Should Libertarians Oppose "Capitalism"?

I say dump both words (capitalism and markets) and talk about people should and should not be allowed to do.

I think you’ve spent too much time with academics. If you say that you favour capitalism, just a different kind of capitalism, all most people will hear is that you favour capitalism, and stop listening. If you want to make sure people understand that you are different you have to make it really obvious. Changing the way you talk is one good way to do that.

I’m with Redland Jack, we should stop using the terms “free market” and “market” and talk about voluntary exchange, or better still voluntary co-operation:

People know their own situation best, and should be able to decide for themselves who they co-operate with.

Isn’t that exactly what libertarians believe? Its a certainly a good summary of what I believe.

Redland Jack’s suggestion is a good one. I will start using “voluntary exchange.”

The word capitalism sounds like you’re in favor of wealth or worse, the concentration of wealth, or worst of all, the current concentration of wealth in the current hands.

We live in an economy where the government has its thumb heavily on the scale. They do a lot of redistribution–and the balance of it goes upward. (Both through subsidies like the home mortgage tax deduction and through regulation that raises barriers to entry and competition.)

Capitalism was named by its enemies. Why do we put up with this?

We are in favor of “markets.” It’s concrete, understandable, and accurate.

Markets are run through voluntary exchange and cooperation and open to a large number of diverse participants.

Capitalism=Uncle Moneybags from “Monopoly.” Unfortunate, but true.

Remember, “Markets!”

[Comment edited for crude language.–Econlib Ed.]

First of all, in the context of political economy, what is an “…ism?”

In the context of political philosophy – what is an “…ism?”

When people use …ism, what are they trying to convey? Ah! That is the point, is it not?

“Ism” applied to a series of economic activities (or policies?)for identification or classification does not provide a definition.

Example: Socialism as a classification of economic programs is determined by the OBJECTIVES (usually “social”) of the programs; whereas Capitalism has no specific operative objectives that determine its use in classification.

I’m totally with Sheldon on this. Bryan Caplan’s rejection is based entirely on his own stereotype of ‘anti-globalization types.’ The fact is that many of the college-age students who join such rallies and events are there because they perceive big business and big government ganging up on the small and powerless. Unfortunately they all too often walk away believing that the problem is market exchange when in fact the problem is expropriation of existing property rights and barriers to competition.

Add Sheldon to that roomful of youth and I bet you get a more intelligent debate and a good fraction of those students will leave the room wanting to know much more about libertarian ideas, and entertaining the idea that the problem really isn’t ‘too much markets’ but rather not enough markets and individual rights.

Capitalism creates a favorable impression among 61 percent of Americans. The favorables is 60 percent amount liberals.

I favor capitalism, but I consider “capitalism” to review to a broad spectrum of economic orders, and I like some of them better than others. I consider a command economy to be pretty much a nonstarter.

If someone says, “I favor socialism,” then I would ask them what they mean. If means “scheme favored by modern social democrats,” then I will say that it is capitalism with a large welfare state.

If someone says, “capitalism is evil,” then I would ask, why? If it is something that is a problem with just some varieties of capitalism, then I would point that out. If I also opposed whatever it is they say is a problem with capitalism, then I would say that too. And explain how I think it should be fixed. And, ask how they think it should be fixed. Probably the result would still be capitalism, but with some probably harebrained intervention.

Of course, there are some people who really favor a command economy and call it socialism. And there are people who dislike things about capitalism that I count as being positive features.

But I think it is possible to get at these things without introducing a new name.

I think I agree that capitalism these days basicaly means crony-capitalism in most people’s mind. And I think finding a new word for people to rally around will be a lot easier than convincing people to see a continuum. And I think your argument is unfair. Anti-globalisation protesters disagree with you (and me) on a fundamental level. They see individuals as making fundamentally flawed choices and a necessity for the government to make things right. But take so-called “social-liberals” who advocate for things such as “pro-choice,” and “gay rights” policies. If you tell these people you want “capitalism”, a lot of them will hear “crony-capitalism” and think of you as the devil. But if you say you want individual liberties to triumph in both the “social” AND the “economic” spheres, you might win them over.

Yes, unfortunately framing, rather than reason and/or empiricism, seems paramount with regard to persuasion. While it’s merely a personal – and hopefully isolated – case study, to many smart people I know words like capitalism, liberty, freedom, and markets have become so tainted that conversations aimed at espousing them are non-starters that quickly devolve into emotional argument. To be for those things is to hate Obama and to love allowing the greedy and the rich to trample the middle and lower classes and pollute the earth.

Westen’s research showing a halt of dorsolateral prefrontal cortex activity when people are confronted with political ideas or evidence they disapprove of comes to mind. And words like capitalism, in my experience, seem to trigger this abrupt free-fall of reasoning ability, along with heightened and negative emotional responses.

Salesmen have known forever that if one tries to sell with logic, one starves. Emotion sells and logic provides buyers with reasons to grasp on to post sale, when most susceptible to buyer’s remorse.

Alas, I still can’t help trying to inject logic and empiricism into debate. But I find that avoiding words that have, for whatever reason, become tainted greatly facilitates my chances of actually changing anyone’s mind.

For what it’s worth, I’m experimenting with words like “tolerance” and “aggression free” and “cooperation” with respect to ideas associated with freedom, non-coercion, division of labor, and trade.

Do “free-market” and “laissez-faire” have better connotations in the public’s mind (even the educated) compared to “capitalist”?

While “capitalism” may suggest cronyism, that’s been part of human nature and society forever, so we don’t like it but will tolerate it. “Free-market” and “laissez-faire” suggest to most people something like economic anarchy. That’s not just appauling like cronyism but downright frightening — so people are definitely against that!

Not that I have any better suggestions than “capitalism” … “freedom for buyers and sellers” might make it more concrete, you get the halo effect of “freedom” in the political sense, and it doesn’t suggest chaos and anarchy.

capitalism, as I’ve understood, was named so by its opponents who criticized the system because some people “capitalize” on others (i.e. zero-sum). However, the term was adopted by its opponents because of the role of capital in production. The in-between system is still referred to as capitalism because it uses prices which could not exist with any meaning in its absence. (In other words, because it is capitalism, though distorted.) Yet all the price distortions caused by constant intervention by a bureaucratic institution not subject to the profit-loss system of the market, are blamed on capitalism by the very perpetrators of its obfuscation. Any change in terminology won’t suppress the politicians desire for control and their shifting the blame of government failure on the Market. This semantics deludes from the fact that only two kinds of systems are possible–one where voluntary exchange determines meaningful prices (even if they are obscured by the coercive component); or one where some planner collects all goods and distributes them in accordance with his/their own opinions of an optimal distribution.

You can say you’re in favor of a ‘wall of separation between business and state’. Puts a Jeffersonian spin on it.

“Voluntary exchange”, while pleasing to some, will be instantly redefined by its opponents, who are numerous. For example:

“How can you call the buying of food/shelter/medical care ‘voluntary’? One must have those to survive, and if you are the seller, you have all the power. This is an inherently unequal exchange situation, and, thus, cannot be called ‘voluntary.”

The true opponents of “capitalism” are focused on the ownership of capital- of the machinery of production. In essence, they don’t believe that an assembly line or a factory can be owned by anyone not laboring with the capital directly- you either use it or lose it. Now, how do you propose to rename “the right to own capital and rent it out in voluntary exchanges?” Propertyism?

“Perhaps you are confusing anarchy with chaos.”

Anarchy is synonymous with chaos, especially among “most people” as I qualified my statement. See definitions 2 and 4 of “anarchy” at dictionary.com.

Sometimes it just feels good to defend/espouse “capitalism” and watch the liberals wince.

My talk was mostly historical not semantic. The argument is that not only is the word subject to too many interpretations to be useful to us, but that historical capitalism is something true free-market advocates should not want to be associated with.

I agree with Brian. Because we cannot have a free market without capitalism it makes no sense to be opposed to it.

I don’t think the point is that people might misunderstand, or just framing – the larger point here is what capitalism actually has meant historically. Historically, it has never meant a free market, it has always meant a system in favor of capitalists. I do oppose capitalism, I don’t just say it for rhetorical effect.

For the poster above who is shocked that people can oppose neoliberalism, consider me one of your ‘ignorant’ folks. I oppose South American dictators, I oppose the use of force to keep your currency in flow, I oppose debt-based economies, and I oppose the use of international organizations and the military to secure the position of large corporations.

@ Steve

On #2, I’m not sure this is an endorsement. Namely, I don’t think the cause-and-effect on this is:
A: Country engages in massive amounts of redistribution
B: Country becomes prosperous
It seems like it’s more along the lines of:
A: Country becomes prosperous
B: Country engages in massive amounts of redistribution
Although I suppose you might argue that, since the wealthy redistributors haven’t ‘collapsed’, that is an endorsement? Or would you further argue that redistributing has led to greater prosperity (or at least no diminution in prosperity)?

I support free markets.* I support socialism** and oppose capitalism.***

*Among other forms of voluntary cooperation.

**Economies where the working classes control the means and conditions of production. I prefer forms such as some types of individualist anarchism, mutualism, and anarchosyndicalism, which strive to maximize each workers’ control of her own means and conditions of production.

***Economies where a distinct capitalist class controls the means and conditions of production. In this sense, capitalism is one of several types of economy where a ruling class controls the means and conditions of production. It can include different economic forms, such as the state capitalism of the USSR [while it lasted] and the mixed-economy capitalism in the USA [for its entire history].

(Methinks some of you are using different definitions.)

RL you made me fall out of my chair! As a quazi-professional sketch comedy writer, I say bravo!

I propose we call a system with private ownership of the means of production “Hessenism”. Now, my question for Sheldon and other opponents of “capitalism” is: would a libertarian, free market be characterized by Hessenism or not?

The concept of “free market” is redundant in an economy where intangibles — like financial advice, teaching, medicine etc — account for the majority of output, as they do in the US.
Conventional economic thinking founders when applied to intangibles. Logical reasoning will lead to the conclusion that in intangibles, the market not only doesn’t work. It doesn’t exist.
In these circumstances, production and exchange are driven by the intuition of the individuals producing and consuming intangibles. Price is a conditioning factor, not a determining one.
So the concept of voluntary exchange sounds better, though I would prefer voluntary interaction, since this covers things you can’t see, touch, taste, smell or hear (ie services/intangibles).
Capitalism, quite apart from its ideological overtones, is also wrong. In intangibles, which involve individuals interacting, there is practically no need for capital. For example, a teacher can teach with practically nothing except intellecual capital (which itself is an intangible). So what is the reason to call a self-employed teacher a capitalist? He or she is, surely, just a teacher making a living in the best way he or she can create value.
The critique of capitalism as a system involving the parasitic partnership between owners of wealth and the state seems powerful. The East India Company, arguably one of the first modern business corporations, was given a monopoly by the British state to trade with India and the Far East. This monopoly was enforced by its own private army and supported by the Royal Navy and the British Army. In 1857-58, the army of the East India company rebelled and was suppressed by the British Army, with much attendant brutality. That’s hardly a libertarian model.
Most modern corporations only exist because of legislation that allows them to record intangible assets in balance sheets. Intangible assets are a legal and accounting fiction and a privilege granted only to organisations incorporated through the various types of legislation the state has imposed on the economies of most countries.
Since the individual is not allowed to treat his or her intellectual capital as being identical to fiat money, why should this right be given to corporations?
A practical libertarian initiative would be to press for the abolition of legally-enforceable intangible assets (goodwill, brands, IPR). Once this happened, you would see the behemoths dominating large parts of the global economy shrinking to their economically-sustainable size and wealth-creaters liberated at the level of the individual to create wealth.

According to Bryan:
“Etymologically, capitalism does sound like a system of rule by capitalists for capitalists – and socialism sounds like a system of rule by society for society”.

Lenin conflated “socialism” with society following Marx’s similar conflation with “communism”. Society in simple terms is a social ordering and construction of the whole, which could be socialist, communist, capitalist or otherwise.

Conflation of concepts is about “isms”. Peter Viereck said: “Formalism, by being an ‘ism,’ kills form by hugging it to death.” Substitute any dogmatic “ism” for Viereck’s “formalism”. About society, “socialism’”, “communism”, “capitalism” become collectively in love with each of their conceptions – dogmatically so – to an extreme about how Society ought to be socially ordered as a whole. Similar love of the market dogmatically employed should be called marketism, which hugs markets to death.

A distinction seminal in sociology since 1887 occurred with typology in Tonnies’ Gemeinschaft und Gesellschaft (Community and Society). Community is personal and communal; Society is individual and associational. Associations and communities are both social, though neither need consume the personal individual in society nor the individual person in community, as they socially now do with social engineering in which economics is top-dog.

Purposely, we should objectively construct societal “houses” about Right (i.e. professionally) to subjectively create communal “homes” about Good (i.e. personally). And, within the paradigm of scientific economics Gemeinschaft is to the Household as Gesellschaft is to the Firm.

Should Libertarians oppose “capitalism”? Oppose any ‘ism’; include libertarianism and marketism.

In Capitalism: A Good Word for a Bad Thing, Kevin Carson argues that “capitalist” is an accurate term to describe the corporatist economy we have now. Thus, we should in fact be anti-capitalist, according to this, and contra Caplan (I side with Caplan).

Carson also writes,

“in common usage, among establishment libertarians and what passes for mainstream ‘free market’ wonks, any country that hasn’t adopted Marxian socialism as its official ideology is ‘capitalist.'”

…
This assumption underlies most mainstream “free market” commentary in the business press and business news channels: even when they explictly refer to “our free market system” in so many words, they really mean a system in which most business enterprise is nominally “private.” No matter how statist a system of regulations is in effect, so long as they’re exercised primarily through “private” actors, and most money passes through the hands of such “private” actors rather than the U.S. Treasury, it’s a “free market” system. Hence, the kind of “free market” agenda you see at places like Heritage and the Adam Smith Institute for “privatizing” government functions by contracting them out to “private businesses,” even when those businesses are guaranteed a profit at taxpayer expense.

It seems to me that by this argument that “free market” is just as bad a term as “capitalism” is for describing the …. free society that we favor (I don’t know what to call it any more). So, do we have to be anti-capitalist and anti-free market too? What terms are we permitted to use to describe our preferred social system?

Sheldon wrote:

Vangel, you’ve put the rabbit in the hat. Who says we can’t have a free market without capitalism? My point is that in practice capitalism has not meant the free market but some degree of government collusion with business. So we certainly can have the latter without the former.

When we talk about the ‘free market’ we use the term to describe the voluntary exchanges that take place in a given society. Each exchange is a voluntary transaction between two parties, either directly or through intermediaries. A voluntary exchange will only take place if each party expects to gain from it. For exchanges to continue to take place, expectations of benefit have to be validated through experience. If either party is not satisfied, the exchange does not take place again under the same terms.

In a free market individuals will use their own capital to produce goods or services and will trade those goods and services freely. If we take away property rights, prohibit private ownership of capital and prohibit voluntary transactions between people who use their own capital to produce goods or services you can’t have a free market.

I think that you are confusing ‘free market capitalism’ with the more familiar ‘state capitalism’, in which we have parties with political connections influence regulators to impose their power and force transactions to include various terms that are advantageous to the established players. You are right to oppose ‘state capitalism’ (or ‘crony capitalism’ if you like that term better) but wrong to oppose capitalism itself because without the right of individuals to trade goods that they produce using their own capital you can’t have a free market system. Frankly, I am disappointed because I expected a very smart guy like you to know better.