A CAPITALIST PRIMER

The general purpose of this complicated entry is to present an external text on the modern understanding of the term “capitalism,” mainly based on the Wikipedia and the Britannica (blue font), and supplied with my annotations (red font), prefaced, and ending with my conclusion.

This is not, however, a straightforward retelling of other people’s tales. My chain of entries is singular, due to the pronounced presence of a persistent and fairly simple leitmotif in it my point being that the history of capitalism, the latter understood as an ideology of laissez-faire, is a continuous fight to restrain the beast by means of imposing a strict state control on the entrepreneurial practices of the admittedly unscrupulous and questionably altruistic profit hunters, a continuous fight, even in the strongest historical citadels of classic capitalism, to dilute capitalistic principles within the social framework of their respective societies, and to smuggle inside, under some fictitious name and generously furnished with false identification papers, that very forbidden and extremely dangerous radical, Genosse Sozialismus.

Capitalism generally refers to an economic system in which the means of production are mostly privately or corporately owned and operated for profit, and in which distribution, production, and pricing of goods and services are determined in a largely free market. It is believed to involve the right of individuals and groups of individuals, acting as legal persons or corporations, to trade capital goods, labor, and money. The term also refers to several theories which developed in the context of the Industrial Revolution and the Cold War, meant to explain justify or critique private ownership of capital; explain the operation of capitalistic markets and to guide the application or elimination of government regulation of property and markets.

There are two points to be made here. One concerns the political rationale on the part of the free nations to justify the capitalistic way of doing business, as opposed to the Soviet-style method of command economy. In defending the Western way of life against “communism,” too much credit has been given to the system of free enterprise which in its laissez-faire form simply does not work, and too little attention has been given to the socialistic principles underlying the European model of economic development.
The other point is this: This definition of capitalism emphasizes profit as its principal feature. Assuming that by profit one means ‘the financial or monetary gain obtained from the use of capital in a transaction or series of transactions’ (in Webster’s definition), the next step is to define capital. According to Britannica, capital in economics is a word of many meanings, which is comforting already! They all imply that capital is a “stock,” that is, a store or supply, by contrast with income, which is a “flow.” In its broadest possible sense, capital includes human population; nonmaterial elements, such as skills, abilities and education; land, buildings, machines, equipment of all kinds; all stocks of goods, finished and unfinished, in the hands of firms and households. In the business world, capital usually represents the part of the net worth of an enterprise which has not been produced through the operations of an enterprise. In economics, it is generally confined to real, as opposed to merely financial, assets.
All sorts of further distinctions are made which have little bearing on this discussion, except to complicate it beyond necessity, which is solely limited to proving the vague nature of our subject.
The for-profit characteristic of capitalism suggests that all non-profit corporations and businesses are not to be counted as part of the capitalist scene, and therefore their prominent presence in American business life necessarily dilutes the capitalist purity of this nation’s political-economic identity. By the same token, the qualified status of private ownership in the basic definition of capitalism as an economic system where “the means of production are mostly privately or corporately owned,” completes the rather confusing story of capitalism as a word of an essentially uncertain meaning.
The concept of capitalism has limited analytic value, given the great variety of historical cases over which it is applied, varying in time, geography, politics and culture. Some economists have specified a variety of different types of capitalism, depending on specifics of concentration of economic power and wealth, and methods of capital accumulation (Scott, 2005). During the last century capitalism has been contrasted with centrally planned economies. Most developed countries are regarded as capitalist, but some are also often called mixed economies, due to the government ownership and regulation of production, trade, commerce, taxation, money-supply, and physical infrastructure.
Are we to understand that capitalism is best to be negatively, rather than positively, defined, as something which it is not (a centrally planned economy), rather than which it is (laissez-faire, for instance, could have fit the bill, except that it is a chimera, putting the whole question of the legitimacy of the term capitalism in serious doubt!) But even in such a case the picture remains unclear. For instance, to what extent should government regulation account for at least some measure of central planning? On the other hand, history is telling us that the so-called centrally-planned economies are such only to a point. Soviet society at all times allowed at least some measure of private enterprise in various sectors of national economy, including small business, special services, such as private tutoring and instruction, private medical and dental services, and of course private agricultural production, allowing small farmers to sell their products for personal profit at any of the numerous farmers markets profusely sprinkled throughout the nation.
The concept of capitalism has evolved over time, with later thinkers often building on the analyses of the earlier ones. Moreover, the component concepts, used in defining capitalism, such as private ownership, markets and investment, have evolved along with changes in theory, in law, and in practice. The following subsections describe several schools of thought in which the thinkers involved do not necessarily agree on all analytic points, but participate in a common general approach to understanding what capitalism is…
The ambiguity of the last paragraph hangs like a thick moist cloud over the mystified, as well as mistified, landscape, promised fair dry weather by some forecasters, heavy storms and flooding by others, yet having neither of the above in actuality. As to the existence of “thinkers who do not necessarily agree on all points, but participate in a common general approach to understanding what capitalism is,” this reminds me of the frequent public discussion as to the definition of risqué art, as opposed to pornography. Apparently, we are expected to “know capitalism when we see it,” rather than have it adequately defined. The only alternative to such ambiguity, I am afraid, would be the boorish and offensive clarity of Marxism.
(For the record, the famous phrase “I know it when I see it,” alluded to in the last paragraph, belongs to the Associate Justice of the United States Supreme Court Potter Stewart, being part of his written opinion in a 1964 pornography case.)