A Definition of ‘Capitalism’
based in economics, not ideology
No term is thrown around more with more ambiguity in its meaning than the word ‘capitalism’ is. I have written on this specific topic before, but my thinking has evolved in the meantime.
Some people think of it as a word for an economic system. For some people it rises itself to the level of an ideology, referring to the governance of societies/nations. For others, it is a term of convenience to refer to ‘free markets’ or ‘exploitation’ or some other characterization, whether desirable or undesirable, of the production of goods/services.
I think of capitalism as a particular form of production. As the root word ‘capital’ implies, it is production involving capital — plant and equipment — on a (relatively) large scale. “Plant and equipment” can seem to imply factories and office buildings, but land and draft animals count as capital — as do slaves.
So here is my definition of capitalism: mass production of goods/services for selling in geographically extended markets.
“Mass production” implies in a way “for selling in geographically extended markets.” Mass production means producing more than can be expected to be sold in the local market where production takes place.
The word “selling” is critical, however. The term ‘state capitalism’ has been used to describe the old Soviet system of the U.S.S.R. and its vassal states. There, the state — the central government — determined what would be produced and in what quantities as well as its distribution. Even in that system, though, the final distribution involved sales. Selling goods and services completed the circulation of money in that system — money that was created to finance the operations of units of production (i.e., factories, etc.), to include providing money for wages and salaries. So “state capitalism” is an accurate term used in that way. [A government purchasing goods and services from the private sector in the process of providing public goods and services (which are not purchased, but are provided) is not remotely the same thing. It is not even close to being “state capitalism.” Sure, those goods and services are paid for with taxes (or borrowed money to be repaid using taxes), but the recipient — the community — does not ‘buy’ them in any reasonable sense of that word. For instance, there is no way for a park designated for a particular neighborhood to be built instead in another neighborhood because that neighborhood offered more money for it.]
That definition of capitalism also has implications for more historically distant economies. In going there we must keep in mind the relativity in “mass production” and “geographically extended.” Where settlements are small and transportation is arduous, those terms are still viable at much smaller scales. By the time empires had developed, however, there can be no doubt of “mass production for selling in geographically extended markets.” Capitalism had definitely arrived.
That was mostly agrarian capitalism, with land and slaves as capital. Again keeping in mind relative scales, however, mining and timbering were also capitalistic enterprises (involving land and slaves). Political rulers were often the owners of those enterprises. Luxury goods produced in smaller quantities intended for the economic elites in distant places also counts as ‘capitalism’. Also, merchants, with their own forms of capital — draft animals for caravans and ships — were definitely capitalists of those times, producing the service of transportation.
In Europe’s ‘Middle Ages’ trade diminished greatly, mostly due to a lawless countryside, though it never disappeared. There were still economic elites scattered about over a large area and the production of goods for selling to them (as the local market for such goods was so small). Some ‘mass production for selling…’ did take place on feudal estates, but, again, trade of that kind was not a major feature of that European economy.
So feudalism can be taken into account, if barely, in the advent of Modern capitalism. In bondage slavery the slaves are property — capital — in the same category as machines — or draft animals. In feudalism serfs were not property, but they were legally bound to the property on which they were born. (They could only leave with the permission of the owner of the estate; while on it, they did have certain very minimal rights, but basically their lives were ruled in detail by the owners of the land.)
In Modern capitalism people are paid money to serve as machines — or draft animals. Some people are hired to be thinking machines. Some people are paid fantastic amounts of money (and other forms of compensation, such as benefits and stocks). Still, any employee of any business is being paid to serve as a machine.
That’s capitalism. Those are its undeniable, it seems to me, features. People can want to add more, but to add more is to get into arguable points and positions. People can also argue about its goodness, or fairness, or rightness or its costs and benefits. For instance, I would argue that most employment in Modern capitalist enterprises goes from from being paid for being used as a machine to being ‘wage slavery’, as such employment is intended for the greater financial aggrandizement of other people within the enterprise. Most importantly, though, we should all at least be arguing about the same thing.