Pro and anti-capitalism: the issues

Reading some of the comments on this post of mine highlights a sad fact - that pro and anti-capitalists often misunderstand each other. I suspect there are at least five misunderstandings:
1. What is capitalism? Some pro-capitalists, particularly in the US, have a habit of identifying capitalism with markets. Intelligent anti-capitalists find this very irritating. Tim, though, gets it right:

There's rather a large difference between "capitalism" and "free markets"...Capitalism defines a system of ownership, markets a method of exchange.

This matters enormously. Markets are essential in any form of society, and have existed pretty much throughout history. But capitalism, in the sense of outside limited liability ownership of firms from which workers are excluded, is a relatively new thing.
And it's not just Marxists who stress that existing ownership structures are changeable for the better. Douglass North won a Nobel prize for showing how they change in response to economic incentives. And Hayek wrote this:

The institutions of property, as they exist at present, are hardly perfect...There is...no reason to suppose that the particular forms [property] has assumed in the contemporary world are final. Traditional concepts of property rights have in recent times been recognized as a modifiable and very complex bundle whose most effective combinations have not yet been discovered in all areas. (The Fatal Conceit, p35-6)

2. Why have workers in developed countries become so much better off since the industrial revolution? Is  it because ownership structures have permitted fast growth? And if so, will they continue to do so? Or is it because markets have become freer and deeper, and that it's markets that contribute most to growth?
Answering this is almost impossible, because we haven't had a free market non-capitalist society to act as a control. But there is some evidence - not proof - that more equal societies can grow faster.
3. When anti-capitalists claim that capitalism impoverishes people, what do they mean? Both sides interpret impoverishment widely - to include well-being and moral development as well as wealth - so this isn't the question.
Instead, intelligent anti-capitalists have in mind John Roemer's theory of exploitation (pdf), discussed in this pdf. This claims that workers would be better off if they could withdraw from the capitalist game, taking with them a per capita share of alienable productive assets.
This claim is not a historical one - so defenders of capitalism are attacking a straw man when they show that workers are better off now than in the past. Instead, it's a counterfactual one, where the counterfactual is a non-capitalist society - say, market socialism or mutualism.
4. Why has this counterfactual never really existed? Anti-capitalists blame, variously: the brute power of capitalism; the cognitive biases that produce an ideology that defends the status quo; the folly and corruption of socialist leaders; or the possibility that technology still favours capitalist ownership.
Pro-capitalists, though, respond to this in the way Will Wilkinson responds to Steven Marglin's desire for meaningful yet inclusive communities; maybe there's another reason why these counterfactuals don't actually exist.
5. What role do such counterfactuals play? It's easy to caricature anti-capitalists as fanatics who want to tear down capitalism and replace with - well, something ill-defined but infeasible.
But perhaps the counterfactual serves a different role. It acts as one pole in a form of reflective equilibrium thinking. In considering aspects of capitalism, we can ask: is there a (theoretical) alternative? And why doesn't it exist? Oscillating our thoughts between capitalism and alternatives can then at least shed light on capitalist organization.
My problem, though, is that many on both the left and right are unable or unwilling to see the debate in these terms. I wonder why.

Comments

[Shuggy]

"My problem, though, is that many on both the left and right are unable or unwilling to see the debate in these terms. I wonder why."

I think people both from left and right have a problem separating markets and ownership in the way you do. Maybe on the left it's a vulgar Marxism hang-over: it isn't, for them, just ownership of the means of production that's the problem but ownership per se. This makes it impossible for them to divorce markets from what they perceive to be capitalism because entering a marketplace carries the assumption that you have something to sell.

[dearieme]

Because if the Left entered a calm discussion about these matters, they'd be giving up their hope that in the end they can use it all as an excuse to butcher people by the million?

[Shuggy]

"Because if the Left entered a calm discussion about these matters, they'd be giving up their hope that in the end they can use it all as an excuse to butcher people by the million?"

If they entered the discussion, is this what they could expect to pass for a rational contribution from the right? It's similar to the sort of breath-taking insight that we get so much of in the blogosphere: Hitler was a socialist because, after all, his party were called the National Socialists. Duh! Stick to the maths, dearieme.

[Gina McCulloch]

Today Northern Rock, tomorrow the world, comrades!

[Scott Hughes]

Great post!

I avoid using the term 'capitalism' because it it has such different meanings to different people. Instead I more specifically say what I support or oppose about any particular economy or theory.

[KMcC]

Shuggy, Hitler was a socialist, as is perhaps hinted at by the name of the party he led. Do you think socialist is in there just to confuse matters? Because Hitler was feeling daffy one morning?

His socialism, though, was based on bogus theories of race and blood (rather than bogus theories of class): a strong state providing every need for the pure few, the rest can whistle.

[Shuggy]

"Shuggy, Hitler was a socialist, as is perhaps hinted at by the name of the party he led."

Making my point for me. Or did you leave out the irony tags from your comment? Jeezus!

[miguel]

Vladimir Jirinovsky - a liberal and a democrat!

[Neil]

"If they entered the discussion, is this what they could expect to pass for a rational contribution from the right?"

Yes. Not that the right has anything it needs to brush under the carpet or anything - oh no, siree.

[Alex]

I take it you haven't heard of the Liberal Christian Party of Ukraine? Not liberal, not notably Christian, not actually a party, set up by Russians.

[Larry Teabag]

Wrong, Mr D. This thread amply demonstrates that pro and anti-capitalists understand each other perfectly well: pro-capitalists think that antis are all fascists, and anti-capitalists think that pros are all morons.

[chris strange]

I would guess that one of the problems is that the arguement comes with a century of baggage attached to it from the fight between centrally planned (generally Socialist) economies and market driven (generally Capitalist) economies. Markets won this argument decisively, but that doesn't mean that some on the left (e.g. much of the Guardian editorial team) haven't given up trying to argue that markets are a bad thing.

In a free market economy ownership of companies is like ownership of everything else, and there to be traded at the discretion of the owners. This will lead to some firms being owned by Capitalists and some owned by their workers. Just as we have now in our fairly free market economy. It would be extremely rare that even the most rampant supporter of capitalism would argue that every solicitor, GP, architect, hedgefund manager, or band member change the way their businesses are owned. Likewise there are still some capitalist owned companies around.

The only way that you can change things is by trying to change the mix of companies from ones that need great big dollops of capital (like heavy industy) which would probably need a capitalist to supply it, to ones that need human captial (such as hedge funds, financial services, arts and design based companies). Which would, ironically, make the unions an great force for capitalism in their efforts to try and protect the old, dieing, manufacturing industries. It would also make Thatcher's breaking of union power a great boon for the creation of a more socialistic society in the long run.

[Backword Dave]

Chris, you'd probably like this post, 'Maybe you're thinking to yourself, "Why is this IOZ fellow, who says he's all for the free movement of labor and capital across borders and over oceans and to distant stars and foreward and backward in time, why is this guy so down and dismissive of capitalism?"' http://whoisioz.blogspot.com/2008/03/confidence.html

[jordan retro 1]

Oh, How much I miss you! If the passionate refreshing breeze knows my heart, it can tell you that I miss you and care you for my life’s time. If graceful white cloud knows my heart, it can tell you I love you and would be together with you forever. Do you like it?