Bryan Caplan  

Should Libertarians Oppose "Capitalism"?

From Poverty to Prosperity<... What I'm Reading...
Yesterday my long-time friend Sheldon Richman spoke before the GMU Econ Society on "Capitalism versus the Free Market."  (The video was streamed here, but it doesn't seem to be archived anywhere; if you've got a link, please let us know).  His main thesis: Libertarians should say that they favor the "free market," not "capitalism."  Why?  Because for many people, "capitalism" simply refers to the status quo economic system outside of explicitly Marxist nations.  Sheldon elsewhere goes on to argue that libertarians should actually say that they oppose capitalism:
We are a group of libertarians who understand that historically the word "capitalism" has meant, not the free market, but crony capitalism -- that is, collusion between business and State at the expense of consumers/workers. Thus we refuse to use the word "capitalism" to describe what we favor: individual liberty in all respects and free, competitive markets. We believe that what we have today IS capitalism -- and we oppose it.
I'm not convinced.  If we were starting from scratch, I agree that it would be great to scrap both "capitalism" and "socialism."  Etymologically, capitalism does sound like a system of rule by capitalists for capitalists - and socialism sounds like a system of rule by society for society.  Since neither etymological suggestion is true, I wish the terms had never been coined.

As Sheldon admits in his talk, however, changing words is like changing currencies.  If they're already widely accepted, you need a really good reason to abandon them.  Awkward etymology notwithstanding, I think the concepts of capitalism and socialism are good enough to keep using.

Sheldon's right that people often use capitalism and socialism as binary terms; if you're not Cuba or North Korea, you're "capitalist."  But this problem is easy to correct: Just emphasize that there's a continuum from pure laissez-faire capitalism to totalitarian socialism, and that most nominally "capitalist" countries are a lot less capitalist than they pretend.  Once you make this conceptual point, the Fraser and Heritage indices of economic freedom are great ways to continue the conversation.

When you "advocate capitalism," don't you risk alienating all of the people who hate the status quo but might come to love the free market?   It's possible, but I doubt it.  Yes, opponents of the free market habitually associate it with "pro-business" economic policies.  But this is usually a deliberate rhetorical strategy on their part.  Almost all self-styled "anti-capitalists" hate free markets per se.  But it's easier to incite outrage against visible injustices than against the invisible hand, and they take the path of least resistance. 

Don't believe me?  Try going to an anti-globalization rally.  Tell people you're for free trade, but against government subsidies for exports.  Tell them you favor freedom to form unions - and the freedom to fire workers for joining unions.  See what happens.  I bet it won't be pretty.

If Sheldon were merely saying that libertarians' noun of choice should be "the free market," rather than "capitalism," he'd have a decent case.  But for libertarians to reject "capitalism" as an alternate noun is overly defensive - and to announce that we "oppose capitalism" is completely confusing.

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COMMENTS (52 to date)
Redland Jack writes:

I've started shifting to the term 'voluntary exchange', as it seems like even the term 'free market' has started to get tainted.

Floccina writes:

I say dump both words (capitalism and markets) and talk about people should and should not be allowed to do.

Lee Kelly writes:

Milton Friedman's Capitalism and Freedom was so called because, apparently, Friedman believed capitalism could exist without freedom but not vice versa. Does capitalism entail freedom (i.e. liberty)? In the minds of most people, I do not think so and neither did Friedman.

Robert Scarth writes:

I think you've spent too much time with academics. If you say that you favour capitalism, just a different kind of capitalism, all most people will hear is that you favour capitalism, and stop listening. If you want to make sure people understand that you are different you have to make it really obvious. Changing the way you talk is one good way to do that.

I'm with Redland Jack, we should stop using the terms "free market" and "market" and talk about voluntary exchange, or better still voluntary co-operation:

People know their own situation best, and should be able to decide for themselves who they co-operate with.

Isn't that exactly what libertarians believe? Its a certainly a good summary of what I believe.

Josh Weil writes:

I think it's just confusing for libertarians to actively oppose the term "capitalism." We should just correct the definition ignorant people cling to for both capitalism and the free-market.

l4k writes:

Redland Jack's suggestion is a good one. I will start using "voluntary exchange."

Robert Scarth writes:

Josh: "We should just correct the definition ignorant people cling to for both capitalism and the free-market."

Thinking about them as "ignorant people" isn't really the best place to start from if you want to convince them that you are right - and more importantly from their point of view, that you care about them and their problems.

If we want to convince someone to change their mind to something closer to our beliefs we first need to understand the other person, how they see their problems, and what their goals are, and then be able to explain how a society based on voluntary co-operation will better help them to solve those problems and achieve their goals.

chipotle writes:

The word capitalism sounds like you're in favor of wealth or worse, the concentration of wealth, or worst of all, the current concentration of wealth in the current hands.

We live in an economy where the government has its thumb heavily on the scale. They do a lot of redistribution--and the balance of it goes upward. (Both through subsidies like the home mortgage tax deduction and through regulation that raises barriers to entry and competition.)

Capitalism was named by its enemies. Why do we put up with this?

We are in favor of "markets." It's concrete, understandable, and accurate.

Markets are run through voluntary exchange and cooperation and open to a large number of diverse participants.

Capitalism=Uncle Moneybags from "Monopoly." Unfortunate, but true.

Remember, "Markets!"

[Comment edited for crude language.--Econlib Ed.]

Dain writes:

Redland Jack's suggestion is a good one. I will start using "voluntary exchange."

Right, and see what a leftist says about your use of the word "voluntary." As if someone with less bargaining power volunteered to be a sex worker, a third world sweatshop worker, etc.

R Richard Schweitzer writes:

First of all, in the context of political economy, what is an "...ism?"

In the context of political philosophy - what is an "...ism?"

When people use ...ism, what are they trying to convey? Ah! That is the point, is it not?

"Ism" applied to a series of economic activities (or policies?)for identification or classification does not provide a definition.

Example: Socialism as a classification of economic programs is determined by the OBJECTIVES (usually "social") of the programs; whereas Capitalism has no specific operative objectives that determine its use in classification.

The government of a locality is the largest dealer in interpersonal violence in that locality (definition). Representative democracy, federalism, and the system of individual title to material wealth (the market, or private property) institutionalize humility by government actors and empower those with intimate knowledge of local conditions.

There. How hard is that? Now we can talk policy.

To adopt new terms because some people misconstrue them is to embark upon an endless flight from serious discussion. With the proposal to invent new terms for "capitalism" and "socialism" we have a situation like "retarded" => "handicaped" => "learning disabled" (which will eventualy give way to a new term when "LD" becomes a school-yard insult). Reality endures, whatever labels we paste over it. Stop running from words.

reasonable writes:

I'm totally with Sheldon on this. Bryan Caplan's rejection is based entirely on his own stereotype of 'anti-globalization types.' The fact is that many of the college-age students who join such rallies and events are there because they perceive big business and big government ganging up on the small and powerless. Unfortunately they all too often walk away believing that the problem is market exchange when in fact the problem is expropriation of existing property rights and barriers to competition.

Add Sheldon to that roomful of youth and I bet you get a more intelligent debate and a good fraction of those students will leave the room wanting to know much more about libertarian ideas, and entertaining the idea that the problem really isn't 'too much markets' but rather not enough markets and individual rights.

Josh Weil writes:


Note I said ignorant and not stupid people. I go to UC Berkeley where very smart people rail against "neoliberalism" and the market in general. They are straight up ignorant.

I would never call someone who hated Milton Friedman ignorant to his face, but it's important to recognize when talking to said person that he has misunderstandings of free exchange.

Bill Woolsey writes:

Capitalism creates a favorable impression among 61 percent of Americans. The favorables is 60 percent amount liberals.

I favor capitalism, but I consider "capitalism" to review to a broad spectrum of economic orders, and I like some of them better than others. I consider a command economy to be pretty much a nonstarter.

If someone says, "I favor socialism," then I would ask them what they mean. If means "scheme favored by modern social democrats," then I will say that it is capitalism with a large welfare state.

If someone says, "capitalism is evil," then I would ask, why? If it is something that is a problem with just some varieties of capitalism, then I would point that out. If I also opposed whatever it is they say is a problem with capitalism, then I would say that too. And explain how I think it should be fixed. And, ask how they think it should be fixed. Probably the result would still be capitalism, but with some probably harebrained intervention.

Of course, there are some people who really favor a command economy and call it socialism. And there are people who dislike things about capitalism that I count as being positive features.

But I think it is possible to get at these things without introducing a new name.

hutch writes:

i've had similar thoughts to what sheldon's talking about. 12-18 months ago when people were talking about the failures of capitalism and asking whether "american capitalism" would go away, i cringed. my view of capitalism isn't what the many in the press want to label it. i wish we had another word to describe the world we prefer. would i be upset if american capitalism went away? technically no, since i prefer an economic system with less government intrusion. but, if the alternative is more intrusion, yes, i would be upset.

PrometheeFeu writes:

I think I agree that capitalism these days basicaly means crony-capitalism in most people's mind. And I think finding a new word for people to rally around will be a lot easier than convincing people to see a continuum. And I think your argument is unfair. Anti-globalisation protesters disagree with you (and me) on a fundamental level. They see individuals as making fundamentally flawed choices and a necessity for the government to make things right. But take so-called "social-liberals" who advocate for things such as "pro-choice," and "gay rights" policies. If you tell these people you want "capitalism", a lot of them will hear "crony-capitalism" and think of you as the devil. But if you say you want individual liberties to triumph in both the "social" AND the "economic" spheres, you might win them over.

Patrick R. Sullivan writes:

Seems to me that Ralph Nader is the expert here. He realized that he couldn't sell his ideas as what they were; socialism. So he changed the name to consumerism and made a lot of headway socializing parts of the economy.

jc writes:

Yes, unfortunately framing, rather than reason and/or empiricism, seems paramount with regard to persuasion. While it's merely a personal - and hopefully isolated - case study, to many smart people I know words like capitalism, liberty, freedom, and markets have become so tainted that conversations aimed at espousing them are non-starters that quickly devolve into emotional argument. To be for those things is to hate Obama and to love allowing the greedy and the rich to trample the middle and lower classes and pollute the earth.

Westen's research showing a halt of dorsolateral prefrontal cortex activity when people are confronted with political ideas or evidence they disapprove of comes to mind. And words like capitalism, in my experience, seem to trigger this abrupt free-fall of reasoning ability, along with heightened and negative emotional responses.

Salesmen have known forever that if one tries to sell with logic, one starves. Emotion sells and logic provides buyers with reasons to grasp on to post sale, when most susceptible to buyer's remorse.

Alas, I still can't help trying to inject logic and empiricism into debate. But I find that avoiding words that have, for whatever reason, become tainted greatly facilitates my chances of actually changing anyone's mind.

For what it's worth, I'm experimenting with words like "tolerance" and "aggression free" and "cooperation" with respect to ideas associated with freedom, non-coercion, division of labor, and trade.

Matthew C. writes:

In the mind of the public, "Capitalism" = the Federal Reserve giving sweetheart loans to Citi / BoA and buying up their toxic mortgage paper, bailouts for GM, and no-bid contracts for Bechtel.

If we want to win over the public, we need to choose a word not fatally tainted by unsavory associations.

I love the idea of dropping all the talk about "capitalism" and focusing instead on freedom of exchange and association, which are ideas that the large majority will support.

agnostic writes:

Do "free-market" and "laissez-faire" have better connotations in the public's mind (even the educated) compared to "capitalist"?

While "capitalism" may suggest cronyism, that's been part of human nature and society forever, so we don't like it but will tolerate it. "Free-market" and "laissez-faire" suggest to most people something like economic anarchy. That's not just appauling like cronyism but downright frightening -- so people are definitely against that!

Not that I have any better suggestions than "capitalism" ... "freedom for buyers and sellers" might make it more concrete, you get the halo effect of "freedom" in the political sense, and it doesn't suggest chaos and anarchy.

RL writes:

With apologies to Monty Python:

College Student: Capitalism is evil.
Me: That will be $5
Me: I got the impression you were very excited about making a point. That you wanted me to respond to it and engage in some form of intellectual back-and-forth.
CS: Absolutely! That's what I love about college.
Me: That's not what *I* love about college. So it will cost you $5.
CS: OK. Here! [Gives me $5]
Me: OK. Continue...
CS: Capitalism is evil.
Me: No it isn't.
CS: Yes it is.
Me: Isn't
CS: Is
Me: Isn't
CS: Hey, this isn't intellectual back-and-forth. This is just you disagreeing with me!
Me: That IS intellectual back-and-forth.
CS: No it isn't.
Me: Yes it is.
CS: Isn't
Me: Is
Me: I'm sorry. Your time is up. Thank you for engaging in this capitalist interaction.
CS: Wait, we're not's another $5...

Sean writes:

capitalism, as I've understood, was named so by its opponents who criticized the system because some people "capitalize" on others (i.e. zero-sum). However, the term was adopted by its opponents because of the role of capital in production. The in-between system is still referred to as capitalism because it uses prices which could not exist with any meaning in its absence. (In other words, because it is capitalism, though distorted.) Yet all the price distortions caused by constant intervention by a bureaucratic institution not subject to the profit-loss system of the market, are blamed on capitalism by the very perpetrators of its obfuscation. Any change in terminology won't suppress the politicians desire for control and their shifting the blame of government failure on the Market. This semantics deludes from the fact that only two kinds of systems are possible--one where voluntary exchange determines meaningful prices (even if they are obscured by the coercive component); or one where some planner collects all goods and distributes them in accordance with his/their own opinions of an optimal distribution.

Matt writes:

Bryan, "Don't believe me? Try going to an anti-globalization rally. Tell people you're for free trade, but against government subsidies for exports." I've done that, the reactions aren't too bad. Not as bad as the firing people ones with unions. That one is way worse. Who determines the definition of capitalism? Is it the 95% of the population who confuses crony capitalism and free markets? Capitalism evokes so much preconceived notions that it hinders logical thought. At least saying you favor freer markets, but not capitalism, makes people realize they probably have incorrect preconceived notions.

Video of the speech is at

Found it at his blog

Patrick writes:

You can say you're in favor of a 'wall of separation between business and state'. Puts a Jeffersonian spin on it.

Jayson Virissimo writes:

"Free-market" and "laissez-faire" suggest to most people something like economic anarchy. -agnostic

Anarchy means "without ruler". Laissez-faire IS economic anarchy. Perhaps you are confusing anarchy with chaos.

Yancey Ward writes:

"Voluntary exchange", while pleasing to some, will be instantly redefined by its opponents, who are numerous. For example:

"How can you call the buying of food/shelter/medical care 'voluntary'? One must have those to survive, and if you are the seller, you have all the power. This is an inherently unequal exchange situation, and, thus, cannot be called 'voluntary."

The true opponents of "capitalism" are focused on the ownership of capital- of the machinery of production. In essence, they don't believe that an assembly line or a factory can be owned by anyone not laboring with the capital directly- you either use it or lose it. Now, how do you propose to rename "the right to own capital and rent it out in voluntary exchanges?" Propertyism?

Dustin writes:

Below is the link to the lecture.

agnostic writes:

"Perhaps you are confusing anarchy with chaos."

Anarchy is synonymous with chaos, especially among "most people" as I qualified my statement. See definitions 2 and 4 of "anarchy" at

R. Richard Schweitzer writes:

Since so much comment here on "Capital-ISM seems to be descriptive, it might be of interest to some to find and read:

"CAPITALISM" by David McCord Wright

NZ writes:

Sometimes it just feels good to defend/espouse "capitalism" and watch the liberals wince.

MernaMoose writes:


And sometimes, you have to realize the hard core liberals, or "progressives" or whatever they're called lately, are never going to be persuaded. No matter what you say or how you say it.

Seems like surveys show fairly consistently that these people make up about a third of the US population. And they are heavily concentrated in academia, the MSM, and government.

It's the rest of the world that we need to figure out how to persuade.

And if you want to make real progress, it's the educational system that we need to take over ideologically. People today are spoon fed "liberal" and "progressive" ideals from the day they start school, almost to the day they leave college.

Somehow, it seems that free market types aren't drawn to careers in education and government.

I tend to believe that, more than anything else, is the root of our problem. That free market ideals still have the staying power that they do in this country, is nothing short of amazing, considering the dominant philosophy that gets channeled in our educational system.

Sheldon Richman writes:

My talk was mostly historical not semantic. The argument is that not only is the word subject to too many interpretations to be useful to us, but that historical capitalism is something true free-market advocates should not want to be associated with.

Sheldon Richman writes:

PS: I'm not saying that if we eschew (gesundheit!) the word "capitalism" we'll be more persuasive to progressives and state socialists. But at least we'll be better understood. Let's at least be rejected for what we believe.

Vangel writes:

I agree with Brian. Because we cannot have a free market without capitalism it makes no sense to be opposed to it.

Sheldon Richman writes:

"Because we cannot have a free market without capitalism it makes no sense to be opposed to it."

Vangel, you've put the rabbit in the hat. Who says we can't have a free market without capitalism? My point is that in practice capitalism has not meant the free market but some degree of government collusion with business. So we certainly can have the latter without the former.

Joshua Katz writes:

I don't think the point is that people might misunderstand, or just framing - the larger point here is what capitalism actually has meant historically. Historically, it has never meant a free market, it has always meant a system in favor of capitalists. I do oppose capitalism, I don't just say it for rhetorical effect.

For the poster above who is shocked that people can oppose neoliberalism, consider me one of your 'ignorant' folks. I oppose South American dictators, I oppose the use of force to keep your currency in flow, I oppose debt-based economies, and I oppose the use of international organizations and the military to secure the position of large corporations.

Steve Roth writes:

What I find frustrating is the use of the word "socialism" to mean two different things:

1. Government owning the means of production.


2. Government engaging in redistribution.

#1 has obviously been profoundly discredited by history (for nonfinancial productive means, at least, and with exceptions such as Singapore's public housing for 90% of citizens).

#2 has been resoundingly endorsed by history--every thriving, prosperous country engages in massive amounts of redistribution.

People are constantly trying to discredit #2 by pointing to the failure of #1. Doesn't wash.

Redland Jack writes:

@ Steve

On #2, I'm not sure this is an endorsement. Namely, I don't think the cause-and-effect on this is:
A: Country engages in massive amounts of redistribution
B: Country becomes prosperous
It seems like it's more along the lines of:
A: Country becomes prosperous
B: Country engages in massive amounts of redistribution
Although I suppose you might argue that, since the wealthy redistributors haven't 'collapsed', that is an endorsement? Or would you further argue that redistributing has led to greater prosperity (or at least no diminution in prosperity)?

ERIC writes:

I'd like to throw the book 'Freedom for Sale: Why the World Is Trading Democracy for Security' by John Kampfner into the mix. Read some of the reviews on Amazon or Google as I think that it would add to the discussion.

Some people think capitalism is good, others bad, and both types often do a terrible job explaining why...let along crafting a definition. When people speak you can quickly see their ultimate motives anyhow, unclouded by jargon...which is what this has almost turned into.

I understand both aims here and given that we are all pretty much on the "same side" the point should be to advance "freedom" and "markets" etc. Do I think you can untangle capitalism from the mix, no, so...hate to say it, why waste your time. You rarely get away with defining anything in any debate or discussion with a single word, so why fixate on it. Isn't this why we use examples and stories to "teach"?

The narrative is more important than wasting time quibbling over poorly understood terms. We're after results anyways, not changing every persons mind. We all should know by now how impossible that task is!

Marja Erwin writes:

I support free markets.* I support socialism** and oppose capitalism.***

*Among other forms of voluntary cooperation.

**Economies where the working classes control the means and conditions of production. I prefer forms such as some types of individualist anarchism, mutualism, and anarchosyndicalism, which strive to maximize each workers' control of her own means and conditions of production.

***Economies where a distinct capitalist class controls the means and conditions of production. In this sense, capitalism is one of several types of economy where a ruling class controls the means and conditions of production. It can include different economic forms, such as the state capitalism of the USSR [while it lasted] and the mixed-economy capitalism in the USA [for its entire history].

(Methinks some of you are using different definitions.)

Bernard Palmer writes:

I made this up for my daughters to see the difference,

In Capitalism gold is used for money
In Socialism paper is used for money
In Fascism nylons are used for money
In Communism food is used for money
In Totalitarianism there is no money

The nylons idea came from Sophia Lorens 2 Women movie in Fascist Italy when her daughter's first customer paid her with nylons.

guthrie writes:

RL you made me fall out of my chair! As a quazi-professional sketch comedy writer, I say bravo!

Steve Roth writes:

@Redland Jack

The fact remains that there is not one thriving prosperous country that operates on libertarian principles. If they're so efficient, shouldn't at least one have emerged, and surged ahead of the others? Hasn't happened.

As such, it's currently nothing more than a utopian dream. And we know how those have turned out over the centuries...

I propose we call a system with private ownership of the means of production "Hessenism". Now, my question for Sheldon and other opponents of "capitalism" is: would a libertarian, free market be characterized by Hessenism or not?

Frank writes:

Steve Roth:

Has any nation really tried to operate on libertarian principles? It could be argued that the U.S did in the beginning. The U.S became very prosperous. The only reason it is going downhill is because it has been engaged in statist intervention for the past century.

That Libertarian ideals produce wealth and prosperity is exactly the reason they don't last. Prosperity invariably results in hedonism and laxity, which weakens both society and the individual, allowing those greedy for power and control to seize it. You'll notice this is always carried out in the model of the Fabian society. Power is only taken by force in dictatorships.

Freedom requires constant vigilance. Maybe we can get it right this time around.

Edmund writes:

The concept of "free market" is redundant in an economy where intangibles -- like financial advice, teaching, medicine etc -- account for the majority of output, as they do in the US.
Conventional economic thinking founders when applied to intangibles. Logical reasoning will lead to the conclusion that in intangibles, the market not only doesn't work. It doesn't exist.
In these circumstances, production and exchange are driven by the intuition of the individuals producing and consuming intangibles. Price is a conditioning factor, not a determining one.
So the concept of voluntary exchange sounds better, though I would prefer voluntary interaction, since this covers things you can't see, touch, taste, smell or hear (ie services/intangibles).
Capitalism, quite apart from its ideological overtones, is also wrong. In intangibles, which involve individuals interacting, there is practically no need for capital. For example, a teacher can teach with practically nothing except intellecual capital (which itself is an intangible). So what is the reason to call a self-employed teacher a capitalist? He or she is, surely, just a teacher making a living in the best way he or she can create value.
The critique of capitalism as a system involving the parasitic partnership between owners of wealth and the state seems powerful. The East India Company, arguably one of the first modern business corporations, was given a monopoly by the British state to trade with India and the Far East. This monopoly was enforced by its own private army and supported by the Royal Navy and the British Army. In 1857-58, the army of the East India company rebelled and was suppressed by the British Army, with much attendant brutality. That's hardly a libertarian model.
Most modern corporations only exist because of legislation that allows them to record intangible assets in balance sheets. Intangible assets are a legal and accounting fiction and a privilege granted only to organisations incorporated through the various types of legislation the state has imposed on the economies of most countries.
Since the individual is not allowed to treat his or her intellectual capital as being identical to fiat money, why should this right be given to corporations?
A practical libertarian initiative would be to press for the abolition of legally-enforceable intangible assets (goodwill, brands, IPR). Once this happened, you would see the behemoths dominating large parts of the global economy shrinking to their economically-sustainable size and wealth-creaters liberated at the level of the individual to create wealth.

Minnesota Chris writes:

Here is a YouTube of the full lecture:

Loof writes:

According to Bryan:
“Etymologically, capitalism does sound like a system of rule by capitalists for capitalists - and socialism sounds like a system of rule by society for society”.

Lenin conflated “socialism” with society following Marx’s similar conflation with “communism”. Society in simple terms is a social ordering and construction of the whole, which could be socialist, communist, capitalist or otherwise.

Conflation of concepts is about “isms”. Peter Viereck said: “Formalism, by being an ‘ism,’ kills form by hugging it to death.” Substitute any dogmatic “ism” for Viereck's “formalism”. About society, “socialism’”, “communism”, “capitalism” become collectively in love with each of their conceptions - dogmatically so - to an extreme about how Society ought to be socially ordered as a whole. Similar love of the market dogmatically employed should be called marketism, which hugs markets to death.

A distinction seminal in sociology since 1887 occurred with typology in Tonnies’ Gemeinschaft und Gesellschaft (Community and Society). Community is personal and communal; Society is individual and associational. Associations and communities are both social, though neither need consume the personal individual in society nor the individual person in community, as they socially now do with social engineering in which economics is top-dog.

Purposely, we should objectively construct societal “houses” about Right (i.e. professionally) to subjectively create communal “homes” about Good (i.e. personally). And, within the paradigm of scientific economics Gemeinschaft is to the Household as Gesellschaft is to the Firm.

Should Libertarians oppose "capitalism"? Oppose any 'ism'; include libertarianism and marketism.

Rob Bradley writes:

I have used the terms "political capitalism" and "free market capitalism"

See my website

- Rob

In Capitalism: A Good Word for a Bad Thing, Kevin Carson argues that "capitalist" is an accurate term to describe the corporatist economy we have now. Thus, we should in fact be anti-capitalist, according to this, and contra Caplan (I side with Caplan).

Carson also writes,

"in common usage, among establishment libertarians and what passes for mainstream 'free market' wonks, any country that hasn’t adopted Marxian socialism as its official ideology is 'capitalist.'"

This assumption underlies most mainstream “free market” commentary in the business press and business news channels: even when they explictly refer to “our free market system” in so many words, they really mean a system in which most business enterprise is nominally “private.” No matter how statist a system of regulations is in effect, so long as they’re exercised primarily through “private” actors, and most money passes through the hands of such “private” actors rather than the U.S. Treasury, it’s a “free market” system. Hence, the kind of “free market” agenda you see at places like Heritage and the Adam Smith Institute for “privatizing” government functions by contracting them out to “private businesses,” even when those businesses are guaranteed a profit at taxpayer expense.

It seems to me that by this argument that "free market" is just as bad a term as "capitalism" is for describing the .... free society that we favor (I don't know what to call it any more). So, do we have to be anti-capitalist and anti-free market too? What terms are we permitted to use to describe our preferred social system?

Loof writes:

Stephan Kinsella asks:
What terms are we permitted to use to describe our preferred social system?

In social engineering a free society for elitism one term libertarianism can use is “propertarian” to describe your preferred social system.

Vangel writes:

Sheldon wrote:

Vangel, you've put the rabbit in the hat. Who says we can't have a free market without capitalism? My point is that in practice capitalism has not meant the free market but some degree of government collusion with business. So we certainly can have the latter without the former.

When we talk about the 'free market' we use the term to describe the voluntary exchanges that take place in a given society. Each exchange is a voluntary transaction between two parties, either directly or through intermediaries. A voluntary exchange will only take place if each party expects to gain from it. For exchanges to continue to take place, expectations of benefit have to be validated through experience. If either party is not satisfied, the exchange does not take place again under the same terms.

In a free market individuals will use their own capital to produce goods or services and will trade those goods and services freely. If we take away property rights, prohibit private ownership of capital and prohibit voluntary transactions between people who use their own capital to produce goods or services you can't have a free market.

I think that you are confusing 'free market capitalism' with the more familiar 'state capitalism', in which we have parties with political connections influence regulators to impose their power and force transactions to include various terms that are advantageous to the established players. You are right to oppose 'state capitalism' (or 'crony capitalism' if you like that term better) but wrong to oppose capitalism itself because without the right of individuals to trade goods that they produce using their own capital you can't have a free market system. Frankly, I am disappointed because I expected a very smart guy like you to know better.

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