4 ms·

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.

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.
- fallingfrog 9y ago
  These are great points. On the obligations point: If you look at the whole uber/Lyft/gig economy dynamic and contrast that with salaried employment, I think you'll see that to the extent that a company owns the time of their employees, they are more likely to give them health benefits, paid vacation time, and so on analogous to how a lord treated his subjects. I think Nassim Taleb has made that point. Whereas a Lyft driver doesn't get taken care of in the same way.
  - dalbasal 9y ago
    I liked Taleb's point too, especially as it ties in to completely disparate situations like ancient greek urbanism. I think it's early to hang to much theory on these gig-companies though. It's still not clear they'll stick around for the long term. Hardly an economic "mode" yet. It's a great place to explore the divide though. To the capitalism point though... I think Uber/Lyft dynamics are perfectly capitalistic in a marxist sense. I think that from a ideological-capitalist perspective, a system where drivers transact more directly with passengers would be more capitalist.
- freeflight 9y ago
  > 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. In some places, these obligations do exist, at least in theory. The German Grundgesetz Article 14, for example, states: "(2) Property entails obligations. Its use shall also serve the public good." [0] Which is often quoted but these days rarely actually enforced/acted upon, the opposite is becoming far more common (privatization of common goods/services or straight up bailing out private companies with public money) like recent pushes to privatize German Autobahn [1] or when the public is bailing out massive private companies, like it happened with the banking crisis of 2008 [2], nuclear waste deals [3] or most recently bailing out German car manufacturers for Dieselgate [4]. [0] https://www.gesetze-im-internet.de/englisch_gg/englisch_gg.html#p0090 https://www.gesetze-im-internet.de/englisch_gg/englisch_gg.h... [1] http://www.dw.com/en/german-autobahns-backdoor-privatization-row/a-39036565 http://www.dw.com/en/german-autobahns-backdoor-privatization... [2] http://www.spiegel.de/international/business/subprime-bailouts-in-germany-taxpayers-forced-to-cover-risk-of-banks-folly-a-546586.html http://www.spiegel.de/international/business/subprime-bailou... [3] http://www.dw.com/en/german-government-does-nuclear-waste-deal-with-energy-companies/a-36089376 http://www.dw.com/en/german-government-does-nuclear-waste-de... [4] https://www.irishtimes.com/business/manufacturing/disbelief-at-plan-for-german-taxpayers-to-pay-for-dieselgate-1.3395183 https://www.irishtimes.com/business/manufacturing/disbelief-...
Treegarden 9y ago
How can all companies be employee owned if you need to invest a lot of capital to start a car factory. Half of the fortune 500 companies are younger then 10 years - starting a company has a high risk on the invested capital. A company is owned by whomever is risking their money to finance it. How is capitalism different from early human tribes? They also needed to work and trade. Things have become much more sophisticated but the basic principles remain. People complain about spending too much time for a company and slaving away - but in earlier times they would have spend way more time on the fields plowing while 4 of their 8 kids died.
- dragonwriter 9y ago
  > How can all companies be employee owned if you need to invest a lot of capital to start a car factory. Equity isn't the only form of capital investment. > How is capitalism different from early human tribes? Well, lots of ways, including the thing that actually defines capitalism, the particular model of property rights. > They also needed to work and trade. Which is broadly true of every human society, regardless of politico-economic system; such systems differ in the (for instance) distribution of the accumulated benefits of trade, not in it's practical necessity. > Things have become much more sophisticated but the basic principles remain. The basic principles that remain the same are not the features that distinguish politico-economic systems from each other. > People complain about spending too much time for a company and slaving away - but in earlier times they would have spend way more time on the fields plowing while 4 of their 8 kids died. Yes, technology has improved since ancient times, and, in the domain of politico-economic systems even most critics of capitalism would agree that it represents positive progress from feudalism and other earlier politico-economic sysyems.
  - dalbasal 9y ago
    An interesting (probably leads nowhere) way of defining this question is in reverse, how would a company that is to be owned by employees going to get started? It's an easier question to answer these days, when many companies are like Google or Facebook. They don't really have "capital assets." No stock to buy or factories to build. Just people that need to pay rent.

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.

fallingfrog 9y ago
These are great points. On the obligations point: If you look at the whole uber/Lyft/gig economy dynamic and contrast that with salaried employment, I think you'll see that to the extent that a company owns the time of their employees, they are more likely to give them health benefits, paid vacation time, and so on analogous to how a lord treated his subjects. I think Nassim Taleb has made that point. Whereas a Lyft driver doesn't get taken care of in the same way.
- dalbasal 9y ago
  I liked Taleb's point too, especially as it ties in to completely disparate situations like ancient greek urbanism. I think it's early to hang to much theory on these gig-companies though. It's still not clear they'll stick around for the long term. Hardly an economic "mode" yet. It's a great place to explore the divide though. To the capitalism point though... I think Uber/Lyft dynamics are perfectly capitalistic in a marxist sense. I think that from a ideological-capitalist perspective, a system where drivers transact more directly with passengers would be more capitalist.
freeflight 9y ago
> 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. In some places, these obligations do exist, at least in theory. The German Grundgesetz Article 14, for example, states: "(2) Property entails obligations. Its use shall also serve the public good." [0] Which is often quoted but these days rarely actually enforced/acted upon, the opposite is becoming far more common (privatization of common goods/services or straight up bailing out private companies with public money) like recent pushes to privatize German Autobahn [1] or when the public is bailing out massive private companies, like it happened with the banking crisis of 2008 [2], nuclear waste deals [3] or most recently bailing out German car manufacturers for Dieselgate [4]. [0] https://www.gesetze-im-internet.de/englisch_gg/englisch_gg.html#p0090 https://www.gesetze-im-internet.de/englisch_gg/englisch_gg.h... [1] http://www.dw.com/en/german-autobahns-backdoor-privatization-row/a-39036565 http://www.dw.com/en/german-autobahns-backdoor-privatization... [2] http://www.spiegel.de/international/business/subprime-bailouts-in-germany-taxpayers-forced-to-cover-risk-of-banks-folly-a-546586.html http://www.spiegel.de/international/business/subprime-bailou... [3] http://www.dw.com/en/german-government-does-nuclear-waste-deal-with-energy-companies/a-36089376 http://www.dw.com/en/german-government-does-nuclear-waste-de... [4] https://www.irishtimes.com/business/manufacturing/disbelief-at-plan-for-german-taxpayers-to-pay-for-dieselgate-1.3395183 https://www.irishtimes.com/business/manufacturing/disbelief-...

Treegarden 9y ago

How can all companies be employee owned if you need to invest a lot of capital to start a car factory. Half of the fortune 500 companies are younger then 10 years - starting a company has a high risk on the invested capital. A company is owned by whomever is risking their money to finance it. How is capitalism different from early human tribes? They also needed to work and trade. Things have become much more sophisticated but the basic principles remain. People complain about spending too much time for a company and slaving away - but in earlier times they would have spend way more time on the fields plowing while 4 of their 8 kids died.

dragonwriter 9y ago
> How can all companies be employee owned if you need to invest a lot of capital to start a car factory. Equity isn't the only form of capital investment. > How is capitalism different from early human tribes? Well, lots of ways, including the thing that actually defines capitalism, the particular model of property rights. > They also needed to work and trade. Which is broadly true of every human society, regardless of politico-economic system; such systems differ in the (for instance) distribution of the accumulated benefits of trade, not in it's practical necessity. > Things have become much more sophisticated but the basic principles remain. The basic principles that remain the same are not the features that distinguish politico-economic systems from each other. > People complain about spending too much time for a company and slaving away - but in earlier times they would have spend way more time on the fields plowing while 4 of their 8 kids died. Yes, technology has improved since ancient times, and, in the domain of politico-economic systems even most critics of capitalism would agree that it represents positive progress from feudalism and other earlier politico-economic sysyems.
- dalbasal 9y ago
  An interesting (probably leads nowhere) way of defining this question is in reverse, how would a company that is to be owned by employees going to get started? It's an easier question to answer these days, when many companies are like Google or Facebook. They don't really have "capital assets." No stock to buy or factories to build. Just people that need to pay rent.