Rename Capitalism Socialism?

Here's a potentially confusing footnote from Roderick Long:

There’s an ongoing dispute among libertarians over the meaning of
“capitalism.” While most libertarians use the term to refer to a free
market, a growing minority (examples include Kevin Carson, Gary Chartier, Charles Johnson, Sheldon Richman, and Brad Spangler) tend to reserve “capitalism” for the corporatist status quo, favoring “socialism” for the free-market alternative;

In a post titled Libertarians against capitalism, Sheldon Richman explains:

We are a group of libertarians who understand that historically the word "capitalism" has meant, not the free market, but crony capitalism — that is, collusion between business and State at the expense of consumers/workers. Thus we refuse to use the word "capitalism" to describe what we favor: individual liberty in all respects and free, competitive markets. We believe that what we have today IS capitalism — and we oppose it.

It is true that capitalism was named by its enemies.  Thus, it's interesting to note that a socialist is someone who believes in socialism, a communist someone who believes in communism but a capitalist is someone with capital.

It's also true that capitalism is a truly social system, a system that unites the world in cooperation, peace and trade.  Thus, if all were tabula rasa socialism might be a good name for capitalism.  But that boat has sailed.

So if we name crony capitalism, capitalism, and if we can't name capitalism, socialism, then what should capitalism be named?

Comments

The "open system" of capital.

Clearly words like "capitalism", "socialism", "communism" etc. have so little meaning and so much emotional baggage that they shouldn't be used for serious discussion.

For example I've heard people say that China is really "the most capitalist country in the world" seriously.

By the way in Poland and probably other [formerly] Communist countries, "communist" means a member of local Communist party, which is surprisingly analogous to how "capitalist" is used in capitalist countries.

Economic liberalism. We're way ahead of you, American dudes.

I've used the term "market". This includes the idealized free market but also real markets operating under constraints or in secret, such as black markets. Of course if what you want to specify is something more specific, such as the accumulation of capital in private hands, factories, etc., then "market" may be too broad. But if you want to specify private property, freedom of contract, and the like, then I think "market" implies these at least insofar as the market is concerned. One cannot speak of markets without speaking of trade, or of trade without each party having control over assets visavis the other party and the freedom to enter, or not enter, a trade.

Edward Gaffney has it right, the original crime here was the corruption of the word "liberal."

The idea that actually existing capitalism has no connection, even as an approximation, to a real free market, as actually existing socialism has/had no connection to communism proper.

Obviously there's a paucity of examples, though if you're going to call yourself an anarchist you should engage with its ideological history (socialist).

Like Dan Drezner I'm sort of glad they're out there.

I offered a few suggestions relevant to this issue here and here.

The argument posited in the headline could just as well have been written by a 80 years ago by a Spanish Anarchist. The idealism of the Libertarian project usually ends up in anarchy, but hey anarchy isn't what it used to be!

What is "the coordination problem"? I'll take Ideologies for $800.

In the meantime, "Sam's Club cuts 10,000 jobs" http://tinyurl.com/yet96as

"Classical Liberalism" , so we avoid the confusion with the American Left.

We should call it "private market," to indicate private ownership of market agents, as opposed to "social market," indicating public ownership of market agents, both "markets" being opposed to "central planning," to indicate centralized (government) decision making.

It seems people want to distinguish "markets" by their level of "freedom" -- I think libertarians largely delude themselves into thinking there is an objective notion of "free market." You need rules and regulations -- otherwise it's not a market, it's mayhem. On the one hand, the notion of "private property" is ultimately arbitrary -- for example in this country we say you can own land, but not really the sky over the land, you can own animals but not people, you can own ideas but only for a limited time, etc. On the other hand, in order to conform to the economic ideal of a "market" you need regulation -- for instance to enforce no negative externalities, and force information sharing.

This is not to say there aren't many many different approaches to how to set up the rules and regulations that define the market -- but just to say it seems arbitrary to me to say one notion is "freer" than another. When it comes to political issues, it seems to me "freer" market is a stand in for either "backward-looking status quo" or "market rules that benefit entrenched business interests."

Most people can't even conceive of a market that is more free than the current system. The idea of a truly free market, even as a thought experiment, is completely alien to ordinary people.

Whatever word we pick, it will be misunderstood.

'...during the Cold War period when those companies were at their peak'

Um, Xe (a true mercenary outfit, one whose business operations does not in any but the most absurd sense involve 'cooperation, peace and trade') played no role in defending anyone against the Soviets.

And you might be interested to learn that the other companies have not shrunk in the two decades since the Soviet Union faded from history, suggesting to someone that can read a balance sheet, they have yet to 'peak.' Just a quote from Wikipedia concerning Lockheed Martin - 'Lockheed Martin is the world's largest defense contractor by revenue as of 2008.[1] In 2005, 95% of Lockheed Martin's revenues came from the United States Department of Defense, other U.S. federal government agencies, and foreign military customers.' And yet, unless the Red Army is hiding out under your bed, nary a Soviet to be found, as far as the eye can see.

If the valuable services of those corporations, at least to their bottom line, did stop the Soviets from dominating the world by using military force, then why didn't those companies shrink?

Maybe because using capital to make weapons is a profitable business, as anyone who has ever spent any time reading or hearing any media in DC surely knows - the ads are unavoidable. Capitalism has never been 'a truly social system, a system that unites the world in cooperation, peace and trade.' If corporations can make money by selling products that kill better, they will - especially if the killing leads to the opening of new sources of revenue. But then, that whole imperialism/colonialism thing seems so 19th century, unlike the hulking modernity of 20th century Soviet menace.

Remind me again - what century are we a decade into now?

Let's call it "the Secret".

Allison, that has been my experience in CS as well. There is a large segment that favors government solutions precisely because in CS we like to have a central system that knows all the information and then solves an optimization problem.

Fortunately though, the last few years have seen economics invade CS, which has done some to alleviate this.

Adam Smith invented the notion of Political Economy to address this problem of nomenclature. Marx ran off with the term and soiled it with his utopian excrament and now folks who haven't taken the time to look at the complexity of the problem are trying to name it out of existence by tinkering with the words.

Markets exist only where there is civil law, minus that you have feudalism, so tough luck, your precious liberty will be constrained if you participate in a market. Markets existed long before Capitalism and their essential functioning was clearly described by Cantillon sixty years before Smith in Cantillon's defense against the rent seekers from the French Regency in the wake of John Law's spectacular 1720 failure to convert France to paper currency.

That episode laid bare the difference between the real economy and the money economy, and the latter is where capitalism takes place. As Cantillon described it, finance was banking, when Smith got to it it was investment, Marx confused everything by imagining Capitalism as a system as if it were anything else but the systematic exploitation of change which is for economic activity the same thing representative government is for politics: a way to decentralize decision making so that those closest to the problem can figure out the solution.

We are now 6.5 billion people doing business or starving with paper currency, before we tie ourselves into pretzels trying to define inconvenient realities out of existence we should try to understand what it is we are talking about first. Capitalism is the worst organization for an economy except for everything else that has been tried in the same way democracy is the worst form of government but for the alternatives.

Erm, considering that they are are writing a piece called 'Libertarians against Capitalism' can we not conclude that they could agree on the term 'Libertarian' instead of 'Capitalism' to describe economies.

e.g. Most countries in the world are 'capitalist' but their capitalism is marked by government cronyism... we call for Libertarianism across the world

@John Henry: The problem with using the term "corporatism" to describe oligopolistic capitalism (a better term IMHO) is that "corporatism" already has a meaning.

Ironically, that meaning is a more general version of that which you suggest: it means "rule by corporations". What it *doesn't* mean, however, is "rule by *business* corporations". Rather, it means "rule by organized groups of like-minded people" or what Theodore Lowi called "interest-group liberalism."

Thus corporatism uses the term "corporation" in its original sense--formal organizations dedicated to a purpose that are recognized as autonomous actors under the law--including not only business organizations, but also trade unions, professional associations, and lobbies of all types.

In its original (and more pathological) forms, corporatism describes a variety of authoritarian systems ranging from bureaucratic-authoritarianism, to clericalism, to outright fascism: Musso himself decribed his system of government as "corporativismo."

The common theme is that corporatism treats people not as individuals, but as members of interest groups, who--in turn--are the only recognized political actors.

See the collection of essays by Pike & Stritch, "The New Corporatism", and particularly the Phillippe Schmitter contribution, "Still the Century of Corporatism?"

A couple points for consideration:
* This is par for the course in the socialist/communist tradition of using language to redefine arguments. It's an attempt to label the opponent out of existence.
* As has been pointed out, these attempts are so successful that the primary term for free marketeers - liberals has been co-opted, and the adopted pejorative - capitalists, has been adopted.

If those ships have sailed, and they probably have, I'd suggest going with libertarianism. It's difficult, at least at this juncture, to imagine as libertarian economy as anything other than one in which free markets are the overriding feature. This is not the case if we say a "liberal economy" or a "capitalist economy". I'd attempt to not define those terms negatively, however, and cede rhetorical ground to folks who shouldn't win any arguments.

Beyond that, it would also require a bit more pragmatism from libertarians, because I suspect my conception of what's "ok" for a libertarian economy.

Does it really matter what it's called? As long as the free market is protected, and the little guy can still build a business and compete on a fair playing field, then I think it should just stay as good ol' fashioned capitalism.

It's the customer that gets to vote with their wallets, tumbling over even the largest corporate giant when they fail to produce as promised. Sure there are a million different angles that one could take to pigeonhole this idea to death, but what is really going on is that people either buy what you are selling, or they don't. There are always people on the other end of the equation.

"Classical liberalism" describes an agenda which is now dead among all but libertarians, in the sense that it opposes a welfare state. It's not something that most people in America or Europe would support, and in contrast I suspect most people in America and Europe support economic liberalism/freedom to trade.

not_scottbot, congratulations for missing the point on a technical detail with a list of non sequiturs. But at least you admitted that you don't think there was a peace dividend (totally untrue), and don't think American defence spending made the world less dangerous (I'll be sure to let South Korea and Germany know).

I've come to the view that socialism is an ideal whereas capitalism is an activity: the one you believe, but the other you do. Like John Henry, I think that what we currently have (in the UK as well as the US) is properly called corporatism, where businesses try to maximise their profits by political capture rather than by sound business practice.

So what would I call a free economy? A free economy, probably. Does it need to be an -ism?

"Marketists" who believe in "marketism" is descriptive but easily confused with the ideology of that Marx guy.

As far as I can tell, political economy has been stagnant for 50 years. We don't even have terms that can adequately describe or distinguish the systems used by the most significant economies in the world (the US versus China) or that can satisfactorily distinguish shades of capitalism (Japan, Singapore, the U.S., Western Europe).

The communists were wrong, but at least they knew what they were talking about.

Us? We still think that you can describe the world based on what the government does to your cows.

I suggest we name it "Bob."

Well, if it needed changing, it would be "Idealism" of course. Easier to fight for ownership as no one will dare or care to claim the title!

Allow me to boringly suggest that some established
academic usage of these terms might be useful here,
although these new commentators are having fun upending
them.

So, traditionally (and this is in Marx, among others),
"capitalism" is the answer to what David asked: a system
of the private ownership of the means of production.
Markets refer to how allocative decisions are made, either
through market forces, or some kind of central planning,
or perhaps through some kinds of ritual traditional rules.
This latter leads to the old textbook trinity of "tradition,
market, and command" that comes one can find in Karl Polanyi.

This has the usefulness of allowing for the occasional odd
hybrid: market socialism, as in Yugoslavia and arguably China
now (although private ownership is steadily increasing, and
there are a lot of odd intermediate forms of ownership there),
and command capitalism, as in Nazi Germany or in the US
temporarily during WW II (I understand that many like to call
Nazi Germany "socialist," because of the name of the party,
but one of the first things Hitler did when he came to power
was to purge the actual socialists who wanted to nationalize
the major companies from the party).

So, what many here would like to call "capitalism" (in contrast
with this new gang that prefers "socialism" apparently) can be
more precisely described as "market capitalism," or if one wants
to emphasize the more laissez-faire versions of it, "free market
capitalism," in which the means of production are privately owned
and most allocative decisions are made by markets.

Of course there are a variety of intermediate forms, including
among others: corporatism, social market economy, indicative planned
capitalism, and so forth, all of which have had examples either
in the past or still existing currently.

How about Open-Access Capitalism. That way it's easy to attack rent-seeking and barriers to entry as "closing access to capital" for the more vulnerable in society. But there is a non-zero chance advocates will be called 'Accessories'.

How about Open-Access Capitalism. That way it's easy to attack rent-seeking and barriers to entry as "closing access to capital" for the more vulnerable in society. But there is a non-zero chance advocates will be called 'Accessories'.

*didn't work the first time. Hope it posted this, and only this, time.

A communist believes the most important factor in the economy is human, arguing that the reason for the economy is for the humans, while the capitalist argues that the most important thing is capital and humans are merely a painful necessity that must be exploited for the benefit of capital.

A socialist sees capital as something that must be in service of humans, and considers the most important capital as that of that held be each individual human: the human spirit, the creativity, their knowledge of culture and the human mind, their education, experience, invention, and innovation, and the stored history of humans.

Capitalists seem driven to strip humans of their capital in two ways - first by eliminating the need for knowledge and experience in order to replace expensive human capital with cheap capital lacking labor; and second by gaining monopoly ownership of human knowledge and creativity. The Mickey Mouse Protection Act is part of this effort seeking to gain ownership of as many ideas as possible so creativity by humans must be done only with permission and ownership of corporations. In another example, George Harrison's composition was consider to infringe on another's based on what is in musical terms the use of a "word" for which the first legal record is the He's So Fine copyright for Ronald Mack invention. The point of the lawsuit was corporate profits, not the interests of the human, Mack, who had died 8 years prior to Harrison's supposed infringement. This claim is almost as absurd as Microsoft claiming monopoly ownership of the word "windows" and by extension the word "lindows".

Rather than advancing the arts and sciences, corporations seek to retard the arts and sciences because that can only be done by humans, not by capital - humans threaten corporate capital with destruction by human capital.

Basically, those who rate capital as superior to and separate from labor aka humans are anti-human, and will certainly view those who argue capital must serve humans as anti-capitalists, when the humans are merely seeking the reward for the more valuable and more important human capital.

And if you think the law has moved to favor the individual small businessman in the past couple of decades, look at the success of small businesses like Lindows, Netscape, and even RIM. The Googles and Amazons denounced corporate capitalism in favor of human capital. Google specifically sought to bypass Wall Street and reach its users who made it so successful, and the capitalists fought Google at every step of the way - it was in Wall Street's terms, unacceptable for humans to get such high status.

"And if you think the law has moved to favor the individual small businessman in the past couple of decades, look at the success of small businesses like Lindows, Netscape, and even RIM. The Googles and Amazons denounced corporate capitalism in favor of human capital. Google specifically sought to bypass Wall Street and reach its users who made it so successful, and the capitalists fought Google at every step of the way - it was in Wall Street's terms, unacceptable for humans to get such high status."

I'm really confused by this paragraph. When you mention Lindows and Netscape, I assume you have in mind their "losses," both in the markets and in the anti-trust courts, to Microsoft. Except, uh, those losses were to Microsoft, who employs human capital just as much as Google does. As for RIM, their lack of success will most likely come at the hands of Apple and, um, Google, two other companies that very much rely on human capital.

Your diatribe about Wall Street and Google doesn't make much sense either. Google is a highly successful, former start-up, yet the story of their beginnings is not that different than many other highly successful tech companies of the past like IBM, Microsoft, HP, Apple, Amazon, etc.

So, True to the Capitalist Spirit, and as part of the Rebranding Exercise,

We Should Auction Off Naming Rights,

Maybe Rupert Murdoch Would Win,

Then We Would Call It Murdochism.

Burma Shave

entrepreneurialism?

I'm really confused by this paragraph. When you mention Lindows and Netscape, I assume you have in mind their "losses," both in the markets and in the anti-trust courts, to Microsoft. Except, uh, those losses were to Microsoft, who employs human capital just as much as Google does. As for RIM, their lack of success will most likely come at the hands of Apple and, um, Google, two other companies that very much rely on human capital.

Your diatribe about Wall Street and Google doesn't make much sense either. Google is a highly successful, former start-up, yet the story of their beginnings is not that different than many other highly successful tech companies of the past like IBM, Microsoft, HP, Apple, Amazon, etc.

In the case of Lindows, Microsoft paid a high price to settle to avoid a clear ruling that said Windows could not be trademarked as the evidence of "windows" as a generic computer GUI term was mounting. On the other hand, Lindows couldn't afford decades of litigation which Microsoft would have sought to take all the way to the Supreme Court, just to prevent the loss of a key marketing tool which allowed Microsoft to effectively shutdown anyone who used Windows without Microsoft approval. That is hardly free market competition, and to argue that "windows" is an invention of Microsoft, in either concept or name is absurd, yet capital is used to crush individuals who seek to compete in even minuscule markets Microsoft seeks to control, but not even compete in.

In the case of Google, it sought to do an IPO for three reasons: 1) allow the original cash capital investors to cash in on their investment, 2) allow the human capitalists to reap a return on their human capital, and 3) to give Google working cash capital to expand. While Google was willing to pay Wall Street for its labor in producing the studies, advice, and legal documents, as well as normal stock sale fees in the auction know as the stock market, Wall Street "free market capitalists" demanded Google accept their price for the stock in the IPO so it could sell it in the auction for whatever price they could fetch. In most of these cases, the investment bank splits up the offering among its favored clients in a transfer of wealth from the buyers of the stock and the firm (Google) to Wall Street. Wall Street argues that they are taking a huge risk; if they paid $80 for a share but could only sell it for $40, they would lose lots of money. Google asked for every share to be sold at auction by Google directly in a dutch auction - and Wall Street does do Dutch auctions. Wall Street fought this because this threatened the entire oligopoly of Wall Street on obtaining working cash capital.

Eventually Google got an arrangement where individual investors got to buy a block of shares for the IPO price, but the Wall Street brokers for the most part erected all sorts of barriers to individual investors, and at the same time kept talking down the price of the stock. Google's assessment was $120 was a good starting point, but eventually IPO'd at $80 with registered individual Google users paying that price, as did Wall Street firms doing the IPO. The stock passed $120 the first day and was far above it within a week. The cost as far as capitalism is concerned is Google the firm got about half the capital infusion it should have which Google could use to grow Google to the benefit of the stock holders. Instead, the "capitalists" - those with the cash investment - had a third to half their capital invest sucked off by the Wall Street vampires who essentially suck the blood from the humans who seek to gain from their labors and personal capital.

The Google founders take the same view of Wall Street as does Warren Buffett, which why both have two classes of stock, the voting stock controlled by the human capitalists, and the non-voting stock, owned originally by the cash injecting capitalists. Buffett has sought to keep the price of shares very high so the B-H stock isn't the subject of Wall Street speculation. The recent split of B shares was a necessary evil of no benefit to investors or the firm.

Basically, Wall Street is the last place you will find capitalists. As Buffett is alleged to have put it, "One of the ironies of the stock market is the emphasis on activity. Brokers, using terms such as "marketability" and "liquidity," sing the praises of companies with high share turnover... but investors should understand that what is good for the croupier is not good for the customer. A hyperactive stock market is the pick pocket of enterprise."

Goldman Sacks, et al, are just croupiers, but running a wheel with 0, 00, 000, up to 0000000000000000000000000.

free-market liberal democracy?

I can't believe no-one has suggested "Smithism".

I usually contrast capitalism with the free market. "Capitalism" is "historic capitalism" or "actually existing capitalism"--a system defined more by what it preserves from feudalism than by the very limited extent to which it allows the formation of prices through market competition. As R. A. Wilson put it, capitalism is a system in which the overall institutional framework is defined by artificial property rights and artificial scarcity rents, with a market price mechanism functioning to a limited extent in its interstices. Or as I put it, capitalism is a system of political economy in which capitalists control the state in the same way that landlords controlled the feudal system, and use it to intervene in the market on their behalf.

We don't need a new term for genuinely free markets--i.e., markets without artificial property rights and artificial scarcity. "Free markets" is just fine.

What we need to do is stop equating "free markets" with capitalism. And we also need to curb stomp all the chatterers on CNBC, the WSJ editorial page, and C-SPAN2 who defend things like the Digital Millennium Copyright Act and drug reimportation bans as part of "our free market system."

While we're at it, the philosophical tradition I come from--individualist anarchism--sees free markets as the best way to achieve socialism. Do away with artificial titles that hold vacant and unimproved land out of use, entry barriers that restrict competition in the supply of credit, and abominations like patents and copyright, and the free market will see that (as Benjamin Tucker put it) "the natural wage of labor is its product."

Capitalism, in any case, is a really horrible term for the free market. Naming the free market after one factor of production, in particular, gives the suggestion that the game is rigged and some factors are more equal than others.

Free Enterprise. (of course)

there's already a name for "crony capitalism"... corporatism.

why complicate the subject. the fact that people get capitalism and corporatism confused doesn't mean that diction is the problem...

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