The question I pose here may seem like one of semantics, but I believe it is important.
Should us libertarians/classical liberals use the word “Capitalism” to describe our economic preferences?
I wish to argue that we should not, because it creates unnecessary ideological confusion. This is because the word has multiple definitions.
Generally, we classical liberals have used “Capitalism” as a synonym for free market economics (i.e. an economy wherein which all economic activity takes place within the realms of consent and contract). We use it as a reclaimed word; a former term of abuse which we now proudly wear (in the same way the non-heterosexual communities have adopted the word “queer”).
But is it either accurate or sensible to use “Capitalism” as a synonym for a free market?
Lets take Karl Marx’s use of the term (a use even Marx sympathizers have often misunderstood). In Marxist theory, all economies are boiled down to three basic things;
1) A primary factor of production (the stuff that is used to make other stuff)
2) A dominant social class that owes their dominance to their control of point 1
3) A subordinate social class that owes their oppression to not controlling point 1.
Under Slavery, the primary factor was slave labour with slaveowners as the dominant class and slaves as the subordinate class.
Under Feudalism, the primary factor was land, with land-owning aristocrats the dominant class and land-working peasants the subordinate class.
Under Capitalism, the primary factor is capital, with capital-owners as the dominant class and capital-working proletarians the subordinate class.
Under Marx’s definitions, Fascism is, in fact, a form of Capitalism since the primary factor is capital, capital’s notional private-sector owners are a social class other than the proletarians, and the actual control of capital is exercised by the state (not the proletarians). Additionally, under Marx’s definitions, non-Democratic State Socialism is also a form of Capitalism because control and ownership of capital are vested in a class other than the proletarians.
This is why an intellectually honest orthodox Marxist can accuse Fascism and Stalinism of being “State Capitalist” even if they are not free market.
Marx’s definition of Capitalism has absolutely no relationship to how free market (i.e. based on consent and contract) an economy actually is. Under the Marxian definitions, someone can be both pro-free market and anti-Capitalist (the Mutualists and early Individualist Anarchists, for instance), or someone can be pro-Capitalist and anti-free market (Fascism, Stalinism).
Therefore, for classical liberals to describe their economic adgeda as “Capitalist” is flatly inaccurate and leads to a significant level of misunderstanding.
Of course, some people on the left do use “Capitalism” as a synonym for free-market. They are equally incorrect. However, the people that used “Capitalism” in this manner were mostly the non-Democratic State Socialists, and their numbers were decimated by the collapse of the Soviet Union (most of them went on to Environmentalism or Social Democracy). Also, let me clarify, I do believe an attempt at real life Democratic Socialism will fail (i.e. The Road To Serfdom) and probably collapse into non-Democratic State Socialism, but that does not mean I believe every advocate of Democratic Socialism to be a closet-case Stalinist. Many are sincere (if, in my judgment, incorrect).
Many libertarian theorists have used the word Capitalism to mean Free Market. Ayn Rand is an obvious example, but Hayek, Mises and Friedman all used the term as a synonym for Free Market. So I am not pretending that changing vocabulary will not have a cost; it will require the use of disclaimers/glossaries, and more thorough exposition on the fact that the word “Capitalism” is an antagonym. However, I wish to open the floor to discussion on this matter; is the word “Capitalism” and our association with it doing more harm than good?