Everything is Capitalism

June 19, 2009

Ronald Reagan once said:

All systems are capitalist.  It’s just a matter of who owns and controls the capital – ancient king, dictator or private individual.

Reagan equivocates on the definition of capitalist here, but for good reason, I think.

The definition of capitalism is a system where capital is privately owned, so technically if one person, a dictator or “state” (which some say is the people, and others correctly recognize as the decision-makers), owns the capital the system isn’t capitalism.

But, the reason Reagan stretches the definition of capitalism is to get to the real difference between capitalism and other systems on the political spectrum.

One attribute is responsible for the political spectrum: who makes decisions and how.  Take away that one attribute and all systems are about the same.

The argument isn’t which system is right.  The argument is who gets to make decisions and why.

I like a system that allows individuals to make decisions and deal with the consequences of those decisions for two simple reasons.

  1. It’s freedom. It seems morally correct because its based on the idea that we’re equal and free.  To me there’s no higher evolution of a species than making this self-aware recognition.  The idea that some are less equal or some or good enough to coerce others seems animalistic.
  2. It more consistently produces better results by any measure for nearly everyone (except, maybe dictator-wannabes).  That is, when you take an honest look at outcomes.

A common misunderstanding of freedom opponents (though many may be unaware that’s what they oppose or believe they oppose it for some good and noble reason), is that us supporters believe free markets are perfect.  We don’t.  Or shouldn’t.  They’re not.  Bad stuff happens.

But, less bad stuff happens more consistently to individuals in free markets than other systems.


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