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Should Libertarians Oppose “Capitalism”?

Excellent post by Bryan Caplan, Should Libertarians Oppose “Capitalism”?, arguing against Sheldon Richman’s contention that we libertarians should not only not use “capitalism” as a synonym for favoring free markets, but that we should say we oppose “capitalism,” because of the term’s connotation of the historical collusion between business and the state.

I have myself for years now preferred the term anarcho-libertarian instead of anarcho-capitalist, mostly because libertarianism is about more than just free markets. But to the extent capitalism means the private ownership of the means of production–and I think this is a defensible meaning still–it is of course libertarian. We can expect any advanced libertarian society to be “capitalist” in that it would have an industrial, productive economy where the means of production is privately owned, characterized by the division and specialization of labor (see my post Rothbard on Self-Sufficiency and the Division of Labor). In my view we should certainly be in favor of free markets and not adopt instead other terms like “market liberal” or “freed market”. I’m not sure what term best describes us–we favor peace, cooperation. Perhaps Henry Hazlitt’s proffered term, “cooperatism,” is a good one. I think it best to use capitalism to refer to a catallactic aspect of the libertarian, free society, while making it clear that we oppose corporatism and business-state collusion, and use free market or libertarian to describe our preferred socio-political order.

But, in my view, we certainly should not say we are opposed to capitalism (and we most certainly should not say we are for “socialism,” as some left-libertarians propose!). Just as saying we are “capitalist” might imply pro-corporatist sentiments if we are not careful, saying you are against capitalism would imply you have left-libertarian sentiments such as hostility to corporations, “bossism,” and like–which may be a subset of libertarianism but is certainly not necessary to libertarianism. We are neither left nor right; we are libertarian.

My comment on the Mises cross-post:

Sheldon Richman March 4, 2010 at 10:22 am

But “the system of private ownership of the means of production” has coexisted with all kinds of pro-business privileges from the state–and has been regarded as capitalist without contradiction. Thus that is not the essence of the free, voluntary market.

Stephan Kinsella March 4, 2010 at 11:13 am

Yes, “the system of private ownership of the means of production” “has coexisted with all kinds of pro-business privileges from the state”. But of course private property rights are incompatible with the state itself and privileges from the state–which is why Hoppe defines socialism as “an institutionalized interference with or aggression against private property and private property claims”.

I would agree “capitalism” is not the “essence” of the free market, but it is a critical feature of any advanced free market, if by “capitalism” we mean “private ownership of the means of production”. We need some word for “private ownership of the means of production”. What would you propose?

Further, some left-libertarians seem hostile to the idea of “private ownership of the means of production”. It is not the state entanglement with traditional mixed capitalism that they object to, nor is it the word “capitalism”–rather, they oppose “private ownership of the means of production”. They seem to be pro-self-sufficiency, communes, “coops,” “anarcho-syndicalism,” “wild-cat strikes,” quasi-agrarian, to favor “the workers,” etc., and hostile to: industrialism, modernity, the division and specialization of labor, “alienation,” “bossism,” “exploitation of workers,” “absentee ownership,” “landlordism,” “pushing people around,” and so on.

We can quibble over the best word to use to denote “private ownership of the means of production”. This is only a semantic and perhaps strategical/pedagogical issue. I think “capitalism” suffices; but another word would work, such as “Hessenism.” But the only reason I can think of for a left-libertarian to be reluctant to come up with a term we can use is (a) he thinks “private ownership of the means of production” is not a crucial aspect of any advanced free market order; or (b) he thinks, with the anti-private-property leftish “anarchists” that “private ownership of the means of production” (whatever you call it) is incompatible with libertarian-anarchism.

I believe left-libertarians are wrong in at least two respects. First, they are wrong to claim that libertarianism is “left” rather than right. It is neither. (See Walter Block’s “Libertarianism is unique; it belongs neither to the right nor the left: a critique of the views of Long, Holcombe, and Baden on the left, Hoppe, Feser and Paul on the right” .) We are not right, but we are not left, either. Both are equally wrong-headed and mistaken ideas, and the very left-right spectrum is based on fallacious premises. That which is good in leftism is already part of libertarianism. The left-libertarians are right to condemn corporatism and so-called “vulgar” capitalism, but libertarians already do this and know this, as standard plumbline libertarians (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).”).

There is an implicit assumption that the standard, non-left libertarians are “vulgar” libertarians, but this is rarely stated explicitly nor are names named. But it is implied. For example in the back and forths over Wal-mart and “anarchist” window-breaking. It is not vulgar to admire and favor and defend modern industry and commerce that is based on “private ownership of the means of production.” By praising a profit-making firm that serves customers one does not automatically, implicitly, or even presumptively endorse the state privileges it receives or regulations or policies it may benefit from. By observing how Wal-mart serves the consumer in comparison to the state, one does not endorse state roads or transportation subsidies. One does not even “ignore” the distortions; we normal, Austrian-libertarians are well aware of the manifold ways in which the state distorts and corrupts the market. This is not news to us.

Second, they are wrong insofar as they oppose and criticize as being unlibertarian and unjust, the various catallactic aspects of a libertarian society, such as: division and specialization of labor, firms, (non-state-chartered) “corporations,” bosses, hierarchies, private ownership of the means of production (whatever label you guys will finally let us use for this), international and long-distance trade, industrialism, commerce, profit motive, “absentee ownership,” and the like. Hostility to these views is not libertarian; it is socialist, it is hostile to libertarianism and private property. To the extent “left-libertariansm” holds these views, it is not just an idiosyncratic subset of libertarianism–it is not libertarian at all.

They may succeed in taking “capitalism” from us. We have already lost “liberal.” In my view, we libertarians should not let “libertarianism” be wrested from us too.

Sheldon Richman March 4, 2010 at 10:59 am [edit]

Or we oppose war and support free markets and the individual freedom and cooperation that underpins them. I see no reason to stick with “capitalism” given its tainted origins and today’s confusion about the term. What are we holding on to and why?


Jeffrey Tucker March 4, 2010 at 11:08 am [edit]

Well, a major problem for me is that by getting rid of the term, and even claiming that we oppose capitalism, we make ourselves less comprehensible. Virtually everyone in the world understands that there is a battle between sociailsm and communism. Apart from small sectors of intellectuals dedicated to contradictory crossbreedings (anarcho-socialism, warmongering capitalism, etc.), it is widely understood that one stands for private ownership and free exchange whereas the other stands for public ownership and central planning. There is also the serious problem of attempting to erase 100 years of the history of thought here, so that we end up opposing what Mises, Rand, Hazlitt, Sumner, Hayek, Rothbard, and thousands of other writers supported – even though we have the same values. Talk about confusion! It seems like a much easier path to clarity by simply explaining what socialism and capitalism mean, as does Hoppe in this book http://mises.org/books/Socialismcapitalism.pdf written as a followup to all the above-named writers. There is a potential danger here in thinking that we can just reinvent terminology in one generation. Intellectual progress builds on what has come before and carries it into the future. Scraping an entire language and starting over doesn’t seem like progress to me.


Stephan Kinsella March 4, 2010 at 11:26 am [edit]

Sheldon, we are “holding onto” the term because we favor a peaceful, prosperous, cooperative society with a concomitant advanced economy, which will of course be characterized by the widespread “private ownership of the means of production.” We need a word for this important concept, for this libertarian and good institution. You need to suggest a term for it if you want to take away the current term. “Free market” won’t do because even a primitive society could be described this way.

You can understand our reluctance to go along with the programme–we are–I, for one, am–suspicious that this is an attempt to switch to “free market” without being clear whether or not you still favor “private ownership of the means of production”, or whether the new term is favored because it is open-ended enough to be compatible with the quasi-agrarian, anti-modernist, anti-division of labor, unlibertarian views of anti-private property leftists. We libertarians do favor private property rights and the economic order that accompanies respect for private property, and that generates the prosperity that all decent, economically literate people favor. And thus we are reluctant to go along with semantic shell games that might be designed to broaden our definition so as to include ideologies that are actually incompatible with these.


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{ 5 comments… add one }
  • Thomas L. Knapp March 4, 2010, 3:21 pm


    You write:

    “I would agree ‘capitalism’ is not the ‘essence’ of the free market, but it is a critical feature of any advanced free market, if by ‘capitalism’ we mean [something that has always been falsely tied to, but has never been part of the definition of, ‘capitalism’].”

    The term “capitalism” was coined to mean a mixed/industrialized state-regulated economy and popularized as part of Marx’s theory of economic evolution in which it falls between the mercantilist era and the revolution/dictatorship of the proletariat.

    “Private ownership of the means of production” in that context is necessarily illusory, because state regulation is a de facto claim of the state’s possession of at least some, and potentially all, of the bundle of rights that constitutes “ownership.” Therefore the difference between “capitalism” and “completely state-operated economy” is a difference of degree, not of kind.

    I’ve no desire to go to constant and total rhetorical war with those libertarians who mistakenly conflate “capitalism” and “the free market,” but they are mistaken, and in a way that plays into the hands of the statist worldview. I decline to be mistaken with them, and reserve the right to occasionally point out to them that they’re stepping on their own cranks.

  • Scott Lazarowitz March 5, 2010, 5:09 pm

    In a given society, there needs to be a recognition of individual rights in an economic context. Part of the “means of production” includes individuals. And included in the individual is one’s person and that which the individual emits from one’s energy, efforts, and so on, i.e. the output of one’s labor. “Private ownership” of means of production, if a means of production includes one’s person, is part of one’s “self-ownership.” We have inherent, God-given or otherwise Natural Rights, among them, the rights to life (which includes the right of self-ownership) and liberty, and property. There’s no State involvement there.

    While defining “capitalism” as “private ownership of the means of production” is the economic aspect of liberty, “private ownership” naturally coincides with free markets and individual rights. It shouldn’t be confusing, and there’s no reason to change the word when describing free markets. I don’t think it was ever intended to define all aspects of human liberty.

    • Paul Lockett March 6, 2010, 7:29 am

      Scott Lazarowitz: While defining “capitalism” as “private ownership of the means of production” is the economic aspect of liberty…

      I don’t think that necessarily follows. Liberty is liberty and property is property. The two are separate concepts, which are generally at odds with each other; liberty is freedom of action, constrained only by the like freedom of others, property is the right to constrain the freedom of action of another.

      Any system of property rights is compatible with liberty if it leaves everybody with the maximum amount of freedom that it is possible for everybody to possess simultaneously. Any choice between systems which satisfy that criteria will be based on something other than liberty.

  • Alpheus March 29, 2011, 4:39 pm

    I went through my own “capitalism-implies-rule-by-landowners-but-what-word-would-be-better?” phase myself. When I was reading a certain post talking about communism and socialism, the word came to me: “Individualism”.

    I’m sure you’ll find that such a word encapsulates the idea of private property, as well as liberty, etc–and the clear opposite of “Individualism” is “Collectivism”, which aptly describes all systems of government that subsume liberty in an attempt to produce a controlled perfect utopia.

    But, in reading your post, I can’t help but agree: we *still* need to keep the word capitalism, and to do our best to defend it, and to clarify what proponents of liberty mean by it. And we would do well to remember that when a corporation cozies up to government, it’s aptly called “crony capitalism”, yet it also goes against everything a proper understanding of “capitalism” stands for!

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