Who invented the term ‘capitalism’ and why

The economic system known as “capitalism” is the only system that guarantees every individual their personal liberty.

It is thus the only moral, honest, authentic and trustworthy political, economic, and social standard for pursuing widespread social wellbeing, prosperity and peace.

But what does the word “capitalism” mean and why was it invented?

“Capitalism” is an economic and social system in which all assets, including homes, businesses and bank balances, are owned and controlled by private people rather than by elite members of the government (often slyly referred to as “the community” or “the people”).

This system is however, much more accurately described as free enterprise, private enterprise, the free market, individualism or laissez-faire (French: “allow to do” or “let it be”) – a policy of minimum governmental interference in the private interactions of individuals and of society as a whole.

Prices and the distribution of goods and services are therefore not administered by a central bureaucracy in this system.

They are spontaneously set by the natural human forces of demand and supply, which fluctuate moment by moment every minute of every day.

Indeed, like gravity, such market forces never cease to operate but are merely distorted when men try to interfere with them.

“Capitalism” is therefore not a social system established according to someone’s written theory.

It evolved spontaneously through the ages through natural human interactions and impulses across the globe.

The term “capitalism” was almost unknown in the English world until first popularised by English translations of Das Kapital in 1867.

This was the work of the father of communism, Karl Marx. The title was translated into English variously as The Capital or simply, Capital. Both these translations are wholly inadequate.

They do not convey the pejorative manner in which Marx used the term.

Like Clinton’s “that woman” or commonly “that scoundrel”, That Capital, or better still, That Accursed Thing called Capital, might more accurately have translated the true intention of Marx’s demeaning and stigmatising language.

Not even Adam Smith had ever heard of or used that term when attempting to describe the free enterprise system in his “Wealth of Nations” a century earlier in 1776.

For him later to be “known” as the “father of capitalism”, is a 20th-century accolade of which he knew nothing, nor deserved.

This is nothing more than a glaring example of how modern notions get mischievously projected onto the past.

In the late 1700s the “philosophy of freedom” took root for the first time in modern history.

The American founding fathers were profoundly influenced by generations of ancient philosophers and by their close European intellectual predecessors such as Adam Smith, David Hume and John Locke.

The core of their movement, the American Revolution, and the subsequent rapid spread of freedom movements across the globe, was fueled by the basic principles of liberty made popular by social, political and religious leaders who had come to an “enlightened” view concerning the nature of individual mankind.

These new views affected all spheres of human relations and were not restricted by politics, religion, or economic considerations.

“Communism” (in some forms also known as “socialism”) on the other hand, is a theory of social organisation in which all assets, including homes, businesses and bank accounts, are owned and controlled by “the community”, hence its name “communism”.

In practice, all assets become controlled and thus effectively “owned”, by the elite members of the government of the day.

Each member of the public works and receives reward according only to their ability and needs, their pay level being dictated by the elites in control and not by the value of their output.

“From each according to his ability, to each according to his needs” was the early rallying slogan of the communist disciples of Marx and Engels. “Communism” is thus the opposite of “Capitalism”.

It is a system of maximal state (“communal”) ownership of all assets and of maximal government interference in the operation of society.

Indeed, under “communalism”, any manifestation of “individualism” is intensely despised and brutally discouraged.

To disparage private enterprise and individual liberty, “communism” thus invented the term “capitalism” and contrived to link the term to all that is bad, including notions of exploitation, mistreatment and abuse.

Yet abuse is very rare in societies where individuals are free to move around as they please, are safe on and in their own property, and have freedom of speech and conscience.

Such human rights are generally absent or poorly protected in “communist” countries.

So the next time you hear the term “capitalism”, know immediately that it is an invented term designed by “communists” to disparage a system of individual freedom and inviolability of private ownership that has produced the wealthiest “middle classes” in all of recorded history and which has almost entirely wiped out the grinding levels of poverty and deprivation last seen in the West in the 1700s.

• Temba A Nolutshungu is a director of the Free Market Foundation

This article was first published in City Press on 16 November 2018


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