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Klein on Horwitz on “Capitalism”

I chimed in too:

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Steve, a question for you, Sheldon, Roderick, etc.: If we ditch the term “capitalism,” for the reasons you describe, what do we do with the technical economic terms “capital” and “capitalist”? The same arguments you use against “capitalism” seem to apply, with equal force, to “capitalist.” For doing theory, we need some term to go with “laborer,” “entrepreneur,” and “landlord.” For doing applied work, we need some word to describe Warren Buffet, John Doerr, etc. If “capitalist” means politically connected crony, what do we call these guys, when highlighting their economic function? “Capital-owners”? “Capital investors”? “Funders”?

Posted by: Peter G. Klein | May 12, 2010 at 11:16 AM

That’s a great question Peter and not one I’ve thought about before. My quick reply is that I’m not sure I accept the premise that those technical economic terms have the same baggage. Certainly not “capital,” though “capitalist” is more interesting. (I wonder if people react differently to “capitalist” vs. “owner of capital”?)

A very good question that I will ponder some more.

Posted by: Steve Horwitz | May 12, 2010 at 11:56 AM

Regarding Peter Klein’s point; our critics use “Capitalism” to mean a system where the owners of capital control national politics. We use “Capitalism” and “Capitalist” to mean a system where the owners of capital control their capital.

I don’t agree with Steve. I know lots of young people in Ireland, in general they are left-wing and believe in “public healthcare”, “strict regulation”, welfare and all the rest. Even if they were asked their position on “free markets” I’m sure it would be negative.

Posted by: Current | May 12, 2010 at 12:24 PM

Klein has an excellent point. Röpke is right that we just have to be careful when we use the term. We have to distinguish it from crony-capitalism or corporatism. Clearly “capitalism” denotes an important aspect of the economy of an advanced libertarian social order. We need words and concepts to understand and discuss this.

The left-libertarians who oppose the term “capitalism” do not do so on solely semantic, or even solely on strategic-tactical grounds. It also has to do with different prediction and preferences: some of them predict far less use of hierarchical firms and corporations, employment, and the division and specialization of labor. The debate over predictions can be had–but should not be masqued or muddied by pretending it’s really a semantic or strategic discussion. Likewise, if you prefer localism, self-sufficiency, etc., and have a personal aversion to hierarchy, employment, etc., that is again something that can be discussed, but again, arguing over what term should be used to describe an aspect of a free society’s economy should not be used as a substitute for this discussion.

This is even more important when we get to substance: some left-libertarians differ from non-prefix libertarians in more than predictions and personal preference: namely, they maintain that various “capitalist” norms and institutions are unjust and unlibertarian–such as absentee/distant ownership and even employment itself (making landlordism and employment almost impossible–the tenants and employees would naturally “own” the facilities they are possessing, and employment could be seen as a violation of certain “inalienable” rights, much like voluntary slavery), laced with other criticism of such a “capitalist” order such as hoary notions of “alienation” and “oppression” and bossism and opposition to “hierarchy” and authority. Such views are indeed substantive–and an innocuous-sounding discussion about whether “capitalism” is pejorative or positive, strategically wise or not, or means free market or corporatism, most certainly should not be used as a proxy or substitute for the more substantive discussion. That discussion, as well as discussions about differences in predictions as well as personal preferences, can only be had if terms are clearly defined so that everyone is communicating clearly.

Posted by: Stephan KinsellaMay 13, 2010 at 12:32 PM

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