Semantic Tools and Faulty Nomenclature
Ludwig von Mises on maintaining the word "capitalism":
It would be correct to describe this state of affairs in this way: Today many or some groups of business are no longer liberal; they do not advocate a pure market economy and free enterprise, but, on the contrary, are asking for various measures of government interference with business. But it is entirely misleading to say that the meaning of the concept of capitalism has changed and that "mature capitalism" — as the Americans call it — or "late capitalism" — as the Marxians call it — is characterized by restrictive policies to protect the vested interests of wage earners, farmers, shopkeepers, artisans, and sometimes also of capitalists and entrepreneurs. The concept of capitalism is as an economic concept immutable, if it means anything, it means market economy. One deprives oneself of the semantic tools to deal adequately with the problems of contemporary history and economic policies if one acquiesces in a different terminology. This faulty nomenclature becomes understandable only if we realize that the pseudo-economists and the politicians who apply it want to prevent people from knowing what the market economy really is. They want to make people believe that all the repulsive manifestations of restrictive government policies are produced by "capitalism." (Human Action, chapter 15)
Comments (16)
In my opinion, there was no more impressive and admirable character in all of human history than Ludwig von Mises. I grow more and more impressed by his intellectual contributions and moral courage with each preceding day. It's a shame more people are not familiar with his work, or, in many cases, have not heard of him altogether. The world has still yet to fully value all of von Mises' contributions.
Published: June 28, 2008 2:46 PM
Ryan, I agree. And I agree with Mises that capitalism is the best word for the name of the system of free markets in spite of the fact that everyone has a different meaning for it. We just have to be careful to define what we mean by it when we use the word. In addition, I think capitalism is a great term for Austrian econ because the major difference between Austrian and mainstream econ is the treatment of capital. Austrian econ is capital-centered, hence capitalism.
Published: June 28, 2008 4:13 PM
Unfortunately, the word capitalism has been tarnished so much by representations of capitalists as greedy pigs with top hats. The word SOCIALIST today actually has a positive connotation in my neighborhood (extremely liberal).
I guess that's why the founders hated democracy.
Published: June 29, 2008 1:06 AM
...seems odd that Mises would emphasize use of the term "Capitalism".
That word originated among European socialists in the mid-19th Century. Marx popularized it as an epithet against free-market principles.
Even today in year 2008 the word "Capitalism" has a generally negative implication in the American media.
Free-Market advocates should avoid that term.
Published: June 29, 2008 7:46 AM
lessig: "Free-Market advocates should avoid that term."
What term would you use? Socialists trash "free markets" "laissez-faire" and any other term used in the past. To socialists, free markets and laissez-faire mean chaos in which the rich and powerful trample over everyone else. Even if you invent a completely new term, socialists will trash it. The word isn't the problem, but the socialists. Adopting the word capitalism follows in the grand tradition of wearing slurs invented by the enemy proudly as a badge.
Published: June 29, 2008 8:10 AM
Because of all the biases associated with 'popular terminology' I have found the name of the philosophy underlying these terms to be most intriguing to those who I speak with.
I speak about classical liberalism. It is actually a bridge to the 'hijacked' word of liberal and since everyone wants personal liberty there is receptivity, generally.
I speak about subjectivism to counteract the proclaimed 'selfish' nature of humans and this elementary logic melts away the misplaced guilt and helps to unlock the shackles of shame associated with individual likes and dislikes.
Without understanding classical liberalism and subjectivism the words 'capitalism' and 'free market' quickly degenerate into rhetorical fuel for the ego-driven interventionists.
Published: June 29, 2008 8:38 AM
I agree with Lessig. I admit that I like the idea of wearing a slur as a badge of honor, but that I think is mere sentimentality on my part. Terms like "free markets" "laissez-faire" have one very big advantage, a logical advantage, over "capitalism": they are a more clear and less ambiguous.
Published: June 29, 2008 6:04 PM
"The concept of capitalism is as an economic concept immutable, if it means anything, it means market economy."
Not so: if it means anything, capitalism means private ownership of the means of production. It is in this meaning that capitalism is opposed to socialism. It is from this meaning that one can derive the opposition between Father Bruckberger's thesis "Le capitalisme, c'est la vie" (Capitalism, that's life: the title of one of his books) and Igor Chafarévitch's thesis "Socialism is a cult of death"* (in his book "Le Phénomène socialiste" -- "The Socialist Phenomenon"). Whether the owner-producer produces "for the market" or not, is conceptually of no importance.
Today's apologists of capitalism are most likely to go wrong when they accept the belief that [so-called "private" limited-liability] corporations meet the conditions of the concept of private property and hence have a rightful place on the free market. That belief usually goes together with the contractarian fallacy, which assumes that property is a matter of [politically relevant] "consent" rather than a matter of productive / creative action, i.e., of individual human action.
* This year marks the thirtieth anniversary of the Jonestown massacre, a small-scale ("only" about 900 people died) American replica of the socialist experiences under Lenin, Stalin, Hitler, Mao, and Pol Pot.
Published: June 29, 2008 7:36 PM
Muse, all too many people who proclaim to be capitalists or otherwise supporters of capitalism do not, in fact, believe in the core tenants of capitalism. They support government interventions in the market to preserve their own capital from risk while opposing interventions to preserve other person's capital from risk. They support government regulation to enable enhanced profitability for their investments while opposing government intervention to, for example, lower the barriers to entry for more competition.
I might even say that most of the talking heads in the media, specifically Fox News, as well as many "Republican" (actually neo-con) supporters of "capitalism" are actually clamoring for fascist corporatism. However, it is difficult to divide these persons in the court of public opinion from true free market capitalists, and when done so, the public has been so thoroughly mislead as to believe these pro-business interventionists are the true "capitalists" while /real/ capitalists like von Mises are marginalized and ridiculed for /actually/ abiding by the principles they proclaim.
Published: June 29, 2008 7:51 PM
Free-Market advocates should avoid that term.
Only if they're ashamed of it, which they shouldn't be. The term is accurate and needs to be reclaimed, not danced around or reinvented with weasel words for politically correct or sophistic purposes, lest the ignorance surrounding the concept be perpetuated.
Published: June 29, 2008 8:07 PM
"What is Capitalism?"
When Ayn Rand began her collection of essays Capitalism: The Unknown Ideal with an article with the above title as its lead, she did something fairly extraordinary: before she could even talk about it, she had to identify the nature, meaning and roots of the term. Hardly any contemporary discussion of capitalism even gets into that territory much less starts out with it.
Published: June 29, 2008 9:43 PM
Furthermore, Rand explicitly used loaded terms like "capitalism" and "selfishness" in order to provoke emotive responses in order to force people to deal with their own irrational prejudices and misconceptions in a philosophical quagmire where terms like "communism", "socialism", "altruism", etc, are poorly defined and conflated. This isn't an Objectivist website, and I'm not commenting on her philosophy per se, but such a strategy is important for semantic clarity and rational consistency.
Published: June 29, 2008 10:43 PM
While I sympathise with Mises's defence of the term 'capitalism', I agree with Lessig and Muse.
Dogmatic defence of an emotionally-loaded term does not help in disseminating the libertarian message against the sort of rhetoric employed by the Left.
I have elsewhere on this forum posted my view of a distinction between 'free market' and 'capitalism' _ I regard the former as the correct description of what Mises called 'capitalism, but given common usage outside academic free market circles such as this one, and how the world of ideology has emerged this last century, 'capitalism' in my mind accurately describes the rent-seeking and coercive nexus between the State and large Corporate interests.
If we are to advance the cause of freedom in a war of words agaqinst the Left, it behooves us to package the message in terms the non-academic audience can relate to. If they have a hazy and undefined feeling that capitalism is their enemy, lets tell them why that is in fact the case, and why State protection of capital is no different to statew protection of Labour. And then present a bona fide free martket institutional framework free of state coercion , and free of ANY sectarian interests, as the only viable solution to the State-driven evils of, er, capitalism. And socialism. By now, capitalism is irrevocably associated in the public mind with mega-corporates like Halliburton ( a creature of Statism if there ever was one), and with the likes of Wal Mart flexing its state-supported eminent domain muscles. It does not describe a self-employed entrepreneur trading in a free-market context, if it ever did . And lets not forget record companies clamping down on internet file sharing.
Mises tried just too hard to defend the word imo. It reminds me of those lexical pedants who to this day lament the loss of the word 'gay' in its pre-1940 sense of 'fun', and who forget that words do indeed change in meaning.
Like 'radical: Nobody uses the word in its original botanical sense anymore, and even the political sense has been eclipsed by 'fundamentalist'. to those under 35 or so, the word 'radical' now means, more or less, 'exhilarating', as used in describing, say, a particularly daring skateboard ride.
Published: June 30, 2008 4:20 AM
Ideas are what ultimately matter, not putting all one's effort into saving a word.
Published: June 30, 2008 4:40 PM
You gotta have a name for your system just to keep communication from being too clumsy. What alternatives do we have to capitalism? Free market and laissez-faire? Most people see them as meaning lawlessness, like the wild west, where the wealthy and powerful run over everyone else. Socialism doesn't mean state ownership of the means of production; it means sharing.
Bottom line is you're going to have to define your terms, whatever term you use.
Published: June 30, 2008 8:09 PM
"Most people see them as meaning lawlessness, like the wild west, where the wealthy and powerful run over everyone else."
Most people think the same when the word "capitalism" is used. Definitions like "private ownership of the means of production" don't help clarify much either, as that's vague and only references one back or begs the question for other definitions.
Published: July 1, 2008 4:46 PM