I regular reader has asked a very important question: what is the difference between free markets and capitalism. Most people do equate the two, and in lazier moments even I mistakenly use the term "capitalism" rather than "free markets," as I support the latter, but do not necessarily support the former.
The first thing to note is that the term "capitalism" was coined by Karl Marx. It describes not an economic system alone, but a politico-economic-social system. In this system, the government -- which is either run by or at least influenced by the bourgeois -- has laws on the books specifically designed to protect the economic interests of that class. The term "free market" describes a kind of economic system only -- an economic system that can exist under various forms of government.
In one of the papers I'm reading for the conference I'm going to on spontaneous orders, the author observed that the invisible hand of the free market worked exactly the same way in 1777, after the publication of Wealth of Nations, as it did in 1775 -- but that politics was never the same after Marx. Indeed, capitalism is a political idea; free markets are a kind of economic spontaneous order that arose naturally through the interaction of people through exchange.
3 comments:
As someone whose first language is German and whose second language is English, I often use the term "capitalism", but never use the German equivalent "Kapitalismus". I use "capitalism" because everybody, including supporters of very free markets, seems to be doing so. I don't use "Kapitalismus" because that would signal that I'm on the far left as far as economic questions are concerned (which I'm not), but mostly because the term suggests that all that matters in a market economy is your capital (in the narrow sense of financial capital). Which is not true, although it is notable that it was more true in Marx's day than it is today.
None of which contradicts your original point, of course.
Marx was German and originally wrote in German, so it's not surprising that you and other Germans make that distinction.
Gotcha. Thanks.
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