"This ain't Capitalism"

Enjoy Capitalism
Image by Jacob Bøtter via Flickr

It’s a recurring theme lately that whenever one will point out sufferring and generally bad stuff happening because of Capitalism, right-wing libertarian apologists will pop-up from the woodwork to point out that “This ain’t Capitalism”. They will claim that the government played too big a role and this we can’t really consider it a fault of the system per se, but must lay all the blame on the government intervention1.

This is starting to get quite annoying so I think it’s time to explain why I consider this a no-true Scotsman fallacy.

First of all, ‘Capitalism’ as a word is quite recent, only coming into the mainstream vocabulary at the start of the 20th century by Werner Sombart, a Marxian who used it in his critique of the system. Before that, the use of the word had been sporadic and in variants of the root, with the most important being by Karl Marx himself who wrote mainly about the Capitalist mode of Production.

This concept has been expanded in the last century to mean a complete economic system who’s core characteristic is the same Capitalist mode of production that Marx was accurately criticizing. Peripheral to that is the sociopolitical situation within which this mode of production exists. This can range from authoritarian imperialism (Fascism), to libertarian minarchism (The American ‘Libertarianism’).

All of these, are still Capitalism. The means of production (factories, land, labour) are still privately owned and the only thing that changes is the degree of political freedom and interference of the state. But the degree to which these two fluxuate has nothing to do with wether the system is Capitalistic or not.

The Austrian school of Economics is of course the most rabid denouncers of this idea. For them, as long as Capitalism is not absolutely free any government, it cannot be called as such (Merchantilism is apparently the correct word) something of course which is complete nonsense. Even under the most welfare-oriented system, the mode of production still remains in the hands of private owners and as such the core characteristic is fulfilled. To argue otherwise is similar to claiming that someone is not a Scotsman because he puts sugar in his porridge.

Apologists of Capitalism from every school of thought, wether that is that there is too much restriction on Capital or that there is not enough restriction on Capital, will eagerly lay the blame for all the human suffering under the actions (or inactions) of Capitalist regimes on anything else than the economic system itself. It’s too much state intervention. Or too much credit expansion. Or not enough checks and balances. Or too much Greed. Or too much Corruption. Or too much environmental destruction. Whatever. It’s anything and the kitchen sink to blame but Capitalism.

And yet we see the same suffering and destruction occuring to any Capitalist system sooner or later. Wether that is the Free Market Wonder of Chile, the Soaring Growth of India or the State Capitalism of the USSR. No matter how much or how little government intervention there is in the market, the same crises happen, povertry and starvation remain, and people suffer. And the only thing that stays constant, the only common denominator, is the Capitalist mode of production.

This is Capitalism.

Also see: Capitalism: A good word for a bad thing.

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  1. The hypocrisy that takes the cake of course is when the same people will blame all the suffering of USSR, Korea and China squarely on Communism without being willing to recognise any other factor other than how those nations defined themselves []