This is a term that i see bandied about here to mean private ownership of the means of production, the opposite of Communism, total disdain for any regulation, the philosophy of greedy slime who plot child enslavement in smoke-filled rooms, etc.
To me, Capitalism is simply the first definition in my list. It is not the opposite of Communism (well, it may be for certain definitions) nor does it inherently despise regulations. The Monty Burns caricature of the Capitalist is a straw man for the purposes of debate.
Capitalism is an economic system for creating and distributing wealth. The basic premise is that you can create new wealth rather than just redistribute existing wealth. This makes it theoretically possible for everyone in the system to become wealthier.
The basic idea is that people should generally own property (including their own labor) as individuals and be as free as possible to exchange property with one another. A secondary idea is that people will place different values on items of property. So people will tend to trade items which they place a relatively low value on for items which they place a higher value on. Because of differing values, each party in the exchange can benefit from the trade.
Well, this thread semi-died, but it’s worth stating for the record. There’s a difference, but compatibility, between free markets and capitalism.
Capitalism is a system which allows for the concentration of (duh) Capital in order to fund larger, more efficient, and longer-lasting operations than individuals could accomplish.
Free Markets are a system (well, lack of a system) which allows nearly anyone to participate in the market on their own terms. You can usually sell whatever you want, provided it isn’t intrinsically illegal under the law, move and sell goods with minimal taxation or harassment, and otherwise participate in the market economy efficiently, which allows for competition.
In the United States, we often talk about the latter when we mean the former. Further, we often assume a Free Market that isn’t necessarily there. Many professions are heavily regulated by the state, or by quasi-state actors who get some level of official support and can limit competition they don’t like. Likewise, we often assume that Capitalism involves, requires, or even that capitalists like free markets.
I agree that capitalism and the free market are two separate things. But I’m not sure I’m in full agreement with your definition of a free market. It’s not just the ability to sell any good you want. A free market also requires people have freedom to buy the goods of their choice. In real world economics, monopolies are a lot more common than monopsonies.
I also think taxation is a pretty minimal issue in free market terms unless it’s being used deliberately to stifle competition. A general tax applies to everyone equally so it has no effect on competition. I see taxation as more of a capitalism issue.
I hadn’t talked about that side of the transaction, but you are absolutely right.
I disagree, for two reasons. First, taxation in unfortunately sloppily applied, frequently used as a blunt instrument by governments, and rarely revisited or reexamined. Thus means that tax structures tend to become increasingly distorted over timer, and that has significant real-world economic effects. Second is that it’s very hard to split taxation from regulation, and regulation is always political somewhere along the line.
I still question it. Consider something like a sales tax. If it’s just a flat percentage on the amount of the sale, how does it affect the free market? Every manufacturer and every customer will be dealing with the same tax so everyone will be playing on a level field.
I can see situations where a tax will affect the free market. Tariffs and excise taxes are obvious examples. But they’re exceptions to the general principle.
Yes, the same with regulations…if they affect everyone across the board then they have no real effect on a free market. It’s only if taxes (or regulations, or incentives, etc) are used to favor one company, or one vertical sector of a market that you get a distortion.
Those aren’t always bad things, btw, but they are definite distortions of a market system, and they are certainly used by governments to do social engineering or favor a sector they think is best for the public good (usually as perceived by their supporters, the base voters and folks who give them money :p).
As for the OP:
Pretty much this…capitalism is simply an economic system whereby the means of production and distribution are privately owned. Regulation often gets brought up in these threads, but in the end capitalist systems are always and have always been regulated in one form or another, so regulation isn’t anathema to capitalism. Where a country sets the bar is going to depend on the citizens in a given nation state, but that there is a bar is pretty much universal. How MUCH a given country allows for the private ownership of the means of production and distribution also varies and depends on the citizens, but I think all successful nation states today have a capitalist economic underpinning in one form or another…otherwise their economies basically suck.
Some capitalists certainly don’t want regulations (at least not ones they perceive hurt them or give someone else an advantage…they would probably be all for regulations that help them, since that’s been how things have worked. Just look at the great monopolies that have existed in the US to see examples of this and how those monopolies were dependent on the government to make them happen), but CAPITALISM works just fine with regulation, and in fact I can’t think of a capitalist system that hasn’t had at least some regulation.
In a recent debate on this topic a poster said that a number of countries in Europe and countries like Canada and Australia weren’t capitalist countries (I had left that discussion for a few days but I didn’t see anyone challenge him on this). This is, of course, ridiculous and shows the level of ignorance some have about what is or isn’t capitalism and which countries are or aren’t capitalist (most countries that are successful today have at a minimum some capitalist aspects…and, all Western European nations are capitalist, as is Canada, Japan, Australia, etc). Some of them are mixed, in that they might have some public ownership and some private ownership of either production or distribution (the US is mixed as well). I think where the confusion comes in is when people think that capitalism is a political system or that capitalist systems don’t have regulation…or something.
It’s a “mode of production.” Feudalism and slavery are other modes of production. What distinguishes capitalism is:
Production is for sale, not one’s own use, unlike say simple peasant or family economies.
Workers, unlike peasants, do not have access to land or other forms of capital and so must sell their labour to the few that own land, factories, etc., that is, the capitalists.
For their labour, they receive wages that represent only part of the value of the goods they produce.
Again, unlike peasants, everything the worker produces belongs to the capitalists. Peasants had to fork over tithes and taxes, but what they produced was theirs. Workers do not own any of the goods they produce at work.
The employer or capitalist controls how work is done, who is hired, etc.
Capitalism creates inherently imbalanced relationships between the ‘haves’ and ‘have nots’. The fact that we don’t have enough regulation in place to prevent things like intragenerational wealth transfer means the board never really gets reset for new players.
Capitalism in a descriptive sense, or capital, is the ownership of the means of production by other than the workers who do productive work; or the possibility of such ownership.
ETA: Also what Kropotkin said. The work product is owned by the owner of the business rather than the worker. That’s often overlooked.
In workerist & producerist theories, wealth is created by the labor of mankind, and those who enjoy the fruits of that labor due to “ownership” and not their own work are parasites.
Some right-wing types have countered with the idea of Capitalism as an ideology, where privately held goods are lionized and publicly held goods are disparaged; this often turns into laissez-faire ideology, or a belief that corruption is good because the government should be as much for sale as everything else. That sense of “Capitalism” is stupid, insane, and highly destructive.
(Note: My background is in environmental biology. I don’t believe a human being can even be a producer per se. Wealth is in nature; portable wealth is wrested from the ground with violence, labor merely refines it or moves it around. So I think the whole argument is prone to false conclusions from false premises. But on balance, yeah, I am suspicious of Capitalism.)
[QUOTE=Kropotkin]
It’s a “mode of production.” Feudalism and slavery are other modes of production. What distinguishes capitalism is:
Production is for sale, not one’s own use, unlike say simple peasant or family economies.
[/QUOTE]
So, what you are saying is that every modern economy including Capitalism and Communism and everything else is different than ‘simple peasant or family economies’. Um…ok. That sounds like a feature not a bug to me. I mean, sure, in the bad old days I could basically have all the mud and disease and tree roots I could use, and if I could find the materials (or trade for them) I could make myself a shirt which I could use myself because, well, there weren’t any shirts to buy elsewhere and no one was selling them in my village. If I couldn’t make a shirt then I would have no shirt I guess.
Yup, that sounds like paradise to me. Instead of a modern system where you can sell your labor for an agreed upon price and then exchange the symbolic representation of your labor (we call that ‘money’ these days…cool, right?) for goods and services produced by other worker who can buy the ones you produce using that money stuff to do so. So, instead of scrounging for roots and mud and hoping for a shirt I can simply nip on over to a ‘store’ and ‘buy’ one with ‘money’ I ‘earned’ by exchanging my labor.
Yeah, most peasants didn’t really have access to their land since in most cases they were basically one step up from slaves (and in some cases there was no step at all). This fantasy world of noble peasants laboring away for their own good and no one else is pretty much the creation of various communist authors trying to idealize a past that never existed.
Oh, and there is no hard line between Worker™ and Capitalist(arr)…they are pretty interchangeable. A worker has the option of taking their labor somewhere else or they could create their own business and hire other workers to work for them. Workers who will also have the same options about exchanging their labor for an agreed upon price, taking their labor elsewhere or even starting their own business. Unlike your peasants who were basically stuck on the little piece of land they were born on, just like their daddy and his daddy before him and so on.
Can you show me historical examples of peasants keeping what they produce except for little things like tithes and taxes? Also, what’s stopping me from starting, say, a wood working business and making wooden furniture for other people to buy BUT ALSO KEEPING SOME FOR MYSELF? I mean, how’s that different than your fantasy peasant example? No peasant in history could make every single thing he or she needed, so they would exchange a basket of carrots for some shoe leather (or perhaps sell a daughter or two to the local lord for seed for next years plantings). I have to pay taxes, sure (and, of course, there is the whole selling stuff for money to buy other stuff), but I could easily keep what I produce without having any poor workers working for me and forcing them to take my money in exchange for their labor…right? Or, lets say I’m a farmer (perish the thought) and have a small family farm. There are still such things in the US and Europe after all. So, let’s say I have such a farm and I produce, well, produce. Some of which I take to the local farmers market up the road and sell…but, some of which I and my family, you know, eat…ourselves. With our own mouths and everything! How’s that different from your fantasy peasant except for the fact that I’m probably several orders of magnitude better off in every conceivable way?
Well, leaving aside how narrow and ridiculous this is, the worker also controls whether he or she sells their labor to the ‘employer or capitalist’…and the government has a say in ‘how work is done’ at least wrt safety rules, minimum wage and many other factors in the various Capitalist nations of the world (hell, they can even have a say in ‘who is hired’ in some cases…and perhaps impact ‘etc.’ as well!). And, as noted, the worker could decide to start their own business and hire others to work for them instead.
Capitalism is the money system. Also known as the “free market” meaning the money system in the absence of rules that constrain how it would otherwise operate.
Capitalism is, by extension, the set of generally prevalent routines and realities that correspond with the unadorned / unalloyed operation of the money system.
The money system, to dig deeper, is the enumerated evaluation of a person’s contribution so as to measure it directly against the evaluation assigned to whatever resources that person wishes to acquire or consume, including (therefore) resources that consist of another person’s contribution, hence a self-referential system.
It is a scarcity-based way of interacting based on the notion that we (collectively) have to make sure no one is getting a free ride, i.e., consuming resources without having contributed anything, and makes the scarcity-based assumption that there is always plenty of work that needs doing as long as people are willing to do it, the latter being the part that we pressure by requiring exchange currency in order to acquire any resource and make use of it, thus assuring that the person in question has first done their share of the proverbial load.
Now, be careful, there. It is certainly true in the sense that the capitalist, to profit, must sell his goods at a unit price higher than the unit sum of all production costs, including labor costs. However, modern economists reject the labor theory of value. No good has any intrinsic value, it is worth nothing more or less than you can sell it for on the market; that is a function of supply and demand, and not of labor except in the indirect sense that labor affects supply.
Well, Thomas Jefferson envisioned a society of yeoman farmers owning their own land and tradesmen owning their own tools. And that ideal of economic self-sufficiency and autonomy was at least partly realized in many parts of the pre-industrial United States (though never in Jefferson’s own South, where most productive property was owned by an elite). But it cannot be realized in an industrial economy.
[QUOTE=Syne]
Capitalism creates inherently imbalanced relationships between the ‘haves’ and ‘have nots’.
[/QUOTE]
No, capitalism is based on inherently balanced relationships based on free exchange. It’s inherently balanced, because in a genuinely capitalistic exchange both parties come out with more than they went into the deal with.
I have a gadget; you have a widget. I want your widget more than my gadget; you want my gadget more than your widget. We trade, and both sides come out with something they value more than what they had going in.
Since the trade is based on enlightened self-interest, on both sides, it is both inherently stable (both of us want to make trades by which we benefit), and also an exchange of equals.
Of course it’s not “inherently stable.” People will not trade fairly if they don’t have to. They will (and do, during any point in history you care to point to) literally enslave you if they can get away with it. Capitalism only works when we force it to, with a legal system that punishes cheaters.
Also, capitalism does not have a very good track record for stability. Recessions and depressions happen, and generally do not result from overregulation.