It’s May Day. That always brings up a few news stories about extreme left wingers demanding an end to capitalism, and extreme right wingers outraged that the commies are coming. Given the ease with which both can be sensationalized, and the ubiquity of social media through which to do it, we may get more than the usual this week.
Capitalism, Free Market, Private Enterprise: terms loaded with emotional content but slim on understanding of their practical meaning. Sometimes capitalism is used as an equivalent for the melange of ingredients that add up to American democracy infused with private enterprise. Sometimes it’s defined through the lens of 19th century Marxism, which is not the same as Leninism or Maoism, but it all gets labeled as communism, which is not the same as socialism, and by this time emotional content has overridden any move toward rational understanding. It’s not helped by battalions of economic and political philosophers who offer oceans of words to obfuscate what could be described in simple ordinary terms about how this stuff works in daily life without bringing up Aristotle and Kant.
What we have in American democracy is a form of capitalism anchored in private enterprise, not free enterprise. Enterprise without government authorization or restraint has never existed. What does exist is the proclamation in law that people have a right to buy, own, use, and sell property as they are able and see fit, but within bounds established by law. Some property is capital, wealth, that owners can invest in enterprises they think will earn a return, thus providing a flow of income to them. Capitalism, the right of private persons to own capital and invest it, has been a central tenet of American society since the first colonists arrived. The Revolutionary War was fought, in part, to preserve that right. It’s enshrined in our constitution.
Capital exists in every system of government. Old time Leninist and Maoist forms of communism made the state the owner of all capital. It didn’t work for Russia and China, nor has it for anyone else. That’s why they have both moved into private enterprise systems. Not democratic to be sure, but private and capitalist just the same. Capital and capitalism is amoral. It has no moral compass of its own. It can be employed for good or evil. Wealth, by itself, doesn’t care one way or the other. The only question is what will provide the greatest return. Social standards can have a mitigating influence. Social pressure to do what is right according to the standards of the day have some value, but not much. That’s where government comes in. It is only through the power of government that capital can be restrained from greater evil and directed toward greater good. Libertarians may not like hearing that, but that’s the way it is. Americans like to give capital, and capitalists, as much freedom as possible. Most other developed nations are less trusting, more willing to use government to restrain and direct. Americans call that socialism without recognizing it’s not a matter of kind, just degree.
All clear so far? Happy May Day.