Capitalism, Corporatism, Mercantilism

Eric over at The Liberty Papers hits upon a point that I think is very important:

More importantly, he betrays an idea that is part of the Left’s meme war. This particular idea has been so effective that many on the Left don’t even recognize just how false it is, perhaps even Eugene doesn’t. The idea that has been promoted since the the mid-19th century is:

Corporatism = Capitalism

Anyone that has read Adam Smith and then looks at how supposedly capitalist economies work would recognize that the USA and UK are not capitalist in any sense of the word. The purpose of government, from a capitalist perspective, is to provide a neutral framework for the market to work within. It should not favor producer, retailer nor consumer, nor should it favor management or labor. By continuously aligning the idea that a scenario where government favors management over labor in the employment market and favors centralized corporations over small businesses and consumers in the broader market, the Left has successfully created the idea that this is Capitalism.

One of the biggest problems I run into when talking to leftists about capitalism is that their idea and my idea of what capitalism is are completely different. I usually try to point out that the system that we're practicing is actually mercantilism, but I think that's a losing battle since most people don't really know what mercantilism is. However, people on the left tend to be familiar with the term corporatism, and corporatism is something I'm opposed to as well. What I disagree with the left about is government's role in eliminating corporatism: leftists tend to see government as a solution to corporatism and corporations as the cause, whereas I see government as the cause and corporations as a symptom.

Ultimately the biggest cause of the problems though is that we're trying to rescue the word "capitalism" from the legacy of Karl Marx, who I believe invented the term, though at the very least he popularized it. The best solution may be to avoid the use of the word entirely because it's so confusing. "Free markets" is probably the best term for what I want and "corporatism" seems like an excellent name for what the left views as "capitalism."

Update: Eric's response to my comment seems exactly right to me:

In my opinion corporatism is the historical successor to mercantilism. Corporatism encapsulates some of the ideas of capitalism to transition from the zero sum ideas of mercantilism to a more modern, but still state centric, approach to trade, industry and economics.

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I think your point about how

I think your point about how we talk with folks is well taken. The key problem is that, like many other memes in society today, we are fighting a battle that is about ideas first and foremost. Such battles have been fought, and won, in the past and they can be again. The American Revolution is the one that automatically comes to mind, especially commentary like:

Without the pen of Paine, the sword of Washington would have been wielded in vain. John Adams

If one term is effectively lost, then we need to use something else.

Excellent observations Sean!

Excellent observations Sean! However, unfortunately you were beat to the punch by Roderick Long several months ago. You still get points though. :cool:

Not all of this is the blame

Not all of this is the blame of the left. Corporations themselves have been one of the chief entities confusing the meaning of capitalism, trying to maintain the moral high ground of free-market rhetoric while at the same time asking for subsidies, trade protection, and various other interferences in the market.

Heh, corporations aren't

Heh, corporations aren't part of the Left? If you think government intervention is a good thing, and corporations do, what does that make you?

Yeah, I've had similar

Yeah, I've had similar thoughts. I've taken to calling myself a "free marketer" because that's really much more accurate -- focusing on capital doesn't capture the full breadth of what free markets are about.

Anti-market policy on behalf

Anti-market policy on behalf of corporations is generally couched in free-market language. "If you give us subsidies, we'll have an incentive to develop more, see?" Certainly opposition to said policies is demonized as socialist.

There are really two

There are really two meanings of capitalist. One is, "someone who derives income from the rent of capital", and the other is, "someone who believes that government should be a referee, but not a player-referee". I usually say that Ted Turner is the former but strongly not the latter, while I am strongly the latter but only slightly the former. Thanks to David Friedman for pointing this dualism out (many years ago on usenet). That's why I prefer to call myself a classical liberal (and there's another term co-opted by the Left and requiring an awkward adjustment).

I also highly recommend Burton Folsom's _The Myth of the Robber Barons_ for background and for differentiating between market entrepreneurs and *political* entrepreneurs. Political entrepreneurs are people who use the government to create or secure opportunities, but the market entrepreneurs usually get tarred with the same brush. Robert Fulton (the steamship monopolist) and the transcontinental railroad grantees come to mind.

Digamma said: "Anti-market

Digamma said: "Anti-market policy on behalf of corporations is generally couched in free-market language. “If you give us subsidies, we’ll have an incentive to develop more, see?” Certainly opposition to said policies is demonized as socialist."

Of course it is demonized as being "socialist". The real question, though, is which position is actually leftist, if we accept that "leftist" means you favor government intervention in economic matters, rather than being a neutral arbiter.

Eric H is saying almost exactly the same things I'm saying. When I tackle both the government and the monopolist (whether it be Robert Fulton, IBM, Standard Oil or Microsoft) I get taken to task by many on the right AND the left. See the ongoing series of discussions related to monopolies over The Liberty Papers to see what I mean.