Rebirth of Reason


"Capitalism" - Is it time for a change?
by Marcus Bachler

Capitalism is a concept invented by Marxists in the 19th century to describe the economic system that they lived in and were rebelling against. Subsequently it has been adopted by the whole world as a word to describe varying degrees of free economic activity.  Today the word is mostly used by the left-wing with an imprecise and invariably negative connotation. The Oxford English Dictionary lists its first recorded use, apparently in the sense of the condition of possessing “capital” by Thackeray in 1854. Marx’s followers developed the term Capitalism in late nineteenth-century literature as a term of abuse for the economic system they wished to overthrow. However, “capitalism” derives from the word “capital”, which is from the Latin “capitalis” meaning “head” from “heads of cattle” to denote value in barter trade. The English word “capital” later came to be associated with wealth in the form of money and property. By the late nineteenth century, many conservatives and businessmen were proudly calling themselves adherents of capitalism. Ayn Rand defined capitalism as “a social system based on the recognition of individual rights, including property rights, in which all property is privately owned”. It seems to me that Ayn Rand had already taken the economic definition of capitalism as a given, and rather than defining the term - defended its inherent social and moral implications. Therefore, the abstract concept of capitalism as an economic system has long been an ill-defined concept.

The Wikipedia Encyclopedia makes the following comments on “capitalism”:

Why does no one agree what capitalism is? It's hard to answer this objectively. Apparently there has never been a clear agreement about the linguistic, economic, ethical and moral implications, that is, the "political economy" of capitalism itself. Rather like a governing political party that everyone seeks to control, regardless of ideology, the definition of "capitalism" at any given time tends to reflect the current conflicts between interest groups.

This begs the question whether or not the original left-wing economic concept of capitalism could not be replaced by more understandable English expressions such as “free market”, “free trade” or “free enterprise”. Wouldn’t any socialist or communist constantly complaining about the inequitable re-distribution of resources through capitalism not find it a challenge to castigate any system that had the word “free” in its title? Not so when it comes to Karl Marx however.

Karl Marx is often cited as the propagator of the concept of “capitalism” as a description of an exploitative economic system. However, although Marx frequently used the words “capital” and “capitalist” in his published works he never in fact used the expression “capitalism”. Marx was more at home criticizing the “bourgeois” elite, which would soon be overthrown in the inevitable dialectical march of historical progress towards the new age of the “proletariat” worker.

The bourgeois age] has pitilessly torn asunder the motley feudal ties that bound men to his ‘natural superiors’, and has left remaining no other nexus between man and man than naked self-interest, than callous ‘cash payment’. It has drowned the most heavenly ecstasies of religious fervour, of chivalrous enthusiasm, of philistine sentimentalism, in the icy water of egotistical calculation. It has resolved personal worth into exchange value, and in place of the numberless incontestable chartered freedoms has set up that single, unscrupulous freedom – Free Trade.

In other words, Marx saw himself as waging a “class war” against the “bourgeois age” of “free trade”!

Nevertheless, the question remains why Marx’s followers did not continue to use the expression “free trade” and instead so gleefully adopted the term “capitalism”. The obvious answer to this would be that Marx’s seminal work on the economy is called Capital Volume 1, whereby he describes the inequality of the economic system of the time in just those terms – inequitable distribution of “capital” between the bourgeois and the proletariat. A logical extension of this economic theory is the critique of the bourgeois “capitalist system”, i.e. capitalism.

Nevertheless, I think that there could be another equally valid explanation. As I pointed out earlier, the precise meaning of capitalism as a concept is open to interpretation. If there’s one thing left-wing activists dislike more than anything is arguing about specifics. In the hands of the left-wing, Capitalism can be made the scapegoat of whatever it is that they happen to hate about the economy at the time. It can stand for corporate corruption and greed, unfair trade with third world nations, excessive profits or the exploitation of workers. Capitalism has become a general smoke-screen for the criticism of avarice and the ultimate in left-wing “woolly” thinking.

Is it time for a change?
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