Are we Capitalist?

This is a post I put on The Freeman — an economics site — about the word “capitalism.” I post it here for my reader’s benefit (I hope.) I also put it as a page so that it remains readable for a long time, for it is important to think about.

I have long been opposed to the word “Capitalism” — argued against it as early as the 1970s in high school, continued through all my college economics courses — and even my Socialist theory professor at NYU had to agree that even Communists had to pull together “capital” to create the state enterprise. He was a bit taken aback by that — but agreed to the concept that a USA steel mill had just as much need for capital as a Soviet one (it was the 1980s, which was a stark period of contrast) to make vast quantities of steel — after constant reminders.

Not thrilled with “Socialism” either — for the USA, in a Toqueville sort of way, is very social. Indeed, we seem to have more social clubs and more socializing than so called Socialism, which ironically restricted people from socializing. Again, it was the Socialist theory professor who had to accede that point — grudgingly.

As I’m not thrilled either with “market economy.” All economies have markets — even two traditional, or primitive, people have a market — my arrow for your curare poison, for instance. Soviet Russia had a market. As did Medieval France. As does the US. Markets are just where things are bought and sold, traded and exchanged, as is required for all since no one can make all they need. Now it depends on who gets to say what one can buy or sell, and when and where, and who gets to accumulate capital and who gets to keep the gain required for a successful enterprise of any sort, big or small.

Voluntary Market doesn’t seem to fit the bill either, for in a sense Marxists argue that all enter into the system voluntarily by the social compact — and that capitalism is “forced” by laws set by elites. And at the time Marx wrote Das Kapital it was hereditary landed aristocracy that wielded a lot of the force, though not all, in England’s market.

Nor does Coerced market seem to fit — for even Soviet Russia didn’t make you buy something, or sell something, you just had limited choices. While the Health care bill under consideration now would coerce you to buy insurance, whether you want to or not. And it would coerce the seller to sell to any coerced buyer regardless of price or earnings or expenses. Which stand coercion and the system supposedly for it or against it on its head — and takes markets beyond where few have gone before.

Nor is there anything wrong about workers owning the means of their productive activities — no reason why General Motors’ unions couldn’t have bought at any time a controlling or complete interest in the company and run it for themselves. I believe Delta Airlines is owned to some degree by its union. Small businesses with just two or three partners as employees are both worker and boss — which are they?

Further — both so called capitalist and socialist economies have “profit.” That socialists want to call it “gain in the five year plan” to avoid “profit” is just a product of politics and semantics — again, the Socialist theory professor couldn’t quite get around that, though he tried. Even “non-profits” have “profit” — it’s just not taxed, but the term “untaxed company” is not politically palatable. No gain, much pain, after all — so non-profits make a profit but call it something else. Semantics again.

Free market sounds too libertine, and without regulations of any kind, thus scary to many. Controlled markets are exactly what, say, Walmart does — indeed, they are very good at controlling their portion of the market.

Same with planned — Ford is a very planned company, even years in advance of product launch. But so were Russian car companies just as planned.

On the other hand — Open Markets fits well — for anyone is open to join or not join the marketplace in any capacity. And Closed Markets is the opposite — for no one can enter the marketplace without permission or restriction from the powers that be and you have no other option then the choices offered, even if you have a better idea — the old “we’ll pretend to pay you, you’ll pretend to work, and you can buy sausage on Tuesday.”

Open Markets do allow for a Closed Market for certain products, such as sewer services, or highways — while Closed Markets don’t allow for anyone to just set up shop of any sort to sell anything.

And those are the terms I use as much as possible (yes, I lapse.)

Open is just that — opportunity at the door so to speak, and you can open it as you please — short of fraud and theft.
Closed is just that — you are locked out or in depending on political power — and fraud, aka corruption, is part of the equation.

And few words are as simple, and unencumbered with baggage, and free from ideological taint as “open” and “closed.” Which is the goal – to make it so simple that an eighth grader can conceptualize the options — open opportunity or closed opportunity – such a simple choice, really.


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