Capitalism as a description, not an ideology

Sometimes when I am talking about economic systems with other people, it often feels as if we're talking past each other. With capitalists, often the standard answer is that the free market will take care of a problem, with very little details to back it up. With communists, capitalism is often talked about as a great evil and that the ideal economic system would have no element of capitalism included, also with very little details to back it up. Needless to say, I don't agree with either camp.

Capitalism the descriptive theory

Part of the reason that I could never agree with anyone who advocates the abolishment of capitalism is because of the thought that capitalism will always be around. Capitalism as a descriptive economic theory is about independent agents in a free market adjusting their production, according to the price set by demand and supply, to form a quasi-stable economy.

With resource scarcity and without centralization of production, capitalism would then be what emerges naturally. This would be regardless of what the resources are or what capital actually is. Whatever the resource, if it's scarce then capitalism is the economic system that is used to trade it in a decentralized system. Whether it's food, tangible products, intangible products, programmers, designers, fame, etc., it's going to be capitalism that trades the resources using capital, be it money, food, minerals, political influence, good will, etc.

The only way capitalism could be avoided entirely is either to have strong centralization, isolation between all small communities, or an abundance of resources. With my preference for decentralization, having no particular desire for isolationism, and knowing that resources are still scarce, I usually don't get a good feeling from people who clamor for the abolishment of capitalism. Although there's a good case to abolishing the application of capitalism to certain resources such as food, of which the world produces enough to feed everyone. (Good food, on the other hand ...)

Capitalism the ideology

On the other had, capitalism is also an ideology. It's the belief that capitalism as an economic system is the end-all and be-all of economic systems. Proponents often claim that the free market is the solution to any problem that comes up. When pointed out problems that occurred in actual capitalist societies, the typical response is that their free market is not free enough, that such problems would go away if they had a true free market. And like other economic ideologues, their supporting arguments tend to be rather hand-wavy.

And similar to communists who say there have never been a true realization of communism, there are capitalists who say that there have never been a true realization of capitalism. Fair enough. I might even care if I was an ideologue, too. However, having a science-oriented worldview, I place far higher value on observations of what happens in the real world, and I don't think much of vague ideals.

So is capitalism good or bad?

For me, the answer is both yes and no. There's no question that capitalism as practiced today, especially in countries such as the United States, has some rather severe shortcomings (unavoidable to some, solely the fault of capitalism to others). However, it's much more uncertain whether institutionalized capitalism far outstrips the alternatives in production that it's more than worth the shortcomings. I don't think so, but it's a question that is still very much unsettled, at least for impure forms of capitalism (and anyone who says otherwise probably has an overly simplistic view of the world).

On the other hand, the economies of today are extremely large scale, so I would oppose any attempt at abolishing capitalism. The only way to get rid of capitalism, besides cutting off all small communities from each other, would be to centralize everything. And given the horrible complexities of a large scale economy, not to mention everyone having different demands, a centralized economy would be hopeless. And then there's the bit about centralization meaning a small number of people wielding a great amount of influence, which is something I don't like. And for all I know, Stalinist Russia and Maoist China may have ended up the way they did because they focused so much on abolishing the Great Evil Capitalism and not so much on forming a classless society.

But at the end of the day, I can't really bring myself to care much about whether capitalism is good or not, especially considering that there could be tons of (rather meaningless) debate on exactly what capitalism is supposed to be. I care much more about specific economic plans and how they would influence the economy and myself. In fact, I have the belief that humans as a whole will approach an ideal economic system as it makes small changes here and there, discovering what works and what doesn't, with things getting better as humans as a whole become more rational and compassionate.

Whether the ideal is capitalism, communism, or something else entirely is not something I care much about. But I trust we will head towards such an ideal as the human spirit improves, and I have high hopes that it will steadily improve with better education and technology. Although I often have my moments of doubt ...

17 Replies to “Capitalism as a description, not an ideology”

  1. "Free market capitalism" is as much an oxymoron as democratic authoritarianism. I've written extensively on this topic.

    Capitalism refers specifically to a political-economic system where the owners of capital have a privileged economic position enforced by the state. By definition, an enforced privilege is a restriction of a market, rendering it at least in part not free.

    Communism and free markets
    Market forces

    I'm forming the somewhat heretical (in the communist world) opinion that communists and socialists can usefully employ properly managed competitive markets.

  2. Communism and capitalism are disjoint: Capitalism specifically privileges the private owners of capital to appropriate some surplus labor from working people without their individual or collective (democratic) consent. Communism prohibits such exploitation. Free markets are a distinct concept, a mechanism for setting prices; markets vs. planning axis is "orthogonal" to the communism vs. capitalism axis.

        1. I am not particularly swayed by a proponent of something trying to define something so that it's cast in the best light possible, nor by an adversary of something trying to define something so that it's cast in the worst light possible. I do not see how your own definition is any better than those by anyone else.

          1. That's precisely what you're doing in the OP: Defining "capitalism" in a way that bears little resemblance to our current economic circumstances.

            Our situations are not symmetric: Since I don't want to replicate what the USSR or China is presently doing, I'm free to define "communism" in terms of what I *want* to implement. You can define "capitalism" to be what you want to implement instead of what actually exists, but then you can't use conservatism as an argument for capitalism.

          2. I don't consider current economic systems to be particularly ideal or even purely capitalistic, nor do I even think that capitalism is an ideal to aim for, so I'm not quite sure what you're talking about.

  3. But I trust we will head towards such an ideal as the human spirit improves

    But how are you going to head towards this ideal when you cannot be certain if that ideal is Capitalism or Communism? Do you feel content to let everyone else do all the work and the fighting?

  4. Everyone, including me, will do the work, making small changes to make the world better, although with the occasional setbacks. Setting a vague ideal as the goal and revolutionizing the world holds little appeal to me, especially when I think that no pure ideology will be practical and I still remain unimpressed with ideological arguments.

  5. "Democratic authoritarianism" doesn't sound like it's such an oxymoron. Just have the dictator democratically elected. :P (Although on a sad note, this does happen time and time again, except that the dictator tries to stop the democratic election of the next dictator ...)

    Being a pragmatist ("anything works is cool"), your position sounds reasonable to me, except that a capitalist would probably call something like that a "capitalist society with elements of socialism and communism". Which may be why I try not to get pulled into semantic arguments ... (not that I always succeed)

    1. Which may be why I try not to get pulled into semantic arguments ...

      Interesting. You completely skipped my point to engage in a semantic argument about a metaphor. I suppose -- if you'll excuse the irony -- if you start a semantic argument, you haven't been pulled into one.

      1. Well, maybe it's because I don't think "free market capitalism" is such an oxymoron. I don't really care if people mean by it "a supporting system with the least amount of force to ensure free trade" or "an economic anarchy" or "a fascist state supporting the power of those with the most capital" or whatever. It's like quibbling over the name "string theory" because it's not really a theory about strings for garments.

        (I may be missing something here, but do you lack a sense of humor or am I missing a humorous point here? I'd like to know if I should never again try to be light-hearted with you ...)

        1. I don't really care if people mean by [capitalism] "a supporting system with the least amount of force to ensure free trade"

          That's not capitalism, that's a kind of minarchism, and it bears little resemblance to our current economic circumstances.

          It's difficult (or perhaps impossible) to justify protecting abstract property rights -- analytically necessary for capitalism -- under the doctrine of minimal force to ensure free trade. It's provable that truly free trade eliminates surplus value and pushes all excess value to the consumer; a system that used minimal coercion to mimic the abstract ideal of free trade must have the same effect.

          1. That sounds like an argument over definitions to me: I've heard some people seriously say that current systems are not really capitalist, and in fact that there have never been a truly capitalist society, that current societies aren't capitalist enough.

            And we seem to have markedly different thresholds for "provable" ...

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