Socialism and Capitalism

by Dan Clore

One must be careful to make one’s intended meaning known when using the terms “socialism” and “capitalism” (as well as related terms) because they have undergone polemic re-definition over the decades that can cause a great deal of confusion.

In the traditional sense, “capitalism” means the ownership and control of the means of production by a class of “capitalists” (in the traditional sense, the owners of capital, or means of production used by workers other than the capitalists/owners themselves) and an economic and political system that favors this.

In the traditional sense, “socialism” means the ownership and control of the means of production by the workers themselves, whether as individuals, cooperatives, collectives, communal groups, or through the state, and an economic and political system that favors this. One should note that this does not necessarily mean by the people as a whole, nor does it necessarily mean state ownership, nor does it necessarily imply a non-market form of organization; historically, anarcho-individualism (e.g., in the free-market form advocated by Benjamin Tucker) has been an important form of socialism.

In the later re-definition, “capitalism” means the private (non-government) ownership of the means of production, and more generally the absence of central planning by the state.

In the later re-definition, “socialism” means the ownership and control of the means of production by the people as a whole, generally by means of the state, or simply the ownership and control of the means of production by the state, or more broadly any form of central planning by the state.

Matters have become especially confused because these terms have been used in ways that include both the traditional sense and the later re-definition of the terms. Thus, Marxist-Leninists will define “socialism” in the traditional sense, but at the same time refer to examples of “socialism” in the later re-definition, in order to gain support for totalitarian Bolshevik regimes that actually destroy any examples of “socialism” in the traditional sense. Likewise, their “capitalist” opponents will do the same, in order to support the belief that There Is No Alternative (TINA) to “capitalism” other than a tyrannic despotism. (In this connection, one should note that according to Marx and Engels, the “dictatorship of the proletariat” is a transitional stage between capitalism and socialism/communism, which will not exist until the state has withered away to nothing.)

In the same way, advocates of “capitalism” will define the term with the later re-definition, but actually refer to concrete examples that instead fit the original sense, even citing dictatorships such as Pinochet’s in Chile as positive examples. And just as with “socialism”, some opponents of “capitalism” will do likewise in order to discredit it in the sense of the later re-definition. At present, state-corporate globalization, in which there is rule by states, corporations, international financial institutions (IFIs), and the like, is the typical form of “capitalism” actually advocated by most avowed capitalists, rather than a truly free market. This effectively means that there are (at the least) three common usages of the terms “socialism” and “capitalism”, and so it behoves one to make clear in what sense one is using these and related terms, and to what empirical examples one refers.

One should also note the term “state-capitalism”, used by socialists (in the traditional sense) to refer to state ownership and control of the means of production in varying degrees ranging from capitalist dictatorships such as Pinochet’s through to Marxist-Leninist dictatorships such as the Bolshevik regimes. This extends the traditional sense of “capitalism”, as the state (at least partially) replaces the traditional “private” capitalist class to varying degrees.

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