It is generally agreed, by both advocates and critics of capitalism, that capitalism is an economic system where the means of production (agricultural land and industrial property, oil wells, factories, businesses, etc., as well as human labor power--both physical and mental labor power) are privately owned and operated (under conditions of competition) for profit. That, however, is pretty much where the agreement ends, and where profound and often vitriolic disagreements begin.
On the one hand, some see capitalism as essential to healthy society and arguably a central pillar of American freedom - one that promotes a higher standard of living for all and is the best bulwark of individual liberty and provides incentives for work, etc. By contrast, others see this economic system as underlying many problems in the world - from environmental degradation, to socially destabilizing income inequality and elite class rule, to government corruption and a subversion of representative democratic principles.
In particular, what “profit” ultimately represents, and its relationship to the compensation given to human labor “costs”, is a central bone of contention between advocates and critics of capitalism, with the former seeing in profit the just rewards of the risk, time, and creative effort invested into the production process by the owner of capital (the capitalist), and the latter seeing in profit a symptom of the exploitation of human labor in the production process (an exploitation made possible by numerous legal and social structures which give the owners of capital a degree of power and privilege not given to the non-owners of capital, i.e. the working class).
Other sources of contention surrounding “capitalism” revolve around the nature of “the commodity” (and the implications of the “commodification” of human relations), the distribution of wealth, productivity and environmental sustainability, war and peace, liberty and tyranny, charity vs. state-sponsored welfare, the role of government and economic planning, the allocation of resources, etc.
In the United States, this debate is primarily mediated (or, some would say, controlled) by the Republican and Democratic Parties, though conservative and liberal religious institutions also play a significant role. The Republican Party (and conservative religious institutions) are generally associated with values typically held by pro-capitalist parties internationally, and the Democratic Party (and liberal religious institutions) are generally associated with values typically held by democratic socialist parties worldwide, but focusing on reining in the excesses of capitalism through regulation rather than replacing capitalism. Only with the recent Bernie Sanders campaign has the word “socialist” gained more widespread acceptability at the mainstream national level, and Democrats routinely make clear their belief that capitalism - appropriately controlled - remains the best proven economic system. [The question of the degree to which these two Parties hold to these values, not only in rhetoric, but in fact, is highly controversial. See “Crony Capitalism”]
Critics of capitalism often focus on the excesses and negative aspects - while proponents often explain negative aspects in other ways and emphasize the positives. Defenders of capitalism interpret many of the negative examples, such as the irresponsibility of Big Finance leading to the 2008 crisis, as actually due to government (e.g. Federal Reserve, government subsidized risk, and housing policy) rather than due to capitalism, while critics of capitalism point to the greed and fraudulent actions of investors--encouraged systematically by the competitive market-- without which the crisis would not have been possible.
However, surprising common ground may exist. For instance, speaking with actual principled socialists (e.g. Marxists) and actual principled advocates of capitalism (e.g. libertarians), one finds (often to the surprise of both) that both are dedicated to representative democracy and both are seeking to maximize economic freedom and prosperity for all (even as they may differ on the “how”). One also finds in both a common opposition to crony capitalism. There is, then, apparently, a largely unexplored territory of a rather large swath of common ground between these two sides, calling into question, perhaps, the “conventional wisdom” which sees these two sides as polar opposites.
QUESTIONS TO PLAY WITH:
- Leaving aside the labels, how would you describe your ideal economic system? What would be its chief characteristics and key elements?
- How close or how far does the current US economic system come to your ideal?
- Just like the term “socialist,” the term “capitalist” tends to be used as mere epithet thrown at political rivals. Rather than seen as useful labels that can serve as starting points for genuine inquiry and dialogue, these words tend to be used to shut down conversation or score political points with one’s like-minded political base. How might the conversation change if we met each other across the table with the question: “So, tell me what capitalism means to you”, or “So, tell me what it means to call yourself a socialist”?