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Capitalism

It's very strange to me that the definition of Capitalism is one of the one of the most contended among political philosophers and economists. It seems to me that there are plenty of words and adjectives to describe most everything we conceive of today and the various systems of economics are no different.

It's a truth that no concept can be properly applied until it is named and it cannot be named until it is defined by what it subsumes and how it is distinct from all others. I think the general hubbub around what Capitalism really IS is a sign of why pure, free-market Capitalism is so rare, why it doesn't exist today on a grand scale, and why it is not part of common political discourse.

The fact is that the concept "Capitalism" has not been well-defined for many even by those who claim to be its proponents.

Capitalism is a social system based on the recognition of individual rights, including property rights, in which all property is privately owned.

The recognition of individual rights entails the banishment of physical force from human relationships: basically, rights can violated only by means of force. In a capitalist society, no man or group many initiate the use of physical force against others. The only function of government, in such a society, is the task of protecting man's rights, i.e., the task of protecting him from physical force; the government acts as the agent of man's right of self-defense, and may use force only in retaliation and only against those who initiate its use; thus the government is the means of placing the retaliatory use of force under objective control.

Ayn Rand, "What is Capitalism" Capitalism: the Unknown Ideal, p. 19.

The fundamental right of any free society is actually the right to property. The right to your life, person, and liberty precede it philosophically, but in practice people tend to start by looking after what they call “mine� and from there come to realize that they may not own anything if they do not first own themselves.

Rather than get into the metaphysics of human beings and how we derive the fundamental basis of any successful society, freedom, from that, let’s simply note the only characteristic worthy of note in order to define Capitalism is that all property is privately owned.

That means that there is no such thing as “public property� in a Capitalist system. Any system that contains some notion of public property cannot be rightly named “Capitalist.�

Private ownership of property also means that there is no rightful claim by any other entity against property. Any system, government, society, or economy, which tolerates non-owners to make claims against the property of another, cannot be rightly described as Capitalist. Taxes are such a claim.

There are just two examples, public property and taxes, why America cannot claim to be a purely capitalist state and I think that’s why there is so much contention over the word “Capitalism.� No one of serious intellectual merit doubts that Capitalism is the virtue to any manner of statism’s vice, but few of that same group want to admit that they live in a state that isn’t capitalistic or that they support statist economic systems.

We have come to describe states like America as ‘mixed economies.’ That means that most of the property is privately owned, but there is some that is controlled by the government or ‘publicly owned.’ (I won’t get into why there is no such thing as public ownership here, but suffice it to say that it doesn’t exist.)

To layer befuddlement upon confusion, those who would describe Capitalists like me often say ‘Laissez-faire Capitalist.’ That term was clearly generated by the Department of Redundancy Department.

I have said all of this because a mastery of the concept of Capitalism and its constituent concepts including property, rights, and ownership, are requisite for discussing economics effectively.

One final note before I close: Fredrich Hayek once wrote:

Man has been able to develop that division of labor on which our civilization is based because he happened to stumble upon a method which made it possible. Had he not done so, he might still have developed some other, altogether difference, type of civilization, something like the “state� of the termite ants, or some other altogether unimaginable type.

Those two sentences illustrate perfectly why there is not a single Capitalistic society in existence today and why most of those who claim to support Capitalism will continue to fall short of the goal of instituting a Capitalist society. Capitalism is no mere accident; it is the only system of interactions appropriate for human beings as human beings. There is no other system that is both moral and sustainable. All others, including mixed economies, will eventually suffer from wholesale, catastrophic failures.

Next up: Distribution of Wealth in Capitalist Societies