As usual, the current political campaign in part involves a war of words. The choice of terminology plays a large part in defining the issues, and defining the issues goes a long way toward deciding them. One of the current debates is whether to use the word "capitalism."
Republican pollster Frank Luntz recently offered this advice: "Conservatives should not be defending capitalism. They should be defending economic freedom. And there is a difference. The word capitalism was created by Karl Marx to demonize those people who make a profit. We’ve always talked about the free enterprise system or economic freedom." 1 That may be questionable economic or linguistic history, but it’s good political advice: wrapping business practices in the patriotic bunting of freedom, or liberty, always has worked. Calling business "free enterprise" cloaks a multitude of sins. Referring to the free market or, more daringly (leaving out freedom) "the market" or the "market system," also works, as those concepts or labels can be held up as alternatives to (shudder) socialism. However, thanks in part to the Occupy publicity, capitalism and the market have taken a hit, so conservatives probably ought to heed Luntz’s suggestion and harp on "freedom."
A somewhat similar point was made by John Kay, writing in The Financial Times. Referring to a series of articles on "Capitalism in Crisis," he said, "The Financial Times is debating capitalism, but what it is really debating is the future of the market economy." Luntz had dismissed "capitalism" as a Marxist term, but Kay exonerated Marx, claiming that he "never used the word capitalism. But after the publication of Das Kapital, the term came to describe the system of business organisation which had made the industrial revolution possible."2 So, to him,"capitalism" is a positive word, but he agrees that it should be abandoned.
(Whether he is correct about Marx may depend on the translation of Capital being used; perhaps the one he relies on doesn’t use the word. I have a copy of Volume I, translated by Samuel Moore and Edward Aveling, which uses "capitalism" once; referring to another author, Marx said that he "betrays the innermost secret soul of English capitalism."3 However, even identifying the translation may not answer the question. A version of Volume I on the web, attributed to the same translators, uses "capitalism" twice, the other time in the phrase "in the period of capitalism," which my book renders "in the capitalist period."4 It hardly matters. Marx used the terms "capitalist" repeatedly, as a noun and as an adjective, often substituting "capitalistic" as the latter.)
Kay’s principal point is that "capitalism’ is an outdated word. Today’s business leaders are not capitalists in the nineteenth-century sense. "Modern titans derive their authority and influence from their position in a hierarchy, not their ownership of capital." That is true, and making that clear might spare us blather about risk-taking and entrepreneurship. (It’s odd that a French term, difficult to pronounce or spell, would be the business buzz word. Even George W. Bush, Mr. Real ‘Murican, used it.)
Kay ended his article with this: "Sloppy language leads to sloppy thinking. By continuing to use the 19th-century term capitalism for an economic system that has evolved into something altogether different, we are liable to misunderstand the sources of strength of the market economy and the role capital plays within it." I certainly agree with the first sentence, but shifting the reference from capital to the market, standing alone, won’t lead to clear thinking. What is needed is a more sophisticated and realistic view of economics, including an awareness of the shortcomings of the market, both as a concept and as the basis of our system. Capitalism, free enterprise, the market, or whatever label next becomes fashionable describes a system which works well if and only if its inherent limitations and daners are recognized and appropriate duties and limitations are imposed.
However, the shift in the terms of reference will have to wait. Mitt Romney’s primary opponents are, in a nice twist on the linguistic tactic, turning "venture capitalism" into "vulture capitalism." That has led to a debate about the virtues of capitalism. Perhaps the C word will disappear during the final campaign, but Romney’s claim that Obama practices "crony capitalism" may keep it alive. No doubt we’ll hear more than enough about freedom and the market too.
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1. http://thinkprogress.org/ posted by Faiz Shakir on Jan 11, 2012
2. http://www.ft.com/intl/cms/s/0/86667196-3afc-11e1-b7ba-00144feabdc0.html#axzz1jBRguu00
3. Marx, Capital, Chapter XXIV, § 4 (Britannica Great Books, Vol. 50, p. 296)
4. Chapter XXIV, § 1: http://www.marxists.org/archive/marx/works/1867-c1/ ; cf. Britannica Great Books, Vol. 50, p. 290
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