Friday, March 21, 2008

Capitalism - the issue

Chris Dillow recently posted about the debate over capitalism:

... pro and anti-capitalists often misunderstand each other. I suspect there are at least five misunderstandings:
1. What is capitalism? Some pro-capitalists, particularly in the US, have a habit of identifying capitalism with markets. Intelligent anti-capitalists find this very irritating. Tim, though, gets it right:

There's rather a large difference between "capitalism" and "free markets"...Capitalism defines a system of ownership, markets a method of exchange.

This matters enormously. Markets are essential in any form of society, and have existed pretty much throughout history. But capitalism, in the sense of outside limited liability ownership of firms from which workers are excluded, is a relatively new thing.
From which workers are excluded? Perhaps that's true for private limited companies - the workers can rarely buy shares in the company they work for. But such workers are not specifically excluded, because nobody else can buy such shares either, and almost all own shares in other firms, even if only through their pension, and are therefore themselves capitalists. All workers in public companies can buy shares in the business they work for.

This was just an insubstantial dig at nasty old capitalism, and some anti-capitalists, particularly in Europe, have a habit of identifying capitalism with anything and everything bad. Intelligent pro-capitalists find this very irritating.

But that's just the spinach that gets stuck between the reader's teeth, the meat of the argument is that alternatives to capitalism are worth exploring, even if only as counterfactuals that shine light on capitalism itself. And he ends:
My problem, though, is that many on both the left and right are unable or unwilling to see the debate in these terms. I wonder why.
One problem is that these aren't the terms in which the the debate needs to be framed. Few pro-capitalists want to prohibit other forms of business structure, like mutuals and cooperatives. Dillow is right, other forms of ownership should be explored. But the real issue is whether capitalism should be banned. If not, then there's no political debate to be had, it becomes a question of business practices.

The issue isn't capitalism. It's economic freedom. A very common tactic - maybe it's evangelism rather than a tactic - is to support an illiberal suggestion with an account of how great one of the subsidiary aspects of it is. The suspicion must exist that an anti-capitalist doesn't merely want to argue against capitalism in a free society, they want to prohibit it. That's incompatible with economic freedom, and the case for economic freedom doesn't rest on the merits of capitalism - it rests on the merits of freedom.

1 comment:

Anonymous said...

The boys at Bear Stearns may regret their investments in their employer.