[cross-posted at Liberty & Power]
As a number of left-libertarians have noted, both “capitalism” and “socialism” are ambiguous terms, bound up with various sorts of confusions. (That’s one reason I try to avoid using them, at least without some sort of qualifying prefixes, adjectives, or scare-quotes. Incidentally, I’m pleased to see that one of my own discussions of this problem is featured – for now – on Wikipedia’s Issues in Anarchism page.) But there’s one definition of the word “capitalism” that might seem perfectly straightforward and unambiguous. Yet actually I think it is no such thing.
The definition I have in mind is: private ownership of the means of production (henceforth pootmop). One thing that most libertarians in the so-called “capitalist” tradition don’t realise (it took me years to realise it) is that when most socialists hear or use this phrase they take it to imply, by definition, the ownership of the means of production by people other than the workers who do the producing – so that a society in which most firms are worker-owned co-ops would not count, in their eyes, as one characterised by pootmop.
This of course is not at all what “capitalist” libertarians take the phrase to mean; although they may tend to assume the traditional hiring-of-labour as the paradigm or default instance of pootmop, a society of worker-owned co-ops – whether or not “capitalist” libertarians would find such a system likely or desirable – would be a perfectly acceptable instance of pootmop. To “capitalist” libertarians, pootmop contrasts not with worker-owned co-ops but with the ownership of the means of production either by the state or by society at large.
Now there are, to be sure, many “socialist” advocates of worker control who envision such control as being exercised either via the state (e.g., Marx, at least in the short run) or via society at large (e.g., Kropotkin). But there are a good many “socialists,” particularly in the anarchist tradition, who favour something like decentralised, bottom-up networks of autonomous local workers’ co-ops – which would count as pootmop by some standards and not others.
A problem for mutual communication between the “capitalist” and “socialist” libertarians, then, is that one group hears the phrase “private ownership of the means of production” and thinks, “ah yes, producers getting to keep what they produce,” and the other group hears the same phrase and thinks, “ah yes, producers not being allowed to keep what they produce.” My advice to both groups, then, is: try not to use this phrase without explaining it, and don’t automatically assume you know what others mean by the phrase when they use it.
Great post. This called to mind a passage I encountered a year or so ago from Bohm-Bawerk’s first chapter in the Positive Theory of Capital, that called attention to this same bi-valence in the use of the term “capitalistic”:
And now we may put into words an idea which has long
waited for expression, and must certainly have occurred to the
reader; the kind of production which works in these wise
circuitous methods is nothing else than what economists call
Capitalist Production, as opposed to that production which
goes directly at its object, as the Germans say, “mit der nackten
Faust”1 And Capital is nothing but the complex of intermediate
products which appear on the several stages of the roundabout
journey.
1 The expression Capitalist Production is generally used in one of two senses. It designates either a production which avails itself of the assistance of concrete capital (raw materials, tools, machinery, etc.), or a production carried on for the behoof and under the control of private capitalist undertakers. The one is not by any means coincident with the other. I always use the expression in the former of these two meanings.
This passage suggests that Bohm-Bawerk’s work in the theory of applies just as much to the workers coops that you spoke of. In that case, though, what language would you use to describe the greater physical productivity of roundabout production, given the confusion associated with the term “capitalistic”?
Typo alert: I meant, in my second to last sentence above, to say: “Bohm-Bawerk’s work in the area of production theory applies just as much to the workers coops that you spoke of, as it does to hierarchically-organized business corporations relying upon wage labor.”
Great Böhm-Bawerk quote, thanks.
Re your question, why not “capital-based”?
Right on, Roderick. You identified the issue perfectly. I consider myself a socialist and dislike “capitalism”, but my vision of socialism is in the tradition of Proudhon, not Marx, and when I use the word capitalism, I use it to mean a hierarchic economic system in which the means of production is owned by people other than the workers or consumers. I wouldn’t know of a better term to use for capitalism, though. “A market-based economy composed of hierarchically-organized businesses owned by people other than the workers or consumers”? Boy, is that a mouthful. What would you suggest?
I would also note that when most people, socialists and capitalists alike, use the term “capitalism”, they either explicitly or implicitly accept that it involves ownership of the means of production by people other than the workers or consumers. Ask anyone who claims to support capitalism if they support the outside investor model (as opposed to the worker co-op model) of business organization and they respond with an enthusiastic “yes”! They may not always include it within their definition of capitalism, but they always accept it as just and fair.
No problem. Thanks very much for your suggestion, thanks very much. I think “capital-based” would definitely be an improvement over “capitalistic,” as it does not seem as susceptable of being read to mean “in the service of Capital.”
I guess using the term “market-based” is out?
Anon73,
I think so, since “market-based” fails to specify the relevant feature of obtaining greater total yield of final goods by lengthening the structure of production (or, increasing roundaboutness). To see why, one can imagine having a market-based system where people system fashioned consumers goods directly (with their bare hands, without the intermediation of machines, tools, etc.) and traded them on the market.
By the way, I think that this particular terminological issue is the reason B.K. Marcus has refused to give up the word “capitalism” in describing his views.
Ask anyone who claims to support capitalism if they support the outside investor model (as opposed to the worker co-op model) of business organization and they respond with an enthusiastic “yes”!
I can think of some exceptions. For example, David Friedman uses the term “capitalism” for what he favours, and Sam Konkin at least sometimes did, but both opposed the hierarchical firm and tradtional wage labour (though they leaned more toward independent contractorship than to co-ops).
I wonder where that leaves Tucker, who supported private ownership of the means of production by people who hire labor, but was still a “socialist.”
IMO, the anarchist movement really needs to learn to use the modern, commonly accepted definitions of words. The word games have become tedious. Socialism is state or community ownership of “the means of production,” capitalism is private ownership of the means of production and profit.
The existence of the old individualist anarchists throws a wrench into everything, because they’re “free market” but “anti-capitalist.” The thing is, their tradition is obscure, and they barely exist today. Obfuscating all modern terminology to placate them is a mistake that just causes endless, pointless confusion.
No, socialism just means wootmop, workers’ ownership of the means of production. Community ownership is one suggested means to wootmop. People regularly shift from one form of socialism to another form of socialism because they believe the second form better achieves wootmop.
Cork:
Excuse me, but the modern definition of capitalism is rather unclear, because different authors definitively see capitalism from different perspectives. If by “commonly accepted” definition of capitalism you mean “free market”, then it is obvious it is YOU who is at odds with many other understandings of the terms that see a decisive participation of the state in economy in what is called “capitalism”
It seems to me that there’s another variable in this. Take the distinction between “the workers own the tools, equipment, and plant themselves” and “the workers use the tools, equipment, and plant, but somebody else owns them” as a starting point. Okay, a workers’ coop is the first case. A classical corporation is the second case: all the workers have is their jobs. So far so good.
But now, suppose the workers’ coop decides not to buy their equipment outright, but to lease it from some other organization. Say, for example, that a truckers’ coop hires their trucks and their garages and their warehouses from some other firm. The entrepreneurial decisions are still being made by the truckers; the administrative tasks are done by truckers, or by people the truckers take on as employees, subcontractors, or partners; but a substantial part of the physical plant is owned by somebody else. Or maybe even all of it. Does that mean the truckers are now wage labor in a “capitalist” plant? Have they stopped counting as a worker-owned firm?
It seems to me that “ownership of the means of production” covers at least two different questions. There is ownership of the physical means of production, the plant and equipment. But then there is ownership of the business organization, with typical corollaries of ownership of the business’s reputation and goodwill, and ownership of the right to residuary income—to whatever surplus or shortfall exists after the costs of the labor and the equipment are paid. If there’s a good year, who gets the surplus? If there’s a bad year, who gets the shortage?
And on that note, it’s worth pointing out that in present-day American “capitalism,” we seem to be moving toward a state of affairs where the residuary income is owned by the state. Consider, on the one hand, that an industry that makes out really well from an economic shift may face a “windfall profits tax,” and on the other that an industry that makes bad choices and gets in trouble may be bailed out at taxpayer expense. Small profits and losses may be privately owned by investors and pension funds, but really big ones function more as if they were state owned.
Roderick:
Fair enough. I’m not familiar with (David) Friedman’s ideas (other than the fact that he is an “anarcho-capitalist”), but at any rate, I think those people are just exceptions to the rule.
Cork:
Since when are those the modern definitions? Almost everyone outside of the Austrian school accepts that “capitalism” involves a hierarchic “market”-based economic system where wealth is owned privately by a small elite, with the state protecting absentee property. If you think otherwise, you might do well to spend some time outside of “anarcho-capitalist” circles.
And I will not let the statists expropriate socialism from social anarchists like myself. Statists believe everything involves the state, so of course they’re going to define socialism in statist terms. If I wish to avoid the term socialism, it will merely be because I do not want to confuse my brand of socialism with Marxism and other state socialisms. (I generally try to use the term only with an explanation, and sometimes I just say “workers’ self-management” instead.)
“Since when are those the modern definitions?”
http://www.google.com/search?hl=en&client=firefox-a&rls=org.mozilla:en-US:official&hs=mKr&defl=en&q=define:capitalism&sa=X&oi=glossary_definition&ct=title
http://www.google.com/search?sourceid=navclient&ie=UTF-8&rlz=1T4SUNA_enUS246US246&q=define%3asocialism
Cork,
Those google pages only seem to reiterate the fact that there is NO CORRECT definition for either “capitalism” or “socialism”. While many, but not all, of the definitions given for “capitalism” invoke some sort of appeal to the private ownership of productive means (something that Roderick’s post shows isn’t as simple and clear as you’d think), the defintions for socialism seemed to vary quite a bit. There may be generally agreed-upon “modern” definitions for words like house or mouse, but certainly not for words like “capitalism” and “socialism”.
While one may be able to sift through these many definitions and piece together some common threads into some sort of workable definition, none of us has any sort of authority to dictate to others what definition one must accept.
It seems rather problematic to me to make any sort of assumptions regarding how any given person defines these terms. My own personal experiences have led me to see that the diversity of meanings that people have for these terms vary much more widely than the diversity I see on those google pages. Short of some sort of grand inquisition coercing people into acknowledging and using one “correct” definition of these terms, it seems to me that such terms will always be contentious and always create confusion and needless conflict. With that in mind, I see no reason to even use such terms anymore, and I generally don’t unless topics of discussion such as this arise.
The only person here who seems to want to create confusion and obfuscation is you, by means of asserting that everyone bow down to some imaginary conceptions of so-called “modern” definitions, although a case could be made for Belinsky due to his apparent wish to identify with the term “socialist”. I prefer “socialist” over “capitalist” myself, but I ultimately reject both anti-conceptual terms.
What’s more important to you: having folks conform to certain “correct” definitions, or having folks understand what you’re saying for the sake of generating effective communication? I don’t think you, or anyone else, will ever succeed with the former.
“Those google pages only seem to reiterate the fact that there is NO CORRECT definition for either “capitalism” or “socialism”.”
They show exactly what I said: that capitalism is private ownership of the means of production, while socialism is state or collective ownership.
“The only person here who seems to want to create confusion and obfuscation is you”
Hahaha yeah, I’m creating “confusion” by using the actual definitions of words. When will I learn?
“While one may be able to sift through these many definitions and piece together some common threads into some sort of workable definition, none of us has any sort of authority to dictate to others what definition one must accept.”
Dude, use whatever definitions for whatever words you want. Use ‘dog’ when you’re talking about cats. Use “movie” when you’re talking about a book. Use the word ‘car’ instead of ‘house,’ if you like that word better. I think it’s a totally ridiculous way of trying to communicate anything to anyone, but I’m not going to stop you. I just think it creates needless confusion.
They show exactly what I said: that capitalism is private ownership of the means of production, while socialism is state or collective ownership.
You’re apparently not reading the same definitions that I’m reading.
Here’s one from the “capitalism” page: “Capitalism is “the condition of possessing capital“ [1]. It refers to an economic system whereby goods and services are exchanged on a for-profit basis. Exchange is generally mediated through money. …” — what’s your take on that definition?
How about this: “Capitalism is the main economic system in North America, as well as in most other countries.” I personally reject the main economic system in North America and most other countries. How ’bout you? Along similar lines is this one: “the dominant organisation of contemporary global economic life.” Are you really gonna identify as “capitalist” when conversing with people who define “capitalism” in such ways?
Similarly, the definitions provided for “socialism” are also not quite as uniform as you’re imagining. There is also at least one commentor here (Belinsky) who clearly defines it differently than you do. Left anarchists also define it differently, although I’m already aware from other places within the interwebs that you’re not interested in a good faith discussion of them.
By the way, I’m waiting for your actual critique of Roderick’s entry, if you’re capable of such. His analysis essentially makes each and every definition of “capitalism” provided by google problematic. Seems to me like you’ll have to address this sooner or later if you want others to take you seriously, aside from maybe some who prefer a more vulgar view of libertarianism.
Hahaha yeah, I’m creating “confusion” by using the actual definitions of words. When will I learn?
There are no “actual” defintions of those words! That’s what everyone here, and others elsewhere, have repeatedly tried to tell you. You’re just stubbornly choosing not to listen.
Dude, use whatever definitions for whatever words you want. Use ‘dog’ when you’re talking about cats. Use “movie” when you’re talking about a book. Use the word ‘car’ instead of ‘house,’ if you like that word better. I think it’s a totally ridiculous way of trying to communicate anything to anyone, but I’m not going to stop you. I just think it creates needless confusion.
Straw-character. How lame.
I have an assignment for ya, if you’re willing to accept. Go out into the streets, and start asking a variety of different people (rich, poor, young, old, “blue collar”, “white collar”, “preppy”, “punk”, etc.) what type of economic system we currently have. When I do this, the answer is usually the same: “capitalist”. Many of them look at me as if I’m on crack when I ask, since I guess it seems so obvious to them. Again, you don’t support the economic system we currently have, do you? If not, why would you want to identify with a term that most, but not all, people associate with the economic system we currently have?
I think part of the problem is that the varied definitions hide differing views about reality and human nature. For example, some leftists say that individuals owning means of production privately will ultimately lead to hierarchy, wage-labor, and the divorce of ownership from use. Hence, it would make sense to define pootmop as “a private ownership system with hierarchy”. People like David Friedman don’t believe any such implication is necessary, and so think of “private ownership” as perfectly compatible with a worker’s co-op based society.
Another fun ‘package-deal’ term is “violence”. The ordinary definition is “damage to a person or a thing”. But since leftists don’t consider damaging a thing to be violent at all the term can become confusing, especially when statists use it in a third sense to mean something like “not officially approved damage to a person or thing”.
Freeman,
Obviously every definition is not going to be worded exactly like the others, but the common thread is exactly what I said. A condition of “possessing capital” cannot exist where private ownership of capital is not allowed, and someone who possesses capital *is* a capitalist in economic terms.
The economic system in North America certainly leans more capitalist than not, although there is obviously not pure capitalism anywhere (they are all mixed economies to some degree).
“Similarly, the definitions provided for “socialism” are also not quite as uniform as you’re imagining.”
Sorry, they look pretty uniform to me. State or collective ownership of the means of production, just as I said.
“When I do this, the answer is usually the same: “capitalist”. Many of them look at me as if I’m on crack when I ask, since I guess it seems so obvious to them.”
It is relatively capitalistic, but certainly not pure capitalism or compatible with strict libertarian property rights.
“By the way, I’m waiting for your actual critique of Roderick’s entry”
I don’t have a critique of his entry, and never said I would be providing one. I’m not disputing that many socialists equate ‘private ownership’ with hiring of labor.
“The economic system in North America certainly leans more capitalist than not…”
I disagree.
The economic system here in NA may be relatively “capitalistic” compared to, say, the North Korean system. I’m not interested in apologizing for economies that are even relatively such (please note that I’m not implying that you are necessarily engaging in such apology), and I’d rather not have my words misconstrued in ways that perhaps imply that I approve of practically any facet of the actually existing economic system. Bear in mind that aside from advocating freed markets, my own values and goals are much more aligned with leftists than with most libertarians I’ve encountered.
As for your claims regarding those google definitions, I guess I’m just more sensitive to certain words and contextual factors. I’m not interested in discussing this further with you.
I don’t have a critique of his entry, and never said I would be providing one. I’m not disputing that many socialists equate ‘private ownership’ with hiring of labor.
Ok then.
I suppose your usage of such words aren’t really that problematic, assuming that those who attempt to converse with and reach out to adhere to worldviews and values similar to yours. This world is filled with people who don’t necessarily see things in similar ways, and I’m more interested in reaching out to them. I think that the way libertarianism is presented and defined needs to be drastically altered for folks like me to have success in such an endeavor.
“Bear in mind that aside from advocating freed markets, my own values and goals are much more aligned with leftists than with most libertarians I’ve encountered.”
In what way? Libertarians are just as concerned with poverty, unemployment, etc as anyone else. We just try to offer real solutions instead of simplistic pap.
“I suppose your usage of such words aren’t really that problematic, assuming that those who attempt to converse with and reach out to adhere to worldviews and values similar to yours. This world is filled with people who don’t necessarily see things in similar ways, and I’m more interested in reaching out to them.”
If someone is dead-set against the free market, then I don’t see how big of a difference calling the system ‘socialism’ will make. The second you give any details of your system, they’ll just go, “hey–wait a minute. That’s capitalism.” Any discussion that went beyond your preferred name for the system–and went into actual features of it–would pretty much defeat the point, would it not?
Sure, we can find ways to convert people who may have different values. We can give our liberal friends Benjamin Tucker and our conservative friends Hans-Hermann Hoppe. I’m just tired of this big ‘vulgar libertarian’ / ‘capitalist’ witch-hunt that has sprung up in some libertarian circles.
If someone is dead-set against the free market, then I don’t see how big of a difference calling the system ’socialism’ will make. The second you give any details of your system, they’ll just go, “hey–wait a minute. That’s capitalism.” Any discussion that went beyond your preferred name for the system–and went into actual features of it–would pretty much defeat the point, would it not?
That’s not true. I went from a Marxist who thought the state should seize the means of production to protect workers to a left-libertarian/libertarian socialist/social anarchist who thinks that the people should emancipate themselves instead of relying on top-down authority to solve their problems. As long as worker ownership of the means of production is emphasized, it is still socialism.
(For socialists, anyway. I’m not claiming that this is the universal definition of socialists; I’m just claiming that it’s the definition that most socialists accept, even if orthodox Marxists often use the term to refer to the transitory period between capitalism and communism where the state owns the means of production.)