Few economists would agree with the title of this post. Yet, as I often proudly proclaim, I’m no economist. I’m an empiricist, and as such I take seriously the literal meanings of words, or the basic models of concepts. There is disagreement even among economists over the meaning of capitalism; some of that disagreement is really based on what I will establish here, that if you take the most basic model of what capitalism means it never existed, hence, could not have succeeded. This leads folks to come up with adjustments (excuses) to the meaning in order to talk about capitalism as something that does exist and succeed.
This post is just to cover the basic meaning/model. Future posts will address why it has yet to succeed, at least at a large scale.
Capitalism involves the private ownership of production that generates profit. The three key words here are private, production and profit. There is some alternative views that focus on property rather than production, a significant substitution at that, but production is needed for any kind of economy to function. As we know from nomadic cultures the same absolute does not apply to property.
There are other extensions of this besides property that are tautological as well. Because we have pursued capitalism in certain ways we incorporate that into the definition. An example would be to extend private ownership to mean private investors or stockholders. These are ways to pursue capitalism but, despite what your favorite free market libertarian think tank might be selling you, are not integral to the basic model or definition except by tautological designation: “We’ve done it that way so that’s the way it is.”
Most folks, even laissez faire economists, acknowledge there have been some practical problems with the “private” part of capitalism. I’ve certainly elaborated on just how much government suckling a “private” corporation needs to exist and to succeed. But there have been problems with all three elements–private, production and profits–that effectively prevented capitalism from ever yet existing at a large scale.
Let me expose my bias from the start. I’m staunchly for free markets, which unfortunately are not possible with a corporate economy. Capitalism I could take or leave, based on how you want to define and apply the profits part of the equation. Future posts will uncover why “taking” or “leaving” capitalism are not possible choices because capitalism never has existed by strict definition and, hence, has yet to succeed.