Years ago, I got frustrated that even economists didn’t seem to have a stable definition of capitalism. Well, beyond the 11th grad econ “private ownership of the means of production”. That’ll help you get a good grade, but offers no insight.

I finally arrive at capitalism, interventionism, socialism and communism are on a continuum. The root is the liberty to keep and use what you earn to generate wealth for yourself by participation in markets and enterprises. I believe as this liberty is first infringed by taxation, it is the “liberty that shall not be named” for most.

In this photo we see the entrepreneur has not been prohibited from developing this “market” and profit from it.

My continuum:

The liberty to retain and accumulate earnings in excess of subsistence and use this “capital” to generate wealth for ones self through participation and creation in markets and enterprises is oddly a liberty that has no common name, like Freedom of Speech. But if we view the capitalism, interventionism, socialism, communism spectrum, we see they all are increasing limitation on who is either permitted to exercise this liberty at all, or advantages some group over others.

Laissez faire capitalism grants this liberty to the most people. Regulation and licensing seeks to limit who has the liberty, for social good or naught. Crony capitalism is when friends of office holders are afforded more of the liberty compared to others. Interventionism is the increasing governmental interference in who may exercise this liberty. Then we have full blown socialism, or state capitalism, where only officeholders and bureaucrats can exercise the liberty and they make wealth for themselves by controlling the markets and enterprises. Fascism (national socialism) and communism (international socialism) are just variants of socialism.

You can even apply this to feudal lords, who were granted this liberty to accumulate and use productive capital to generate wealth for themselves, with appropriate tribute to their king. For most of history, the grant of the liberty (capitalism) was restricted to the “high born”. Even the grants to the Church of lands for monasteries, nunneries, etc. came with the grant of the liberty to retain and use that which was in excess of subsistence to generate wealth for the order.

Socialism, in contrast, uses government to limit the individual ownership of productive capacity up to total socialism where the individual is permitted no ownership/control of productive capacity except for their direct personal skills and even then may be prevented by the overseers from using their skills in a job that requires them, instead being assigned other work. Under socialism, the liberty to better oneself is limited to government bureaucrats, controlling political party members and their cronies. The rest of the populace being slaves regardless of the treatment they receive.

“Precisely what makes a slave is that he is allowed no use of productive capital to make wealth on his own account.”