This is the definition I’m thinking of:
I can’t find the exact source of it now, but the word was already in use in that way in the 19th century (the dictionary lists that definition as such anyway.) I doubt Marxists were the first to make use of the word, and besides it has a variety of meanings.
Socialists came up with the name capitalism to describe the system they were against just like Adam Smith came up with the name mercantilism to describe the system he was against.
But what system were Socialists against? Men like Proudhon were very sentimental towards free markets. Socialism once just meant an opposition to economic exploitation.
How is this possible without a state? I’m not sure.
Well in that case, if “capitalism” was the economic and/or political system of the 19th century that socialism arose to defy, I gladly join with the socialists in opposing “capitalism”.
I’m just saying, if the word has already been used to describe the economic system as defined in my above post, I don’t see why we should have to concede its usage as many libertarians do with the word liberal.
Well, that is up to you how you define it for yourself. Alas, if you want to have a conversation about something it seems to be a good way to be clear about what one refers too. If you declare an apple a banana and your opponent a cherry a peach, chances are that you argue to the end of life without getting anywhere - given the topic is fruit :-).
So let me try to put a definition about what capitalism is to the discussion.
Capitalism is the use of Capital to achieve individual means.
What is capital? Capital is savings. Because you can not put to production what you do not have, the first question always is, do I consume what i got or save it. Austrains call that time preference. Once you have enough saved you can use those savings to produce something. Bottom line someone who has savings is a capitalist, as she owns Capital, which means the ability to produce something. This is the Capitalist part in economics.
Question is what to produce? Something that makes you better off. This is the entrepreneur part in an economy. Find something that consumers are willing to pay a price that is higher than the cost to produce it.
Now, you have filled your entreprenural function and found such a product that is sought at the market -or so you think.
Next step is to produce it. If you do it by yourself, you start wearing the laborers hat, produce your product and sell it. Hopefully.
The last actor in this system is the consumer. And she is the allimportant. She is the one that decides whether it was worth to save, find a product and to produce it, by deciding if she is willing to pay an adequate price. That means if she is willing to give you some of her savings because she values what you have to offer more than the amount of her wealth (money) you are asking for.
Now, people can specialize. Some might be good in saving things, because they have a time preference that allow them to save now and earn the fruits later. Those might specialize and provide capital for new endeavors. We call them Capitalists.
Others are best at transfering ideas into reality, in finding ways to make products cheaper, more plenty, invite new products, find new ways to use known resources. Those might focus on this skills and become entrepreneurs.
And last not least, some are very good in the act of producing itself. They specialize as laborers.
Yet, all human beings act in all 4 functions, they save, they put ideas into reality, they produce and they eventually consume.
This very system is the only one that can provide prosperity for all involved.
Fair enough, nhaag. I do not accept that as the definition of capitalism, but I can concede the points.
What ingredients do you consider have to be added to make it up to capitalism? [:)]
Well, I’m always big on context and origins, so I look first to the origin and the context of the word to get my understanding of its definition. I can understand your points, however, and they make sense. I just think in a more dialectic tone, I guess.
Im just worried about some inequalities that workers might suffer temporarly as a result of the capital accumulation that occured under the state sanctioned system. Although I agree, it would probably vanish pretty quickly.
I am in favour of this, absolutely.
Fair enough. I am new to this community and I need to adopt a bit so bare with me.
So here would be the austrian definition, or Mises definition what capitalism is.
Captialism is a system where private ownership and control over all means of production exist.
This definition rules out all interventionalism, corporatism, mercantelism etc.
Mind that it does not say private ownership alone, but private ownership and control.
Have a great day
Yes, that would be what Mises would define capitalism as, and this is perfectly fine. I, however, do not think he defines it correctly, but that’s just me.
I think the idea of private “ownership” without “control” is ridiculous.
In order to move this discussion to the question of whether capitalism can exist without the state, you must provide the group with your definition of the term. You have not responded to this request and your original post provides no definition of the term. It is clear that you are stating that the Muscovy Company is “the” example of a capitalist organization. However, you do not tell us why.
Please enlighten us of your definition including the source of the term and how it is intended to be used. If you would like to convince us that the term “capitalism” is per se anti-free market, you have to provide a logical explanation.
It is in fact. Yet, that did not prevent the fascist Italy and Germany to do exactly that. Oh, and by control I mean total control. From that point of view there seem to be no state that really ensures that right, maybe Lichtenstein.
To me and from how I understand the austrian school the Muscoy Company is “the” example for a mercantilist organization.
The reason is that the Company got a privilege from the state which in turn is a coercive hampering of the free market.
Ironically, the term capitalism, though of unkown origin, arose to be used in it’s current institutional meaning in the middle 19th century when it was used by socialists to emphasize the role that private property played in the “exploitation of labor”. The term I prefer is Free Enterprise.
Um… Actually, I have.
Read post 1
When a statement is made and then a question followed many times the question is simply a rhetorical device. The idea that capitalism is not free market comes from here - that capitalism has, since its birth, been granted to certain systems, but has never existed without a state to prop it up.
Why is this an example of the capitalist organization? Because this is what people have been calling capitalist since capitalist was a name. I don’t really care what you wishfully want to call capitalism - I don’t know why you want to call it that either, but ok - I care what capitalism has actually been defined as, and not through the eyes of a an that simply wanted to embrace a term his opponents laid upon him, but through the actual dialectical context of the day.
Ask PJ Proudhon to give you an example of a capitalist. Now, he may not give you an example of an executive in the Muscovy Company, but he certainly wouldnt give you an example of a baker, a butcher, or a candlestick maker.
Why does this matter at all?
While this particular discussion seems to revolve largely around semantics, it is an important issue. People too often look at so-called capitalist (interventionist would be more accurate) economies and equate them with truly free markets. Problems that result from the intervention are erroneously blamed on “market failures”, which are used to justify further interventions.