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Capitalism is such a tricky word to use. On one hand, we have Marx' definition, characteristics of an economy and polity: urbanism, bourgeois elites, private p

Capitalism is such a tricky word to use. On one hand, we have Marx' definition, characteristics of an economy and polity: urbanism, bourgeois elites, private property, wage labour. It was good foresight. The world he described di more or less come about. More than at any other time we work in companies, for wages, in cities. Most of the important property is privately owned. On the other hand, we have anglo-american ideological "capitalism." It's a variant of liberalism. The emphasis is on free markets, and a confidence that these produce an efficient self organizing market. But, the ideals (at least of the philosophers they refer to) are a little bit of awkward fit in 20th & 21st century settings, where the economy is made up of massive companies. Adam Smith, the American founders, Locke, Hume... and others that form the basis of ideological capitalism... they idealized independent people, usually farmers. Entrepreneurs, maybe 10 person tin factories. Facebook or Unilever... Idk if an economy of mostly these is all that capitalist, by the proponents' definition. Anyway, I think the ideological lens (neoliberalism, asian-capitalism) might be more obscuring than clarifying. In practice, the economic systems are the same. The ideological differences between the US & China do not impact the stucture of the economies more than (for example) geography or local cultural norms do. The Soviet centralised economies were different, but I'm not really sure how related that is to ideological communism. It's just what they did when all those commune projects failed. ..The actual differences are more in the legal systems and the political norms (which in China are still extremely strict). Here I think we agree.

fallingfrog 9y ago
The definition of capitalism that makes the most sense to me is that capitalism is the separation of ownership of businesses from employment in the business, i.e. The joint stock corporation. As opposed to all businesses being run directly by their owner, or being family businesses, etc. The big idea behind the joint stock corporation is that the son of the previous owner might not be the best person to run the business when the previous owner passes on, and if you want to unlock the wealth and resources of the aristocracy you need a way for them to invest in a business and have a permanent stake rather than just give a loan. But then to make that work you need to take the legal and ideological stance that businesses should be optimized to benefit the owners of them - the owners of the capital. From that point of view, markets and a currency and banking system- the "free market"- can exist without capitalism. For instance, if all companies were employee owned, there would be no stock market, and no class of people whose role was to own stock and collect the profits. Capitalism was a great idea, and produced a huge surge in investment, but freedom for the people who don't own capital is neither necessary or helpful to make it work.
- ttoinou 9y ago
  Seems like you are only talking about the market for corporate governance http://www.econlib.org/library/Enc/CorporateGovernance.html http://www.econlib.org/library/Enc/CorporateGovernance.html and not about the foundations of a political system
  - fallingfrog 9y ago
    I think history shows that capitalism and democracy can coexist, but I think it's a mistake to assume that they are the same thing, or that they can only exist together. I suppose that's what the parent article is arguing too.
- dalbasal 9y ago
  That works, but I think to get at what people mean (pro or against) when they say capitalism, you have to define it in a way that speaks to the economic "system" in practice, not just the rules governing it. Joint-stock and separation of capital & ownership. These need to be the dominant structure in an economy, for the economy to "count" as capitalism. IMO, this is a lot closer to Marx' "mode of production" definition (he also saw it as a progressive step up from feudalism) that the "capitalism as an ideology" definition of Neo/Classical/Anglo-liberalism. So... your defining mechanism may have existed at point A but I don't count that as capitalism until that mechanism runs a significant portion of industrial output. ...Also you need to consider all the clearly non-capitalist mechanisms that separate "ownership" from management, like the Byzantine/Ossoman system for example. The "ideological" definition just makes a lot more sense in a small firms world, where you really are talking about freely transacting individuals. The private property point is also worth delving into. No one is a feudalist anymore, so no one defends it. But, I think it's worth comparing and contrasting to this (much more long lived) ideological and practical mode of society. It's the one part of the definition both that marxists and capitalists emphasize is a defining feature of "Capitalism." The private property point made by marx is a pretty obscure 175 years later as we lost context. He considered feudal rights and borouise property to be very distinct from each other. Under most well functioning feudal systems in their prime, there were "welfare-ish" obligations (and obligations generally) of lords to serfs. Emergency grain stores, for example. A lord was expected to house and feed his subjects. These obligations don't come with modern property rights. In fact, there is barely a concept of obligations that come with property or rights anymore.
ttoinou 9y ago
Adam Smith, the American founders, Locke, Hume... and others that form the basis of ideological capitalism... they idealized independent people, usually farmers. Entrepreneurs, maybe 10 person tin factories. Facebook or Unilever... Idk if an economy of mostly these is all that capitalist, by the proponents' definition. Then you need to read the french free marketers like Frederic Bastiat or Gustave de Molinari :p
- dalbasal 9y ago
  True, these guys (having come later, and often writing in direct response to Marx, a contemporary) are easier to think of in the context of post industrial economies. IDK, Molinari. I do know Bastiat, but I can't recall anything that speaks directly to the reality of an economy made up of mostly large firms. He's pretty early though, and the world wasn't like that yet (even though Marx saw it coming, I think). The "Austrians" (particularly Hayek, IMO) do address this world of megafirms a lot more than earlier writers (again, makes sense considering the times). This is getting a lot closer to modern theories, with Hayek directly defending "capitalism" (free market systems, and here we really have the modern ideological framework in a similar form to today's). They (Hayek & Mises anyway) had much more modern, abstract theories. Hayek described the economy as an information system, with price signals as its source of information flow. This certainly is a defense (one the the most interesting and convincing, IMO) of free markets, but we're back to the modern definition. ..It's fairly tangential to Marx' definition, and harder to argue for from a traditionally ideological/liberal perspective. IE, it's fairly tangential to and disconnected from the "liberals" of the british enlightenment or the american revolution.
  - ttoinou 9y ago
    FYI Bastiat wrote before Marx (Bastiat most likely is among the ones Marx talked about when he said "bourgeois economists have said [...]") There were already mega firms back then (East India Company IIRC ?)
    - dalbasal 9y ago
      Interesting, I always thought bastiat was writing in response to marx... You're right about the colonial megafirms, they were really the forerunners of today's corporate world...quarterly stock price pressure and all. But, they're pretty absent from most examples of that time. Maybe it's because they didn't operate in Europe much. Modern free marketers can easily disown them on crown issued monopoly grounds. Smith considered them the same as guilds... Even Marxists didn't really pay as much attention to them as they should have, considering hindsight.
danielvf 9y ago
> "Adam Smith...idealized independent people, usually farmers. Entrepreneurs, maybe 10 person tin factories" Actually, Adam Smith constantly used independent farmers as examples of inefficiency, and the second paragraph the first chapter of "Wealth of Nations" mentions huge companies "destined to supply the great wants of the great body of the people". Adam Smith is easier to read than are most discussions of his writing. If you want a sample, read the first three chapters of "Wealth of Nations" - only 20 pages. https://www.ibiblio.org/ml/libri/s/SmithA_WealthNations_p.pdf https://www.ibiblio.org/ml/libri/s/SmithA_WealthNations_p.pd...
- dalbasal 9y ago
  Cheers Daniel. I suppose we could argue this point. But... my reading of Smith is that he is describing the world as it is at his time. A lot of mid-sized agricultural enterprises, in a world transitioning from feudal privilege to private ownership. A smaller (but very interesting) industry, also transitioning from the guild system to a more modern system. Here's a semi-random example from a chapter on wager labour: "When an independent workman, such as a weaver or shoemaker, has got more stock than what is sufficient to purchase the materials of his own work, and to maintain himself till he can dispose of it, he naturally employs one or more journeymen with the surplus, in order to make a profit by their work. Increase this surplus, and he will naturally increase the number of his journeymen." or the famous one: “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own self-interest. We address ourselves not to their humanity but to their self-love, and never talk to them of our own necessities, but of their advantages” It seems to me that he is talking about a world that is not really capitalist, in a marxian sense. Smith does spend a lot of time on wager labour, he does talk about freedom (nonexistent under feudalism) to pursue their own interests and the market forces which create opportunities. But... the economy he is describing is of small scale industry, landlord-tenant dynamics... I don't think Marx would have called this capitalism. Also, what he regards as "monopoly" (bad) is a much lower bar than we use today. Where he describes larger scale structures like corporations (I think he means guilds and regulators), joint-stock companies (rare then), and such it is usually in a negative light, associated with monopoly or what we'd call "regulatory capture" today. All of this is arguable. Smith was a long time ago, the world was different, and we can't really know if he'd consider modern capitalism good. But, I do think that what marx was describing and SMith was advocating are two completely different things. We happen to call both capitalism (depending on whether we're for or against it). I think they're tangental or even somewhat contradictory. I agree with your more important point. Read Smith. It's a great opportunity to read accessible and interesting texts that are important to modern thought, and still easily relevant. Don't try read Marx, only heartbreak will follow. Read Darwin too, for the same reason.

fallingfrog 9y ago

The definition of capitalism that makes the most sense to me is that capitalism is the separation of ownership of businesses from employment in the business, i.e. The joint stock corporation. As opposed to all businesses being run directly by their owner, or being family businesses, etc. The big idea behind the joint stock corporation is that the son of the previous owner might not be the best person to run the business when the previous owner passes on, and if you want to unlock the wealth and resources of the aristocracy you need a way for them to invest in a business and have a permanent stake rather than just give a loan. But then to make that work you need to take the legal and ideological stance that businesses should be optimized to benefit the owners of them - the owners of the capital. From that point of view, markets and a currency and banking system- the "free market"- can exist without capitalism. For instance, if all companies were employee owned, there would be no stock market, and no class of people whose role was to own stock and collect the profits. Capitalism was a great idea, and produced a huge surge in investment, but freedom for the people who don't own capital is neither necessary or helpful to make it work.

ttoinou 9y ago
Seems like you are only talking about the market for corporate governance http://www.econlib.org/library/Enc/CorporateGovernance.html http://www.econlib.org/library/Enc/CorporateGovernance.html and not about the foundations of a political system
- fallingfrog 9y ago
  I think history shows that capitalism and democracy can coexist, but I think it's a mistake to assume that they are the same thing, or that they can only exist together. I suppose that's what the parent article is arguing too.
dalbasal 9y ago
That works, but I think to get at what people mean (pro or against) when they say capitalism, you have to define it in a way that speaks to the economic "system" in practice, not just the rules governing it. Joint-stock and separation of capital & ownership. These need to be the dominant structure in an economy, for the economy to "count" as capitalism. IMO, this is a lot closer to Marx' "mode of production" definition (he also saw it as a progressive step up from feudalism) that the "capitalism as an ideology" definition of Neo/Classical/Anglo-liberalism. So... your defining mechanism may have existed at point A but I don't count that as capitalism until that mechanism runs a significant portion of industrial output. ...Also you need to consider all the clearly non-capitalist mechanisms that separate "ownership" from management, like the Byzantine/Ossoman system for example. The "ideological" definition just makes a lot more sense in a small firms world, where you really are talking about freely transacting individuals. The private property point is also worth delving into. No one is a feudalist anymore, so no one defends it. But, I think it's worth comparing and contrasting to this (much more long lived) ideological and practical mode of society. It's the one part of the definition both that marxists and capitalists emphasize is a defining feature of "Capitalism." The private property point made by marx is a pretty obscure 175 years later as we lost context. He considered feudal rights and borouise property to be very distinct from each other. Under most well functioning feudal systems in their prime, there were "welfare-ish" obligations (and obligations generally) of lords to serfs. Emergency grain stores, for example. A lord was expected to house and feed his subjects. These obligations don't come with modern property rights. In fact, there is barely a concept of obligations that come with property or rights anymore.

ttoinou 9y ago

Adam Smith, the American founders, Locke, Hume... and others that form the basis of ideological capitalism... they idealized independent people, usually farmers. Entrepreneurs, maybe 10 person tin factories. Facebook or Unilever... Idk if an economy of mostly these is all that capitalist, by the proponents' definition. Then you need to read the french free marketers like Frederic Bastiat or Gustave de Molinari :p

dalbasal 9y ago
True, these guys (having come later, and often writing in direct response to Marx, a contemporary) are easier to think of in the context of post industrial economies. IDK, Molinari. I do know Bastiat, but I can't recall anything that speaks directly to the reality of an economy made up of mostly large firms. He's pretty early though, and the world wasn't like that yet (even though Marx saw it coming, I think). The "Austrians" (particularly Hayek, IMO) do address this world of megafirms a lot more than earlier writers (again, makes sense considering the times). This is getting a lot closer to modern theories, with Hayek directly defending "capitalism" (free market systems, and here we really have the modern ideological framework in a similar form to today's). They (Hayek & Mises anyway) had much more modern, abstract theories. Hayek described the economy as an information system, with price signals as its source of information flow. This certainly is a defense (one the the most interesting and convincing, IMO) of free markets, but we're back to the modern definition. ..It's fairly tangential to Marx' definition, and harder to argue for from a traditionally ideological/liberal perspective. IE, it's fairly tangential to and disconnected from the "liberals" of the british enlightenment or the american revolution.
- ttoinou 9y ago
  FYI Bastiat wrote before Marx (Bastiat most likely is among the ones Marx talked about when he said "bourgeois economists have said [...]") There were already mega firms back then (East India Company IIRC ?)
  - dalbasal 9y ago
    Interesting, I always thought bastiat was writing in response to marx... You're right about the colonial megafirms, they were really the forerunners of today's corporate world...quarterly stock price pressure and all. But, they're pretty absent from most examples of that time. Maybe it's because they didn't operate in Europe much. Modern free marketers can easily disown them on crown issued monopoly grounds. Smith considered them the same as guilds... Even Marxists didn't really pay as much attention to them as they should have, considering hindsight.

danielvf 9y ago

> "Adam Smith...idealized independent people, usually farmers. Entrepreneurs, maybe 10 person tin factories" Actually, Adam Smith constantly used independent farmers as examples of inefficiency, and the second paragraph the first chapter of "Wealth of Nations" mentions huge companies "destined to supply the great wants of the great body of the people". Adam Smith is easier to read than are most discussions of his writing. If you want a sample, read the first three chapters of "Wealth of Nations" - only 20 pages. https://www.ibiblio.org/ml/libri/s/SmithA_WealthNations_p.pdf https://www.ibiblio.org/ml/libri/s/SmithA_WealthNations_p.pd...

dalbasal 9y ago
Cheers Daniel. I suppose we could argue this point. But... my reading of Smith is that he is describing the world as it is at his time. A lot of mid-sized agricultural enterprises, in a world transitioning from feudal privilege to private ownership. A smaller (but very interesting) industry, also transitioning from the guild system to a more modern system. Here's a semi-random example from a chapter on wager labour: "When an independent workman, such as a weaver or shoemaker, has got more stock than what is sufficient to purchase the materials of his own work, and to maintain himself till he can dispose of it, he naturally employs one or more journeymen with the surplus, in order to make a profit by their work. Increase this surplus, and he will naturally increase the number of his journeymen." or the famous one: “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own self-interest. We address ourselves not to their humanity but to their self-love, and never talk to them of our own necessities, but of their advantages” It seems to me that he is talking about a world that is not really capitalist, in a marxian sense. Smith does spend a lot of time on wager labour, he does talk about freedom (nonexistent under feudalism) to pursue their own interests and the market forces which create opportunities. But... the economy he is describing is of small scale industry, landlord-tenant dynamics... I don't think Marx would have called this capitalism. Also, what he regards as "monopoly" (bad) is a much lower bar than we use today. Where he describes larger scale structures like corporations (I think he means guilds and regulators), joint-stock companies (rare then), and such it is usually in a negative light, associated with monopoly or what we'd call "regulatory capture" today. All of this is arguable. Smith was a long time ago, the world was different, and we can't really know if he'd consider modern capitalism good. But, I do think that what marx was describing and SMith was advocating are two completely different things. We happen to call both capitalism (depending on whether we're for or against it). I think they're tangental or even somewhat contradictory. I agree with your more important point. Read Smith. It's a great opportunity to read accessible and interesting texts that are important to modern thought, and still easily relevant. Don't try read Marx, only heartbreak will follow. Read Darwin too, for the same reason.