the nineteenth centuries, such as Adam Smith and the other Scots, for the word “capitalism” to describe the system they favored. Such use by its proponents is largely a twentieth-century phenomenon.
Because the term was coined by opponents, it’s not surprising that it is etymologically loaded. Usually the suffix “ism” refers to “belief in” something. In the case of capitalism and socialism, we can see how looking at the words this way reveals the bias. Its name suggests that “capitalism” is a system in which “capital” is the central feature and motive force. Those who support such a system seem to “believe in” the power of capital, which further suggests that capital’s interests are the ones that are, and perhaps should be, served by the system.
Compare that to the term “socialism,” which puts “society” in the same role. This system is presumed to involve a belief in the power of “society” as a whole, and the term suggests that society’s interests are the ones that are, and should be, served by the system.
Faced with a choice between a system whose name suggests that it serves the interests of only a small fraction of the already wealthy and powerful and one whose name suggests it will serve the interests of society as a whole, which would you find more attractive?
The problem here is that the names beg a whole series of questions of political economy by seeming to imply who benefits from each system. The implied claims that capitalism (that is, free markets) primarily serves the interests of capital and that socialism would serve the interests of society as a whole are not facts but theoretical assertions open to debate and, I would argue, both false. Using these terms tends to obscure the questions of whether either system actually works the way the name seems to suggest. Neither term is useful for understanding what sorts of institutions each system actually entails.
Finally, the word “capitalism” has come to mean a variety of things, largely because of the way the name puts “capital” front and center. (Notice that I had to clarify that I am using “capitalism” to mean “free markets.”) Far too often, capitalism’s opponents use the term to refer to any sort of system in which the interests of capital come first.
So when governments grant favors to private firms, or when firms actively seek such favors, enabling them to control markets to the detriment of us all as consumers, we are told this is “capitalism.” When challenged by free-market defenders on the distinction between “capitalism” and “free markets,” these same critics will simply say, “You’re the ones who talk about how we have a capitalist economy. So why are you objecting to my using it to describe the status quo?”
And that’s a fair response which nicely illustrates the problems that arise when we use a word to mean one thing (capitalism = free markets) but so many others use it to mean something else (capitalism = whatever benefits capital). It also explains the contrasting analyses of the recession I noted at the outset.
So what should freedom lovers do? In next week’s column I offer some suggestions.
Comment by voteright on 31 December 2009:
Great article. It is all really about “Control” — in the commonly accepted “word” “Capitalism” implies CONTROL by a few CAPITALISTS whereas “Socialism” implies CONTROL by the Party of a FEW POWER BROKERS who are under the CONTROL of a few (the same) CAPITALISTS. They are are the people who provide the funds, media influence and other promotional materiel to bring “UNKNOWN INDIVIDUALS” into focus and create a facade of a “COMMON MAN RISING TO THE TOP”. Think about it; a few years prior to their ascendancy to prominance Carter, Clinton, Obama et al were unknowns. You might want to watch the video “The Money Masters – How International Bankers Gained Control of America” which is available at http://www.fiatempire.tv. It is a 3.5 hour video, but is worth the time.
Comment by Pearl on 31 December 2009:
Though I am loathe to surrender the term based on the deliberate misuse by those who oppose freedom, I must agree that, for the sake of clarity, something must be done. It is similar to the way those on the left used public schools to indoctrinate children and redefine “Fascism” as a “right wing” ideology. In fact, I grew up in the 70′s and always felt uncomfortable with that assessment, but couldn’t clearly define why. Now I know that the reason why is logical – it’s a lie. Fascism is socialist, it’s even part of the acronym that made up the term “NAZI”. Oh well, time to start from scratch and I hope there is a clear alternative to “Capitalism” as a guiding principle for freedom loving individualists who want to compete in a free market system.
Comment by Steve Horwitz on 31 December 2009:
If you want to see a perfect example of the problem of using “capitalism” or “free-market capitalism” to (mis)describe the status quo, see Larry Kudlow’s column today. http://article.nationalreview.com/?q=MmEzZTAxODdlN2QxZTAxNDEzMTAzNWNiOGQ4ZDIwYTU=
And when all of his good predictions don’t come to pass, what possible objection can he have to others saying that “free market capitalism” failed yet again?
Comment by Brian Denton on 31 December 2009:
I always liked Market Liberalism.
Comment by BAM on 31 December 2009:
Hooray! I am delighted that somebody else has finally addressesed the inappropriate use of this unfortunate word, “capitalism”.
Likewise, the words “liberal” and “conservative have lost all meaning, as typically used today.
For years, now, I’ve been preaching in vain against such inaccurate and meaningless terminology, and the harm that such misuse does, not only to the ideas of liberty, but to discourse in general. Thank you kindly for introducing the linguistic dilemma to a larger audience than mine.
In contemporary usage, the word “liberal” has nothing whatever to do with the definition of its root in the word “liberty”. Those described today by the word “liberal” not only have zero interest in extending economic liberty but also have little or no interest in defending individual liberty (except in a few, strictly-limited areas of human endeavor).
The word “conservative” is likewise meaningless. Those so described today, find less and less of today’s society and government that they wish to “conserve” and more often advocate radical changes in and reversal of most of the government “advances” during the past century!
Finally, the word ‘capitalism” does NOT describe the free market, at all! Especially when the largest domestic “capitalist” is the U.S. government, and the largest “capitalist” in the world is China! The issue is NOT the accumulation of large sums of money (i.e. “capital”) for investment or other use. Rather, the issue is the EXCHANGE of money and commodities. The word “capitalism” does not address this exchange at all, and we need a better word to do so.
In past centuries, there was an excellent word that served quite well to describe the exchange of money for goods and services between individuals as well as between nations. However, I fear that any attempt to re-introduce the word “intercourse” would merely lead to some obvious jokes on late-night TV shows. A suitable word is still needed to described this notion!
Furthermore, to be successfully adopted, those to whom it applies must feel comfortable term must be comfortable with that term. Also, it should be positive in tone, rather than negative. It is useful to note the demonstrable success of the terms “pro-choice” and “pro-life”. The popularity of these terms, and the willingness of proponents to adopt them, is at least partly to the “positive” nature of the perefix “pro-”.
Appropriately juxtaposing “liberty” with “tyranny” in its title, Mark Levin’s book begins by explaining why he avoids the word “conservative” and embraces libertarians and others in a broader coalition, which I would describe as “pro-liberty”. While I have hopes of seeing the palatable term “pro-liberty” gradually replace word “conservative”, there is little hope that the term “pro-tyranny” would be willingly adopted by today’s “liberals”! To complete the pair of “pro-” terms (replacing both “liberal” and “conservative”), requires a more-palatable antonym for “liberty”.
Therefore, I am indebted to Howard Dean for providing a solution! The former DNC chair recently proposed the term “communitarian” as a replacement for the shared goals of so-called “liberals” and “conservatives”. He is absolutely right in identifying the antipodes of the spectrum – a range that is represented on axes of the Nolan chart as a percentage from 0 to 100%. Those who advocate reduction in the percentage of self-governance generally argue that the loss of liberty is necessary for some “greater good” as decided by “the community”. Therefore, we have an excellent pair of candidate for balanced, non-pejorative terminology:
- PRO-LIBERTY
and
– PRO-COMMUNITY
Let us all replace conservative/rightist/pro-capitalist/etc. with “pro liberty” and liberal/leftist/progressive/socialist/etc. with “pro-community”.
I tried these out on two of my colleagues, who host very leftist talk shows, and both were very comfortable with the idea that “community” interests should trump “liberty” whenever necessary (i.e. whenever the politicians decide to reduce liberty for the good of the community).
Now, all we need is a better term than “free intercourse” in favor of which to finally dump that silly word “capitalism”.
Yours, In Liberty [TM],
-/bam/-
Bruce Alan Martin
“Long Island Liberty, with BAM”
Tuesdays at noon on
WUSB 90.1 Stony Brook
Comment by Jason on 31 December 2009:
Marketism, since it is belief in markets.
Consumerism, since the consumer is in charge.
Freedomism or Freeism, since it is a belief in freedom.
Comment by Thomas Ryan on 31 December 2009:
An accurate assessment of the different viewpoints is that of ‘individual liberty’ versus ‘collectivist control.’ Unfortunately, the term ‘liberal’ has been similarly corrupted such that we now must endure the qualifier ‘classical liberalism’ to distinguish Smith, Mises, Hazlitt, and Hayek liberalism from that of Roosevelt, Kennedy, Carter, and Obama. And regrettably, the notion of individual responsibility as an integral component of liberal thought also has waned.
In any case, I agree with Brian in suggesting the term Market Liberalism. I also suggest the term Collectivism for the opposing perspective. Another suggestion, though one with relevance only to Trekkies would be ‘Federation’ versus ‘Borg.’
Comment by Desi on 31 December 2009:
I’ve just recently been thinking about this too! I knew “capitalism” was popularized by Marx, and that you can live happily in a “free-market” or “laissez-faire” economy without being focused on the accumulation of capital. The key is whether or not economic transactions are voluntary or coerced. No voluntary transactions will take place without a perceived benefit or increase in value to all parties, whereas coerced transactions try to manipulate and distribute according to a zero-sum theory of value.
I also think we should stop calling collectivists “liberals,” because the opposite of “liberal” is “oppressive,” not “conservative.” And the opposite of “conservative” is “progressive,” which again gives them too much credit. The collectivists are definitely winning the battle of the labels.
Comment by chris on 31 December 2009:
I’ve argued this before too. (http://newkindofmind.blogspot.com/2009/10/two-dumbest-words-in-english-language.html)
Comment by Tom Blanton on 31 December 2009:
Calling conservatives “pro-liberty” is a little too Orwellian for me. Perhaps we should call conservatives “anti-liberals” and call liberals “anti-conservatives” for the sake of accuracy. That pretty much sums up their respective philosophies.
Unfortunately, the anti-capitalists have already demonized the terms “free market” and “laissez-faire”, but the term “economic liberalism” might confuse the anti-capitalists for a while. I think the real challenge is to convince the ordinary American that the U.S. economy more closely resembles fascism than a free market economy.
Comment by Steve Horwitz on 31 December 2009:
@Tom:
On fascism, you might want to see this piece of mine: http://www.fraserinstitute.org/education_programs/forstudents/ask_professor/Fraser_12150901.asp
Comment by StevePeraza on 31 December 2009:
I agree that the term “capitalism” has been defined often by its opponents. However, I’m not yet convinced that the proponents of “free markets” or “market liberalism” do not seek to serve the interests of capital.
Rather I believe that the owners of “capital” compete aggressively to incentivize their property in America’s free markets. This involves creating coalitions with other entrepreneurs and with political officials, the combination of which creates the current political economy that benefits “capital” and its owners. Isn’t the point of free markets the opportunity for those with capital to trade, invest, etc. without restrictive government regulation?
I do not believe that changing the term will ameliorate the abuses that get fairly and unfairly associated with capitalism/free markets/market liberalism. No system is perfect. And ordinary people can and should criticize systems that do not work to their advantage. This is as natural—dare I say—as the “invisible hand.” Changing the term will not change the criticisms.
What might be more beneficial for those who confuse “capitalism” is exactly what Professor Horwitz’ brief essay begins to do; that is, clarify its meaning and explain its past and present significance. People need to know what capitalism means, how it works, and why it has come to mean what it has come to mean.
As the French historian Marc Bloch once noted, historians must beware not to fetishize the origins of facts, for they might obscure their meaning and use. Though Marx initially popularized the term as an “-ism,” it has hardly been a taboo. Only recently has it reemerged as a social problem, and only in some political circles. Misrepresented or not, most Americans still believe in capitalism. The goal is to remind America what they believe in.
Comment by Tom Blanton on 31 December 2009:
Good article on fascism, Mr. Horwitz – that is exactly what I was talking about.
Mr. Peraza writes:
“Rather I believe that the owners of “capital” compete aggressively to incentivize their property in America’s free markets. This involves creating coalitions with other entrepreneurs and with political officials, the combination of which creates the current political economy that benefits “capital” and its owners. Isn’t the point of free markets the opportunity for those with capital to trade, invest, etc. without restrictive government regulation?”
A coalition of entrepreneurs and political officials sounds like a cartel treading in the area of corporatism or fascism. While this arrangement may benefit the participants, it certainly doesn’t benefit a free market in that competitors who are not part of this cartel will most likely face restrictions or regulations that cartel members are not subject to, or cartel members will receive special privileges or subsidies non-members won’t receive. Once government enters the picture, it is hard to make the case that a free market exists.
Comment by Atherton-Bloxham on 1 January 2010:
I have long written and given speeches about Capitalism and the free market using the term “voluntary exchange process”, finding it gives people pause without the knee jerk reaction. The term collectivist is accurate, but actually the coming term, I think, along with progressive will be communitarian, as the college professors are already using that term. Philosophically, is it not communitarianism vs. individualism. It is with sadness, that I agree with the article, though I have proudly identified with the label, capitalist. I also try to not use the words left and right for the very reasons mentioned and use the Nolan Chart to, again, encourage people to think more logically and accurately. Lynn Atherton Bloxham
Comment by Rafe on 1 January 2010:
Yes, if you let opponents dictate the terminology you are asking for trouble. (Although among friendly opponents who are actually listening to you, it should be possible to use their definitions and still win the argument). So talk about free trade, the market order, the classical liberal agenda.
And like A-B said, stop talking about “left” and “right” as well, that typology was promoted by the Fabians to link laissez fair liberalism with conservatism (of the kind that Hayek rejected) and more recently, with images of jackboots and death camps.
Respected colleagues over here have rejected this argument about giving up the terms “left” and “right”, saying “but everyone knows what it means”. How can it mean anything when the label “right” covers a bundle that includes zero state anarchists, classical liberals, authoritarian conservatives, the Religous Right and genuine fascists.
Comment by Russ Nelson on 1 January 2010:
May I suggest that whatever name is used, it should be accompanied by a web page defining the term and an institution which can tell people whether a particular use of thd term is accurate or not. This has worked well for the Open Source Definition.
Comment by Bud Hunt on 1 January 2010:
The term “capitalism” is a very confusing word and deserves more study and research than can be presented here.
A simple description of capitalism is from, ” Capitalism: The Unknown Ideal by Ayn Rand”. “Capitalism is a social system based on the recognition of individual rights, including property rights, in which all property is privately owned.”
I highly recommend the book “Atlas Shrugged by Ayn Rand” which is second in distribution only to the Holy Bible. This book was written in the 1950′s but is very appropo to the situation we are now in with the present administration.
Refer to this website: http://www.aynrand.org/site/PageServer?pagename=index, for a little enlightenment.
Comment by Dan on 1 January 2010:
Marx’s definition of capitalism was both clear and simple: M-C-M’
The value form of the product of labor is the differentia specifica of the capitalist mode of production, and this mode of production is not the same thing as bourgeois society.
Comment by Troy Camplin, Ph.D. on 1 January 2010:
I’ve been arguing this for years. I typically use “free market” rather than capitalism, because of the very issue of using a negative term coined by the opponents. But all in all, we should be very specific about everything we are talking about. The shorthand terms don’t, as pointed out, mean anything near the same thing by different people. I often find myself agreeing with socialists about what is wrong, then disagreeing with them that it is capitalism and, of course, what direction to go from here.
Comment by Vincent Wroblewski on 1 January 2010:
Market society is a good word..
Comment by Vincent Wroblewski on 1 January 2010:
In “Human Action” Mises has no problems with these definition..His words are precise and accurate..There are three types of societies (yes, Only three societies) Market society (free market)…Hampered market (UNited States and Europe)…and non-market (socialism).. The emphasis here is society.. where a multitude of individuals come together to exchange goods and services.Regulations restrict market socities which are the hampered markets. If there are total wage and price controls or totalitarian government there are no longer “prices” because there isn”t free exchange hence the term ‘non-market” hope this is helpful….Thak you…
Comment by Kyle Bennett on 1 January 2010:
Let me explain this by analogy….
(and I apologize in advance for the offensive language, its not language I use, but I think it helps make the point)
African-Americans have changed the label they prefer from “negro”, to “black”, to “African-American”, all in an attempt to get out from under the negative associations that became attached to earlier terms. But those who always just said “nigger” still think “nigger” no matter what term is used. Say “gay”, or “homosexual”, and some people still think “faggot”. Say “mentally handicapped, “differently abled”, or “special”, and some people still think “retard”. Say “classical liberal”, or “market centric trade-ist” or any other term you might want to invent, and some people will still think “capitalist pig” and “robber baron”.
Those connotations and prejudices are not attached to the term, but to the *concept*. If someone can’t or won’t understand the concept, or lie about it, or just hate it for whatever reason, changing the name does nothing to change their impressions. The only thing it accomplishes is a bit of temporary confusion and a lasting impression that the people changing the term are afraid of their own ideas, or worse, trying to put one over on people.
Focus on educating the public that corporatism is not capitalism and we’ll get a lot further, a lot faster.
Comment by Peter Vander Meulen on 2 January 2010:
I will chime in as one wearing sneakers in a room filled with Guccis.
As a small (micro) business owner for the past decade, I wrestle constantly with the macro forces invisible to my daily receipts. Most are not beyond comprehension, just beyond contemplation. I will not pretend to ascend any Acropolis with the noted minds at work here, only to offer a whisper from the cobbled streets of my chained mercantilism.
While true that markets grant access, bequeath power and bestow privilege, my belief is that neighborhoods, communities, churches and families do as well. Without explicitly acknowledging these primary forces, economics loses its forcefulness. Its vision becomes tainted by market engines that too often deride human power.
Markets may effect change but are not of necessity the pre-eminent cause for change. Defining society by labor and its fruits misses the nature of society. Individuals work to survive, to live, to love, to leave a legacy of something better. Unless forced by government, markets, religion or social agenda, ours is not a life defined by work. Labor is the means to an end, an end not limited to merely acquiring the means.
I’ll offer two labels though no label really does justice to the complexity that surrounds us all.
1) Those who believe in the preeminence of markets: Dowists.
2) Those who believe the preeiminence of personal social rights: Personalists.
Comment by Wayne Abernathy on 3 January 2010:
I think that Mr. Vander Meulen misses the point about free markets. Free markets are what allow personal social rights to be preeminnent. Free markets are the means by which individuals, persons, engage in the right of free exchange of what is theirs. Infringements on those free markets infringe upon those personal, individual rights.
Comment by David Singhiser on 4 January 2010:
In the past few months as I’ve been reading and learning more about the economy, I’ve had the same problem as Dr. Camplin. I agree with the problems set forth by socialists but reject their belief that capitalism is to blame, and reject even morea their solutions.
Part of the problem is the misunderstanding of capitalism, not only on their part but by the so-called conservatives. They – (I!) somehow came to believe that “capitalism” and free-trade were good but didn’t bother to understand either one. I trusted the editorials, the lobbyists, and the government when they come out in favor of corporations or treaties on Free Trade. The choice was in reality corporatism vs. socialism, but never free-market capitalism.
Each side justifies their own form of “legal plunder” but neither side considers the option of protecting private property and forbidding the state from committing any form of wealth redistribution.
Comment by Dr. Steve on 4 January 2010:
Looking forward to part 2. In the meantime, I like freedom vs the state, or statism (there is that ‘ism thing again) Mark Levin makes a good argument in his recent book.
Freedom if explained well enough should make the argument without detailed economic theory. Freedom as in life, liberty and the PERSUIT of happiness. Not freedom of want or need as FDR suggested it means. Freedom of property rights and the ability to enter contracts by choice, enjoying good decisions and assuming the risk and obligations of bad choices. Freedom from the state.
What a concept. Someone should write it down. Oh, that’s right , they did several hundred years ago!
Comment by Fran Barlow on 4 January 2010:
As an avowed socialist posting to a site that is dominated by those who have apparently assumed that such a concept as “the free market” is not only desirable but meaningful, it’s inevitable that any critique I’d be inclined to offer is going to be howled down in a welter of doctrinaire hand-on-the-heart blather. The comments about fascism being “socialism” and another poster verballing his alleged leftist acquaintances probably weren’t intended as irony, but they nevertheless underline the problem with the blogger’s exercise.
I would make the point however that words with the suffix ism are very commonly descriptors of practices. One of the bloggers here offers one — consumerism which is also used to describe the practice of buying lots of consumer goods, presumably to gratify onesself. There are plenty of others — feudalism (which describes a set of practices attached to landholding and payment for land usage), socialism (which describes a system in which social production is carried on to create use values determined by the producing class and in which labour power is allocated by planning through the agency of the producing class rather than as a traded commodity and in which the means of production are held in common by the producing class), pluralism (a political system in which a multiplicity of rival and diverse political and cultural formations is endured by the polity) and so forth. There are plenty of other examples. The ambiguity attaching to socialism arises because it’s assumed that those professing to be socialists of some kind or another (or held to be such by their political enemies) are always authoring socialism or instantiating it in an unproblematic sense. As the author of this blog points out, this is not so of those who avow “free market” ideas, but those here are fairly happy to assume that people they don’t like really are socialists, which is of course, culturally and intellectually convenient. For the record, let me say that I’ve have never seen a regime that would qualify as socialist and think it unlikely I will live long enough to see one. Certainly, neither the bonapartist collectivist USSR nor Nazi-led corporate capitalist Germany would qualify.
I doubt that inventing new terms for old ideas will serve your cause any better than putting old wine in new bottles. Once people taste what is on offer, they will like it as much and as little as they did before. What you ought to be considering is how complex societies can maximise the utility they supply their stakeholders (and what utilities ought to be supplied and comparatively valued). Clearly, markets have a role to play in that exercise where they can be organised to minimise collective action problems, offer comparatively low transaction costs, ensure transfer of property by bona fide consent, but it’s unlikely that any system using market mechanisms fitting this description could be called a “free market” system. As recent events have shown, outside of highly intrusive oversight by arms-length third parties with authority, markets inevitably infringe upon transfer by consent, security of property, enforcement of promises and so forth. It is no small irony that your preferred candidate for the 2000 and 2004 presidency — a self-avowed “free market guy” was author to the most massive debasement of all these principles. You might reflect on how that happened, if what you propose is so self-evidently robust and appealing.
Anyhow … I wish you all the best playing in your little fantasy pond …
Comment by Marcel Votlucka on 4 January 2010:
I don’t bother much with “capitalism” or “socialist” anymore. I think these are words used to describe 20th and 19th Century institutions that no longer exist. I also don’t like a disctinction between
pro-liberty” and “pro community” because one can certainly be for Liberty as well as strong communities.
I think a more straightforward way to coach it is “Liberty versus Slavery” (or Freedom versus Fascism). It’s a matter of who controls versus who is controlled — versus people like us who want a free market society with strong community bonds and local (and individual) control — and our rhetoric ought to reflect that bluntly no matter what term is used.
Comment by Steve Horwitz on 4 January 2010:
For Fran:
President Bush was not “my guy.” I didn’t vote for him, I didn’t support him, and I’ve called him, in print, certainly the worst president since WWII if not since WWI. He was no “free market guy” ever. So don’t try to pin him on me anyway!
Nor did I argue that any real world system is rightly described as “socialist.” I agree with you, with the exception of the 1917-21 period in Russia, which really was an attempt to abolish the market etc., making it pretty damn close. In fact, that was part of my point.
Your analysis of recent events is hard to square with your own argument that Bush wasn’t really a free market guy. If he wasn’t, then how can you pin the blame on the market the way you attempt to? You can’t have it both ways.
Comment by Dr. Steve on 4 January 2010:
So Fran, what then is a socialist if not one who subscribes to socialism? You offer a criticism of everyone else in three paragraphs but fail to offer your own view. I suspect we would not agree on anything, but I am curious.
No system is pure but I’ll take my chances with freedom. Does the “free market” infringe upon transfer by consent and security of property or the state? I’d say only the state has that power to abuse the individual.
Comment by Billy on 5 January 2010:
Fran,
Thank you for proving the author’s point when you say:
“As recent events have shown, outside of highly intrusive oversight by arms-length third parties with authority, markets inevitably infringe upon transfer by consent, security of property, enforcement of promises and so forth.”
Comment by Fran Barlow on 5 January 2010:
Steve Horwitz …
You’re doing a variant of affirming the consequent here. While socialism, if it ever comes to pass, may well be marked by an absence of markets in the sense we would understand them (and IMO even that’s far from clear), and absence of markets or even the attempt to contrive such a state does not entail socialism. The ruling regime in Russia post-November 7 (NS) 1917 was faced with a massive crisis. Russia was what we would call “a failed state”. The government’s measures, which came to be known as “war communism” were an attempt (failed) to avoid calamity by people who were very much making it up as they went along. The fact was though that the “market” for necessary goods had already failed. A large agricultural subsistence state organised along feudal lines had conscripted its largely peasant population to fight in a war and this (along with the general backwardness of transport infrastructure) had led to a run down in inventories of food, which was compounded by a subsequent drought-forced crop failure, civil war and the conflict over the land question. As soon as the civil war ended, the state introduced NEP i.e. a more liberalised market regime.
In his mind, he was a free market guy, but my point was that free markets are not meaningfully possible, and his attempt to legislate as if they were ended up making a dog’s breakfast of the markets that existed. The world works independently of how we think it operates.
Someone who
a) asserts that socialism is possible and desirable
b) works to lay the political, cultural and material foundations for socialism at some point in the future, allowing that he or she may not live to see the results of his or her efforts
b) would include such things as pressing for more inclusive governance including over production, more equitable collaboration between communities regardless of jurisdiction, increases in labor productivity, transparency in trade and so forth
I should add that rational people (of which socialists are a subset) always take the world and its human and material resources as they find them and work to advance the common utility through the most efficient and effective means along timelines of value to the humans we are dealing with. In the current context, resort to markets is likely to be the method imposing the smallest transaction costs and which will be easiest to deal with collective action problems, and so we should certainly use them, resorting where necessary to transfer payments to resolve serious inequities.
Comment by Philip Walker on 6 January 2010:
When I talk about capitalism, I mean the system with stock markets and computer companies: the economic-technological development that we have right now. Capitalism is always evolving as different ways of ‘doing the economy’ (to coin an ugly phrase) rise and fall.
When I want to talk about the underlying economic engine, I talk about free markets, free trade, or even more clearly, economic freedom. That cannot evolve, although the amount of freedom we enjoy can obviously change.
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[...] my Anarquistas por La Causa and What’s in a name?, Roderick Long 2006-04-08 and 2008-06-27, Steve Horwitz 2009-12-31 and 2010-01-07, Gary Chartier 2010-01-19, Kevin Carson 2010-03-06, Sheldon Richman 2010-03-02 and [...]
Pingback by More Evidence that the Word "Capitalism" Might be a Problem | Austrian Economics Blog on 13 May 2010:
[...] recently had a two-part Freeman Online piece about why we might want to think about ditching the term [...]
Pingback by Smashing Capitalism in Caesar’s Palace | Austro-Athenian Empire on 13 May 2010:
[...] Steven Horwitz’s comments, parts one and two (and see also this [...]