[Part of An Anarcho-Capitalist Case Against Left-Libertarianism series.]

Introduction

If you’re a libertarian, the term “capitalism” usually registers as a positive invocation to you. Private property, voluntary exchange, and free markets will probably all come to mind. Likewise, you will probably also as a libertarian instinctively see it as a term in constant need of defense.

However, if you are not a libertarian, the term “capitalism” might encompass all that you see as wrong with the world: greed, cronyism, inequality, extinct unicorns, and so forth. You will probably blame the problem on the solution, confusing “capitalism” with “corporatism,” and even go so far as to suggest that capitalism in and of itself spawns the latter.

Plenty of terms with broad usages end up being inadequately defined in dictionaries or the minds of casual users which have to be much more carefully defined when you’re doing something as specialized as economics.

“Capitalism” is properly defined as “private ownership of the means of production.” Despite this fact, you’ll constantly hear press, politicians, and the public in general use the word as a negative pejorative, and while I’d love to hear the definition driving their usage, otherwise this isn’t too intellectually interesting to me. In common usage, the word means something fairly vague, arguably resembling what was described as a pejorative above. But as with a lot of terms which exist in common use, whatever is said about its definition turns out to be pretty useless when using it in a specialized context for analytical purposes. I know exactly one definition which makes it amenable to analysis: the economic definition.

Indeed, it is very much an uphill battle; and, similar to the reasons described above, even some left-libertarians suggest that “capitalism” be abandoned, including by those who label themselves as capitalists, or that those who support free markets adopt the term “anti-capitalism.” To be frank, I oppose this line of thinking. I prefer the word. I find numerous reasons to keep “capitalism,” and think that it is “anti-capitalism” that should be dropped. That is the view which I intend to support here.

Left-Libertarian Interpretation

When asked for a definition of what “anti-capitalism” is, those who argue in favor of it go on to offer definitions of “capitalism,” then afterwards claim that “anti-capitalists” oppose it, which is what “anti-capitalism” is. In the process of discussion, a few articles are often referenced describing their points of view on the term which are: “Advocates of Freed Markets Should Embrace ‘Anti-Capitalism’” by Gary Chartier, “Libertarian Anticapitalism” by Charles W. Johnson, “Anarcho-Capitalism is Impossible” by Anna Morgenstern, and “Capitalism: A Good Word For A Bad Thing” by Kevin Carson, each of which I’ll be looking at successively.

Starting with Chartier’s article, he defines “capitalism” in three ways:

capitalism-1 an economic system that features property rights and voluntary exchanges of goods and services.

capitalism-2 an economic system that features a symbiotic relationship between big business and government.

capitalism-3 rule — of workplaces, society, and (if there is one) the state — by capitalists (that is, by a relatively small number of people who control investable wealth and the means of production).

Looking at all 3 definitions in Chartier’s article, not only are none useful for the task given, but they are also vague (what precise kind of property rights are we talking about? ), poor, and inaccurate definitions of “capitalism.”  Not only that, but Chartier essentially describes every country’s economic system. So with the possible but unlikely exception of North Korea, every country on earth is capitalist. None can even be said to be more capitalist than another, which makes any attempt of analysis futile. Thus, to start denouncing “capitalism” as defined in Chartier’s book would accomplish nothing but to confuse basically all libertarians — the left would think I’m one of them, and everybody else would wonder who I am and what I’ve done with Jeff.

Chartier’s first definition defines capitalism more or less as free markets and voluntary exchange. Although my objection is somewhat of a nitpick, it is still worth addressing. Capitalism isn’t the same thing as “voluntary exchange” or even “free markets.” Some would like to see “capitalism” understood as free trade in all goods.  However, as an economist, I find a lot of utility in careful definitions. I advocate capitalism, but that doesn’t mean I think the word should be defined as “all the stuff I like.” Capitalism is a necessary but insufficient condition for those things. If I want to talk about free markets, I have “free markets” for that. Free markets imply capitalism only in that they imply secure property rights. So, capitalism is a subset of a free market referring to the private property rights in the means of production.

And not only would I not say they’re mutually exclusive, I also think that free markets would trend toward capitalism, since survival requires consumption. Per Say’s Law, production is always an antecedent to consumption — you need to produce in order to consume. Production on any scale compatible with life requires capital, which is man-made (it doesn’t “grow on trees”). To have an incentive to produce capital you have to be able to make use of it and/or sell it, and for either of those you have to be able to control it — and the same for the incentive to buy it. To have any confidence that you will still control it tomorrow, you need a legal regime that assigns you exclusive rights to control it — that is, you need private ownership of the means of production, or capitalism. Thus, while the two aren’t identical concepts, I do believe that markets would trend towards capitalism.

I would levy the same criticisms onto Johnson as well. While Johnson’s first three definitions are more detailed in “Libertarian Anticapitalism,” they describe “capitalism” more or less the same as Chartier’s: 1. free markets 2. symbiotic corporatist relationship between the state and business. 3. A wage labor system ruled by capitalists. But unlike Chartier’s article, Johnson has a fourth definition of capitalism which is defined as,

“[t]he commercialization of everyday life — that is, a condition in which social interactions are very largely mediated through, or reshaped by, overtly commercial motives, and most or all important social and economic institutions are run primarily on a businesslike, for-profit basis.”

For starters, I don’t think any such arrangement has ever existed. Marriages, families, and friendships (social institutions) are run on a for-profit basis? I don’t have friends solely for monetary profit, and I doubt Johnson meant psychic profit either. Furthermore, what are the economic consequences of “the commercialization of everyday life“? When I go to the grocery store, is that an overt commercialization of something? Of “everyday life”? Commercialized as compared to what? All the adverbs like “largely,” “overtly,” “primarily,” etc., make it impossible to resolve any dispute as to whether a given arrangement fits the definition. I don’t see how any useful predictions could be extracted from it. It’s not even a description of anything, and it’s really not useful for economic analysis.

These criticisms bring me to my overall objection with their set of definitions. Johnson’s definitions 2-4, and Chartier’s capitalism-2 and capitalism-3, they suggest, are the appropriate definitions (rather than the first definition they list — that of property rights and voluntary exchange), and seem to work their way around in a circle to justify that claim with the goal of impugning capitalism. For instance, in the section “IV. Why Freed-Market Advocates Should Call the System They Oppose ‘Capitalism,’” Chartier argues in his first point “To Emphasize the Specific Undesirability of Capitalism-3” what is essentially a circular argument, one which Johnson paraphrases in his second definition (Pro-Business Political Economy). They insist all other definitions together, except the first one of “free markets,” form the preferred definition, and in the course of arguing those points, refer to the goal of discrediting capitalism as a reason to prefer that definition. In other words, “Capitalism, whatever it means, is bad. I think we should use a definition according to which it’s bad, so we can say how bad it is.” That is, they are arguing a strawman that no self-identifying capitalist worth their salt would use, describing everything that the left hates about the world: it’s “capitalism,” and “anti-capitalism” opposes it.

While numerous left-libertarians hold the same definition(s) of “capitalism” as Chartier and Johnson, others argue that defining “capitalism” as a system of private property is equally problematic. Which brings us to “Anarcho-Capitalism is Impossible,” by Anna Morgenstern. In her article, Morgenstern not only makes the same mistake as Chartier and Johnson by invoking simply “free markets” as its definition, but goes on to say a system of private property is problematic:

…because where would you draw the line between private and public? Under a state, state property is considered ‘public’ but as an anarchist, you know that’s a sham. It’s private property owned by a group that calls themselves the State. Whether something is owned by 10 people or 10 million doesn’t make it more or less ‘private.’”

This, too, is misleading. First of all, I wish it were true, because then perhaps some public officials could, and might, sell some of that land and a market could prevail. Secondly, again, I define capitalism as “private ownership of the means of production.” Public property is not capitalist, nor is it private. And third, this argument worded differently would amount to saying, “Private property can’t exist in a world without government because there are flaws with public property.” A thousand times no. Public property is irrelevant to the feasibility of private property. This argument is bad, and Anna should feel bad.

Carson’s “Capitalism: A Good Word For A Bad Thing” is a bit of a mixed bag. I agree with plenty of it (in particular, the cited definition of capitalism from Sheldon Richman). But I also disagree with it more than I agree, and I’m not sure what the point is or what I’m supposed to get out of the article. Unfortunately, most of it is a gigantic equivocation fallacy, with some strawmen and non-sequiturs thrown in for good measure. For example, Mises talked about the stock market because it is obviously connected to ownership of the means of production (and not merely a market in equity). I don’t see why Carson can’t seem to grasp that here. Additionally, his statement that,

Before Mises’ time, ‘capitalism’ was used by mainstream political economists to describe the actual system of political economy they lived under – i.e., historic capitalism,”

is just plain false. The term “capitalism” was not a descriptive label for “what we have now,” but a definitive ideal that was being described by the science of economics. They were trying to delineate how things worked generally, as scientists, not describing the history of what had occurred. Carson confuses economic history with the science of economics here, as do most leftists when analyzing economics.

Also, Carson is saying “capitalism” is “all about capital.” Not only that it’s merely the defining characteristic that distinguishes it from other systems, but literally the central tenet, with every other aspect of capitalism completely subordinate to that. Whereas a more proper explanation, if one really examines the economics of it, is that capital (particularly in arrangements where it is privately owned and well-accumulated) is merely what separates it from other systems (including from more primitive free market systems that rely more on land and labor than on capital). And this is was what Mises was getting at as well; yet Carson twists his words into saying “if they have a stock market, they are capitalists, even if it’s Stalin’s USSR.”

Anyway, it seems Richman’s definition is perfectly serviceable, and Carson goes on to trip over himself to:

a) not use that definition

b) not offer an alternative definition, and

c) try to make a case for using this new, not only undefined, but in this case actually “de-defined,” term.

This is why he primarily focuses on the inconsistent and corporatist rhetoric coming from places like Heritage and the Adam Smith Institute — thereby not having to deal with the academic definition of the term, and instead dealing with political special interest groups. Knowing full well, of course, that special interest groups often spin rhetoric, or even outright lie, to push the policies they prefer. He doesn’t really seem to offer any good reason to be “anti-capitalist” by this definition.

If left-libertarians want me to identify with whatever legitimate concerns they have with state intervention, then I’m all ears; but otherwise, how about we figure out what those other things are instead of using ambiguous terminology which totally means one thing when they’re recruiting, and totally does not thereafter. Many who oppose capitalism on the libertarian left even seem coincidentally to hate it as it is delineated by the economic definition as well, which is even more unusual since their preferred methods of organizations such as cooperatives are features of capitalism. Worker-owned co-ops are capitalist if the workers, individually, are actual owners. You have to own resources to pool them, and the resources pooled in a corporation or among partners are means of production. And since it’s fairly easily defensible on those rigorous economic terms, especially since it can facilitate their own preferences, they want another definition according to which it can be more plausibly attacked.

When people start using vague terms to define a word, watch out. And left-libertarians generally abhor clear definitions of terms, because they expose their propositions to criticisms. A definition should be specific, because otherwise we can’t actually even have a rational nor logical debate. A definition should be anything which can be reliably referred to in order to distinguish what the term refers to from what it doesn’t, and can be used to resolve disputes about that question. The definitions of capitalism provided by Chartier, Carson, Morgenstern, and Johnson are merely abstracted out notions which don’t help any sort of discussion. Thusly, the authors commit the logical fallacy of definition.

The Value of a Term

The term “capitalism” in typical discussions is certain to appeal to negative connotations. Much of that reason has to do with how it has been historically defined. A prime example of this is the 2008 Financial Crisis. If you ask the average person on the street, capitalism is likely to be blamed. I don’t deny that the term has baggage, much of it going as far back as Tucker, Proudhon, and Hodgskin. Left-libertarians will suggest, “‘capitalism’ carries a lot of baggage — much of it negative” as reason for abandoning the term — otherwise, such connotations are historically inaccurate.

Again, I am in fact aware of the history and etymology of the term going back to the 19th century and how it was used by Marxists and left-anarchists to describe what is today called “corporatism” and involved the classical error known as the labor theory of value. This is often brought up in any discussion of the term “capitalism” with someone from the left. However, history alone doesn’t establish definitions of terms. I’m not talking about any historical system when I use the term, and certainly neither is the Left when they use the term “socialism” (see, “But that wasn’t real socialism!” when confronted with the disastrous results of any attempt at or implementation of any of their ideas).

But the “historically inaccurate” argument is a nonsense charge used to deny the reality of the argument called the etymological fallacy. Taken together, their use of “capitalism” seems to be a synonym for “thing that creates problems,” which is not only itself “historically inaccurate” but simply useless as well.

Not only that, but according to The Oxford English Dictionary, the term capitalism first appeared in English in 1854 in the novel ‘The Newcomes,’ by novelist William Makepeace Thackeray, where he meant “having ownership of capital.” It was previously attributed in other languages to the socialist Louis Blanc (“…what I call ‘capitalism,’ that is to say, the appropriation of capital by some to the exclusion of others”) in 1850.

The origin of the word “capitalist” itself is of much earlier vintage: in French, A. R. J. Turgot (1727-1781) used “capitaliste” in his essay, ‘Reflection on the Formation and Distribution of Wealth’ (1769-1770), and William Godwin used its English version, “capitalist,” in his Political Justice (1794). ‘The Hollandische Mercurius uses “capitalists” in 1633 and 1654 to refer to owners of capital. David Ricardo, in his ‘Principles of Political Economy and Taxation (1817), referred to “the capitalist” many times.

At one point I nearly opted to leave the term “capitalism” behind due to the aforementioned baggage. I thought, “You know, left-libertarians and anti-capitalists have a point. The term gets perverted, misused, and has been distorted by the advocates of the state. I know what I mean, but others might not. Perhaps calling myself a market anarchist instead of an anarcho-capitalist or embracing ‘anti-capitalism’ is a good idea.” But then some time later, in “Socialism: What It Is,” the individualist anarchist Benjamin Tucker has the same thought, yet this time about socialism and its conclusion being completely contradictory to the conclusion of “capitalism” (or rather, his definition of it). He responds to a fictional character who associates the word “socialism” with all things bad by saying:

Yes, it is a glorious word, much abused, violently distorted, stupidly misunderstood, but expressing better than any other the purpose of political and economic progress, the aim of the Revolution in this century, the recognition of the great truth that Liberty and Equality, through the law of Solidarity, will cause the welfare of each to contribute to the welfare of all. So good a word cannot be spared, must not be sacrificed, shall not be stolen.

Seriously, left-libertarians? You oppose “capitalism” for its supposed association with corporatism,  yet you take pride in “socialism” (even though you are forced to emphasize over and over that you don’t mean state socialism)? Double standard, no? If the state-socialists and others who abuse the term “socialism” cannot have a monopoly on the term “socialism,” neither can those left-libertarians and others who oppose “capitalism” for the same reason.

How leftists use the term “capitalism” isn’t much more clear or consistent than their use of other important terms. Near as I can tell, “capitalism” is to “socialism,” as “bourgeois” is to “proletariat.” One of them is whatever I like, and the other is whatever I don’t like. I’m happy to say exactly what I mean by “capitalism” and use it consistently so that it can be examined on its merits. “Capitalism” is private ownership of the means of production. Whereby “private” I mean individual, and by “ownership” I mean an exclusive legal right to use or control the use of the thing owned, and by “means of production” I mean land, labor, and (especially, in this context) capital.

In some cases, left-libertarians may not think the origin matters so much as the stench the term conjures up in the minds of the hearers. I don’t deny that the term has baggage. I don’t deny that the term has some negative connotations, namely that those who oppose it, conflate it with or reference, the system that we have today (and the supposed “capitalist” political lobby groups on the right do the same, while advocating their own particular flavor of fascism or corporatism). I don’t much care for this either. By this same logic, does that mean we should abandon other terms such as “anarchist,” “libertarian,” and so on? They are tainted terms as well, so should we stop using them on the same grounds? Should we drop numerous other terms because of how they make individuals feel? This makes no sense. Negative connotations don’t justify abandoning a term.

Furthermore, that supposed stench to the Left is mostly about, or at least indistinguishable from, the private ownership of the means of production (which at least some left-libertarians don’t even oppose), so dropping the term is missing the point. “Capitalism” conveys another vitally important attribute, which is capital accumulation and its role in production and innovation. Same problem here: accumulation itself is a lot of what leftists turn their nose up at (“capitalism” is to “socialism” as “bourgeois” is to “proletariat”), since it encompasses what many left-libertarians have contempt for, which is those with more agency than others.

As Mises stated in The Anti-Capitalistic Mentality,

What makes many feel unhappy under capitalism is the fact that capitalism grants to each the opportunity to attain the most desirable positions which, of course, can only be attained by a few. Whatever a man may have gained for himself, it is mostly a mere fraction of what his ambition has impelled him to win. There are always before his eyes people who have succeeded where he failed. There are fellows who have outstripped him and against whom he nurtures, in his subconsciousness, inferiority complexes.

But division of labor and capital is what allows humans, unlike any other entity, to acquire additional agency. Yet the fact that acquisition is not — and cannot be — uniform, and that thus some acquire more than others, is more abhorrent to them than no one acquiring anything at all.

The purpose of words is to facilitate communication, and not all forms of the word “capitalism” work in that regard. Sure, I have to go on to qualify it, pin it down, tease out the precise meaning I intend, when I use it with people not familiar with the broad landscape of this thought. But that’s fine. And it’s more than fine; it’s a plus.

Good words are ones which start conversations, not end them. I’m happy, eager even, to have the conversation that comes after I tell someone about capitalism. If I used a supposedly more technical and precise term (“free market anti-capitalism”) — which in fact would have to be a long string of terms that would be unintelligible to most people — it would be no more informative to the uninitiated. In fact, it would be less informative, and the sheer weight of jargon that would need to be digested would not facilitate communication, it would shut it down. It’s for reasons I just described that I don’t even identify as a “market anarchist.” Sure, I am for markets, and I am an anarchist, but then again mutualists, socialists, and other anarchists on the left can be considered market anarchists too. “Capitalism” has just enough familiarity, just enough baggage, that my conversational partner will become curious rather than intimidated.

Some may argue that I am hindering the advancement of liberty by using the word “capitalism”; to which I say that I don’t use it for that purpose, at least not in casual conversation, without making it very clear what I’m talking about. Most of us capitalists don’t. Depending on context, I talk about “freedom” or “economic freedom,” since “capitalism” wouldn’t be enough, even if most people weren’t using broken definitions. It’s about impressing upon the common consensus an educated perspective on what certain ideas mean, and in this case, what terms correctly mean — not adopting a definition that is guilty of mischaracterizing certain terms in a poor way like the consensus does now due to gross assessments of reality.

Capitalism Is Not Corporatism

And no, “corporatism” does not evolve from “capitalism,” as some have insisted. To suggest that corporatism arises from capitalism itself is absurd. It would be more accurate to say that capitalism creates an abundance of wealth among all people which then may lead people to become complacent (particularly if they don’t understand the source of the wealth they have access to) and begin turning to government to enact laws and regulations to solve various minor problems that people could solve themselves. In response to this enactment of laws, smaller companies begin to fail and larger companies begin to buy politicians in order to protect their profits, and ultimately their survival — with the additional assistance of the ever-increasing regulations which crush their competitors.

No, anarcho-capitalism is not fascism, either. If fascism is the merger of state and corporate power, I’m not sure how fascism is supposed to exist without both of these active ingredients. Or if one is just defining fascism as corporate power, I must take issue with the terminology. State “power” is exerted by threats of violence against all who disobey. Corporate “power” is exerted as an offer of an exchange of value. “Do what I want or die” is rather different from “do what I want or I won’t give you my stuff.”

In short, corporatism and fascism are the result of a people calling for growing government and the anti-capitalistic attitude of those who don’t feel they’ve gotten everything they wanted out of a system in which so many others are successful.

Conclusion

Numerous libertarians, including anarcho-capitalists, prefer to keep the term “capitalism” because we favor a peaceful, prosperous, cooperative society with a concomitant advanced economy, which of course can be characterized by the widespread “private ownership of the means of production.” A word is needed for this important concept, for this libertarian and good institution. The onus is on the libertarian left to suggest a term for it if they want to take away the current term. “Free market” won’t do because — as described above — a socialist (or even a primitive) society could be described this way.

Left-libertarians need to understand and accept the reluctance to go along with their trend. We are — or at least I, for one, am — wary that this is an effort to switch to “free market” or “anti-capitalism” without being clear on whether or not they and other left-libertarians still favor “private ownership of the means of production” — or whether the new term is favored because it is ambiguous enough to be compatible with the quasi-agrarian, anti-modernist, anti-division of labor views of anti-private property leftists. Libertarians do favor private property rights and the economic order which accompanies respect for private property, as well as generates the prosperity that all decent, economically literate people favor. Thus, we are rightfully hesitant to go along with semantic shell games which might really be designed to broaden the definition so as to include ideologies that are actually incompatible with these things.

“Capitalism” is the private ownership of the means of production. Dropping this term, even while retaining the concept, buys us nothing.