If there is one word in the English language that can instantly make any leftist start foaming at the mouth in anger upon its utterance, its ‘capitalism’.
Some people will have the strongest and loudest opinions about capitalism without having a proper understanding of what the term actually means, or stands for. Instead, they have their own completely fabricated definitions that they use to base their dogmas on, which have likely been influenced by leftist media or leftist college professors or a combination of the two. If one were to ask these people for a definition of capitalism one might hear: “capitalism is a rigged system in which the rich get richer while the poor get poorer!” or “capitalism places the interests of big businesses above the lives of actual people!” or simply “capitalism is greed!”. There are many more variations of false definitions for capitalism but they are all wrong in that they are nothing but emotional appeals with no rational basis.
If all of the negative images of capitalism are based upon false definitions, then what is capitalism? According to Merriam-Webster, the dictionary definition of capitalism is:
“An economic system characterized by private or corporate ownership of capital goods, by investments that are made by private decision, and by prices, production and the distribution of goods that are determined mainly by competition in the free market”.
Though this definition does give an accurate picture of capitalism, those who are unfamiliar with capitalism or free markets might see the words “private” and “corporate” and think “See! capitalism is all about big business! That’s why we need the state!”
If you or anyone you know happens to react this way then I offer two responses: first, corporations can only have power over people if the state grants them special privileges in the form of either regulations restricting competition, or in the form of subsidies granted to them. In a free market, a corporation’s success is dependent upon whether or not they produce something which other people value and are willing to pay for. Second, the word “private” in this context simply refers to the people, and not specifically business people, but everyone including you and I, engaging in voluntary transactions.
In essence, capitalism is just a system of voluntary transactions between consenting parties. This is all common knowledge to anyone who already holds ideas of limited government, but if other people who are not familiar with these ideas, continue to be fed the baseless characterizations of what capitalism is from the beginning, then an honest conversation about economics can never happen. It must clearly be established what capitalism is and what capitalism is not. If the state gets involved in the economy by regulating business, that is not capitalism. If businesses lobby government in exchange for privileges, that is not capitalism. If there is force or coercion of any kind in the market place, that is not capitalism. If individuals are freely engaging in transactions that are voluntary and mutually beneficial, that is capitalism!
If there is something that both limited government advocates, and those on the left can agree on, it is that whenever government and business begin to mingle, the outcome is never good. Much of the hostility towards capitalism is rooted in this mix of government and business, but this is NOT capitalism. Some have dubbed this as “crony capitalism”, but I don’t agree with this term because it places capitalism in a category that it does not deserve to be in. Instead “cronyism” should be looked at as its own form of fascism, without any connection to capitalism. Cronyism is definitely a problem in this country, and free market advocates are unfairly being lumped into the same category as these crony statists. Those advocating for capitalism are actively trying to get rid of cronyism by shrinking the power of the institution that the cronies spend large amounts of money lobbying, which is the state. The distinction between cronyism and capitalism must be made clear to those who are unfamiliar with free market ideas so that they do not confuse the two and thus do not potentially develop a hatred of the wrong idea.
My intention here is simply to challenge people’s fabricated perceptions of what capitalism is. There are people out there who make far better cases for capitalism than I could ever make, but what I want to do here is to clarify the foundation on which capitalism rests, which is voluntary exchange. I understand that there are those people who do hate capitalism and see it as evil while also knowing (or believing that they know) what it actually means, but if we make it clear what the basis of capitalism is and what it is not, then we will have a better chance of fighting against the horrifying image of capitalism that the media and academia have dishonestly constructed. In short, capitalism is not about making the rich richer, capitalism is not about greed, and capitalism is not about putting business above people. Capitalism is freedom.
* Naseem Husain am from Houston Texas, currently attending the University of Texas at Austin. He is a passionate Libertarian looking to spread the ideas of liberty one article at a time.