Thursday, May 13, 2010

Capitalism

There appears to be a debate in some libertarian circles on whether or not libertarians should embrace or reject the word "capitalism."

Those who would reject the word do so on the basis of the baggage that comes with the word. It was first popularized by Marx to describe not just the free market but also economies in which the government interferes in favor of businesses.

Those who would keep the word do so on the basis of there being no better single word. Other terms are less widely known or are more cumbersome. The word itself, they argue, actually describes best the economic system advocated by libertarians in spite of its baggage.

It really is a simple choice, and capitalism is the best word for a free market economic system, but if it is to be used it must be fought for. A simple pronouncement is far insufficient.

People are doing that. Garry Reed, the Libertarian News Examiner, did so recently with the article Corpratism – equally loved by left and right.

Those who would disparage Capitalism are always confusing it with other ideologies, including but not limited to Corporatism, Keynesianism, and Monetarism. Some go so far as to say Monetarism, the economic ideology of Friedman and the Chicago School, is a libertarian economic ideology.

A few moments of honest thought would dispel any confusion over whether or not these other ideologies are included in Capitalism as is meant by libertarians. Monetarism has a central bank. Corporatism has protective tariffs and bailouts. It's not even necessary to describe the many differences between Capitalism and Keynesianism. And yet the myths persist.

That is because detractors want to lay at the feet of Capitalism the faults of the other systems. In Corporatism, failing businesses get bailouts, in Capitalism they do not. Yet if the two are the same then bailouts are a feature of Capitalism. In Monetarism the dollar loses value every year to the point where a 2010 dollar is worth a few cents compared to a 1910 dollar. Yet if the two are the same then an inflationary monetary policy is a feature of Capitalism.

Every fault that detractors name in the real world, as opposed to pure theory, comes from departures from the free market and government interference in the free market. Therefore it is not the fault of the free market. The only way to blame Capitalism is if other ideologies are lumped together with it.

Those who wish to preserve the word "Capitalism" have the right idea, but they must remember that they must fight for it. It's a good word but it has to be defended. The attempts to add baggage to the word are continuous.

Update: It was pointed out that Marx only popularized the term "capitalism", he didn't coin the term. Correction noted.

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