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12 Definitions of Capitalism

Week 1

12 Definitions of Capitalism

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Week 1

On Defining Capitalism 

Executive Summary

1. Controversy exists not only over whether capitalism is good but what precisely it is. Consequently, some arguments about capitalism talk past each other. 

2. Our “What Is Capitalism?” samples twelve definitions and descriptions. Two are from widely used encyclopedias, five are from leading anti-capitalists, and five are from leading pro-capitalists.

3. Some descriptions take capitalism to be about economics only, rather than a broader set of moral, political, and economic principles. For example, Britannica and Merriam-Webster make it synonymous with “free market economy” or “an economic system” with certain characteristics. Ayn Rand, by contrast, defines it more broadly as “a social system” and as based on moral principles of “individual rights.”

4. Anti-capitalists characterize it in adversarial terms. For example, Karl Marx states that capitalism’s apparent progress is always a “harbinger of a coming crisis.” Pope Francis states that capitalism makes many or most people “excluded and marginalized.” Adolf Hitler claims that capitalism is essentially about the “exploitation of the economically weak.”

5. Pro-capitalists emphasize the voluntary nature of capitalist processes and its in-principle rejection of physical force from human relations. Murray Rothbard, for example, says it’s an “array of exchanges” each undertaken by “voluntary agreement.” Friedrich Hayek says it does not intend “any deliberate design” but nonetheless must be adopted by those wanting generally “the very survival of mankind.”

6. Others deny that intended principles and processes are important and that the actual outcomes are key. Noam Chomsky, for example, emphasizes that in practice capitalism amounts to government on behalf of the powerful and a “welfare state for the rich.” By contrast, Milton Friedman claims that it’s “the only way that has ever been discovered” to get large numbers of people to cooperate peacefully and with respect for freedom.” 

7. Some definitions situate capitalism historically, as a break with earlier feudalism’s emphasis upon producing “expensive goods suitable only for the upper classes.” As Ludwig von Mises puts it, early capitalism was an innovation characterized by “mass production to satisfy the needs of the masses.”

8. So, should capitalism be defined in terms of underlying principles, intended goals, actual processes, actual outcomes, in contrast to historical societies or systems, or some combination of the above? 

Read the 12 full definitions and descriptions here. Summary by Stephen Hicks, 2021.

See Next:

1. Ayn Rand, "What Is Capitalism"

2. Robert Hessen, "Capitalism"

3. V. I. Lenin, Capitalism as Imperialism

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