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Capitalism, Socialism, and Libertarianism

There’s been a good deal of debate recently in libertarian circles about the word capitalism. Is it compatible with libertarianism? A synonym for it? Should we use it? For example:

As some of my posts linked above indicate, I find this debate extremely frustrating because the nature of the debate is rarely made clear. In that respect it is reminiscent of the interminable debates over gay marriage and thick v. thin libertarianism. On the gay marriage issue, it’s often the case that the arguments of gay marriage opponents boils down to opposition to the word marriage being used by the state in the caption in the statute, though they usually won’t come clean and admit it. In my view (not shared by all my co-bloggers at TLS), the thick-thin paradigm adds nothing of substance and is used to equivocate–engaging in non-rigorous argument about what “libertarianism” “is” semantically and then using this to argue for one’s particular substantive positions; it’s like trying to prove that marriage implies slavery or wife-ownership because the word “my” is used in “my wife.”

The libertarian opponents of “capitalism” often engage in equivocation, I believe. If challenged they say they are just opposed to the word, as if this is a semantic or maybe tactical/strategic issue. But because of confused leftist beliefs, many of them are actually opposed to aspects of the underlying social order that we anarcho-libertarians refer to as (non-corporatist) “capitalism”–the modern industrial free market. They oppose “absentee ownership” (see my post A Critique of Mutualist Occupancy), favor localism and self-sufficiency, are leery of the division and specialization of labor, buy into Marxian ideas about “alienation” and “labor”; they accuse standard libertarians of putting undue stress on “capital” while they do the same with “labor” and “the workers”; some flirt with crankish Georgist ideas, and so on. Some of the opponents of the word “capitalism” seem to have genuine strategical or even semantic concerns, such as Sheldon Richman, instead preferring the term “free market.” But some of them seem to oppose even this term–preferring instead the bizarre and annoying term “freed market,” or outright opposing the word “market” in the phrase “free market” (see Markets vs Free Markets).

In my view we should separate the semantic and strategical debate from a debate about substance. Conflating these leads to dishonest argumentation, confusion, and equivocation. On the substantive issues, we can have that debate; I think “left-libertarianism” is a confused project. To the extent it is correct, it is just standard libertarianism and adds little new; see my post Wombatron’s “Why I Am A Left-Libertarian”, noting: “yes we need to be aware that modern day ‘big business’ is not pure; it’s too in bed with the state (as Rothbard, say, recognized long ago in criticizing Rand’s bemoaning of Big Business as being America’s most persecuted minority). Yes, corporatism is bad. Yes, “big business” is often in bed with the state. We know this. And to the extent left-libertarianism says things standard libertarians do not say qua libertarians, then it is either wrong, or incompatible with libertarianism, or, at best, compatible but completely orthogonal to it as much as one’s religious or recreational or cultural preferences are outside of libertarianism (see why the “thick-thin” debate can worm its way in here by unduly and unnecessarily expanding what libertarianism “is”?). In my view, we libertarians are neither left nor right; both left and right are confused, wicked doctrines. We are better than both of them. Which one is “more” evil is a question that may have no answer; from the libertarian point of view, both are wrong, which is why we have an original, fresh, consistent, and radical view focused on individual rights. But my point is not to debate this here. The point is that it’s a substantive debate. It won’t be solved one whit by pointing out that the word “capitalism” was originally attached to us by our enemies as a pejorative.

So to my mind, the only legitimate debate about using the word “capitalism” is a semantic one, or perhaps a strategical/tactical one. As for semantics, this is not really an interesting debate. As a semantical matter, “capitalism” technically means a system with private ownership of the means of production. This is true regardless of its origin, and regardless of whether corporatism is prevalent in the West. It is at least arguable that “a system of private ownership of the means of production” is an acceptable definition of “capitalism”. So much for the semantic issue. If this is what the word means, is it a synonym for libertarianism, as Rand, Friedman, and other founders of modern libertarianism used it; or at least for “free market”? Is it at least compatible with libertarianism? It seems to me that capitalism should not be used as a synonym for libertarianism. For this reason in the last few years I tend to refer to myself as an anarcho-libertarian instead of anarcho-capitalist. I believe capitalism–especially if it is made clear that it does not include corporatism–is closely associated with libertarianism in that it describes the free market in any libertarian society above a primitive level. That is, libertarianism supports property rights, which clearly imply a free market, so long as men engage in trade; and a free market is characterized by capitalism since the means of production (if there are any) are of course privately owned. This is true even of the left-libertarians’ kibbutzes, communes, and coops–such arrangements are simply voluntary coownership which is just one type or application of private ownershp rights.

What about tactical or strategical concerns? This one has more weight. The West is often referred to as “capitalist” because it allows a much higher degree of genuine capitalism than have other countries. Yet because the western states have never been fully libertarian, there has been a large and growing degree of corporatism or mercantalism. Thus in popular usage “capitalism” has some corporatist connotations. If we call ourselves capitalism we may mislead outsiders and open ourselves to unjust criticism. This is one reason I tend to say anarcho-libertarian instead. But so long as we are clear that we mean laissez-faire capitalism, or to condemn corporatism, mercantalism, and protectionism, I see nothing wrong with using the term capitalism to describe an important aspect of libertarian theory and society. Due to the constant drumbeat of the left-libertarians, there is a temptation to just give them this one. To stop using the word. To retreat. But we have to be careful in siding with them on their ostensibly “semantic” battle. In my view, we standard libertarians do not want to give the impression that we agree with the leftists’ substantive attacks on (laissez-faire, Lockean, private-property, modern, industrialized) capitalism. That debate should be a separate one, not mired in semantics.

Update: I posted the following comment to Sheldon Richman’s FEE blogpost Is Capitalism Something Good?:

It seems to me that a legitimate definition of capitalism is the private ownership of the means of production, and that there is no doubt that any advanced economic order of a libertarian society would have capitalism so defined. Even if it has private-collective worker-owned firms, co-ops, kibbutzes, and the like existing in isolated pockets sort of like the Amish still do today. And in fact even such communalist enclaves are built on private ownership of capital–it’s just that the members of the co-op voluntarily co-own the property privately. So we can view the co-ops etc. of a free society to be a (probably marginal) subset of capitalism; and in any case they are certainly compatible with capitalism since the economic order of a free society can have a wide diversity. In my view there is little doubt that there will always be a dominant and significant role for corporations, firms, employment, mass production, the specialization and division of labor, international trade, and so on–though there well may also be more opportunities for self-sufficiency, localism, communalist experimentation, and so on.

It is also true that the word capitalism nowadays has non-libertarian connotations like corporatism and crony capitalism. So where does this leave us? Capitalism, defined carefully, is a significant aspect of the economic order of a libertarian society. Even if defined carefully capitalism does not fully describe libertarianism or a libertarian society, but only one aspect of its economy. So I do not think we should use capitalism as a strict synonym for libertarianism (for this reason I use the term “anarcho-libertarian” nowadays instead of “anarcho-capitalist”), and when we do use it, we obviously have to be careful that we do not give the misleading impression that we are condoning crony capitalism or corporatism–so we can add a modifier if necessary, like “laissez-faire” or we can make it clear that we favor capitalism but condemn corporatism, etc.

So: do not use capitalism as a synonym for libertarianism; keep the word around for use in describing an aspect of a libertarian social order; but use it carefully in a way that does not connote crony capitalism.

A final note: we should not bash capitalism since this will be taken by anti-libertarians as siding with their hostility to property rights and the free market. And we should definitely not employ the word socialist, either, to describe our views.

Another comment of mine on the FEE blog:

@Little Alex:

“@Carpio: Your “eternal-teen-rebel” rhetoric is making you look silly and evasive. Placing capital in a hierarchy above the liberty of self-management to define a social system is regression. (http://wp.me/pnWUd-2rW)”

Libertarians view property rights as the only rights. Liberty is defined in terms of property rights. The libertarian conception of property rights immediately implies that all property, including “capital,” is privately owned. Thus “capitalism,” defined as a system in which capital is privately owned, is compatible with libertarianism and indeed an important aspect of any reasonably advanced libertarian society. Conceptually identifying this feature of the economic order of a libertarian society and attaching a name to that concept is not “Placing capital in a hierarchy above the liberty of self-management.” To the contrary, it is simply rational and honest explication and conceptual analysis of social and economic systems. As such, I can understand why it may rankle some leftists given the left’s hostility to rationality and clear thinking (and by saying this I do not mean to vindicate the right; they are both dishonest, wicked, confused views. Thank God we standard libertarians have escaped the left-right straitjacket).

“I’d never read Clarence Carson’s article, but you continue to ignore this rationale that many have echoed: “linguistically, it does not stand for private property, free enterprise, and the free market. It is false labeling to make it appear to do so. Capitalism means either a system in which capital holds sway, which is largely what Marx apparently meant, or an ideology to justify such a system”.”

“a system in which capital holds sway”–such vague, amorphous phrases are often trotted out and used for equivocation. We libertarians believe in property rights. Qua libertarians we need have no Marxian type opinion on whether any given feature of a free society “holds sway.”

“@Kinsella: RE: “It seems to me that a legitimate definition of capitalism is the private ownership of the means of production”

“Why? Assertion?”

This debate is at least partly about the meaning of terms–semantics. I think many leftists are reluctant to admit this because although in disingenuous fashion they at first seem to acknowledge this, this is quickly dismissed and substantive issues are smuggled in via equivocation. Well if someone says a word is inappropriate, then a semantical inquiry into what the meaning of the controversial term is, is warranted. Thus if I state that a legitimate definition of a word is X, this is not an “assertion”–it’s understood to be an appeal to standard methods of determining what definitions of given words are. That is, resorting to a dictionary or the like. And if you consult dictionaries, or encyclopedias, you’ll see that a very common definition of “capitalism” is “an economic system in which investment in and ownership of the means of production, distribution, and exchange of wealth is made and maintained chiefly by private individuals or corporations, esp. as contrasted to cooperatively or state-owned means of wealth.”

Or similar. This is not “assertion.” It’s a reasonable way to find out what a word means in a language. Now given this technical definition, as I argued, it is of course NOT incompatible with libertarianism and individual rights, and in fact is a crucial feature of any reasonably advanced libertarian society. As I acknowledged, it is not a good synonym for libertarianism but rather describes on part of the economic order of a libertarian society. It is associated with libertarianism because you cannot have true capitalism without a libertarian order (because capitalism requires property rights to be respected, and only libertarianism consistently does this); and you cannot have any reasonably advanced, productive, modern, prosperous, libertarian society without capitalism. So, they imply each other–so it is no wonder some people use capitalism as a stand-in for libertarianism, perhaps as a form of metonymy, in which “a thing or concept is not called by its own name, but by the name of something intimately associated with that thing or concept”.

I also acknowledged that “capitalism” has other connotations that are incompatible with libertarianism, namely what we libertarians who try to keep concepts and definitions straight would call “crony capitalism” or perhaps “corporatism” or “mercantilism.” And because of these connotations and because of ambiguities and confusions (some of them caused by leftists and left-libertarians, perhaps), we have to be careful when we use the word capitalism: we should use it not as a synonym for liberty, but for a critical feature of the economic order of a free society; and we should be clear to use it in a context or way that makes it clear to the audience that it is the libertarian, free-market, anti-corporatist, technical, and libertarian-compatible meaning of capitalism that we have in mind.

So what if we need to do this? Such caution is (perhaps unfortunately) necessary for many of the radical ideas we advocate, which turn off the masses and the malicious–when we use free market, profit, individualism, self-interest, property rights, rationality, reason, economics, welfare, government, and so on. We have to deal with such misanthropes and ignoramuses, unfortunately, but we do not have to join them.

“RE: “It is also true that the word capitalism nowadays has non-libertarian connotations like corporatism and crony capitalism.”

“Nowadays? No, sir. Always.”

So what? It still has a technical definition in economics that in fact accurately describes a crucial feature of any advanced economic order that will arise when property rights (liberty) are respected. And for anyone who seeks any economic understanding at all, we need a word that correlates with this concept. There is a word; it’s useful; there is no reason whatsoever not to use it–so long as one is careful as I have adumbrated above–and as most libertarians are, already–once again showing that the left has almost nothing to teach us libertarians. Where the left is correct, we libertarians already know it (as Rothbard, say, recognized long ago in criticizing Rand’s bemoaning of Big Business as being America’s most persecuted minority). And where the left is original, or non-libertarian, it is wrong (e.g., its crankish economics, silly views on alienation, etc.–not that every aspect of Marxism is incompatible with libertarianism–see Hoppe: Marx was “Essentially Correct”).

I must say I have about had it with left-leaning libertarians having the gall to tell standard libertarians to learn from leftism–we are better than leftists, far better. It is they–these economically illiterate, individivual-hating, totalitarian-supporting, murderous, collectivist cranks–who should learn from us. Leftism, sir, frankly, is rank evil. Libertarianism is good. I know which side I’m on. The only thing I want from the left is for them to drop their crankism and misanthropy, acquire some economic literacy, and join us in respecting individualism and property rights. Other than that, I have no use for leftism/socialism, and am reminded of a comment by Sudha Shenoy in this regard about what socialists are really good for (this is said tongue in cheek, mind you).

“The usage of “capitalism” in the Randian/Misesean sense wasn’t intellectually honest; whether or not they admit it, it was purely political, they got away with it for a bit, but the crisis of actually existing capitalism has come back to bite genuine free marketeers in the ass.”

We will have to disagree on this. As a libertarian who appreciates the critical role of Mises in the fight for economic understandng and for individual liberty and property rights–and I also appreciate Rand’s role in the beginnings of the modern libertarian movement–I find such accusations to be completely appalling. Mises defended the private property order–the free society, whether left-“libertarians” realize this or not–and defended it proudly, using terms adequate to convey ideas–using terms that are part of the language, yes, using terms hurled pejoratively against us. The left also “accuses” us of favoring economic inequality (we do!), individualism (we do!), property rights (we do), self-interest (we do), and so on. I think Mises et al. are to be commended and appreciated for having the courage to proudly stand up for the goodness of the property-rights order that libertarianism favors. Mises fought for your rights, sir, and you call him dishonest? Utterly appalling.

In any case: your argument here is yet another apparently attempt to pretend like your are making only a semantic point, while the underlying motive, the passion, etc. are clearly political and activist oriented. The origin of the term is irrelevant. A word acquires a certain meaning in a given time in a given community; this is what dictionaries are for. It is clear beyond cavil that one standard, accepted meaning of the word “capitalism” is a system with private, as opposed to state, ownership of the means of production. And it is clear also that such a system is an inextricably important and good aspect of a libertarian society. Yes, the word has other meanings and connotations, but this only means we have to be careful and vigilant.

[Mises; TLS]


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