Open thread on capitalism

By popular demand IRL, this thread is for arguments about capitalism. It can mean many things to many people, so to provide a starting point, here is my definition:

capitalism – a socio-economic system based on private property rights, with economic outcomes arising from the aggregated decisions of individuals and firms competing for value in a market.

The components ‘property rights’, ‘decisions’, ‘firms’, ‘competing’ and ‘market’ can have a multitude of qualifiers attached to them, which add to or modify this definition, but I believe the above is what underlies the various kinds of capitalism. Feel free to agree or disagree in comments, and we’ll see where the discussion takes us. It would be nice if people read an earlier post on economic debates, but it’s not essential.

This entry was posted in economics and tagged , . Bookmark the permalink.

29 Responses to Open thread on capitalism

  1. Bas says:

    I wonder if you could spell out some of your reasoning for opting for this definition. What recommends it? What does it allow us to understand? What errors does it avoid?

  2. john walker says:

    I am definitely not an economist. But ‘representations ‘ are what I do for a living,– Is this a discussion about capitalism or about “capitalism”?

  3. Jarrah says:

    I opted for this definition because I’m concerned about the misuse of categorical words, and how that can degrade people’s understanding of important concepts. For example, often I read complaints about “capitalism”, but many times on closer inspection they are in fact complaints about facets of modernity, or about actions by states that reduce the degree or scope of capitalist processes. “Capitalism” has become a catch-all word that is distorted to the point where in some cases it has lost its ability to describe a coherent idea. Common fallacies like “capitalism puts profits before people” is the result.

    I think my definition allows us to isolate the technocratic/objective side of a complex subject, and gives us conceptual space and clarity for developing the idea and its myriad connections to the human condition.

    It is a dry, reductionist definition and therefore inadequate for any holistic understanding, but that’s why we have so many other words and concepts – we can add to ‘capitalism’, instead of trying to expand its jurisdiction to include contradictory concepts and therefore destroying its meaning.

  4. john walker says:

    There are familiar echos to the many confusions of the usages of ‘modern’ in ‘contemporary ‘ arts culture .

    “isolate the technocratic/objective”
    Because capitalism can have so many often paradoxical usages, context is I think essential. ‘Capitalism’ ( without usage-context) has usages that are both true and mutually exclusive.
    Perhaps definitions of what ‘it’ is ‘not’, might be a start?
    Is China a capitalist economy?

    Regarding ‘technocratic/objective management’ amongst the most enthusiastic adopters of Taylorisum were the Soviets.

  5. john walker says:

    Is capitalism ; anything that needs a lot of ‘concentrated’ capital?

  6. Jarrah says:

    No. For example, communism is another system for accumulating and concentrating capital. Of course, some people describe Soviet communism as “state capitalism”, but I think that’s just a further example of how people distort the meaning of words to which they personally ascribe a negative connotation. ‘Fascism’ is another.

    As for what capitalism is not, that set is very large, but a useful exclusion might be – the banks/airlines/car companies/etc bailouts were not capitalism. Things done in the name of capitalism aren’t necessarily capitalism.

  7. john walker says:

    Is there much actual capitalism about these days?

  8. john walker says:

    Suggest that the Historical (Karl Marx ??) ,usage of ‘capitalism’ is to denote the period, roughly between 1700 – 1900??, when the mass production(And mass distribution) of copies became the major mode of production , in the west. These mass production entities needed a lot of capital and thus were to a degree natural oligarchies /monopolies.

    ‘The Standard oil company’ was called ‘standard’ (and was initially popular) because it delivered a reliable, standard, regulated, product at a time when Lamp oil could turnout to be Petrol- with fatal results.

  9. Jarrah says:

    Marx is the last person to go to for explanations of capitalism!

  10. john walker says:

    Was thinking of the ‘history’ of the usage of the term. (I am not at all sure about what capitalism in a purely economic sense means.)
    The standard images of the past are- The ford motor company circa 1925, The Seven Sisters, the great depression so on. Or these days, the fiance markets, moral hazard/managements, the visa card and macas.
    It is often linked to corporate, and large.
    It is often automatically linked with free liberal societies but I would question the assumption.

  11. Taylor says:

    I think this guy (Michael G. Heller) has the best theory of capitalism I have seen:
    http://sites.google.com/site/impersonalcapitalism/

    I came across this via his comments on marginalrevolution.com. His theory is a social and economic theory, which integrates Hayek, Schumpeter and Weber (it helps if you’ve read a bit of Weber though).

    The section in the website on why he wrote the book is itself very insightful.

  12. john walker says:

    Taylor I will try to read it.

    Re capitalism and ‘capitalism’
    Back in the 70s & 80s, some people thought they could change art by redefining ‘art’, what they mostly actually succeeded in doing was removing themselves from reality.
    The usefulness of the map is exactly that it is not the terrain, but the map dos need to have an isomorphic relation to reality.

  13. Taylor says:

    Good point about the map, I think this is why Michael says about the experiences that led him to write the book “Such experiences have influenced the selections I make in this book between theoretical claims that seem to match reality and those that do not.

  14. john walker says:

    ‘property rights’, ‘decisions’, ‘firms’, ‘competing’ and ‘market’ have all longish histories , except for- ‘firms’- as in; shares in a ‘company limited’ – a dutch invention in 17th C ?

    Have often wondered; Has economics has taken much interest in Chaos Theory, after all , economies are clearly not linear systems, they exhibit long periods of stable oscillating random changes around a fairly stable center point and occasional sudden rapid radical changes that are then followed by long periods of oscillating ( randomly) around a fairly stable new center. Small variations in starting conditions do not always average out.

    PS have spent a bit of time studying the ‘market’ for the resale of art. There is a curiously ‘scale independent’ aspect to these markets; in all the markets studied ,no matter how big or small, most of the resales of art- if measured by gross monetary value, go to about 20-30 names. (not the same ‘names’ rather the same number of ‘names’) Any ideas as to why?

  15. Splatterbottom says:

    ‘Capitalism’ is a word which demonstrates the limits of abstraction. The use of this word to convey meaning inevitably fails because the range of possible meanings is too broad. Any attempt to give a one-word description of an economic system is doomed.

    There are other words which more accurately describe the various systems and circumstances a speaker may be alluding to, such as the component words you use in your post.

    A common use of ‘capitalism’ is in contra-distinction to ‘communism’, a word which suffers from the similar problems. In this sense your description of the components is on the money, but you have to wonder about the wisdom of using at all a word which requires qualification of other words which are in turn required to qualify the original word.

  16. Jarrah says:

    “you have to wonder about the wisdom of using at all a word which requires qualification of other words which are in turn required to qualify the original word.”

    Doesn’t that describe all words?

  17. john walker says:

    contextual web – is not the quite the same as recursive qualification.
    Recursion can occasionally end in: IF ‘it’ = True, Then ‘it’≠ it. However a non recursive language is one that cannot make statements about ‘itself’, a passable langauge for a technocrat, but no use to anybody who wants to be a bit creative.

    A precisely vague definition of capitalism is I expect possible.
    There is a lot of work being done on precisely vague programs , the concept is very important to the development of AI systems that can cope with recursive highly relational system terms like- poor , rich , adequate so on .
    ‘A large cucumber was, in the road, in front of a small elephant.

  18. Splatterbottom says:

    Doesn’t that describe all words?

    Some moreso than others. The complexity of the thing alluded to by the word, the degree of generalisation and the level of abstraction sought, the more useless the word is in describing any specific thing. “Masturbate” is a fairly straight-forward word. “Love” isn’t.

  19. john walker says:

    Splatter A language that excludes terms that are not straight-forward is a pretty useless language for describing the real world. It can also result in fantasied ‘un-reality politics’ something that can be very dangerous.
    from ‘Meditations in a time of civil war’

    We had fed the heart on fantasies,
    The heart’s grown brutal from the fare;
    More Substance in our enmities
    Than in our love; O honey-bees,
    Come build in the empty house of the stare.

  20. Splatterbottom says:

    JW, exclusion was not what I had in mind. It is objectionable to use a word of imprecise meaning as though it conveys something precise. ‘Capitalism’ is such a word, and it is often used to make generalisations about substantially different economic systems and relationships. My point is rather that rational argument requires precision. A word whose meaning has become too loaded with ambiguity and generality should be avoided. It is better to say exactly what you mean, even if it requires a paragraph rather than a word.

    Poetry gets a pass here as it has a different method. Its words directly infuse in the reader responses, such as feelings of beauty or of melancholy or a sense of meaning or connection, by way of the emotions it provokes as much as by rational argument. Poetry weaves its web by exploiting the possibilities inherent in words weighted with multiple meanings and subtle shades of implication.

  21. john walker says:

    Splatter, yes and no. The problem with “capitalism” is that it can either refer to an historical period or it can refer to a ‘quality’ , qualities are relational things; a particular color can be either ‘warm’ or ‘cool’ depending on what other colors are near it.
    Yeats “Honey Bees” are a reference by Yeats to the words of one of Yeats ancestors, Johnathan Swift in a satire called “The Battle of the Books” . This tale includes a debate between new theory(in the form of a spider and his clever web) and the classic canon (in the form of a Honey Bee) Aesop awards the Laurels to the Honey Bee ; who harms no one and brings us “honey and wax” and in a world that can sometimes be bitter and dark what could be more useful than “sweetness and light”

  22. Jarrah says:

    The reason one can refer to a historical period as ‘capitalism’ is because of its capitalistic qualities – therefore ‘capitalism’ always refers to qualities first.

  23. john walker says:

    true enough.
    Reminds me of something; Orthodox Christians regard Evangelicals as heretics. This is because Evangelicals privilege scripture over the ‘ body -church’ : ritual/communion.
    The Orthodox (quite logically) point out that the ritual, the breaking of the bread and sharing of the cup, came first and that the ‘text’ came much latter. It (the text) was a result of the action, it was not the cause of the action.

  24. Adrien says:

    I think capitalism is a collective label for something that resulted in England surfeit of three things: rule of law with private property rights and limitations on state power, a culture of sink or swim market hussle, mass production technology.

    In the PRC you see an importation of this mass production technology and the allowance of private property. This is enough to produce ‘capitalism’ as we recognize it. The difference being that the PRC has no rule of law or structural limitations on the concentration of power. The market economy exists at its whim. However the market economy has also produced a modern middle-class and they want the rule-of-law by and large.

    There’s something a bit repulsive about business. But no matter your feelings on the subject it’s a fact that it has produced great prosperity. Prosperity we take for granted whilst slagging it off on the internet.

  25. Adrien says:

    Marx was right about one thing viz capitalism: alientation.

  26. john walker says:

    Adrian PRC…. ? is short for what?

    “Rule of law with private property rights and limitations on state power”, really developed (between about 1790 and 1850 ,By the wigs) as reforms needed to deal with an already existing situation.

    Many would point to the massive/desperate effort needed to defeat Napoleon, as being the critical force in the development of the’ first capitalist state’. The war transformed Britain into the first mass producing , military industrial complex. Wellington was in many ways the first modern general, his skills were much more about logistics than tactics and he was very good at combining strategic offense with tactical defense.

  27. john walker says:

    Alienation – ‘anomie’ is an interesting term , it also refers to freedom.

  28. Adrien says:

    Adrian PRC…. ? is short for what?

    People’s Republic of China.

    The rule of law, limitations on state power and private property rights have a legacy that goes back centuries before the period you mention. The Magna Carta and the English Civil War, to mention two significant events, were crucial as well.

  29. john walker says:

    The history of power in the UK is of course very long and complex . The period from the regency into Victoria’s reign is, however, very important to how things developed .
    For example in about 1790 the whole population of London had (from memory) about 7 seats in parliament, whereas rural Kent had about 40 seats.

    PRC is a very paradoxical place.

Leave a Reply

Your email address will not be published. Required fields are marked *