Capitalism: Yes and No; C. Carson

That is, "free market" has a comDr. Carson specializes in American intellectual his tory. He has written a number of books, including Or ganized Against Whom? The Labor Union in America. His latest are volumes I and II of a series, A Basic History of the United States. monly accepted meaning, can be used with precision, and is not over loaded with meaning so as to be value laden. A free market is a mar ket open to all peaceful traders, one in which sellers are free to sell to the highest bidder and buyers are free to buy what they will from whatever seller they will. Or, to put it another way, it is a market in which buyers and sellers are free to contract with out obstruction or interference from government. Thus, when government inter venes in the market so as to restrict the number of sellers or buyers, to set prices, or to prescribe quality, it is not a free market. It is possible to oppose or favor such a market while agreeing as to what constitutes a free market. Nor do differences as to the extent of freedom entailed necessar ily rule out the use of the phrase in discourse.

75 76 THE FREEMAN February In a similar fashion "free enter prise" and "private property" gen erally meet the tests as terms of dis course. Enterprise is free when all who can and will may produce and dispose of their goods to willing buy ers. The opposite of free enterprise would be government granted mo nopoly over any field of endeavor, or the restriction of it through fran chises, licenses, or other devices which exclude some enterprisers. The phrase can be used both by those who favor and those who oppose it, though those who oppose it might prefer other language. Private prop erty is simply property that is pri vately owned, and the owner is pro tected in his enjoyment of it by government. I have not, of course, exhausted the distinctions nor cov ered all the areas about which dis agreement may exist, for any of these phrases, but it was my purpose only to make a prima facie case for them as terms of discourse.

Capitalism: A Value-Laden Word The same does not go, however, for "capitalism." It does not have a com monly accepted meaning, propo nents of it to the contrary notwith standing. As matters stand, it cannot be used with precision in discourse. And, it is loaded with connotations which make it value laden. Indeed, it is most difficult for those who use it from whatever side not to use it simply as an "angel" or "devil" word, i. e., to signify something ap proved or disapproved. Meanwhile, what that something is goes largely unspecified because it is hidden be neath a blunderbuss word. My considered opinion is that cap italism is not a descriptive word at all in general usage. Dictionary-like definitions may give it the appear ance of being descriptive. One dic tionary defines it as "a system under which the means of production, dis tribution, and exchange are in large measure privately owned and di rected." On the face of it, the mean ing may appear clear enough. We can come in sight of the difficulty, how ever, if we turn the whole thing around and look at what is supposed to be signified, shutting out of our minds for the moment the word used to signify it. Suppose, that is, that we have a set of arrangements in which the means of production, dis tribution, and exchange of goods "are in large measure privately owned and directed." I am ac quainted with such. arrangements, both from history and from some present day actualities.

But why should we call such ar rangements "capitalism"? So far as I can make out, there is no compel ling reason to do so. There is nothing indicated in .such arrangements that suggests why capital among the ele ments of production should be sin gled out for emphasis. Why not land?

1985 CAPITALISM-YES AND NO 77 Why not labor? Or, indeed, why should any of the elements be sin gled out? Well, why not call it capi talism, it may be asked? A rose by any other name, Shakespeare had one of his characters say, would smell as sweet. That argument is hardly conclusive in this case, how ever, nor in others similar to it. Granted, that when a phenomenon is identified it may be assigned a name, and in the abstract one name will do as well as another, if the name be generally accepted. In the concrete, however, the name should either follow from the nature of the phenomenon or be a new word. Oth erwise, it will bring confusion into the language. Marxist Derivations Capitalism, as a word, does not conform to these strictures. Its root is capital, an already well estab lished word in economics, used to re fer to one of the elements of produc tion. Moreover, capitalism gave a form to the word that already had a more or less established signifi cance. When an "ism" is added to a word it denotes a system of belief, and probably what has come to be called an ideology. It is highly un likely, if not linguistically impossi ble, for such a formulation to serve as a neutrally descriptive word for the private ownership of the means of production, and so on.

But we are not restricted to theory in our efforts to discover whether capitalism is simply a neutrally de scriptive word. It was given cur rency in the highly charged formu lations of Karl Marx and other enemies of private property. Marx's fame hardly stemmed from any pow ers he may have had for neutral de scription. On the contrary, he is best known for his extensive efforts to re duce all of reality and all relation ships to the point where they fitted within the ideological scheme of class struggle. He had the kind of mind that reduces everything to a place within a single dominant sys tem. Thus, the private production of goods is a system, a system reduced in his scheme to capitalism. In discussing the dictionary-like definition of capitalism, I dropped the word "system" used in the dic tionary and substituted the word "arrangement" for it. I did so be cause it seemed to me that a society could have arrangements in which the production of goods would be pri vately owned without this constitut ing a system. Arrangements for dis tinguishing between claimants of property and protecting such claims are necessary in society. But, "sys tem" is ominous when linked to cap italism on the one hand and the pro duction, distribution, and exchange of goods.

Private ownership of the means of production does not dictate any par ticular mode of production. In point 78 THE FREEMAN February of fact, a great variety of modes of production do occur under private ownership. A man may own his own land and cultivating devices and produce what he will by his own ef forts. Many have, and some do. Or, to take the other extreme, produc tion may be organized in great fac tories by intricate division of labor and under extensive supervision and direction. Between these two ex tremes, there are in fact a great range of ways in which production and distribution have been and are carried on. Indeed, it is only where private property is the rule that this variety is possible. In Marx's mental world this vari ety and diversity could not exist, or, if it did, it could not last. It must all be finally reduced to a single sys tem-capitalism. And capitalism led to greater and greater concentra tions of wealth until all was in a few hands. Then, of course, the apoca lypse must come, the revolution, in which an impoverished proletariat would rise up in its wrath and seize the instruments of production, and so on and on through the whole Marxian scenario. The word "capi talism" still carries the overtones of this Marxian analysis. For example, the dictionary from which was drawn the earlier definition gives as further definitions of capitalism: "the concentration of capital in the hands of a few, or the resulting power or influence," and "a system favoring such concentration of wealth."

Another dictionary says, "The state of owning or controlling capital, es pecially when tending to monopoly; the power so held." The High Cost of Salvage In sum, capitalism gained its cur rency from Marx and others as a blunderbuss word, misnames what it claims to identify, and carries with it connotations which unfit it for pre cise use in discourse. Even so, there has been a considerable effort to re claim the word for discourse by some of those who are convinced of the su periority of privately owned capital in the production, distribution, and exchange of goods. It is a dubious un dertaking. For one thing, Marx loaded the word, and when all that he put into it has been removed, only the shell remains. For another, lin guistically, it does not stand for pri vate property, free enterprise, and the free market. It is false labeling to make it appear to do so. Capital ism means either a system in which capital holds sway, which is largely what Marx apparently meant, or an ideology to juslify such a system.

It is not my point, however, that it might not be possible to use capital ism as a label for private property, free enterprise, and the free market. Indeed, I think it has been done at what I call the bumper sticker level of discourse in the United States. Undoubtedly, if enough effort were 1985 CAPITALISM-YES AND NO 79 put into it the name of roses could be changed to tomatoes. But I doubt that the game is worth the candle. Moreover, there is no real discourse, discursive reasoning, at the bumper sticker level. Bumper stickers as sert; they do not reason or prove. So do titles of books, for examples. But labeling is an inferior art, and name calling is a form of propaganda. Thus, the problem of discourse with a word such as capitalism remains. It is not my intention, however, to suggest that we should discard the word capitalism. Far from it. Rather, I see the need for the use of the word in its inherent sense in serious dis course. A word, certainly a word formed with an "ism" suffix, is gov erned by and takes its meaning from its root. Granted, words sometimes slip their moorings in the course of time and lose all connection with earlier meanings. This is apt to hap pen, I suspect, when the root word has fallen into disuse. That has by no means happened in the case of capital. Capital itself is as important today as ever, and the word is still in widespread use to describe it with considerable precision. Moreover, something that I would like to see correctly identified as capitalism is widespread, if not rampant, in the world.

Keeping in mind that capitalism, because of the "ism," is ideological in form, it means most basically an ingrained preference for capital over the other elements of production. That is, it means an imbedded pref erence for (or commitment to) capital over land and labor. Considered as a system, capitalism is the establish ment of that preference by the ex ercise of government power. To put it into more precise economic terms, it is the forced transformation of some greater or lesser portion of the wealth of a people into capital. In po litical terms, it is the legalization and institutionalization of a prefer ence for capital. State Capitalism Ironically, in view of Marx and so cialist doctrine generally, capitalism is most rampant in Communist countries. It is there that the most extreme measures are taken to ac cumulate capital. The Soviet Union, for example, has long used slave la bor to mine gold in forbidding climes.

It has done the same for cutting tim ber in the arctic cold of Siberia and for reaching other hard to get nat ural resources. The basic aim of much of this is capital accumulation to foster industrialization. There is perhaps no better way to visualize the preference for capital over labor than political prisoners (slave labor) working in gold mines. But it does take other forms. There is confisca tory taxation, in which most of the wealth of all who produce is taken away for use by the state. The cap ital hunger in Third World countries 80 THE FREEMAN February is ravenous today, as they reach out to try to obtain it from countries in which there is more wealth. The thrust is for industrialization, and the industries are usually owned by the government. Some writers who have noted this penchant of socialist and Commu nist countries for capital have called it state capitalism. While the phrase is not objectionable, it may well be redundant. If my analysis is correct, all capitalism is state imposed cap italism. Otherwise, it is most un likely that there would be an estab lished preference for capital over land and labor.

Granted, .some people in their pri vate affairs do evince a preference for capital over other sorts of expen ditures. I have known men, for ex ample, who were much more given to buying tools and various equip ment than clothes. But then the same men often spend more on au tomobiles, not usually capital expen ditures, than on either. Nor is it likely that businessmen, however enamored they may be with machin ery or computers, will make so bold as to ignore the market for long in determining the mix of the elements of production. Only governments, because they spend what they have not earned, can afford to do that or have the power to require others to ignore the market. Capitalism is a will of the wisp unless it is estab lished by the state. A Red Herring The notion that the conflict in the world is between capitalism and so cialism is a Marxian red herring. Whether Marx deliberately con ceived a perverse term to designate the conflict or not, it has had re markable success in confusing the issue. In Marxian terms, capitalism is not simply the private control over the instruments of production. It is the effective ownership and control over the instruments of production by a few men with vast concentrated wealth at their disposal. In Marxian terms, again, this great wealth was obtained by the ruthless exploita tion of workers. To argue the oppo site position is to risk falling into a fairly well laid trap. At the most ob vious level, it is to take on a varia tion of the old conundrum of whether or not you are still beating your wife.

Thus, the defender of "capitalism" begins by granting that, sure, 19th century capitalists were a hard lot. But that has all changed in the 20th century, he maintains; humane leg islation and genteel businessmen have changed all that. To sustain this argument, he grants more and more of the Marxist, or at least the socialist, case, and justifies the in creasing government control over private property. Those who argue in this wise have taken the socialist bait and rushed headlong into so cialism with it. But the heart of the difficulty is 1985 CAPITALISM-YES AND NO 81 that the word capitalism as it is em ployed is a semantic trap. On the one hand, it makes it difficult to keep the issues in focus, because it is used in a confusing and misleading way. On the other hand, it blocks from our view a mass of phenomena which we need to see clearly, and which capi talism used in its root sense would help to do. The issue is not between capitalism and socialism. There is an issue about private vs. public own ership of the means of production, but there is no logical connection be tween that and capital or capitalism.

Whatever Marx may have thought about capital, all too little appar ently, there is no substantial differ ence among the leaders in the world today over the necessity for and de sirability of capital to aid in both ag ricultural and industrial production. If anything, socialist countries are more determined to get their hands on accumulated capital and concen trate it than what remains of so called capitalist countries. Every device, ranging from the most sneaky to the most openly con fiscatory, is employed in this quest. I nominate as the most sneaky the monetizing of debt, by which wealth in private hands is sopped up by a process of monetary debasement. There exists now a vast series of banking-like mechanisms by which this money is sopped up and trans ferred to countries around the world where governments more or less own and control the instruments of pro duction. Capital is what much of this is about, and if we could call it by its proper name, it would be called cap italism. As matters stand, however, we are denied the use of the very word that could help to bring all this into focus.

Freedom ys. Tyranny The issue, I repeat, is not between socialism and capitalism, in any meaningful sense of the words. In the broadest sense, it is between free dom and tyranny. As regards cap ital, it is between whether men shall be able to keep the fruits of their la bor and dispose of accumulations of it as they think best, or have it con fiscated and used for politically de termined ends. It is between the free market and the hampered market. It is between free enterprise and state controlled activity under the direc tion of a vast bureaucracy. It is be tween dispersed wealth under indi vidual control and concentrated wealth used to augment the power of the state. It is between the right to private property and the might of centralized government thrusting for total power. There· are other di mensions, moral and social, to the contest, but the above are the major economic ones. Capitalism, as cur rently used, tends to act as a red her ring to draw us off the scent and dra w attention to largely extraneous issues.

82 THE FREEMAN So, I conclude, as regards the use of the word capitalism, sic et non, or, in English, yes and no. No, to take that part of the equation first, the word cannot be effectively used in discourse and debate in its Marxian or socialist sense. It cannot be used with precision because it is a loaded word, loaded with Marxian ideology. It has been severed from its root and made to connote what it does not clearly do. Nor does it have a com monly accepted meaning, or set of meanings, for Marxists and non Marxists. Its use obfuscates the is sues and conceals a major aspect of socialism (i. e., its capital hunger). No, capitalism is not an apt word for the use of defenders of private ownership of the means of produc tion. Linguistically, it does not mean private ownership, nor does the case for private property hinge upon its potential use as capital. The right to private property is grounded in the nature of life and labor on this earth, and it is, therefore, a gift of the Cre ator. Its use as capital is one of the possibilities of property. To defend private property from the perspec tive of the advantages of privately disposed capital is to approach the matter wrong end to. In any case, capitalism is still a misnomer for what the defenders are discussing; their flanks are exposed to the ad versary because it is his chosen ground; and when the defenders have loaded the word with their own meanings it does not have a com monly accepted meaning for use in discourse.

Socialists Seize Capital to Achieve Industrialization Yes, there is a place for the wora capitalism in the language. There is an ideology and there are practices which cry out to have this word stand for and identify them. The ideology is the established preference for cap ital over the other elements of pro duction. In practice, it thrusts to the use of government power to concen trate capital, to promote its accu mulation, and to confiscate the wealth necessary to that end. Used in this way, the word capitalism helps to identify and bring into focus developments which are otherwise difficult to construe. We can see clearly that capitalism is a disease of socialism, not the off spring of private property. It is not a system in which the instruments of production are privately owned, but one in which private property is taken to provide capital for publicly owned industries. Perhaps the most dramatic examples of it at the pres ent time are the grants and loans to Third World and Communist na tions by which wealth from the United States and European coun tries is being appropriated for their industrialization. That, by my un derstanding, is capitalism, and it should bear the name and onus. @ Hans F. Sennholz The Demand for Labor To SPEAK of a supply of labor may refer to the productive exertions by all those individuals, whether self employed or wage-earning, who do, or would like to do, any work for wage or profit. The potential supply in a given market depends on the size of population, the amount of time each individual spends work ing, and the skill and application which the workers bring to their jobs. The effective supply depends on the preferences and choices by the workers themselves.