What is Capitalism?

What Is Capitalism?

It seems like a straightforward question, or at least a question with a straightforward answer. We are living through the triumph of capitalism. It surrounds us and informs our lives, and defining it should be as easy as pointing to the world around us.  But it’s hard for fish to see water, especially ideological fish, and I’ve recently been struck by the myriad definitions of capitalism, often never-fully-articulated, that I hear and read.  I was especially struck by the lack of definition in Thomas Piketty’s Capital in the Twenty First Century which, although a masterful analysis of capitalism, uses the term rather uncritically. Similarly, in discussions with my friends on both the left and the right, ‘capitalism’ gets thrown around as a sort of shorthand for any number of social facts.

While the systems thus defined all bear what we might call a family resemblance to each other, each definition focuses on a different aspect of capitalism.  This terminological confusion leads to fruitless debate, as the salient points of each definition are made to talk past each other. I felt that it would be useful to clarify the four major definitions of capitalism that I see. Each definition is neither complete nor exclusive, but taken as a whole they are elucidatory.

 1) The classic Marxist view defines capitalism as the commodification of wage labor due to the control of the means of production by a certain class, i.e. bourgeoisie.  Because workers (collectively the proletariat) own only their labor power, they are forced to sell it on the market for wages. The process of wage labor is, according to Marxists, fundamentally dehumanizing, and by alienating workers from the products of their labor, turns them into wage slaves. This fundamentally alters the nature of our species being as humans, and any system in which wages are paid for labor and the workers do not own the product of their labor will alter species being in this way.

2) A different take, most germane to the historical-materialist study of relations of property and production, focuses less on bourgeoisie control of the means of production and more on the loss of the means of subsistence by the peasant class (my view on this is informed Marxist medievalists, such as Bob Brenner at UCLA).  When pre-capitalist peasants (e.g. medieval serfs) owned their own land and tools, they possessed the basic means of subsistence (in this case largely coterminous with the means of production). Controlling their own subsistence, they were subject to no economic coercion.  The ruling class (the lords) could only expropriate the surplus from the peasants by extra-economic means, namely force. When workers depend on the market for their subsistence, however, oppression and exploitation can take economic forms. While the distinction between (1) and (2) may seem slight, it changes the emphasis from the effect of capitalism on species being and then the individual to the broad historical sweep of social property relations.

3) The third definition is that capitalism is the rational and constructive use of accumulated capital by individuals and firms in order to maximize their profits and  accumulate further capital through efficiency and rationality (whatever that means).  This seems to be the implicit definition used by Piketty (e.g. when he describes postwar Europe, with almost all capital under government control, as ‘capitalism without capitalists’), and it goes back at least to Adam Smith. Under this view, even large-scale economies with wage labor (such as some parts of the Roman world) are not capitalist because there is no rational investment geared toward capital accumulation (better to withhold judgment on that historical question for now). While the social property relations in (1) and (2) suggest this strategy as the best for maximizing “success” in a capitalist society, this definition focuses only on the economic aspects, allowing for more nuanced analyses (like Piketty’s) but often overlooking the social aspect of what it means to live in a capitalist society and the effect of capitalist social relations on the lived experience of the individual.

4) The final definition that I would flag is a sort of bastardized Weber that has been absorbed by the right wing in the United States.  Capitalism becomes a metonymy for a whole series of values, such as individual initiative, hard work, low taxes, American world dominance, and Protestantism.  While this definition is not as rigorous (especially from a Marxist perspective) as any of the three above, it is important to understand that the historical circumstances surrounding the rise of capitalism can suggest that capitalism is just the name for the totality of an individualistic, Protestant society. Moreover, given that the history of capitalism has seen (in the West) the greatest rise in living standards in history, as well as increased personal freedoms, and generally the greatest material improvements in peoples’ lives ever, there is a certain allure to this whole ‘capitalist’ thing that has nothing to do with the actual social property relations of capitalism.  A corollary to this definition, and one that is just as flawed but rooted in the same view of capitalism as metonymy for modernity, is a confused left wing critique of all imperialist ventures and the project of modern democracy as inherently capitalist. The Roman Empire was not capitalist, but it sure was no humanitarian aid project.

These four definitions are in no way mutually exclusive, nor are they comprehensive.  Each of them elucidates different aspects of the beast that is our society, and each suggests different paradigms for understanding the world that we live in.  The hope is that by fully understanding the similarities and differences between these viewpoints there can once again be productive discussion that is not obscured by the terminological difficulties that plague most academic and political discourses.

Moreover, I am looking for blind spots in my own conception of these terms.  If you feel like I missed an aspect of capitalism, or missed a way that we talk about it in today’s discourse, I would love you to inform me.  Thanks in advance!

© Henry Gruber 2013