What to Make of “Capitalism”

For the United Kingdom’s The Guardian, Pankaj Mishra says the world is “looking at a fresh political awakening,” citing examples from Egypt and Greece to Israel and China. “[E]xtreme and seemingly insurmountable inequality,” Mishra argues, are the source of the new “public anger,” and that inequality is itself the result of “the west’s model of consumer capitalism.”

In using the word “libertarian,” as both a noun and an adjective, to describe myself and my views, it’s often assumed that I’m an advocate of “capitalism,” commonly coupled with “free market” to make “free market capitalism.” When I explain to people that I consider “free market capitalism” to be an oxymoronic phrase, yoking fundamentally inconsistent concepts, the usual responses are confusion and charges of deliberate obfuscation.

After all, for decades now towering figures in libertarian thought, ranging from Ludwig von Mises and Murray Rothbard to Ayn Rand, have used the word capitalism to mean the peaceful system of voluntary exchange, an economic model completely beyond the coercive reach of the state.

Because of this constant reiteration of the capitalism as free market idea, we might think — and many, if not most, American libertarians do — that we ought to forgo petty cavils at the word, adopting and affirming capitalism in spite of its ambiguity and baggage.

While there exist earlier uses of the term, anarchist historian Shawn P. Wilbur points to an 1839 work by Pons Louis François de Villeneuve as among the earliest appearances of the word. It’s probably safe to say that Villeneuve’s invocation of “capitalisme,” though not entirely negative, was not calculated to convey anything like the “freed market” that market anarchists endorse.

Indeed, throughout the nineteenth century, “capitalism” was called upon by a wide variety of radical thinkers to communicate different, often imprecise, things. Whether or not there is any consistent, ideological current running through the early uses, none seem to assign to the word the definition of capitalism accepted by the contemporary libertarian in the United States.

The free market anarchist Thomas Hodgskin, for example, was in the habit of using “capitalist” as a derogatory epithet, and Benjamin Tucker’s prodigious body of work clearly distinguishes capitalism from free markets. Capitalism, for these champions of liberty and free markets, meant a system of pervasive political privileges whereby the rich use the power of the state to preclude competition in order to exploit the productive.

We can thus regard the usage of “capitalism” employed by the American species of libertarian as at least somewhat anomalous, historically speaking. Even beyond the fact that the capitalism as free market meaning deviates from earlier, established senses of the term, the multiple, conflicting definitions of the word also render it confusing.

As Sheldon Richman has said, “[I]f, without controversy, capitalism can take the qualifiers ‘free market’ and ‘state,’ that tells us something.” American libertarians’ idiosyncratic use of the word capitalism also functions to divide us from the broader, world community of anarchists and libertarians, who (for the most part) consider themselves and their movement ardently anti-capitalist.

In Europe, even the word “libertarian” is more often associated with socialism than it is with capitalism, further broadening the chasm between liberty-lovers in the Old and New Worlds. The goal shouldn’t necessarily be to convince North American free marketers to identify themselves as socialists. Although many once did, that would likely be an exercise in futility, a project more likely to outrage than to unite.

Instead, our aim should be to dissociate true free markets from capitalism, a system that for people all around the world calls to mind the exploitation of labor, subjugation of the poor, and huge disparities of wealth. These realities are uniformly the result of the state’s intervention in the economy on behalf of well-connected business actors who hold absolutely no brief for the free market.


Citations to this article:

Free Markets & Capitalism?
Markets Not Capitalism
Organization Theory
Conscience of an Anarchist