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Neither “capitalism” nor “socialism” seems to me well-named. As I’ve noted here in the past, my experience is that most Americans who favor “socialism” don’t actually favor the dictionary definition of government ownership of the means of production, but instead favor something resembling a Scandinavian approach to government taxes and spending. However, the Swedes themselves–who after all lived in close proximity to socialism in the style of Soviet Russia for decades–typically say that they are not socialists, but instead follow their own kind of capitalism. Sometimes “socialism” ends up being the name for an aspirational desire for a better world, while “capitalism” is blamed for all the problems of modern living, which means that the comparison is between apples and oranges.

The meaning of “capitalism” is a muddle as well. Robert Fredona, Sophus A. Reinert, and Teresa da Silva Lopes lay out some of the issues in “Forms of Capitalism” (Business History Review, Spring 2024, 98:1, pp. 3-35).

Among the many examples they offer is a 1939 book written by N.S.B. Gras, a prominent Harvard Business School professor who described six kinds of “capitalism” in Business and Capitalism: pre-business capitalism, petty capitalism, mercantile capitalism, industrial capitalism, financial capitalism, and national capitalism. Gras wrote: “[T]he term ‘capitalism,’ like ‘rheumatism’ and ‘indigestion,’ must be abandoned or differentiated. To be sure, discrimination in the use of the term impairs its propaganda value. Our interest here, however, lies simply in a better understanding of the subject.”

In American politics, it sometimes seems to be assumed that “capitalism” means Republicans and “socialism” means Democrats. But these terms do not exist as a shorthand for 21st century US politics, nor as a way of distinguishing American economic/political arrangements from those of northern Europe. After a review of attempts to define capitalism and to differentiate various “capitalisms,” the authors write (footnotes omitted):

Simple dictionary definitions aside, after a century and a half of good faith attempts by some of our keenest minds, we don’t seem any closer to meaningful agreement about the definition of capitalism or the historical boundaries of the phenomenon. The caution proposed by Weber in defining “religion”—“definition can be attempted, if at all, only at the conclusion of the study”—should perhaps be applied to studies of “capitalism” in equal or greater proportion.

Some definitions seem too inclusive. N.S.B. Gras’s own definition, for example: “a system of getting a living through the use of capital,” by which he means “goods or trained abilities used in producing other goods or services.” Even more inclusive is Deirdre McCloskey’s. She has argued with panache that capitalism and the market economy, which “contrary to what you might have heard, has existed since the caves,” are synonymous. “Market participants are capitalists. You are, for example.” Some seem rather too exclusive: despite his protests to the contrary, Braudel’s insistence on separating capitalism—“a world apart where an exceptional kind of capitalism goes on, to my mind the only real capitalism”—from both material life and the market economy, and finding it only in the “shadowy zone” of great merchants and monopolists “hovering above the sunlit world of the market economy,” seems rigid and artificial (or at least excessively Olympian). In stark contrast with McCloskey’s paleolithic capitalists, some have pushed the “dawn of capitalism” all the way to the 1830s or 40s. Rather than every market participant being a capitalist, most definitions are more restrictive, like David Schweickart’s: a capitalist, for him, is “someone who owns enough productive assets that he can, if he so chooses, live comfortably on the income generated by those assets.” …

Many of capitalism’s staunchest defenders tell us that capitalism without competition isn’t capitalism at all. Peter Thiel—a capitalist by all the definitions we’ve read— tells us, no, “actually capitalism and competition are opposites.” The best definitions risk being somewhat boring. The most interesting ones seem less interested in capitalism’s form than its spirit. Such is Wallerstein’s identification of capitalism’s essential, and essentially irrational, characteristic: “the persistent search for the endless accumulation of capital—the accumulation of capital in order to accumulate more capital” along with “mechanisms that penalize actors who seek to operate on the basis of other values or other objectives.”…

When it comes to capitalism, precision is not always called for, and not always helpful. … Many of the newly-coined “forms” of capitalism that we listed above—perhaps especially the most outré ones, like “sugar daddy capitalism” or “Candy Crush capitalism”—may be ways of identifying not new “forms of capitalism” in the traditional sense but new characteristics of a capacious and polythetically-defined capitalism. Along the same lines, but from a different vantage point, we might think about what the characteristics are that are shared by both “managerial capitalism” and “booty capitalism,” or “mercantile capitalism” and “casino capitalism.” From either perspective, though, we might put it this way: capitalisms form a family.

Another possible approach to capitalism is the spatial. It is no longer enough to think in terms of gradation, or of whole societies as the unit of study, as Frederic Lane once did. “Capitalism,” he argued, “is a matter of degree: it is hard to find a society 100 percent capitalistic or 0 percent capitalistic.”

Naturally, some of these definitions of capitalism appeal to me more than other, but I won’t fight those battles here. I’ll just note that in my own mind, the high-income countries of the world are all “capitalist,” although they model different forms of capitalism that embody different social tradeoffs. Fredona, Reinert, and da Silva Lopes write: “We suggest stepping back and reconsidering the pronouncement of N.S.B. Gras, at the origins of business history, that capitalism must be abandoned or differentiated. Capitalism, whatever it is, whenever it began, seems at once more productive and more destructive than any other force in human history. It also seems intractably plural.”

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