It is clear that when people talk about 'capitalism' they are often batching many separate ideas into one all encompassing umbrella term. This is a mistake and prevents clarity in discourse. Yet, I often find that differences of opinion stem from semantic misunderstandings caused and exacerbated by imprecise terminology.
In linguistics a portmanteau is a blend of two (or more) words (or morphemes) into one new word. A portmanteau typically combines both sounds and meanings, as in smog which is a blend of the words smoke and fog.
In a sense 'capitalism' may be such a portmanteau in an ideological sense, blending positive ideas -- thrift, industry, productivity, innovation and entrepreneurial spirit while subsuming or embedding negative ideas -- corruption, greed, fraud, competition, cheating and cronyism.
When one hears "Capitalism is the best, most productive system in the world." One may respond with "yes, best for the top 1% of the richest country in the world. Not so good for the non-moneyed billions at the bottom." Capitalism cannot supply the poorest segments of the world with potable water, salt tablets, basic shelter or nutrition. But it is still somehow best?
When one hears the complaint that socialism is inefficient and will lead to stagnation and declining standards of living, one has to look around and wonder. While the richest 1% sees their quality of life skyrocket, again we are left with the images of deprivation, want and suffering worldwide.
Some will argue that "Capitalism hasn't been tried in those places, that they are the preserves of corrupt, self dealing governments that exploit their people for the sake of a crony class." Yet that is a perfect description of our own political-economy racket in which business and government seamlessly blend and blur in the nether realm of lobbying firms, defense contractors, self regulating business, and captured government regulators.
In a recent article in Monthly Review, Richard Peet examines many of these contradictions and concludes that "earlier competitive “liberal capitalism,” opposed to intervention by the mercantilist state, was transformed at the turn of the century into monopolistic “finance capital” which was integrated into a “centralized and privilege-dispensing state.”
He notes the tendency of "corporations heavily involved in production — automobile or steel makers, for example — have become increasingly financial in orientation, diversifying into credit, insurance, real estate, etc." He also notes the "the financialization of everything — meaning control of all areas of the economy by finance. The tremendous economic power of the new entrepreneurial-financial class enables vast influence over the political process."
In Peet's view, capitalism is no longer concerned with the Smithian moral virtues of industry, productivity, probity and thrift. Rather, capitalism has fallen prey to the Casino vices -- recklessness, shortsightedness, indulgence, wantonness, greed and fecklessness. "Financialization has involved increasingly exotic forms of financial instruments and the growth of a shadow-banking system, off the balance sheets of the banks. The repeal of the Glass-Steagall Act in 1999 symbolized the almost complete deregulation of a financial sector that has become complex, opaque, and ungovernable."
Capitalism has morphed into 'finance capitalism' occluding and subsuming the very productive industries that created wealth, growth and prosperity in the first place. Finance capital now preys on productive corporations as items to be broken up, liquidated, financialized, or hedged, ie. bet against.
When you encounter bromides about 'capitalism' and its supposed efficacy, try to identify for yourself if the speaker is portmanteauing the old style capitalism with all its supposed moral virtues into the new modern finance capitalism.
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