What is "Capitalism"?

The question is important to ask because often in times as these where dissent and radical opinion have suddenly come to be almost mainstream, the question of whether the capitalist political-economy is still viable for humanity is more than a mere conceit of a few Marxist intellectuals in a coffee house near a university.  Though, perhaps, not much more.

At any rate, the question has a substantive, ideological component, but I think also an important historical component.  Everyone in the United States is familiar with the basic narrative of capitalism.  Capitalism refers to  free markets, and un-intrusive state functions.  Capitalist countries are dominated by small business - the "engine of the economy" - while rigorous enforcement of property rights encourages the development of a fair, liberal democracy, with representative government that serves the popular will.

It's almost a joke to write even though that is word for word what I was taught through grade school, and certainly in law school.  Privatization and property - the state protection of the owners of capital - encourages democracy.  Maybe back in early 2006 when I was 23 years old and eager to hang my Juris Doctor on the wall of my office in some skyscraper somewhere, that actually made sense.  In 2011, it's almost laughable.

Yet, my personal feelings notwithstanding, many people still draw this grade school distinction between 'capitalism' and 'socialism.'  The real problem with the economy, they might say, is that the state has grown too large, has intruded too far into the economy.  This is fundamentally the province of socialists.  The more educated sophists here might suggest that this begins with the well-intentioned socialist call for reform, and redistribution that elites - perhaps understood as a kind of crude socialist themselves - co-opt to insulate themselves from competition, use the state to socialize their risks while maintaining the paradigm of private profit.

The narrative seems compelling if you're only partly listening while you watch Jersey Shore or huff paint thinner.  The problem is that historically, this makes no sense.  The term capitalist was originally used merely to describe people who owned capital.  That's it. The first references to a sort of capitalist political economy were made in reference to a political system and economy that was dominated by capitalists, and this was popularized, in a critical tone, by Karl Marx (though he didn't coin the term, and he often referred more to the 'capitalist mode of production').  Therefore, in a descriptive tone, capitalism merely refers, or should merely refer if one is loyal to the etymology, to the political-economy dominated by the private ownership of capital, and widely characterized by the investment of capital, extraction of profit, and reinvestment for more profit.  One needs only read the first page of any business section in any major newspaper to see how this reflects the real world.

If the origin of the term 'capitalism' has nothing to do with democracy, free markets,  or small business, why do we think of it in those terms popularly, particularly in the United States?  There are a few answers we might consider, but in my view there is one very compelling explanation: corporate propaganda.  As a preface, this explanation is a double edged sword.  At once it is dangerous to merely assume that the beliefs of millions are purely the product of calculated attempts to deceive by corporate elites.  The effects of propaganda should not necessarily be so simplistically understood.  I would argue much of it merely involves the use and abuse of language - the construction of a relationship between emotive expressions and simple concepts. Capitalism is us, free enterprise, prosperity, competition, low prices, abundance, freedom, and democracy.  All this and more can be yours if you allow corporations to act unfettered in solely their own interests.  (For more on this process, check out Selling Free Enterprise: The Business Assault on Labor and Liberalism 1945-1960 by Elizabeth Fones-Wolf, PR!: A Social History of Spin by Stuart Ewen, and Taking the Risk Out of Democracy: Corporate Propaganda Versus Freedom and Liberty by Alex Carey).

For the first time in my life, now, it seems like the erstwhile "radical" notion of criticizing capitalism has reached the edges of mainstream politics.  Perhaps that will be a lasting feature of discourse until something somewhat extreme changes, or perhaps it will taper off if the Occupy protests cannot last the winter.  Either way, it is important to work on encouraging the use of the word 'capitalism' descriptively in any critical context.  Now there is a real opportunity to appeal to nominally conservative people who are equally fed up with the extension of American power abroad, and the dangerous links connecting Washington with finance.