Capitalism is an economic system in which the means of production are privately owned and operated for profit.
Let us examine the concept of capitalism by itself and by this definition.
The first phrase to be examined is “means of production.” This is not only the driving force in the definition of capitalism, but also the driving force of the system we are describing, homonism. If the system we are talking about is based on production (of commodities), then the means of production are indeed the driving forces of production. That the driving forces are privately owned is the second statement of this definition.
It must be noted that the means of production have been privately owned in almost all historical societies except for some tribal communities. Even under communism, they were privately owned to some extent, for example, in Auroville (India).
So what is so special about capitalism that all definitions identify the means of production as private property: It is profit (third sentence). In all economic systems based on private property, only capitalism produces profit. So we take for granted that capital (per se) produces profit and thus increases capital. We take this idea for granted, probably because it was so deeply implanted by Karl Marx.
As with almost all self-evident things, in this case, there is an added fallacy. It is wrong to jump from the first statement directly to the third as if they were two sides of the same coin. Money makes money … is so widespread that not even in 2008 and later in the global economic crisis could we see how wrong it is.
It is probably true that the first proposition was true for some time in the late 18th and early 19th centuries. Most likely, there was a time when capital was both a driver of production and an end result for the owner of capital in the form of profit. But if it is still true that our society is based in part on profit as a result of the economy, then it is now also true that the driver, the first sentence of the definition of capitalism, is not capital, but: …?
Capital, but not only financial capital
We could name several drivers for the growth of wealth, production and profit, such as knowledge (know-how), excellent workforce, availability of natural resources and good relations with customers, supliers and wider communities.
Financial capitalism is dead, but not capitalism, which recognizes different forms of capital.
Capital is indeed like air for human beings. We cannot exist without air (capital), but we cannot say that air (capital) is a drive. Capital is a necessity, it is even a debt from the point of view of a company in relation to its owners. We owe not only to the owners of financial capital, but also to social or natural capital. The real drivers of the present are in a constant struggle with capital.
Can we say that capital was a driver of Apple’s or Microsoft’s success? Or worse, can we say that a bank with the safest possible financial capital structure is safe in the market without all the other forms of capital mentioned above being in play? Can we say that human capital has the power to create value without the interaction with all other capitals?
The belief that capital itself has the power, this illusion based on a definition we have been repeating since Karl Marx, has deepened all crises, including the one of 2008. It was not the loss of financial capital that was so shocking, but the fact that the global economy, based on this logical fallacy, was unable to do the obvious: realign the relationships and interactions between capitals. To be precise: The realignment took place even though it was not understood.
Competence (of nature, evolution) without comprehension.
The fact that capitalism understood as financial capitalism is long dead does not mean that capitalism based on private property is also dead. Added value always arises from interaction between capitals. Interaction in the economy is always interaction between particular individuals who bring different capitals into play. One could still call such a system capitalism. But since it will take some time to separate the term “capital” from “financial capital”, I prefer to call it homonism.
It is relieving to see that capitalism is not being destroyed by communists, socialists, unions, workers, deprived … but by homonism.
This is the third revision of the post from 2011.