The term “capitalism” has to rank right up there on the list of concepts with so many definitions and elaborations that they have become pretty meaningless for serious conversation without a great deal of caveating. References in the popular literature/press are even more untethered (and, therefore, useless). While preparing for my upcoming lecture series on the modern world, I have wrestled with this morass and have emerged, if not unscathed, then at least with more cogent thoughts than when I went into intellectual battle.
There are two fundamental problems.
First, as a person with some economic/financial/business literacy, I understand capital as an essential factor of production, part of the triad of “land, labor, and capital” which is the basis for any enterprise. Capital implies cash and a “capitalist” would therefore be someone who supplied the cash (aka an investor) in a business undertaking. However, translating this micro-economic framework into a macro politico-economic system is awfully awkward. In other words, calling someone a “capitalist” (i.e., a rich investor) doesn’t tell us much about their philosophy or the nature of the society in which they operate.
Second, as a person with some historical/philosophical perspective, I can’t avoid Karl Marx, whose turgid prose sprawled across what we now count as economic theory and history and socio-political engagement. For Marx, capitalism is a system in which the means of production are generally owned by individuals (or their corporate proxies); i.e. there is private property and the factors of production (land, labor, and capital) are interchanged through markets, with the outputs ending up in the hands of consumers. Marx’s problem was that a group of “capitalists” took over the means of production and thereby disempowered (and alienated) workers without capital. [My thanks to a piece by Pablo Gilabert and Martin O’Neill, which has helped me with this model.]
All well and good in terms of a plausible (if controversial) economic theory.
However, if we want to understand capitalism as a central component in the creation and deployment of the modern world, these approaches don’t really flesh out its impact or explain its history.
It is important to understand capitalism because since the demise of its two principal competitors during the 20C—communism and fascism—capitalism has become pretty much the only game in town; the winner (as it were) of the three-part series of wars (WWI/WWII/Cold War) of the 20C (this is what Francis Fukuyama meant when he famously proclaimed “the end of history” in 1992). It’s also important looking forward because the foundations of capitalism—private property and markets—have been the premises of the way humans relate to the planet and our resultant climate predicament.
Liberalism and democracy also enter into the mix. The three are not really separable and their confluence makes it difficult to juxtapose capitalism (separately) with the two other politically-oriented ideologies noted above.
So, building on Marx and others, we can describe capitalism not just as a description of economic relationships, but more fundamentally as an approach to the world or way of thinking based on economics. Stated differently, in a capitalist society we define ourselves and evaluate others and determine how to act across our lives principally from an economic perspective: morals are secondary to money.
I should hasten to add that I am speaking at a pretty broad level of generalization here and acknowledge the existence of many exceptions both in terms of populations, individuals, particular actions. Still, the reliance on an economic framework within which to see the world does seem an essential characteristic of our modern world.
While capitalism is a world-wide phenomenon, with particular flavors and practices arising in different cultures, its global predominance is due principally to its rise in Western Europe in the so-called “early modern” era (i.e., 1400-1800). Europeans, inspired by this approach to living, marshalled technologies and resources to seize control of the planet and its various cultures, thereby demonstrating, inculcating, and embedding capitalism ubiquitously. Even as Westerners relinquished formal control in the mid-20C, the informal tentacles of capitalism remained as the basis of the culture and economies in countries whether formally colonized (e.g. India) or not (e.g. China).
It's a bit of a mind-stretch to consider how capitalism came to dominate Western/European culture to such an extent (a topic I will revisit in an upcoming posting). We tend to think of medieval and early modern Europe as a Christian culture with certain moral values and there are a lot of pieces of the story as to how European minds shifted from one to the other (again, acknowledging overgeneralization). It may be that the reaction to the corruption of the Catholic Church which occasioned the Reformation undermined the established order sufficiently to create an opening for a new kind of thinking; not just a new set of values and practices, but a discarding of the metaphysic/theoretical in favor of the operational. Out with Jesus, morality, and the hereafter; let’s focus on the present and measurable realities of power (per Machiavelli) and markets.
I should insert here a brief apologia for Adam Smith, often characterized (blamed?) as the father of capitalism. While his analysis was sound and immensely influential, his own views were grounded in a moral universe (read his “Theory of Moral Sentiments,” not just his “Wealth of Nations”).
But, in any event, here we are. As with most other historical analyses, it doesn’t do much good to assign blame, either to earlier practitioners or those (us?) of the current day.
Environmentalists champion the inclusion of natural resources (broadly construed) into the market mentality; thus, calls for carbon credits or natural capital or some mechanism to handle the riches of outer space or the sea floor. Even as I endorse these approaches, I recognize that they inherently concede the fundamental premise to capitalism. And it may well be that there is no better alternative. It’s not as if the energy, freedom, and mind-boggling improvements in the human condition occasioned by capitalism should be summarily dismissed.
As we look across the last 250 years, approaches such as romanticism, socialism/Communism, fascism, and a raft of religions have sought to slow the juggernaut or ameliorate its excesses. Each has had, to date, but a marginal effect.
Nor can we go back to some prelapsarian idyll. At least we can’t engineer our way back there. A planetary collapse may force us to; but that road, however likely based on civilizational inertia, is pretty ugly and unpredictable, to put it mildly.
There are two fundamental problems.
First, as a person with some economic/financial/business literacy, I understand capital as an essential factor of production, part of the triad of “land, labor, and capital” which is the basis for any enterprise. Capital implies cash and a “capitalist” would therefore be someone who supplied the cash (aka an investor) in a business undertaking. However, translating this micro-economic framework into a macro politico-economic system is awfully awkward. In other words, calling someone a “capitalist” (i.e., a rich investor) doesn’t tell us much about their philosophy or the nature of the society in which they operate.
Second, as a person with some historical/philosophical perspective, I can’t avoid Karl Marx, whose turgid prose sprawled across what we now count as economic theory and history and socio-political engagement. For Marx, capitalism is a system in which the means of production are generally owned by individuals (or their corporate proxies); i.e. there is private property and the factors of production (land, labor, and capital) are interchanged through markets, with the outputs ending up in the hands of consumers. Marx’s problem was that a group of “capitalists” took over the means of production and thereby disempowered (and alienated) workers without capital. [My thanks to a piece by Pablo Gilabert and Martin O’Neill, which has helped me with this model.]
All well and good in terms of a plausible (if controversial) economic theory.
However, if we want to understand capitalism as a central component in the creation and deployment of the modern world, these approaches don’t really flesh out its impact or explain its history.
It is important to understand capitalism because since the demise of its two principal competitors during the 20C—communism and fascism—capitalism has become pretty much the only game in town; the winner (as it were) of the three-part series of wars (WWI/WWII/Cold War) of the 20C (this is what Francis Fukuyama meant when he famously proclaimed “the end of history” in 1992). It’s also important looking forward because the foundations of capitalism—private property and markets—have been the premises of the way humans relate to the planet and our resultant climate predicament.
Liberalism and democracy also enter into the mix. The three are not really separable and their confluence makes it difficult to juxtapose capitalism (separately) with the two other politically-oriented ideologies noted above.
So, building on Marx and others, we can describe capitalism not just as a description of economic relationships, but more fundamentally as an approach to the world or way of thinking based on economics. Stated differently, in a capitalist society we define ourselves and evaluate others and determine how to act across our lives principally from an economic perspective: morals are secondary to money.
I should hasten to add that I am speaking at a pretty broad level of generalization here and acknowledge the existence of many exceptions both in terms of populations, individuals, particular actions. Still, the reliance on an economic framework within which to see the world does seem an essential characteristic of our modern world.
While capitalism is a world-wide phenomenon, with particular flavors and practices arising in different cultures, its global predominance is due principally to its rise in Western Europe in the so-called “early modern” era (i.e., 1400-1800). Europeans, inspired by this approach to living, marshalled technologies and resources to seize control of the planet and its various cultures, thereby demonstrating, inculcating, and embedding capitalism ubiquitously. Even as Westerners relinquished formal control in the mid-20C, the informal tentacles of capitalism remained as the basis of the culture and economies in countries whether formally colonized (e.g. India) or not (e.g. China).
It's a bit of a mind-stretch to consider how capitalism came to dominate Western/European culture to such an extent (a topic I will revisit in an upcoming posting). We tend to think of medieval and early modern Europe as a Christian culture with certain moral values and there are a lot of pieces of the story as to how European minds shifted from one to the other (again, acknowledging overgeneralization). It may be that the reaction to the corruption of the Catholic Church which occasioned the Reformation undermined the established order sufficiently to create an opening for a new kind of thinking; not just a new set of values and practices, but a discarding of the metaphysic/theoretical in favor of the operational. Out with Jesus, morality, and the hereafter; let’s focus on the present and measurable realities of power (per Machiavelli) and markets.
I should insert here a brief apologia for Adam Smith, often characterized (blamed?) as the father of capitalism. While his analysis was sound and immensely influential, his own views were grounded in a moral universe (read his “Theory of Moral Sentiments,” not just his “Wealth of Nations”).
But, in any event, here we are. As with most other historical analyses, it doesn’t do much good to assign blame, either to earlier practitioners or those (us?) of the current day.
Environmentalists champion the inclusion of natural resources (broadly construed) into the market mentality; thus, calls for carbon credits or natural capital or some mechanism to handle the riches of outer space or the sea floor. Even as I endorse these approaches, I recognize that they inherently concede the fundamental premise to capitalism. And it may well be that there is no better alternative. It’s not as if the energy, freedom, and mind-boggling improvements in the human condition occasioned by capitalism should be summarily dismissed.
As we look across the last 250 years, approaches such as romanticism, socialism/Communism, fascism, and a raft of religions have sought to slow the juggernaut or ameliorate its excesses. Each has had, to date, but a marginal effect.
Nor can we go back to some prelapsarian idyll. At least we can’t engineer our way back there. A planetary collapse may force us to; but that road, however likely based on civilizational inertia, is pretty ugly and unpredictable, to put it mildly.
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