I'm delighted to see so much discussion over the issues raised in my last post, "'Capitalism': The Known Reality." I'd like to advance the discussion a bit, and to respond to some of the discussants as well.
First, let me say that this issue of how to define "capitalism" is not an issue that is distinctive to "capitalism." In the wake of the Iraq war, I'm starting to feel as if the entire libertarian movement, broadly conceived, is in a theoretical convulsion over the very meaning of the term "libertarianism." One critic, R. J. Rummel, has gone so far as to draw a distinction between the "libertarian" and the "freedomist," a neologism if ever there were one, which is roughly his way of distinguishing between "isolationist" and "internationalist" stances. It's getting so bad that unless we start using modifying adjectives to describe our various positions, we'll end up getting lumped together with viewpoints that are anathema to our perspective.
In recent intellectual history, this was first manifested, perhaps, in the battle over the word "liberalism," which seems to have been forever lost to those who advocate "welfare-state" liberalism. It is no longer identified in the United States as synonymous with the "classical liberal" conception. Try using "neoliberalism" and a whole host of other problems result, especially since some in Europe have used that term to describe a position in which the state helps to "preserve" competition.
A similar intellectual battle is taking place in various circles over the heart and soul of "anarchism" (as some of our discussants have pointed out in recent threads) and over Rand's "Objectivism" (as I've pointed out in the concluding passages of my essay, "In Praise of Hijacking"). In this regard, I was struck by something Roderick Long said here:
Rand embraced terms like "capitalism" and "selfishness" as a kind of the-hell-with-it defiance. I'm not inclined to embrace those terms, but I confess my liking for "anarchism" expresses a similar mood.
But Rand's battle over use of the word "selfishness" is worth considering. Most dictionaries defined this term as "concern only with one's own interests," usually with the connotation "at the expense of others." Even Rand felt the need to use a modifying adjective—"rational"—to describe her ethical position: "rational selfishness." But in many ways, she was engaging in a deconstruction of conventional meanings—a transvaluation of values, if you will—which overturned traditional conceptions, replacing them with reconstructions or what Grant Gould calls "revisionis[m]" of her own. In some respects, this is entirely understandable, however. Gould is right to say here that "[u]nless we want to populate the whole three-dimensional space with technical terms that nobody will understand or remember (and I'll admit, it's tempting) we need to defer to the wider understanding of terms." Or else a parade of neologisms will follow, and we'll be consigned to a Tower of Sociological Babel.
I have argued that Rand was engaged in a grand, dialectical revolt against the kind of ethical dualism that reduced all of morality to a bout between competing sacrificial creeds: those who would sacrifice others to themselves and those who would sacrifice themselves to others. Arguing for a reverent concept of benevolent, rational "selfishness" that extolled neither masters nor slaves required the use of an established term as a means to transcend its conventional limitations. This is not an unusual problem for more dialectically inclined thinkers who often use terms that have conventional meanings, terms that have "been tainted by a vastly different, one-dimensional philosophical context," as I write in Ayn Rand: The Russian Radical:
To avoid such terms entirely, Rand would have been compelled to invent wholly new terms at the risk of becoming incomprehensible. By using known terms, she might appear to have actually endorsed one pole of a duality. Thus, in the conflict between egoism and altruism, for example, she is an egoist. In the conflict between capitalism and socialism, she is a capitalist. But such a one-sided characterization profoundly distorts Rand's philosophical project. She is not a conventional egoist. Her ethics constitutes a rejection of traditional egoism and traditional altruism alike. Likewise, Rand is not a conventional capitalist. ...
Since this is relevant to the larger issue—the meaning of "capitalism" and "libertarianism" and so forth—I'd like to quote at length from my discussion in the Rand book:
Rand's defense of capitalism is similar in form to her defense of "selfishness." In fact, Rand titled her collection of essays in social theory, Capitalism: The Unknown Ideal, for much the same reasons that she entitled her collection of essays on morality, The Virtue of Selfishness: A New Concept of Egoism. Both "capitalism" and "selfishness" have had such a negative conceptual history that Rand needed to reclaim these concepts and to recast them in a new and nondualistic framework. [Nathaniel] Branden remarks that he had told Rand of his preference for the word "libertarianism" as an alternative to "capitalism," since the latter term had been coined by anticapitalists. For Branden, "libertarianism" signified a broader, philosophical characterization which addressed the issues of social, political and economic freedom. But Rand refused to renounce the concept of "capitalism," just as she rejected any attempt to couch her ethos of rational selfishness in more neutral terms.
Unfortunately, however, by using words like "selfishness" for something positive, and "altruism" for something negative, the Randian still faces enormous rhetorical obstacles.
Interestingly, though Rand's approach to capitalism is not Weberian—there is no connection made between capitalism and the Protestant work ethic, for example—her definition of capitalism is pretty much an "ideal type."
Following her literary methods, Rand seems to have extracted and emphasized those principles which, she believed, distinguish capitalist society from all previous social formations. She began with the real concrete circumstances of the historically mixed system, breaking down its complexity into mental units. She constituted her vision of capitalism on the basis of such abstraction, having isolated and identified those precepts which are essential to its systemic nature. In this regard, she eliminated the accidental and the contingent in order to focus instead on the philosophical ideals of the capitalist revolution. Such a revolution was incomplete because its principles had never been fully articulated and implemented. Rand views her own project as the first successful attempt to articulate the moral nature of the capitalist system, ideally understood, thus making possible its historical fulfillment.
Let's recall what an "ideal type" is. As our L&P colleague Pete Boettke puts it in his explanation of "equilibrium" in economics as an "ideal type":
An ideal type is neither intended to describe reality nor to indict it. It is instead a theoretical construct intended to illuminate certain things that might occur in reality; empirical investigation determines whether these phenomena are actually present and how they came to be there. In this view, disequilibrium is not necessarily a market failure; something less than perfection may yet be better than any attainable alternative. Deployed as an ideal type, equilibrium analysis allowed economists to describe what the world would be like in the absence of imperfections such as uncertainty and change. The descriptive value of the model lay precisely in its departure from observed reality, for this underscored the function of real-world institutions in dealing with imperfect knowledge, uncertainty, and so forth.
And so, Rand, and other thinkers, such as Murray Rothbard, have engaged in a similar defense of "capitalism" as a moral ideal, which is, in fact, an "ideal type," a "one-sided accentuation," as Max Weber put it, of specific aspects or vantage points. The ideal type is conceptually pure, and speaks to the essence of the phenomena at hand, even though it "cannot be found empirically anywhere in reality. It is a utopia.”
But is it utopian? That's a question for another day.
The reason I've raised the issue of the effectiveness of using "capitalism" as a word to describe the ideal libertarian social system, however, is that the conceived ideal departs significantly from the Western reality that is often described with the same word. (I like Lisa Casanova's "corporatism," but alas, even that has problems. See here, for example.) So when left-wing critics rightfully argue that laissez-faire has never existed in its purest form and that state intervention has typically marked the historical expression of "capitalism," it becomes almost an impenetrable communicative exercise with those critics, since they see state intervention as part of the essence of "capitalism."
Steve Horwitz has argued, as have others at L&P, that these rhetorical issues extend to "anarchism" as well. He prefers to call himself a "radical libertarian" (the way I've called myself a "dialectical libertarian"). But given the recent conflicts over the meaning of the term "libertarianism," I think we'll find ourselves involved in an infinite regress of "Ism Debates." Because now, instead of arguing over the corruption of the word "capitalism" (or was it always corrupt?) or the corruption of the word "liberalism," we have to face the conflicts between those who are paleolibertarians and those who are "liberventionists" and so forth, each of whom claims that the other is corrupting the -ism. The same battle takes place within conservatism, among paleoconservatives and neoconservatives and God-knows-what-else. And we've even seen here at L&P, similar battles over the meaning of the term "feminism."
In the end, I do agree with Steve that we all need to focus on "real world systems." Because, whatever we wish to call our ideal, the potential for creating that ideal—or for creating the conditions within which it might emerge—grows out of that which exists, that which is. Different contexts of meaning are part of "that which is." Since meaning is embedded in context, and different people operating in different traditions attach different meanings to their terms, the advocates of freedom have lots of work to do.
The best we can do is to define our terms as clearly as possible and to show sensitivity to the translation problem when engaging those who operate with a different model. The worst we can do is to allow others to pin on us meanings and ideals to which we don't subscribe, making us into apologists for "that which is," rather than visionaries for that which might be.
Cross-posted to L&P here, where readers can leave comments. See follow-up discussions here, here, and here.