Being a libertarian means opposing the use of force to restrain peaceful, voluntary exchange. That doesn’t mean it should be understood as involving support for capitalism.
Whether this claim makes any sense at all depends, of course, on what you mean by “capitalism.” For some people, perhaps, the term just refers to free exchange. And if that’s all you intend when you talk about “capitalism,” you’re quite right that there’s no real conflict between what you’re talking about and a sensible libertarianism.
But people very often have some other senses of the word in mind when they employ it. For instance: mainstream print and electronic media regularly use “capitalism” to refer to “the economic system we have now.” And it’s relatively common to hear “capitalism” employed as a synonym for “dominance of workplaces and society by capitalists—by the owners of substantial capital assets.” Libertarian principles as I understand them entail support for capitalism in neither of these senses.
To a very significant degree, the economic system we have now is one from which peaceful, voluntary exchange is absent. An interlocking web of legal and regulatory privileges benefit the wealthy and well connected at the expense of everyone else (think patents and copyrights, tariffs, restrictions on banking, occupational licensing rules, land-use restrictions, etc.). The military-industrial complex funnels unbelievable amounts of money—at gunpoint—from ordinary people’s pockets and into the bank accounts of government contractors and their cronies. Subsidies of all kinds feed a network of privileges businesses and non-profits. And the state protects titles to land taken at gunpoint or engrossed by arbitrary fiat before distribution to favored individuals and groups. No, the economies of the US, Canada, Western Europe, Japan, and Australia, at least, aren’t centrally planned. The state doesn’t assert formal ownership of (most of) the means of production. But the state’s involvement at multiple levels in guaranteeing and bolstering economic privilege makes it hard to describe the economic system we have now as free. So if “capitalism” names the system we have now, anyone who favors freedom has good reason to be skeptical about capitalism.
The privileges that mark the existing economic order, whatever we call it, inure disproportionately to those with the most political influence and the greatest wealth. And the network of privileges preserved by the state tends in various ways to boost the privileges of capitalists in the workplace. As regards the workplace: state-secured privilege reduces the possibility of self-employment (by raising capital requirements and otherwise increasing costs of entry, while simultaneously reducing the resources people might be able to use to start and maintain their own businesses). It also imposes restraints on union activity that reduces workers’ capacity to bargain effectively with employers. By reducing alternatives to paid work and reducing workers’ collective bargaining opportunities, the state substantially increases employers’ leverage. In short: dominance of workplaces and of society by “capitalists” is incomprehensible in anything like its current form without attention to the state’s mischief. Again, if this is “capitalism,” proponents of freedom have no reason to embrace it.
It’s certainly conceivable that someone could argue that, while “capitalism” is frequently used for objectionable social phenomena, it is just as frequently employed for an economic system to which freedom is truly central. I am not sure either what the relevant proportions are or what weight should be attached to particular instances of using “capitalism” in one way or the other. I am quite sure, however, that the negative usage has been around for a long time (“capitalist” in the pejorative sense was employed by enthusiastic advocates of free markets like Thomas Hodgskin in the first half of the nineteenth century) and is very common today. Indeed, all too frequently, I fear, when “capitalism” is employed in a positive sense, it’s used as a “package deal” concept (as Roderick Long has helpfully emphasized) that somehow means both “free exchange” and either “the status quo,” “rule by capitalists,” or both. It’s tainted. And when people in the streets of countries throughout the developing world chant out their opposition to “capitalism”—meaning, in reality, not genuine freedom but rather imperial dominance by the USG and its allies—I think it’s vital for libertarians to be able to make clear that the system of statist oppression the protestors are naming isn’t the one advocates of freedom favor.
Contributors to the Wall Street Journal’s editorial pages, commentators on Faux News, and (other) spokespersons for the political and economic elite may continue to use “capitalism” for whatever it is they say they favor. They’re not libertarianism’s natural allies, and there’s no reason for libertarians to emulate them. Support for free (or freed) markets is quite consistent with enthusiastic anti-capitalism.