Capitalism versus Free Markets

A statement I have made, which seems to draw puzzled looks, is that I do not support Capitalism, I support a Free Market economy.

The standard response is: “Isn’t that the same thing?”

It may seem like arguing whether or not Fig Newtons are cookies. I concede that many who write in favor of free markets use the terms interchangeably. In addition, others are specific about different types of Capitalism. I do not have any animosity towards those who do so. I tend to agree with arguments in favor of Capitalism, as far as Capitalism is referring to a free market. Despite this, I have several specific reasons for making this distinction in my own communication.

First, the meaning of terms is important. Many who view themselves as conservative seem to recoil at signs of political correctness. A janitor is a janitor…there is no engineering of sanitation involved. Calling things as they are is a good trait. However, the language that we use invokes ideas and images about the topic discussed. Particularly important is how the words are defined by the people who hear them. In this case, whoever controls the definition, or meaning, of a term also controls the debate. It’s true that meaning can change over time, but this can be a lengthy process which also requires different experiences attached to the term.

With that in mind, we should consider that Capitalism, as a term, was originally promoted, and therefore defined, by Communist and Socialist authors. This definition carried with it particular connotations about morals and values of a capitalist. By accepting and using this term, we are promoting the images created by those original authors.

What are those images? Here is a description that has permeated American life. Simply think about your own feelings and views about corporate executives as you read this description about the origins and moral foundations of Capitalism.

Components of Capitalism (Werner Sombart, “The Quintessence of Capitalism,” 1915):

  1. Greed: The love of money (accummulating it and hoarding it) is believed to be at the root of motivation for pursuing Capitalism. Individual self-interest is seen as directed towards money and influences the methods of acquisition.
  2. Immoral Acquisition of Riches is presupposed to permeate all Capitalist transactions because of these original immoral methods:
  • 2a. Force: Highway Robbery. Capitalism is based on the idea that force is used when possible or necessary to acquire money.
  • 2b. Magic: Treasure hunts and alchemy. Compared with “Projectors” that work for banks. The desire for money leads people to accept and try methods for acquiring it that deceive them and waste their time and efforts.
  • 2c. Scheming and Invention: Fraud, bribes/pay-offs, Ponzi schemes, false advertising, selling ideas, and exaggeration. These are some of the modern terms for descriptions of centuries-old efforts to get people with money to finance some idea or effort. It encompasses the idea that people will say anything to make a sale.
  • 2d. Money: Interest and Gambling. Stock-echanges and speculation. Ties into projection and selling business ideas. Those with money have an easier time making money without any real work. It takes money to make money, but it is believed that this does not represent legitimate work and encourages laziness and dishonesty.

These are the assumptions and images that are intended by communists and socialists when they speak out against Capitalism. Does anyone find these qualities or actions desirable?

Yet these are the images that often come to mind for most people when they hear the word Capitalism–EVEN IF THEY AGREE WITH FREE MARKETS. We can easily translate these descriptions into recent events by corrupt individuals, companies, and politicians.

Why has Socialism been gaining so much ground worldwide? Because they are controlling the images that come to mind when we try to talk about the importance of economic liberty! Because we use the term Capitalism when trying to discuss liberty!

What type of economic system is the foundation of freedom? Is it Capitalism, as defined above? Or is it the free market, restrained only by individual rights to life, liberty, and property? Does a free market evoke the image of people who care more about money than they do about the rights of others? Or does Capitalism evoke this image?

Capitalism, as the meaning has been conveyed, suggests that anything is acceptable in pursuit of money and wealth. Does this sound like liberty?

If we talk about known cases of corrupt CEO’s, who lie to their investors and forge reports until the execs walk away with millions and leave the rest penniless–does this violate individual rights to life, liberty, and property? This action is seen, whether right or wrong, as justified by Capitalism. However, a Free Market that respects individual rights does not justify this kind of action.

What is the difference?

The difference is that the United States was built upon God-given individual rights to life, liberty, and property. This is an ideology. This is how I would define Americanism. Our rights to liberty and property defined our economy as a free market. So a Free Market is not an ideology in itself, but a particular aspect and outgrowth of liberty and the ideology of Americanism.

On the other hand, Capitalism represents an ideology. The most widely accepted ideology of Capitalism is described above. It includes selfishness, greed, and survival of the fittest. We are not a Capitalist society! We are an American society. Within the freedoms we enjoy, people may choose to practice Capitalism, localized Socialism or Communism, or any other -ism they may wish, as long as those practices do not violate individual rights to life, liberty, and property!

This Americanism is decidely UNSELFISH! It includes a necessary view of the needs of our descendents as we sacrifice our current comforts in order to preserve their future freedom. Freedom from tyranny; freedom from debt; freedom to live and believe as they choose.

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