What is Capitalism?

This was written at 4am in about ten minutes of frantic typing. As such, it may be poorly constructed. It may have typos. Above all, it might be a bit.. weird.

You might dislike me. You might consider me so immoral that you write a book about how horrible I am. Let’s say that you do that. When you write this book, you should not title it – Why Driscoll’s are Pathetic. You should instead title it – Why Stephen Driscoll is Pathetic. If you attack me, attack just me, not my family. There are many Driscoll’s large and small. They are diverse people in terms of personality, geography, occupation, worldview, and so on. An attack on the part is not an attack on the whole. An attack on one member is not an attack on the whole family. My flaws are not shared by my cousins. Be specific.

Now, like the Driscoll family, the family of views that we group together under the umbrella of capitalism is notably diverse. Now, thankfully, not too many people write books attacking Driscoll’s. But a lot of people write books attacking capitalism. Usually they are not attacking the whole family of capitalism though, they are attacking just one or two members of the family. Most commonly they are taking a shot at libertarian capitalism or free market capitalism, rather than say state capitalism or mixed capitalism. So, if they are just taking a shot at a few members of the family, why do they address the critique to the whole family? Why do they attack the whole Driscoll clan, rather than just one member?

Driscoll’s have certain things in common. When you attack the Driscoll family in aggregate rather than specific members in isolation, you should confine your attack to a condemnation of common attributes shared within the family. Similarly an attack on capitalism cannot attack attributes that only some members of the capitalist family possess. If you wish to attack capitalism in general, attack it for what it is – an economic system based (but not entirely consisting of) private ownership of the means of production, with wages and prices set predominantly by market forces, rather than by government edict.

But not many people have a problem with that (Trotsky does but he isn’t reading this). People have a problem with Ronald Reagan, or income inequality, or an undue focus on the accumulation of wealth, or individualisation, etc. Sadly these arguments are all arguments that are against some members of the family, but not others. So they aren’t arguments against capitalism.

So, why is it that so many people equate capitalism (the family) with one or another of the particular schools of capitalism (individual members)? It is because proponents of particular schools of capitalism have an unhelpful habit of acting as if their school is the only school of capitalism, with everybody else being flung into outer darkness. This is just politics. Capitalism is a powerful buzzword that everyone wants. So particular groups act as if the word is theirs alone.  So of the dozens of apologetic texts that have emerged from each of the schools, almost all just claim to be defending capitalism. Of course what they mean by capitalism differs book by book. It is somewhat analogous to the way that various sporting codes try to act as if the word ‘football’ is their sole property. Unfortunately critics of capitalism make the same mistake.

This frustration over the misuse of definitions is not a new thing, many an academic has railed against it over the years. Even Wikipedia tries to address it its very first paragraph on capitalism, “There are multiple variants of capitalism, including laissez-faire, mixed economies, and state capitalism.” Or, from Tony Judt (one of the best modern historians of last century and a raging left winger), “Capitalism is not a political system; it is a form of economic life, compatible in practice with right-wing dictatorships (Chile under Pinochet), left-wing dictatorships (contemporary China), social-democratic monarchies (Sweden) and plutocratic republics (the United States).” Or try Ha-Joon Chang of Cambridge, considered by many to be the most famous anti-capitalist in the world. The problem with that, and its not a small problem, is that he considers himself very much a capitalist (the most famous anti-capitalist in the world calls himself a capitalist!!!) “This book is not an anti-capitalist manifesto. Being critical of free-market ideology is not the same as being against capitalism… I believe that capitalism is still the best economic system that humanity has invented. My criticism is of a particular version of capitalism that has dominated the world in the last three decades, that is, free-market capitalism.” (from 23 Things they Don’t Tell you about Capitalism).

If we were to let the neo-liberals steal the word ‘capitalism,’ then we would be in an interesting predicament. Friedrich Hayek, that raging right winger, would be a socialist by our new definition. As would Adam Smith. As would Karl Popper. Keynes certainly would (might be a commie actually). Now this should somewhat alarm us. If our definition of ‘English’ excludes the Queen, Winston Churchill and King Arthur, then perhaps we need to re-examine our definition. If you don’t believe me, re-read Smith’s Wealth of Nations, or more usefully Theory of Moral Sentiments, or Hayek’s Road to Serfdom, with a critical anti-socialist eye.

Here’s a quote from the Road to Serfdom – “To create conditions in which competition will be as effective as possible, to supplement it where it cannot be made effective, to provide the services which, in the words of Adam Smith, “though they may be in the highest degree advantageous to a great society, are, however, of such a nature, that the profit could never repay the expense to any individual or small number of individuals” – these tasks provide, indeed, a wide and unquestioned field for state activity.”

Here’s Karl Popper – “[a] free market is paradoxical. If the state does not interfere, then other semi-political organisations, such as monopolies, trusts, unions, etc. may interfere, reducing the freedom of the market to a fiction.”

So if we go ahead and take the neoliberal definition, then we must say that almost every great so-called ‘capitalist’ intellectual hero of the last two centuries, was in fact a raging socialist, apart from Friedman himself. If your definition of a swimmer excludes Thorpe and Phelps, then it isn’t such a good definition.

So we can think of this as unhelpful ‘bundling’. I would like to get Foxtel, just for the premier league soccer. Unfortunately, they don’t offer just premier league soccer. They offer 86 channels all bundled together with soccer somewhere in the mix. The misuse of the word capitalism bundles together two things – capitalism itself, as defined previously, and some particular bunch of particular views attached to some particular school of capitalist thought (probably neo-liberalism). The critic attacks both at once, and tarnishes both at once, even if he only has arguments against the later part of the bundle. So capitalism itself is constantly being dragged through the mud, because of some school or another, and consequently has a very dirty reputation, and this is a shame. So it is consequential then. It is important that we use words appropriately. In the beginning was the Word.

See, I can’t help but think that capitalism – private property, free determination of the prices of apples and salaries etc – capitalism in some form and shape, is the only option for human economic survival – this is history’s lesson. It is the only workable system.

The neoliberal barbarians are not at the gates of Rome, they are sitting on the throne. They have sacked three of the greatest nations on Earth – reducing social mobility (the ability of the poor to become rich) by 60%-70% in three decades in America (taking it back to near feudal levels). They have sacrificed income inequality at the altar of GDP growth, and achieved neither. They have hollowed out the skill-base of the nation, and then kept it limping along on debt and delusion. They have taken three of our greatest countries – the US, UK and Ireland – at least. Don’t let them take one of our greatest words too. By handing them this venerable old word, we give one of the most distasteful political movements in modern history, an unmerited leg up. And there’s no need for us to give them that, ‘Capitalism’ is about as synonymous with ‘Neoliberalism’ as ‘Norwegian’ is with ‘Anders Behring Breivik.’

I’ll let you get back to your – Why Stephen Driscoll is Pathetic – trilogy.