| The Concept of "Capitalism" Should Not be SO Confusing
|I simplify a term that has been distorted by many.
Recently I had a conversation with a friend who was upset
that a corporation was able to get the government to use
its power of eminent domain to take the land from several
people for a private-for-profit project. This was clearly not
a public project such as a road or a sewer (and I’m being
intentionally vague because that specific project is not the
point of this article). My friend concluded by saying, “and
that’s why capitalism is evil.”
I then asked, “Why do you think that’s capitalism?”
My friend replied, “Because it’s a corporation out to make
I then said, “That project ceased to be capitalism when
force was used to take those individual’s property if they did
not want to sell.”
I have found over the years that many people are confused
about what capitalism is, as well as, what comprises the
other types of economic systems.
One of the problems I’ve found is that several modifiers
are frequently added to the term capitalism which causes
a great deal of misunderstanding (and I suspect not
without intention). Here are some examples: Corporate
Capitalism, Crony Capitalism, Free-Market Capitalism,
Laissez-Faire Capitalism, Private Capitalism, Responsible
Capitalism, State Capitalism, Turbo Capitalism, and Welfare
Capitalism (this is not an exhaustive list).
During his run for President, I heard Bernie Sanders use
one I'd never heard before: Casino Capitalism (a term
coined by John Maynard Keynes in reference to the
fortunes made and lost in the stock market of the 1920s).
I have even heard people describing Democratic Socialism
as a type of capitalism. A type of socialism as a type of
capitalism? No wonder so many people are mixed-up!
Adding to the discombobulation is that most countries
today have a mixed economy which is part capitalism and
part command economy (a command economy is one in
which business activities and the allocation of resources
are determined by government order rather than market
forces - TheFreeDictionary.com), i.e., communism,
socialism, fascism, monarchy, or other dictatorship.
My motivation in writing this article is to do one thing -
simplify the concept of capitalism - so that anyone can
I will start by going to TheFreeDictionary.com for an
“official” definition: Capitalism (kap'i-tl-iz'?m) n. An
economic system in which the means of production and
distribution are privately or corporately owned and
development occurs through the accumulation and
reinvestment of profits gained in a free market.
This definition properly includes the term free market,
which means: an economic market regulated by the
forces of supply and demand (TheFreeDictionary.com).
It is the inclusion of the term free market which
differentiates how profits are made under capitalism as
opposed to any other system. It is the voluntary exchange
of goods and services without any government regulation.
It is a consensual exchange of goods and services where
each party feels they have come out better because of
it. If there is force or fraud it ceases to be a free market;
a coerced market it is not capitalism.
All other systems of economics support forced exchanges
to one degree or another.
The other day, I saw a meme which nicely summarized
the difference between voluntary and forced exchanges:
When is sex NOT rape? When it is consensual.
When is a job NOT slavery? When it is consensual.
When is a transaction NOT robbery? When it is consensual.
If an exchange (sale, purchase, trade, swap, share,
contribution, donation, gift, etc.) is not consensual or
voluntary - then it is forced. If you are not willingly parting
with your time, effort, property, or wealth - whatever the
circumstances may be - then it is not voluntary, and hence
Capitalism is consensual; and it is voluntary. If there is
ANY force involved, then it is NOT capitalism.
So, the next time you hear someone use the term
"capitalism," ask yourself whether or not the exchange
and/or the economic system they are describing or
referring to includes or involves force.
Since this is generally a column on motivation, I'll conclude
with this question: How would you prefer to be motivated:
by force... or by the freedom of choice?
© Robert Evans Wilson, Jr.