Capitalism: Unfortunately Alive and Well

In an article for Business Insider titled “Is Capitalism Dead?” Larry Doyle bemoans “the incestuous nature of the Wall Street-Washington relationship.” Observing that a “few gigantic banks dominate our markets,” Doyle reflects that “Wall Street as it currently exists is an oligopoly,” not an accurate reflection of “the principles of capitalism.”

He cites Investopedia for a definition of capitalism that describes it as “[a]n economic system based on a free market [and] open competition,” and he contrasts that with the high barriers to entry that typify, for instance, the banking economy. Against his “true form of capitalism,” Doyle sets oligopoly, “[a] situation in which a particular market is controlled by a small group of firms.”

It may seem to many to be all too precious a quibble, but market anarchists take exception to Doyle’s use of the word “capitalism” to mean “free markets.” Our umbrage at the C-word, isn’t just an idiosyncratic dislike of the word itself; it’s based largely on precedent, on the historical use of the word to describe something very different from “open competition.” Indeed, capitalism has, throughout its history, depended on significant and enduring state interventions in economic activity in direct contradiction to genuine free markets.

Notwithstanding his affinity for the word, capitalism has in actual fact denoted something closer to Doyle’s oligopoly than to anything like a free market. Contrary to the claim that “right now it isn’t capitalism,” then, market anarchists maintain firmly that the economic system right now is properly designated “capitalism.” We counsel free markets as a liberating and enfranchising alternative that would duly reward productive behavior.

When, as market anarchists, we urge the replacement of the relationships of authority with those of mutually beneficial exchange, or commerce, we are not offering an apology for the commercial entities of the present moment. It is not business in and of itself, as an object apart from its modes of action, that we plead for, but rather the “economic means” of reciprocal value.

As explained by the American individualist anarchist Francis Dashwood Tandy, “[S]olve the economic problem and you trim the claws of private enterprise, rendering it incapable of great evil, while retaining its good qualities.” Those good qualities, including the impulsion of price toward cost, obtain in completely free competition, a condition absent of the coercively instituted privileges of statism.

Though it is often blamed for the worst evils of the state capitalism of today, competition is — at least in its truest, most unrestricted form — conspicuously lacking from the economic system created and maintained by the state. Rather than championing the “cutthroat competition” that is, in the popular conception, culpable for the crises that bestrew economic life from time to time, Big Business engages the state to prevent competition.

And in so doing, the state capitalist elite can hold supply (from job opportunities to commodities) in check, profiting by ruling out the contests of the marketplace. Pro-market and pro-business are better understood as opposites than as synonyms. Without the active intervention of the state, most of the permanent features of the corporate economy would buckle and disintegrate under their own weight, submerged in the flood of their enormous costs and diseconomies.

The popular maxim used to describe the interplay of special interests in a “democracy,” the one that speaks of “concentrated benefits and dispersed costs,” is actually quite an accurate description of the corporate capitalist economy.

The consequences of direct subsidies, intellectual property monopolies, and regulatory cartelization — just to name a few — all redound to the benefit of influential, entrenched corporations; their “free market,” suffused throughout with the state’s preferential treatment, is very unlike the one that the laboring man is expected to operate in, where he is to “sink or swim,” carrying his own costs and working for a living.

Words have meanings, and “capitalism” means exactly the kind of exploitative system that sincere advocates of free markets oppose. And while it may not be dead yet, killing capitalism — a system wholly resulting from the state — is certainly the goal.

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