Friday, February 09, 2007

Origins of the Word Capitalism: Thackeray not Marx?

Robert Lawson writes:

Recently I was explaining to a friend why I generally refrain from using the word "Capitalism":

"My reasoning is mostly tactical. The word was first coined by Marx and continues to be used as a pejorative by the left. 'Capitalism' as a term implies to me that capital is special and that the owners of capital, the capitalists, are therefore the special beneficiaries of the system. This of course was Marx's view. Even today, to many people capitalist = fat cat. But the fact is that 'capital' as a factor of production plays no more of a special role in a market economy than any other factor. You and I would argue that the real beneficiaries of the system are consumers and laborers. It would in my book be more accurate to say "laborism" than "capitalism".

I am not sure that Karl Marx invented the word ‘capitalism’; he certainly began using early, particularly in volume 1 of ‘Capital’, or at least his editors of the Moscow edition sprinkle his text liberally with it (from memory).

The Oxford English Dictionary, considered an authority on the English language, credits William Makepeace Thackeray for the first published use of the word ‘capitalism’ in his novel, The Newcomes (1853-55), though it is clear from its context that this refers to finance capital, rather than as a ‘system’. Financiers in 19th century novels tend to get a bad press; see Trollope’s ‘The Way We Live Now’.

The origin of the word ‘capitalist’ is of much earlier vintage: in French, A. R. J. Turgot (1727-1781) used ‘capitaliste’ in his essay, ‘Reflection on the Formation and Distribution of Wealth’ (1769-1770), and WilliamGodwin used its English version, ‘capitalist’, in his Political Justice (1794).

I take Robert Lawson’s point about the word capitalist over emphasizing its importance as the main factor of production, though I am not so sure that ‘laborism’ is a better alternative because it is another factor. I would have thought that ‘consumer’ is better than ‘capitalist’ and ‘labourer’ (two factors) bearing in mind that Adam Smith considered the consumer was the sole purpose of production (perhaps ‘consumerism’?).

Still, Smith called his fourth age of man, ‘commerce’ (after Hunting, Shepherding and Farming), and I have long preferred to name it as he did, despite the differences between the elements that he considered were important in the commercial economy and the mass consumer societies that have followed. Just a thought.

[Read the ‘Division of Labour’ Blog, to which Robert Lawson is a regular contributor, at:]


Blogger Unknown said...

I too thought it was Marx, interesting. Thank you.

12:12 pm  
Blogger indipete said...

I agree that "capitalism" is a misleading term, but I am surprised to see that no one is mentioning "the free market" (which is a sylable shorter) or "free enterprise" as an alternative. Or "economic freedom."

2:47 am  
Blogger Prehistoric Conservative said...

Coining of the word is not as important as the stigma later attached to the word after a concentrated effort at developing a pejorative.

Instead of capitalism, many in the U.S. prefer to call our system "free-enterprise", but that may have existed in the Edison, Ford, etc. era, but it has become so eroded here it is now about to completely collapse from being O-bomb-ed.

If we want to be creative we could talk about the free market, as Robert suggested, which means a system allowing purchasing decisions by free people. Therefore our system could be called the economic system of Peoples Free Choice or someone may have better wording. Hope we can be successful in its resurrection,in any event.

2:58 am  
Blogger Austin Gerassimos Mackell said...

But marx was the first to use the term as referring to an all encompassing system?

10:14 pm  
Blogger Austin Gerassimos Mackell said...

But the use of the term to refer to an all encompassing economic system can be traced to marx?

10:16 pm  
Blogger Michael Stenberg said...

This seems to be a fairly old blog; so, hope it's still active.
In agreement with some on this blog, the term "capitalism" is misleading; but, it's misuse has been repeated so often in our college and high school courses, and in the press, both "left" and "right," that few accurately employ it in our current discussions.
It helps to understand that there are two kinds of goods, those that are consumed, (used, purchased, if you like,) and those goods used to create the consumption goods, historically referred to as capital goods, or the means of production: farms, factories, laboratories, etc. Every society has both consumption and capital goods. The confusion generated - fostered - in our schools comes from the misleading use of "capitalism" to mean "private enterprise."
To simplify, the three main socio-political/economic systems that use capital goods have been classified as "communism," wherein the State owns and controls the means of production, "fascism" or "socialism," where the private citizen may own the capital good, but the State tells him/her how and when it can be used, and how the products can be distributed, i.e., regulates the means of production, and "private enterprise," where the private individual or company both owns and controls the means of production, and the market self-regulates the distribution of products.
It would help in our debates about these three systems if we used terms more precisely.
And, if we can trust anything from the highly politicized Wikipedia, even their article on the term "capitalism" traces its etymology much further back than the 18th century.
Hope this helps.

2:56 pm  
Blogger Unknown said...

I would just use the word "market(s)" and a "free market" when referring to a market that is not regulated by the state and saying that I'm an advocate of a "freed market" to help signify that this is a goal that has not been wholly met before on a large scale. No the guilded age was not a free market lol.

9:48 pm  
Blogger Gavin Kennedy said...

Hi Jacob
Thank you for your comment, which I see you posted on 20 July 2013.
Do you read Lost Legacy in 2013?
It is now at:
I seem to get comments regularly from 2005-9; is there some reason?
Blogger changed the address a few years ago.
Gavin Kennedy

6:59 am  
Blogger Bobby33x said...

Well, usage inevitably determines a word's meaning and 'Capitalism,' for better or worse [I think 'better'], has come to mean: 'Free and Open Markets' AND 'Private Property Rights.' All good things.

9:35 pm  
Blogger It Only Stands to Reason said...

I greatly appreciate Gavin's and Michael's contributions. However, I still hold out for 'capitalism'. We find "free" markets preceding the emergence of the capitalist system.

Marx emphasized control/organization of the system of production, which does not reside with labor or consumers. He emphasized production on the basis that those who control production dominate a society.

Many on the left agree with Michael to the extent that they refer to the USSR not as communism but state capitalism.

Marx of course argued that capitalism was a progressive force, but would fall of it's own internal contradictions. (Marx underestimated the resiliency of capitalism.) The complaints of the negative connotations attached to capitalism seem to me an attempt to deny that capitalism has contradictions - sort of, let's look at only the upsides, and blame the downsides on something else. This is advocacy, not analysis.

11:19 pm  
Blogger David Driver said...

Yes. What exists from a rational perspective - though this view too is corrigable - is "Consumerism".

The failure of Marx's thesis to properly define value (Marx used the now defunct labor theory of value), rendered his entire thesis moot. In fact, it is probably for this reason alone that he stopped writing Vol. II of Das Kapital in 1880, 3 years before his death. His thesis was wrong, and he knew it.

Marginalist theory (Menger, Jevons and Walras, 1871) based value on the utility of a product being realized in the actions of the consumer to buy at a given price. Value has less to do with labor and materials (and profit), than it does the maginal utility of a product at a given price, to a consumer who has already bought sufficient quantity at the given price. What he is willing to pay for the next unit of product, is the real value.

Marx never fully considered the full impact of the consumer on prices or value. And his vision of capitalism - synthesised into our owm definitions of it today - never fully understood why the misplaced sense of value would inhibit the production of goods and services, by denying the key component to progress - competition.

Competition to create the best product at the lowest price, to capture the largest market share, by relying on the consumer to define precisely what he is willing to spend for a given quantity at a given price.

And that is "consumerism", not "capitalism".

8:41 pm  
Blogger R. Craigen said...

The Oxford American Dictionary defines Capitalism thusly:

"an economic and political system in which a country's trade and industry are controlled by private owners for profit, rather than by the state."

whereas it defines Capitalist essentially as a synonym for "investor".

The term is not so much problematic as it is USED in problematic ways, meaning with no particular definition in mind. It is a scattergun, and generally used pejoratively.

However, if the above definition were placed for contrast alongside a definition for Socialism which interchanged "private owners" with "the state" -- which would seem quite appropriate -- it seems that neither system would be regarded as immediately pejorable by use of the term. Of course, each of us comes with our judgement about these two approaches to control of trade and industry, and they provide useful poles for a spectrum.

Indeed, I can think of few systems today that fall into either camp -- what we have is a spectrum between the two with a blend of private and state control of the distribution of capital and the control of commerce. So one could speak of systems' relative placement along that spectrum as a useful rubric for discussions.

The terms are also used to express ideologies concerning how capital OUGHT to be controlled. I believe Marx is largely responsible for creating that dichotomy and trying to set up societal enmity between them. He certainly treated "capitalists" as vile villains and this attitude has come to dominate left-of-center discussion about such things. In most neosocialist discourse today vilification of "capitalists" as bogeymen is absolutely de rigeur. But one could as easily (and with far better justification, given their history) put socialists into that camp.

In my view: socialists are parasites who are obsessed with capital. Listen to modern neosocialist conversations -- they are entirely concerned with money, who has it, who controls it, and the character of people according to where they fit in that scheme. These categories are almost undeveloped among those who hold to free-market capitalism as an ideal. It is, with a bit of irony, socialists who are infatuated with capital and wealth, and approach the subject through the lens of envy, jealousy, inflated injury and ... yes ... greed.

3:04 am  
Blogger Panchito said...

Marx was not the "inventor" of the term "capitalism", but he was the prominent individual (ideologue? Economist? philosopher? anthropologist?) in history to have introduced the term "capitalism" as a pejorative to derisively refer to --and purposely malign-- what could be very appropriately called “free-entrepreneurism”; in turn, that is, the overall human-societal system that organically and systemically hatches, grows and promotes free-enterprise and its inherent companion, individualism, the latter two being the most feared nemeses of both socialism and communism. There cannot be free-enterprise in the absence of individualism, free-enterprise providing enhancing feedback to individualism. Free-enterprise and individualism are yoked almost in a mirror fashion.

6:51 pm  
Blogger Doug Selby said...

The opposite of socialism is freedom.

9:50 pm  

Post a Comment

<< Home