Talking Past Each Other: Anarchism and The Two Meanings of “Capitalism”

But a quick glance at the major anarchist thinkers of Europe, England, and America would ostensibly indicate that all were firmly anti-capitalistic, a closer look will show that this is incorrect, for the term “capitalism” has been used in socialist literature in two contradictory manners. On the one hand, the term is used to denote production according to the dictates of the market, or in socialist terminology, “commodity production.” On the other hand, capitalism is defined in terms of class relations, i.e., the ownership of the means of production by the “bourgeois,” or ruling, class. The former may be termed the economic definition and the latter the sociological definition. If the economic definition is used, it follows that the more things are handled by the market, the more capitalistic the society. This means that price controls, tariffs, licensing restrictions, state unemployment compensation, state poor relief, etc., whether they are considered beneficial or not, must be classified as anti-capitalistic institutions since they constitute modifications or restrictions of the market. Since the state does not sell its services on the market, “state capitalism,” according to the economic definition, is a contradiction in terms.

But if the sociological definition is used, the state becomes compatible with capitalism, for whatever serves to entrench the bourgeois class, the owners of the means of production, in power is, ipso facto, “capitalistic.” Since both proponents and critics of capitalism were in general agreement that market competition would force the “rate of profit” to fall, the two definitions lead to mutually exclusive consequences. Since the economic or market definition posits pure laissez faire, any government intervention to protect the interests of the bourgeoise is anathema. But that is precisely what is entailed in the sociological definition: state intervention to protect profits and institutionalize the position of the property-owning class. When the sociological definition is used, capitalism becomes incomprehensible without control of the state by the bourgeoise. For with the power of the state behind them, the bourgeoise are able to protect their privileged positions from the threat of competition by the establishment of tariff barriers, licensing restrictions, and other statist measures.

The proponents of capitalism, however, had only the economic definition in mind when they defended capitalism. Far from intending to defend state intervention to preserve artificially high profits, it was, in fact, such pro-capitalist writers as Adam Smith who vehemently condemned such “mercantilist” arrangements and urger their replacement by free trade capitalism. Since comparison can only be made when definitions tap the same domain, confusion occurred because of these definitional differences, and critics and opponents of capitalism talked past each other when many were in basic agreement. But if the economic spectrum is analyzed from the point of view of the economic definition only, then comparison can be made on the following basis: capitalism would be equated with the market, communism with the absence of the market, and mercantilism with a mixed or restricted market.

communism                                mercantilism                                capitalism
0: ————————————————:—————————————–:100
non-market                               restricted market                                market

We are now in a position to reassess the anti-capitalism of the anarchists. What is evidence in such a taxonomy is that while certain anarchists such as Kropotkin and Bakunin must certainly be classified as socialist or communist, others like Proudhon, Godwin especially the native American anarchists such as Josiah Warren, Benjamin Tucker, and Victor Yarros, despite their characterization of themselves as socialists, must be placed within the capitalist camp…

-David Osterfeld, “Freedom, Society, and the State (excerpt). Anarchy & The Law. Edward P. Stringham, ed. 2007. pp. 505-506