The use of the word Capitalism to describe what goes on in free market economies – usually in opposition to Socialism or Communism – has long struck me as unhelpful.
“Capital” describes assets used, or with the potential of being used, to create other goods. Marxist economist David Harvey has described capital as “value in motion” – value used to create more value – which amounts to the same thing. We talk about Production Capital, Finance Capital, Human Capital, Social Capital and Cultural Capital, different forms of wealth that can be used as levers to enable greater productivity of one form or another.
My issue with the label “capitalism” is that it seems (at least in popular use) to highlight the simple use and accumulation of capital (rather than the system of ownership, control and distribution) as a distinctive feature of the so-called capitalist societies. Depending on who’s talking, the mood of discussion seems to equate use of capital either with greed and exploitation or with resourcefulness and productivity. This turns capital and its accumulation into something that people should be for or against, and masks its nature as an inescapable feature of all human societies everywhere.
Hunter-gatherers preparing sticks, stones and skins for use and keeping them around to make tomorrow easier are increasing their capital stocks. So are feudal farmers holding back grain to plant in spring time (“grain to make more grain”), rearing animals to slaughter and store as hams for the winter, building tools and houses. So are communist and capitalist managers of industry as they reinvest their surplus to buy new equipment… You get the idea.
Socialists and Communists are just as interested in the accumulation and employment of capital as the most ardent free-marketers, and face more or less exactly the same tradeoffs regarding labour productivity, resource extraction, social upheaval and environmental damage – and often manage them with worse results. These problems don’t go away with the change of ism.
The history of humanity, of culture and technology, is the story of intergenerational capital accumulation.* It’s not (just) that we’d be poorer without capital – it’s that we simply wouldn’t be.**
*…and its intermittent destruction through war and disaster.
**At least, not in any recognisable form, and certainly not in any recognisable clothing.