My wife and I had a long running debate about the intelligence of her cat Samantha. She (my wife) noted that Samantha would, among other things, respond to someone calling her name. I challenged that by pointing out that I could say “rutabaga” in the same tone of voice and get the same feline response. Needless to say, this debate went on until Samantha went to the great feeding bowl in the sky.
I think the same approach could be applied to the term “capitalism,” which is to say that the word itself has no meaning and much depends on the speaker’s tone and intent. The result is that much of what passes for debate about merits or deficiencies is really just people talking past each other, leading to a waste of time and no clearer understanding of the issues involved, much less to specific solutions for the considerable problems and abuses of the current way of doing things. Of course, there is no single “right” definition, conceptual words morph across cultures, histories, and speakers’ intentions. All we can ask is that people make clear what they mean by “capitalism,” (or, for that matter, by “history,” “democracy,” or American “greatness”) and their purpose in using the term.
As I have previously noted in this occasional series, Historians have described the emergence of a socio-economic system, primarily in Western Europe and primarily over the past five hundred years. “Capitalism” in this reading has evolved both in terms of its institutions, practices, and significance over this time; indeed, its protean nature is one of its notable attributes (e.g., it’s a long way from the Bank of England in the late 17C to bitcoin in the 21C). We can trace these changes not only through those institutions (e.g., the number of limited liability corporations), but also through the critique of these phenomena by contemporary commentators (including champions of religion, ethics, nature, and humanism).
Of these analysts, Marx was the most important for both his insights and his profound long-term influence on both thinkers and practitioners of political economy. Marx got a number of things wrong (and those who claimed to implement his ideas in Russia and other places over the past 110 years got even more wrong), but his juxtaposition of “capitalism” and “socialism” remains the touchstone of debate, even though, as the subsequent practice of both business and government has evolved, the distinctions have become increasingly blurry (see, e.g., “state capitalism” in China, “public-private partnerships,” and the quasi-investment banking deals coming out the White House lately).
While both capitalism and socialism have evolved considerably since the 19C, most political debate is conducted under a somewhat simplistic A vs. B rubric which does little to comprehend the national or historical variants or the complex texture of each. Indeed, what has emerged, especially since the 20C triumph of capitalism over communism and fascism, is the use of “capitalism” as a somewhat generic term for the dominant socio-economic system of modernity. It’s a label that doesn’t tell us much in general, much less with particular regard to “capital” or “capitalists.”
For example, once we stop thinking of “our” mode of “capitalism” as the (if you’ll pardon the expression) gold standard, we can see that there are many ways to mix the roles of the state and the private sector. Using various indices, we can line up countries according to tax rates and progressivity, public expenditure as a percentage of GDP, extent of the social safety net, competition/antitrust policy, or the pro rata number of bureaucrats. We would find a continuum for each standard rather than sharply distinguished groupings. Moreover, we would find pretty much of a mish-mash, with particular national systems high on one measure and low on another. In other words, there’s no simple model of capitalism and likely few places that are at the extremes across a group of standards.
From another perspective, we have to acknowledge that whatever “capitalism” is, it has evolved over the past several centuries in many ways. So, critiques by Marx or others, however accurate they might have been at the time, don’t necessarily tell us very much about the phenomena that we face in the 21C. A recent study of the “Crisis of Democratic Capitalism” (2023) illustrates this point. In general, Martin Wolf’s analysis is quite perceptive, especially his tight linkage between the types of political and economic systems which dominate our world. However, the “crisis” with which he is concerned is not with “capitalism” per se, but rather with the hypercapitalism (i.e., push towards plutocracy/monopoly/oligarchy) characteristic of many “advanced” countries today.
The situation with “capital” and “capitalists” is much the same. We now have “natural capital,” human capital,” and “information capital” among others. Such terms however, don’t make a copse of trees or a group of laborers into capitalists. Similarly, no everyone who lives and actively participates in our modern socio-economic-political system is thereby a “capitalist,” even if they have a 401k.
The phenomenological morass is one reason I prefer to think of capitalism in terms of epistemology or a set of attitudes about money, personal value, and the nature of society which can be considered at both the societal and individual levels.
The upshot of this conceptual and semantic confusion is that public debate about capitalism (as well as a fair amount of scholarly discussion) is confusing and fruitless. I often think it would be better for both public and scholarly debates to stop using terms that have been hollowed out by abuse and overuse (capitalism, sovereignty, and progress all come to mind in this context). Taking a few moments to flesh out what we mean would avoid these semantic traps and perhaps provide some clarity of both diagnosis and prescription. In my History work, for example, I try to avoid bald references to the “industrial revolution,” referring instead to the “period of rapid industrialization.”
“A rose,” as the Bard said “by any other name would smell as sweet.” The way our world works, too, would be however good or bad it is, regardless of the labelling. Samantha responded both to her name and to “rutabaga;” although more quickly in either case if you had a piece of turkey in your hand.
I think the same approach could be applied to the term “capitalism,” which is to say that the word itself has no meaning and much depends on the speaker’s tone and intent. The result is that much of what passes for debate about merits or deficiencies is really just people talking past each other, leading to a waste of time and no clearer understanding of the issues involved, much less to specific solutions for the considerable problems and abuses of the current way of doing things. Of course, there is no single “right” definition, conceptual words morph across cultures, histories, and speakers’ intentions. All we can ask is that people make clear what they mean by “capitalism,” (or, for that matter, by “history,” “democracy,” or American “greatness”) and their purpose in using the term.
As I have previously noted in this occasional series, Historians have described the emergence of a socio-economic system, primarily in Western Europe and primarily over the past five hundred years. “Capitalism” in this reading has evolved both in terms of its institutions, practices, and significance over this time; indeed, its protean nature is one of its notable attributes (e.g., it’s a long way from the Bank of England in the late 17C to bitcoin in the 21C). We can trace these changes not only through those institutions (e.g., the number of limited liability corporations), but also through the critique of these phenomena by contemporary commentators (including champions of religion, ethics, nature, and humanism).
Of these analysts, Marx was the most important for both his insights and his profound long-term influence on both thinkers and practitioners of political economy. Marx got a number of things wrong (and those who claimed to implement his ideas in Russia and other places over the past 110 years got even more wrong), but his juxtaposition of “capitalism” and “socialism” remains the touchstone of debate, even though, as the subsequent practice of both business and government has evolved, the distinctions have become increasingly blurry (see, e.g., “state capitalism” in China, “public-private partnerships,” and the quasi-investment banking deals coming out the White House lately).
While both capitalism and socialism have evolved considerably since the 19C, most political debate is conducted under a somewhat simplistic A vs. B rubric which does little to comprehend the national or historical variants or the complex texture of each. Indeed, what has emerged, especially since the 20C triumph of capitalism over communism and fascism, is the use of “capitalism” as a somewhat generic term for the dominant socio-economic system of modernity. It’s a label that doesn’t tell us much in general, much less with particular regard to “capital” or “capitalists.”
For example, once we stop thinking of “our” mode of “capitalism” as the (if you’ll pardon the expression) gold standard, we can see that there are many ways to mix the roles of the state and the private sector. Using various indices, we can line up countries according to tax rates and progressivity, public expenditure as a percentage of GDP, extent of the social safety net, competition/antitrust policy, or the pro rata number of bureaucrats. We would find a continuum for each standard rather than sharply distinguished groupings. Moreover, we would find pretty much of a mish-mash, with particular national systems high on one measure and low on another. In other words, there’s no simple model of capitalism and likely few places that are at the extremes across a group of standards.
From another perspective, we have to acknowledge that whatever “capitalism” is, it has evolved over the past several centuries in many ways. So, critiques by Marx or others, however accurate they might have been at the time, don’t necessarily tell us very much about the phenomena that we face in the 21C. A recent study of the “Crisis of Democratic Capitalism” (2023) illustrates this point. In general, Martin Wolf’s analysis is quite perceptive, especially his tight linkage between the types of political and economic systems which dominate our world. However, the “crisis” with which he is concerned is not with “capitalism” per se, but rather with the hypercapitalism (i.e., push towards plutocracy/monopoly/oligarchy) characteristic of many “advanced” countries today.
The situation with “capital” and “capitalists” is much the same. We now have “natural capital,” human capital,” and “information capital” among others. Such terms however, don’t make a copse of trees or a group of laborers into capitalists. Similarly, no everyone who lives and actively participates in our modern socio-economic-political system is thereby a “capitalist,” even if they have a 401k.
The phenomenological morass is one reason I prefer to think of capitalism in terms of epistemology or a set of attitudes about money, personal value, and the nature of society which can be considered at both the societal and individual levels.
The upshot of this conceptual and semantic confusion is that public debate about capitalism (as well as a fair amount of scholarly discussion) is confusing and fruitless. I often think it would be better for both public and scholarly debates to stop using terms that have been hollowed out by abuse and overuse (capitalism, sovereignty, and progress all come to mind in this context). Taking a few moments to flesh out what we mean would avoid these semantic traps and perhaps provide some clarity of both diagnosis and prescription. In my History work, for example, I try to avoid bald references to the “industrial revolution,” referring instead to the “period of rapid industrialization.”
“A rose,” as the Bard said “by any other name would smell as sweet.” The way our world works, too, would be however good or bad it is, regardless of the labelling. Samantha responded both to her name and to “rutabaga;” although more quickly in either case if you had a piece of turkey in your hand.
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