What is capitalism? Are we capitalists? The word has different meanings to many people. Capitalism as a word was actually coined by Karl Marx. It means, “an economy without government controls.” Many libertarians prefer the word free market because they think that capitalism has many bad connotations, like the fat cat bankers and the Wall Street elites sticking it to the little guy. Well, this is how Karl Marx portrayed capitalism and this is how people learn about what capitalism is while attending school. After all, today we live in a mixed economy. The best of both worlds, right? We saw the evils of capitalism at the end of the 19th Century and surely any moron knows that capitalism cannot be left untamed? People would be working in horrible conditions and getting their arms blown off in factories. The truth is that free acting individuals without the aid of the state have given us the standard of living today. The state likes to take credit for things like the forty hour work week and minimum wage but, these things would not be possible if it was not for the massive increase in wealth that the free market brought into the world.
The confusion about the definition of capitalism is pervasive throughout society, even by many people who claim to be for it. People throw the term around loosely and seem to not even understand what it means at times. People also seem to say that Europe and Canada are socialist. The truth is that neither is United States capitalist nor is it European socialist. Both are a mixture, each country has free elements of their economies and varying degrees of government control and the countries of Europe have many different mixtures at that.
Just because Europe and Canada have larger social safety nets does not make them socialist. Socialism is defined as: the government ownership of the means of production, that people work for the state and the state decides what everyone does. I guess you could say that Europe has more state control over their economies than we do but, this is not really true either. If this is the litmus test, then it is arguable that the United States is more socialist than Europe. Look at how the American housing industry is controlled by the American government. The same is true of banking. It is hard to believe that Europe has more control over their banking sector than the United States. Europe did not blow up a huge housing bubble through government sponsored entities like Freddy May and Fannie Mac… or whatever they are. In fact, Canada is ranked “more free” than America economically. So even though they have socialized health care, they are more free market or “capitalist” than we are.
To be honest, capitalism and socialism are almost without meaning anymore. Most of the public and political pundits have no idea what they mean. Politicians like to say we are capitalist. The ones on the right say this because they believe that their constituents like to hear this. It is much more politically convenient than saying that we are not capitalist because that would take some inconvenient explaining that might put some of his friends in a bad light. Politicians on the left like to say that we are capitalist as a foil to their progressive or socialist ideas. If obvious problems in society exist, it must be because America is capitalist. The solution is whatever pet government scheme that politicians have that will alleviate the “cruel” results of a capitalist society. If the problems exist because of government, it would not make sense to use more government to solve such problems. This is why leftist politicians describe America as capitalist. Because their solutions are not. Under no circumstance will they ever point to the government as a cause of even the smallest of problems. As you can see, capitalism and socialism, as terms, are used for political expedience and have little to do with reality.
I like the term ‘free market’. It is really the same thing as capitalism but, it emphasizes freedom. Some people use the term ‘freed market’ to differentiate from the market we have today, which is not free at all. This being said, ‘free market’ is good for me and is less confusing than ‘freed market’. At the same time, it is important that advocates of the free market are making it clear that they are advocating human freedom, not Wall Street or profits, or whatever smear socialists like to use. Economic Freedom is just as important as religious or any other type of personal freedom. In fact, they cannot be separated. It is a contradiction to say that a person should be free in personal areas of his life but, must be controlled economically by the state. Humans are meant to be free by their nature. Both economic and social freedoms are intertwined.
In the end, America does not have a free market. It is a corporatist hybrid. Though government may not own companies outright, it protects large corporations at the expense of the public and smaller firms. Our regulatory state does not and never has protected the public from public monopolies but, has instead entrenched monopolies through government privilege. The state pretends to protect us from contaminated food but, it has been large food producers who pushed for food regulation that have flexed out small time competition using compliance cost muscles. The government pretends to protect bank depositors through FDIC insurance but, has protected banks from bank runs allowing them to leverage their assets up to the hilt with no check in place whatsoever. The government pretends to protect from monopolies with antitrust laws but, has instead used these laws to destroy the competition of politically favored businesses. Worst of all, the government created the Federal Reserve to end the boom-bust cycle. Instead, it gave us the first Great Depression and is about to give us the second.
A true free-market society benefits the individual and the society as a whole. Society becomes healthier over time and even the poorest among us have the opportunity to become successful. Though that American dream still exists, it only exists because of the last vestiges of the free-market. When freedom disappears, so will the American Dream.
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