from Capitalism Isn’t a ‘System’ by Barton Swaim at The Wall Street Journal:
What’s odd about Mr. Giridharadas’s essay, and others like it, is that the reader is simply expected to understand how the word “capitalism” stands for everything allegedly wrong with the U.S. economy. It’s a “system,” a “conscious project” that has caused “economic precariousness, stalled mobility and gaping social divides” and developed into “the win-win ideology that has governed the past few decades.” But the details of this system must be too obvious to mention.
So what is capitalism supposed to mean? The word “capital” has been around since the late Middle Ages and meant then more or less what it means now: money used to invest or build and so earn more money. In the 19th century, Saint-Simonians and other proto-socialists started referring to capitalism to signify a system in which those who had capital used it to dominate and exploit those who didn’t.
This was a gross oversimplification of a dizzyingly complex reality. It reminds me of “The Power of Words,” a 1937 essay by the French Christian philosopher Simone Weil. Her complaint was that European political discourse consisted mainly of empty abstractions, of which “capitalism” was among the most prominent. Weil didn’t defend capitalism, but she rightly sensed that the tendency to blame every societal ill on it was a mental deficiency.
A modern European economy, she contended, “consists in certain methods of production, consumption, and exchange, which are continually varying, however, and which depend upon certain fundamental relationships: between the production and the circulation of goods, between the circulation of goods and money, between money and production, between money and consumption.” This inscrutable arrangement “is arbitrarily converted into an abstraction, which defies all definition, and is then made responsible, under the name of capitalism, for every hardship endured by oneself or others. After that, it is only natural that any man of character should devote his life to the destruction of capitalism.”
Capitalism is just economic freedom, and just like political freedom it is subject to principles and rules. It is not the rule of property over man as so many early progressives interpreted; ultimately a man’s thoughts and ideas are his property. Capitalism did replace feudal classes with economic classes which were more mobile and thus fraught with greater anxiety.
Much of the criticism levied at capitalism is from the attempts to exercise political control of the process. Crony capitalism is not capitalism; it replaces the free choice of consumers and producers with government incentives and power. Government is needed to protect property rights and contracts, and it may be needed to resist monopoly control. Monopolies can be hard to identify and especially hard to control in our modern environment where entirely new fields develop overnight and a leader quickly dominates. Government often encourages monopolies; intense regulations can discourage competition and startups.
When activists complain of markets failing to serve our needs, they often are just unwilling to pay the market price and are seeking subsidies at someone else’s expense. Progressives and socialists who insist on government control while speaking in terms of greater democracy are contradicting themselves; the market place properly regulated is the greatest display of democracy.