Capitalism is by far one of the most widely used and most widely defined terms in the social sciences, maybe also next to globalization, society and state. Contemporary economic and political debates would be unthinkable without it. However, especially the wide range of definitions of capitalism has lead to many misinterpretations and subsequently several academic problems, starting from different ideas behind the term up to interdisciplinary misconceptions when working with it in theory and in practice. One prominent example is the negligently equation of capitalism with the concept of free markets or a free market economy. Orthodox and heterodox economics as well as political scientists are often equating both concepts when describing and analysing the post-industrial-revolution economic system and its social dynamics, as some prominent academic works throughout the history show.1 But are capitalism and free markets really two sides of the same coin? After trying to circumnavigate around the problem of terminology in economics and political science for quite a while, the debate around this question became more and more popular in recent years, particularly in regards of seemingly cyclical crisis phenomena, growing state interventions in economies, and other phenomena’s like financialization, globalization and so on. And a trend in academics is recognizable: That, although both terms are not mutually exclusive, a differentiated and more profound conception is urgently needed to help prevent conceptual confusion and to clarify scientific outputs.
The aim of this text is therefore to bring new insights into the current debate, as a lack of critical discussion and examination can be identified especially in the libertarian and individual anarchist movement regarding this research issue. What is needed is a more interdisciplinary and critical look on the historic roots and modern dynamics of capitalism in its interplay – not to say symbiosis - with the state and in contrast a more comprehensive definition of free markets and their absence of authority, coercive power and interventionism.
A more precise distinction between capitalism and free markets can help us in the end to reduce the inflationary and uncritical use of the term capitalism in social sciences and at the same time increase the scientific quality of researches.
Table of Contents
- Capitalism = the free market?
- Braudel's concept of capitalism and the libertarian critic on state/corporate capitalism
- Capitalism and free markets: Two different coins
Objectives and Key Themes
The objective of this text is to clarify the distinction between capitalism and free markets, particularly within the context of libertarian and individual anarchist thought. It aims to move beyond simplistic equalities and offer a more nuanced understanding by integrating historical perspectives and contemporary criticisms.
- The problematic equation of capitalism and free markets.
- Fernand Braudel's three-level conception of capitalism.
- The libertarian critique of state and corporate capitalism.
- Historical examples of free markets existing outside of state-controlled capitalism.
- The role of the state in shaping both capitalism and free markets.
Chapter Summaries
Capitalism = the free market?: This chapter introduces the central question of whether capitalism and free markets are interchangeable concepts. It highlights the widespread tendency to conflate the two terms, particularly within economics and political science, and points out the resulting conceptual ambiguities. The chapter motivates the need for a more precise distinction, emphasizing the importance of this clarification for both academic rigor and practical understanding of economic systems. It introduces Fernand Braudel's work as a potential framework for this differentiation and notes the growing recognition of this issue among libertarian and anarchist scholars.
Braudel's concept of capitalism and the libertarian critic on state/corporate capitalism: This chapter delves into Braudel's three-level conception of capitalism, differentiating between material life, micro-capitalism (economic life), and "true capitalism" (the anti-market). It then draws parallels between Braudel's "anti-market," characterized by speculation, inequality, and monopolies, and the libertarian critique of state and corporate capitalism, which similarly identifies state intervention and regulatory capture as distortions of genuinely free markets. The chapter highlights the common ground between Braudel's historical analysis and the libertarian perspective in their shared concern about the concentration of power and the suppression of genuinely competitive markets.
Capitalism and free markets: Two different coins: This chapter concludes by emphasizing the distinct nature of capitalism and free markets. It argues that while capitalism may utilize some free market mechanisms, a truly free market does not necessitate capitalism. Historical examples, such as the development of merchant law (Lex Mercatoria) in medieval times, illustrate the existence of free markets independent of state-controlled or capitalist systems. The chapter underscores the fundamental role of the state in fostering capitalism, including its involvement in creating modern corporations and monopolies, contrasting this with the simple requirements of a free market: secure property rights and mechanisms for voluntary exchange.
Keywords
Capitalism, free market, libertarianism, state capitalism, corporate capitalism, Fernand Braudel, market economy, private property, voluntary exchange, regulation, monopoly, competition, historical analysis, economic theory, political economy.
Frequently Asked Questions: Capitalism vs. Free Markets
What is the main argument of this text?
This text argues that capitalism and free markets are distinct concepts, often mistakenly conflated. It aims to clarify this distinction, drawing on historical analysis and integrating libertarian and anarchist perspectives.
What is the text's objective?
The text seeks to provide a nuanced understanding of the difference between capitalism and free markets, moving beyond simplistic equalities. It explores this distinction through historical perspectives and contemporary criticisms, particularly within libertarian and individual anarchist thought.
How does the text define capitalism?
The text utilizes Fernand Braudel's three-level conception of capitalism: material life, micro-capitalism (everyday economic activity), and "true capitalism" (a system characterized by speculation, inequality, and monopolies, often intertwined with state power). It also incorporates the libertarian critique, which views state intervention and corporate power as distortions of genuinely free markets.
How does the text define free markets?
The text defines free markets as systems based on secure property rights and voluntary exchange, independent of state control or capitalist structures. It emphasizes that the existence of free markets does not inherently necessitate capitalism.
What is the relationship between capitalism and free markets according to the text?
The text argues that while capitalism might utilize some free market mechanisms, a truly free market does not require capitalism. Capitalism, particularly in its state-controlled or corporate forms, is often seen as hindering genuinely free and competitive markets.
What is Braudel's contribution to the text's argument?
Fernand Braudel's three-level model of capitalism provides a framework for differentiating between everyday economic activity, a more developed market economy, and the anti-market forces of speculative capitalism often intertwined with state power. This framework helps to distinguish capitalism from truly free markets.
What is the libertarian perspective on capitalism and free markets?
The text incorporates the libertarian critique of state and corporate capitalism, which argues that state intervention and regulatory capture distort genuinely free markets. Libertarians, according to the text, see a significant difference between the free market ideal and the reality of capitalism.
Does the text provide historical examples?
Yes, the text uses the example of the development of merchant law (Lex Mercatoria) in medieval times to illustrate the existence of free markets independent of state-controlled or capitalist systems. This demonstrates that free markets can exist outside of capitalist frameworks.
What are the key themes explored in the text?
Key themes include the problematic equation of capitalism and free markets, Braudel's three-level conception of capitalism, the libertarian critique of state and corporate capitalism, historical examples of free markets existing outside of capitalism, and the role of the state in shaping both capitalism and free markets.
What are the keywords associated with this text?
Keywords include: Capitalism, free market, libertarianism, state capitalism, corporate capitalism, Fernand Braudel, market economy, private property, voluntary exchange, regulation, monopoly, competition, historical analysis, economic theory, and political economy.
- Quote paper
- BA MA Eric Hugo Weinhandl (Author), 2019, Capitalism and free markets. Two sides of the same coin?, Munich, GRIN Verlag, https://www.grin.com/document/491170
