As with many “isms”, this is a slippery topic, and different people will have different answers. It is certainly a term which has suffered from much slander and misunderstanding, typically by tyrants denouncing liberty, and socialists denouncing individual merit. Capitalism has a lot to do with both liberty and individualism.
However, I am not going to tell you what the definition “is” - because I don’t claim to have the “one and only” definition. Furthermore, by its very nature, I believe, you have to figure it out for yourself. But I am hoping that this document may get you started in understanding why you have to figure it out for yourself.
“I cannot teach anybody anything, I can only make them think”
Socrates
“Even the very wise do not see all ends”
Gandalf, "Lord of the Rings"
Let’s start with what is, I believe, a fundamental truth: You exist. If we can’t agree on that detail, you needn’t bother reading any more, because you are already lost. However, if we can agree on that, I will suggest a further fundamental truth: you have a mind. And it is solely your property. No one controls it, except you. It is your single most important tool for getting you through your life. It travels with you from the day you are born to your deathbed, and no one else can really know what goes on in there. This detail really matters to the definition of capitalism, and there have been enough tyrants who have tried to get their way by insisting that people have no individual existence outside of some group.
“It is thus necessary that the individual should finally come to realize that his own ego is of no importance in comparison with the existence of his nation as a whole… and that the higher interests involved in the life of the whole must here set the limits and lay down the duties of the interests of the individual”
Fascist Dictator Adolf Hitler
You come into the world as a baby, and as you grow you are at liberty to learn, understand, believe or love, anything you choose, anything which your mind tells you is good. You will choose clothes, foods, friends, beliefs, environments, lovers, investments and so on based on what your mind concludes is best for you. You can of course be wrong, or choose badly, and outside factors may impact on your expectations, but we all do our best with what we know, and often times we change our minds based on new situations and conclusions. Now, it’s true you can be influenced by events, buddies, family, customs, co-workers and other external factors; but the power of choice remains yours. Some people run away from home to avoid family influences; some abandon misguided friends who are walking a less sensible path; others leave jobs, all in order to help clarify the choices of life. I am not saying anything here so far that is particularly clever. We all know that this is true, I think.
You can let others think for you, if you so choose, but that result starts out as having been your choice. You could also choose to not let others think for you. Even if you hire some specialist, like a doctor, or a lawyer, or an accountant, or an engineer to figure something out for you, because they are particularly good at solving some problem for which you need a solution, you are at liberty to reject their opinion. You are always King (or Queen) of your own mind.
“The greatest thing in the world is to know how to belong to oneself.”
Montaigne, 1580
Quite typically, as a young child you grow up believing that what your parent, or teacher, or country, says is “true”, and that’s fine because you are too young to know any better. At some later stage of your life though you realize that they weren’t always right, and so you work to improve on your understanding of the universe based on, what is in your opinion, your new and better information. This is learning. You have learned that no one else knows everything, they can be wrong, and that you are responsible for finding your own interpretation of reality. This fundamental truth is your freedom of thought.
“Every man is fully satisfied that there is such a thing as truth, or he would not ask any question”
Charles Pierce
“We are not afraid to follow truth wherever it may lead, nor to tolerate any error so long as reason is left free to combat it”
Thomas Jefferson, 1820
“But truth has its own way. It works and produces effects even if party programs and textbooks refuse to acknowledge it as truth.”
Ludwig von Mises, 1952
These are the first steps to understanding “Capitalism”: you exist, you enjoy freedom of thought, and there are truths about the universe for you to learn, with or without the help of others. Capitalism, I suggest, honours and embraces these truths.
To understand “Capitalism” as politics, let’s start by understanding something about the word "politics". Politics is the name for “the relationship between people”. You and your spouse, you and your children, you and your friends, you and your co-workers, you and your country – all of these involve a “political” relationship between rational actors – people who think. The word “politics” has been captured by the popular media to suggest that it only relates to Government and Kings and such stuff, but that is unnecessarily limiting. Only Robinson Crusoe on his desert island was not burdened by politics, but that changed as soon as Friday showed up.
So how do people behave, politically?
It is entirely customary for people to strive to persuade others to do their bidding; we all want to make our own universe better. Maybe your father wants you to take out the garbage; maybe your girlfriend wants to go to a movie, maybe your co-worker wants you to go to lunch somewhere different … your decisions on how to react to these issues, or indeed to compel or persuade others to do the things you wish, involve a balancing of political relationships. You may not want to take out the garbage, but you love your father or it’s his birthday; you may not want to see the movie, but you love your girlfriend and she watched a Western with you last time; and therefore, under their political influence, you choose to do something you might not have otherwise chosen or bothered to do. Sometimes you resist someone’s bidding, and that can result in some form of conflict. All through your life, you are surrounded by political relationships, and your life is like a ball bouncing among other balls, buffeted by the influence of others and in turn buffeting them back, picking and choosing options upon which to make your decisions. Most of the political “deals” you make in life are voluntary.
So far so good.
Now, some people find that the effort of persuading others to do their bidding is tiresome. It is vastly simpler just to make someone do something, whether or not it is contrary to the other’s voluntary will. To cause violence to them, or the threat of violence, if necessary, to make them comply. Persuasion can take so long, and it’s such a drag if the person doesn’t agree with you. If I can just force you to do something, the something gets done. If I can just tell you what to think, I don’t need to waste my time arguing with you or making you understand how right I am, and getting you to agree with me voluntarily.
Throughout history there have been countless examples of people using or threatening violence against others in order to get their way quickly, without requiring the burdensome struggle of convincing and obtaining voluntary agreement. Traditional monarchies (kings), Lenin’s Russia, Hitler’s Germany, Mao’s China, the Khmer Rouge of Cambodia, all the way down to pirates, murderers, muggers and thieves, are examples of those people willing to use violence to get what likely they would not have obtained voluntarily. For Capitalists, the denial of a person’s freedom to think, choose, and act for his or herself by violence or threat of violence, is a moral wrong. Most people agree: that is why pretty well everyone agrees that murder, and theft, and genocide, are bad. A gun in your face is a dramatic challenge to your fundamental freedom of thought and choice.
“Of more worth is one honest man to society and in the sight of God, than all the crowned ruffians that ever lived”
Tom Paine, 1776
“Those who deny freedom to others, deserve it not for themselves; and under a just God, can not long retain it”
Abraham Lincoln
But sometimes people come up with what they think are really great ideas about how to make life better for everyone. And it would be so much easier to get to this good place if we could just pass a law. “Law” is the word for forcing people to do things legally – (yes, that is a circular definition). It is a very old trick; to make people do what you want, by calling it something lofty, or by wielding a scepter or a crown or a “holy” relic. If I say something is “God’s Will”, or “the King’s Will”, or “the Will of the People” it is far more persuasive somehow than if I just say it’s “my Will” (what I want). And so the road to Hell is sometimes paved with good intentions.
“When the President does it, that means that it is not illegal”
Richard Nixon, 1977
“Truth is whatever benefits the State: error is whatever does not benefit the State”
Nazi Minister Robert Ley, 1890-1945
“Any excuse will serve a Tyrant”
Aesop, 550 BC
Law is a tool to make people do something, which the fellow with power thinks is good. It spares the effort of persuasion, and goes directly to compulsion (the threat of violence for failure to obey). If you happen to be persuaded also, that’s fine, but not necessary. Most people will accept a law against murder; they are already persuaded, and so have no objection to the compulsion. The law is not intrusive, but consistent with your free choice anyhow. However, there are other laws the value of which may not be apparent to you, and you are not persuaded; you are, however, compelled to obey by the threat of violence. These kind of laws have been increasing, and increasing, and increasing, over the last 60 years in particular, although this is an ancient problem.
“The more corrupt the State, the more numerous the laws”
Tacitus, 56-120 AD
Our society has grown into a political environment in which persuasion has been rejected in favour of compulsion as the way to get things done. When people want something they think is good, instead of entering into a persuasive dialogue to convince others to agree voluntarily, they lobby the government to “pass a law” and thereby make everyone else comply. They lobby to raise taxes for some, increase benefits for some, reduce taxes for some, take away benefits for some… all because the government saves them the trouble of persuasion, or rather because the government has created an environment in which it seems to be normal behaviour to take from Peter to pay Paul. In that kind of world, no one wants to be Peter. So lobby like crazy to be Paul. We witness a daily travesty as freedom of choice is sacrificed to force, and otherwise decent people grow up believing that it is morally acceptable to ram their wishes down other people’s throats, by law.
“Thus substantially all the legislation of the world has had its origins in the desires of one class of persons to plunder and enslave others and hold them as property”
Lysander Spooner, 1882
So then, what is Capitalism?
At the start of this, I could have just told you what “Capitalism” is, and make it appear like I am the guru who knows all; however, I am taking the harder way of making you figure it out for yourself, and leaving it to you to either agree with me - using your freedom of thought - or disagreeing with me – also using your freedom of thought. So here goes:
I envisage, and invite you to envisage too, a political government which encourages freedom of thought, rather than denies it. Because everyone, including me, has opinions as to what is “best”, we cannot all get our own way: therefore, I believe that what is “best” is for the Law not to impede each person deciding what is best for themselves, and to exclude as much as possible the power of force from people’s decision-making.
“So many men, so many opinions; every one his own way”
Terence, c. 190-159 BC
I envisage a government which does not listen to those who wish to get by force whatever they think is “best”. I envisage a government which would be the opposite to traditional monarchies (kings), Lenin’s Russia, Hitler’s Germany, Mao’s China, and so on; which limits its power of force as much as possible, rather than relying on force to compel its particular agenda.
I imagine that this would be a land which repressed peoples tried to escape to.
Capitalism, I believe, limits the scope of government to maintaining peace, and security from violence by others. Its power of force should be limited to preventing everyone else’s use of force. It would have an army, to protect us from foreign threats; a police force to protect us from internal threats; and a traditional judicial system to resolve disputes, and apply the broadness of law to specific situations. Less than this, and I believe there is no government at all, and there would be no safeguard against the threat of violence by muggers and thieves. More than this, and it is just some gang (call it Liberal, Conservative, Green, NDP, etc.) forcing their own views on others against their freedom of thought.
As for other ideas of “what should be”, let people deal with one another by voluntary persuasion and agreement. You need a new car? Let the different car companies compete to best please you, through voluntary persuasion. You need groceries? Let the supermarkets compete to best please you. You need gas? You need clothes? You need a home? You need insurance? Let there be competition for your business. Will it be perfect? Maybe not, we are still human after all. But it will be moral. It is the right way to do things, because its design is based on the way people really are.
“The only freedom which deserves the name, is that of pursuing our own good in our own way, so long as we do not attempt to deprive others of theirs, or impede their efforts to obtain it”
John Stuart Mill, 1859
Where Mao’s China or Stalin’s Russia was a prison camp where everyone “not persuaded” by those in power lived in terror (or were executed or sent off to slavery), Capitalism does not compel those “not persuaded”, but encourages them to walk their own peaceful path through life, as best they see fit. Anything else is not moral.
“They listened, trying to understand Jonathan Livingston Seagull. He spoke of very simple things – that it is right for a gull to fly, that freedom is the very nature of his being, that whatever stands against that freedom must be set aside, be it ritual or superstition or limitation in any form. “Set aside,” came a voice from the multitude, “even if it be the Law of the Flock?” “The only true law is that which leads to freedom,” Jonathan said, “There is no other”.
Richard Bach, 1970