Photo: Liquid Assets © Andrew Clifton, 2018
A principle of Semantic Etiquette
Words, I think, should be allowed, wherever possible, to mean what they say. No more, and no less. This simple maxim applies, in particular, to compound words, made up of familiar elements, each of which is associated with some reasonably well-established usage and meaning. It maintains that whenever a straightforward, self-explanatory usage – or perhaps, a small set of equally simple alternatives – is clearly suggested by the form and content of a word, then such interpretations should be accepted as its principal definitions, unless there is some clear and reasonable justification for doing otherwise.
I call this precept the transparency principle, since a definition which conforms to it is implicit in the form and content of the word itself. Conversely, a definition which violates it can be described as more-or-less opaque. A general preference for transparent usage does not, of course, imply that we should never use words in any other, less obvious sense – but it does suggest that it may be helpful, sometimes, to make it clear when we are doing so.
It is, of course, a universal feature of natural languages that words and phrases are commonly used and understood in a variety of different senses; often, to convey distinctive aspects or applications of the same basic concept. Thus, there may be more than one transparent usage of a word – and there may be other, less obvious but related ideas that we want to express, in some way. For example, one might use a term which is commonly taken to denote a political ideology, to speak instead of the application or use of that ideology in practice, or the kind of political and economic arrangements that are required, to realise its goals. Much of the time, such variant uses can be readily distinguished by context – and when in doubt, some qualifying term may be added, for the sake of clarity. My point is merely that the primary definition and usage of a word should consist, wherever possible, in straightforward interpretations of its form and content.
The transparency principle exemplifies an ethical practice I call “semantic etiquette”. It is based on the idea of assigning meaning to critically important terms within a contested domain in a way which seeks to maximise clarity, honesty and understanding, whilst remaining fair, impartial and respectful towards differences of opinion. Sadly, such principles are seldom observed within highly disputed domains of human thought, such as philosophy, religion and politics.
The Components of “Capitalism”
The word “capitalism” is made up of two elements, “capital”, and “-ism”. My ageing 1998 edition of the Penguin Dictionary of Economics defines “capital”, in a broad sense, as “any asset or stock of assets which is capable of generating income”.  It is sometimes assumed that this usage was originated by Adam Smith, who is said to have defined “capital” as “that part of man’s stock which he expects to afford him revenue”  – but in fact, the mediaeval Latin term capitalis had been used for centuries previously, to mean the “principal” part of a loan; that is, the sum originally lent, which serves to generates an income, for the lender, in the form of “usury” – or interest. 
It’s important to understand the key differences between capital, income, and wealth in a general sense. A moderately affluent person, for example, might own a fine collection of hand-made silver spoons; a skilled silversmith might earn a living crafting such items, as an employee of the owner of a bespoke silverware factory. This “private enterprise” functions as a capital asset – thus, its owner is able to continuously accumulate wealth, merely by virtue of owning it, without necessarily having to undertake any work.
The silverware factory exemplifies the power of owning the “means of production” – a notion that crops up frequently in definitions of capitalism – but it should be noted that there are other kinds of capital asset. We might suppose that, many years after the silverware factory has closed, the spoon collection – a rare example of the work of a famously impoverished, but gifted craftsman – might have appreciated enormously in value, such that its current owner can sell it, at a considerable profit over the original purchase price. Likewise, any goods or assets that one buys cheaply in the hope of selling at a higher price, such as stocks and shares, qualify as capital. 
Capital, in short, is the kind of wealth that gives its possessor an economic advantage over others in terms of exchange, making it possible to extract a profit. Tellingly, when this word is modified into a verb, “to capitalise”, it means taking advantage of something – often competitively, at someone else’s expense; as when, for example, a general is said to “capitalise” on an opponent’s mistakes, in order to secure victory. Thus, the notion of capital is strongly associated with that of competitive, private interests; hence, the succinct phrase popularised by Karl Marx, “the interests of capital”  – by which he meant, of course, the economic interests of the private owners of capital assets.
The word “capitalist” came into widespread use in the seventeenth century to denote an owner of capital – or, to be a little more precise, someone who actively increases in wealth by means of their ownership of capital assets. However, when the suffix “-ist” is used in this way, to associate a person with some kind of practice, or activity, it sometimes lends itself to a parallel usage, denoting a motivating ideology or belief system(e.g., hedonist, Buddhist, loyalist). Since “capitalist” activity is, typically, highly motivated and purposeful – and hence, many of those who practice it strongly believe in its utility – it’s clear that this word can also be meaningfully used in two complementary senses, referring either to a particular type of economic activity, or to an ideological faith in its merits.
The word “capitalism”, of course, is constructed from “capitalist” by replacing “-ist” with “-ism”. This suffix is used in a variety of different ways, to denote something which is characterised by the term to which it is attached – most commonly, an attitude, belief, philosophy or ideology which favours a particular idea, concept, doctrine, or principle (e.g., hedonism, rationalism, Taoism).  It should be noted that, as we saw in the case of “-ist” words, many ideological “-ism” words are also used in an “active practice” sense. Thus, a religious term like “Taoism”, for example, can be used in both of these ways, denoting either a commitment to this kind of religious belief, or the active practice of its precepts – or, perhaps, expressing both ideas at once.
The first use of the word capitalism, in print, is attributed to the nineteenth century French socialist Louis Blanc, who wrote of “What I call ‘capitalism’ that is to say the appropriation of capital by some to the exclusion of others”. However, this neologism didn’t immediately catch on. Entrepreneurs, industrialists and their political allies certainly didn’t rush to embrace the term, while critics of their business practices and institutions preferred to berate the “capitalists” themselves. Indeed, Karl Marx, archenemy of “capitalism”, only ever used this word a handful of times in all his writings – preferring to delve into detailed critique of the “capitalistic mode of production”.
It seems that, during the nineteenth century at least, the spectre of any sort of capitalist ideology was not nearly as salient, in the public mind, as was capitalist practice. Undoubtedly, both capitalists and their critics were fully aware that capitalist enterprises are highly purposeful, motivated by the personal interests of those who pursue them, but neither group saw a pressing need to explicitly identify capitalism as an ideology. Hence, early uses of the term “capitalism” employ this word in an ‘active practice’ sense, offering by way of explanation some account of what capitalists actually do.
However, in the modern world, it is clearly the case that capitalism is not only something that people practice, but also something that many people preach, advocate and firmly believe to be admirable and good. Capitalism is not merely something disreputable and embarrassing, that people quietly do, in the privacy of their own boardrooms; on the contrary, it is also something that is very widely proselytised, promoted, and encouraged. Those who are disposed to shout from the rooftops about the virtues of capitalism don’t merely want us to participate – after all, most of us already do, whether we like it or not. They want us also to value, admire, and appreciate capitalism – and above all, to believe in it – just as they do. Clearly, capitalism is not just a practice: it is also an ideology.
Restoring a Sense of Purpose
Having grasped the concept of “capital”, and the variable usage of “-ism”, we are now in a position to evaluate some conventional, contemporary definitions of “capitalism” – in the light of the principles of semantic etiquette, as mentioned earlier.
Today, the word “capitalism” is typically defined as an “economic system”, by means of which goods and services are produced and distributed, within a society. For example:
- A political, social, and economic system in which property, including capital assets, is owned and controlled for the most part by private persons. Under capitalism, the price mechanism is used as a signalling system which allocates resources between uses. 
- Pure capitalism is defined as a system wherein all of the means of production (physical capital) are privately owned and run by the capitalist class for a profit, while most other people are workers who work for a salary or wage (and who do not own the capital or the product). 
- An economic system based on the private ownership of the means of production and their operation for profit. Central characteristics of capitalism include private property and the recognition of property rights, capital accumulation, wage labor, voluntary exchange, a price system and competitive markets. 
Although these definitions seem somewhat opaque – in the semantic etiquette sense, mentioned above – it should be noted that they have some degree of descriptive validity, in two distinct ways. First, people who identify as supporters of “capitalism” tend to strongly advocate the implementation and maintenance of the sort of economic systems these definitions describe. Second, many of the established economic systems which are widely recognised as manifestations of “capitalism” conform quite closely to these definitions. However, it seems to me that this descriptive accuracy is more than coincidental. It arises, I think, from a further factor – which may not be apparent, at first glance.
To my mind, the most striking feature of all such formulations is not so much a common property but rather an absence; it is something they all conspicuously lack. None of these definitions explicitly associate capitalism with a defining objective, value or goal. To me, this seems like defining a clock in terms of a description of its mechanism without mentioning the fact that its purpose and function is to tell the time.
It is quite curious, and rare, for an “-ism” word to be defined and used in such a way.  We do not, for example, define “monarchism” as a synonym of “monarchy”, i.e., as a political regime which is characterised by hereditary individual rule; but rather as an ideology, consisting in belief in or advocacy of that kind of system. Capitalism, on the other hand, is conventionally defined as an abstract set of economic relations and rules, all of which seem purposefully designed to serve a particularly obvious guiding principle – which these remarkably coy definitions omit to mention.
To be fair, the first two definitions cited above are quoted from texts concerned primarily with economics, and so might be expected to emphasise economic features of the practice of capitalism. However, the third is quoted from Wikipedia, a general encyclopaedia – which one might hope would adopt a broader perspective.
One possible explanation for the widespread preference for defining capitalism as an “economic system” consists in an intellectual ideology that is alarmingly prevalent in modern, Western culture. It is the idea that we should seek to describe, understand and define the world in wholly abstract terms, untainted by inexplicable, unsettling, unscientific notions like value, intent, or purpose.  Another possible contributing motive may lie in the fact that that the fundamental goal and function of capitalism is considered, by many people, to be reprehensible – hence, it may be easier to promote the notion of capitalism if its ideological purpose is played down, as much as possible.
However, if there is some degree of subterfuge going on here, it is not overwhelmingly effective. We can readily infer the purpose of capitalism – or of a capitalist economic system – just as easily from the various definitions listed above as we can from our understanding of the word “capital” itself.
It seems undeniably clear that the object of “capitalism” – viewed either as an ideology, or an activity or process, or indeed as an all-embracing economic system, is to serve, first and foremost, the private economic interests of owners of capital. Its aim, and purpose, in every one of these senses, is to maximise returns to capital, either for the individual owner of capital, or for capitalists in general.
Making ‘Capitalism’ Transparent
Now that we have restored a sense of purpose to our concept of capitalism, it is possible to decide how best to define this word, in a transparent way. In the light of the foregoing discussion of “-ism” words, which are used to denote both an ideology, or belief, and an associated practice, it seems clear that we actually need two definitions, not one. My proposed solutions are as follows:
I. Capitalism is a practice which is designed to generate revenue from capital.
II. Capitalism is an ideology which favours the interests of capital.
The term “capital” is used, here, in its familiar sense, to mean any privately owned asset which may serve to provide revenue, or profit, to its owner – and the phrase “interests of capital” means, of course, the economic interests of the private owners of capital assets. The context in which the word capitalism is used will often make it clear which of these two senses is intended – but if necessary, a suitable qualifier such as “in practice” or “ideological” can be used for the purposes of clarification.
The word “capitalist”, when used as an adjective, can refer to either of the two senses of capitalism specified above. Once again, the intended sense will usually be clear, from context; for example, a phase like “capitalist business strategy” suggests the active practice sense, whereas “a capitalist political agenda” suggests ideology.
A little more care is needed, I think, when we use the word “capitalist” as a personal noun – so another pair of definitions may be helpful here:
I. A Capitalist is an owner of capital who actively participates in capitalism.
II. A Capitalist is a person who believes in capitalism, in an ideological sense.
It is worth pointing out that, these two senses of “capitalist” may not always apply to the same individual. For example, someone who owns no capital whatsoever might still fervently believe in the merits of capitalism; likewise, one might be a passionate anti-capitalist, in principle at least – whilst owning a share in a small business and holding savings in an interest-bearing retirement plan, which is invested, indirectly, in the stock market. Indeed, in a capitalist society, it’s remarkably difficult to survive, economically, without participating in capitalism, to some degree.
All of the definitions I’ve proposed above are distinguished, I believe, by a number of compelling advantages, which can be outlined as follows:
- They are transparent, in the semantic etiquette sense outlined above, being clearly implicit in the form and content of the words, “capitalism” and “capitalist”.
- They are not manifestos that seek to justify these terms, nor credos listing tenets of capitalist belief, nor even theories setting out how capitalism is supposed to work.
- They are open to the use of suitably qualified secondary definitions, referring, for example, to political and economic institutions and systems which facilitate capitalism.
- They are therefore consistent, at least in principle, with established definitions of capitalism as systems of political economy, construed as secondary definitions.
- They are neutral, with respect to the level of commitment a capitalist has to the capitalist ideal.
To expand a little on the second point – one of the major flaws of the various established definitions of capitalism is that they are laden with this sort of extraneous baggage. Such “manifesto definitions”, in my view, never serve a genuinely useful purpose, but often, a pernicious one; in short, I regard them as dangerously misleading think bubbles, which are best avoided. 
Furthermore, an important reason for excluding an account of the technical details of capitalism-in-practice from a definition of this term is that, in this sense, capitalism is very complex indeed – as well as extremely variable and diverse in its manifestations. Any such ‘definition’ that runs shorter than a lengthy essay, at least, will inevitably be an oversimplification – and definitions need to be succinct.
Fortunately, a third advantage of our primary definitions lies in the fact that we can refer to them as the basis of secondary variants – which, therefore, have no need to specify technical details. Thus, we may use the word “capitalism” (suitably qualified, if necessary) to denote, in a secondary sense:
I. A capitalist political economy – i.e., an economic system that is favourable to capitalism, in either, or both primary senses of the word.
II. The condition of a society in which a capitalist political economy prevails.
Happily, as the fourth item in my list of advantages asserts, these two secondary formulations are consistent, at least in principle, with the various conventional definitions of “capitalism” that we currently find within dictionaries, textbooks and encyclopaedias. We should treat these, however, not as definitions proper, but rather as brief descriptions, or models, of the economic conditions thought to be favourable to capitalism.
To expand, finally, upon the fifth point – my ideological definition of capitalism has the great advantage that it provides a simple explanation for our judgements as to whether a particular sort of political regime is more, or less “capitalist” than another. One might imagine, perhaps, that the most perfectly capitalist system we could possibly establish is clearly specified by the notion of “pure capitalism” – as described in the second of the three standard definitions I quoted earlier. But consider the following two scenarios, A and B:
A. All of the means of production are privately owned and operated for profit. Taxes are kept to a minimum and are highly regressive in their impact, ensuring that the bulk of tax revenue is obtained from the working classes, not the capitalist class (i.e., taxes are heaviest on income and spending, lightest on corporate profits, dividends, capital gains and wealth). There are few effective restrictions on monopoly, oligopoly, price-fixing and suchlike anti-competitive business practices. Trade unions activities and collective bargaining, if permitted at all, are severely restricted, to the point of impotence. Regulation of private industry and commerce, however, is kept to a minimum level that business leaders find congenial. Indeed, they often play a part in writing such legislation themselves – since wealthy individuals and corporations are legally permitted to make unlimited “campaign donations” to politicians.
B. All of the means of production are privately owned and operated for profit. However, steeply progressive taxes are levied on income, corporate profits, dividends, wealth and capital gains and this revenue is used to substantially redistribute wealth from the capitalist class into the hands of the working and professional classes. Collective bargaining rights are universally respected and protected by law. Strict anti-trust laws are rigorously enforced, along with limits to the monopoly privileges associated with patents, copyright and intellectual property. Businesses are regulated, in accordance with democratic demand, to minimise negative externalities such as pollution and other such antisocial corporate behaviour. Individual donations to political campaigns are restricted to small amounts and corporate donations are prohibited.
According to the aforementioned definition, A and B are equally, and purely, capitalist. Imagine, however, asking equal numbers of equally ardent capitalists and socialists the following question: which, of these two scenarios, is the most ‘purely’ capitalist? I feel sure that we could expect a remarkably high level of bipartisan agreement, to the effect that scenario A is a great deal more capitalist than B! The basis of this conclusion is equally clear: scenario A very clearly serves the private, economic interests of the owners of capital far more effectively and thoroughly than B. 
I think it must be acknowledged, however, that a person can coherently identify as a “capitalist”, of a sort, without necessarily preferring scenario A over B – or at least, not in every respect. Such a person might believe, on the one hand, that a system which enables, supports and encourages the pursuit of private profit is highly desirable – and greatly preferable to a system which prohibits or discourages those things – whilst maintaining, on the other hand, that this goal, however important, is not the only desirable goal we should take into account.
Fortunately, our ideological definition of capitalism allows us to propose a variety of qualified definitions which distinguish different degrees of commitment to the capitalist cause:
- Pure capitalism is an ideology which favours the economic interests of private capital over all other considerations.
- Moderate capitalism is an ideology which favours a balance between the interests of private capital and other important political goals and notions of the public good.
- Prosocial capitalism is a form of moderate capitalism which favours the interests of private capital, provided that this is beneficial, and not harmful, to the interests of society as a whole.
Of course, these qualified terms can also be used in an ‘active practice’ sense, to denote the implementation of the corresponding ideologies.
A radical opponent of capitalism, in all its forms, is at liberty to argue that the notion of “prosocial capitalism” is incoherent, akin to something like “benign warfare”, or “non-violent murder”. However, it’s up to the anti-capitalist to make this argument convincingly, in the light of all relevant evidence; it cannot just be taken for granted, as prima facie grounds for dismissing the concept out of hand.
A radical proponent of pure capitalism, likewise, is perfectly free to argue that all forms of “moderate” or “prosocial” capitalism are absurd, or morally contemptible. However, neither a pure capitalist nor a radical anti-capitalist has the right to insist that our definition of pure capitalism should replace that of capitalism, simpliciter.
This would be an unacceptably tendentious definition, rather like defining the word “Christian” to mean “a member, in good standing, of the United Free Church of Scotland”. It violates the transparency principle of semantic etiquette, since it does not follow, straightforwardly, from the form and content of the word “capitalism”. It also violates the principle of neutrality – another fundamental rule of semantic etiquette – which holds that definitions of ideologically contested terms should be sufficiently open to interpretation to allow scope for the expression and defence of various different shades of opinion.
Of course, is up to the moderate or prosocial capitalist to defend her position, and she must therefore be at liberty to do so; which would be difficult, I think, were the position itself to be denied a name.
RELEVANT WORKS IN PROGRESS…
The Purpose of Socialism – Taking a similar approach to the present article, I will critically examine various established, conventional definitions of socialism – along with related ideas, such as “social democracy”, “democratic socialism” and so forth – and then propose a transparent definition of socialism, in a general sense.
The Heart of Humanism – In this essay, I will examine the damage that has been done to the concept of humanism through the misleading use “manifesto definitions” – and draw attention to the effects of these toxic, ideological think bubbles in other areas of philosophy, religion and politics.
NOTES AND REFERENCES
Bannock, G, Baxter R.E. and Davis, E (1972) Penguin Dictionary of Economics. ↩︎
The exact quotation, concerning “a man’s stock”, is as follows: “That part which, he expects, is to afford him this revenue, is called his capital.” Smith, A (1776) An Inquiry into the Nature and Causes of the Wealth of Nations. Admittedly, the popular paraphrase is a little neater! ↩︎
Fetter, F (1937) “Reformulation of the Concepts of Capital and Income in Economics and Accounting,” in Fetter, F (2017) Capital, Interest, & Rent (edited by Murray Rothbard). ↩︎
It is also worth noting that the principle capital assets exploited by many contemporary businesses are not tangible objects like buildings and machinery but rather, items of “intellectual property” such as designs, branding and software - and suchlike “intangible assets”. For a fascinating exploration of this trend, see Haskel, J and Westlake, S (2018) Capitalism without Capital: The Rise of the Intangible Economy. ↩︎
Marx, K (1847) Wage Labour and Capital ↩︎
Other common applications of the “-ism” suffix include: practices and process, not associated with ideologies (criticism, plagiarism); states, conditions and traits (alcoholism, autism); words or with a distinctive quality (witticism, neologism) and prejudice or discrimination based on a certain quality (racism, sexism, ageism). None of these, however, are applicable to capitalism. ↩︎
Blanc, L (1851) Organisation du Travail ↩︎
Marx, K (1867) Capital. ↩︎
Merriam-Webster entry for “Capitalism”, retrieved 18 August 2020 from https://www.merriam-webster.com/dictionary/capitalism ↩︎
Zimbalist, S and Sherman, H (1988). Comparing Economic Systems: A Political-Economic Approach. ↩︎
For another example of this oddity, see my forthcoming essay, “The Spirit of Socialism”. ↩︎
This mindset can, of course, be regarded as a think-bubble – and in my view, a gravely misleading and misguided one. This is a topic to which I plan to return, in future essays. ↩︎
My forthcoming essay, “The Heart of Humanism” will explore the pitfalls and hazards of manifesto definitions in more detail. ↩︎
It might be argued that many of the details of scenario B are incompatible with the proviso that “all of the means of production are privately owned and operated for profit”, according to a strict interpretation of notions of property rights and free enterprise liberty. However, this positions requires an argument, with which many might disagree; and this underlines my point that standard definitions of capitalism are vague, with respect to degrees of strict commitment. I would hope, however, that those who are sympathetic to such an argument would be satisfied with my definition of “pure capitalism”. ↩︎
I have no wish to suggest, or imply, that either the UFCS or its members are disposed to defining the word “Christian” in such a way. I just wanted to pick an example of a denomination with a fairly small membership, in order to make my point. ↩︎