Since becoming an economic libertarian and an advocate of laissez-faire capitalism, I’ve noticed that most attacks on capitalism are forms of the Straw Man fallacy: instead of defining the opposing view in terms that its advocates would accept, you create a "straw man" a stand-in or dummy position to attack in its place. The straw man is easy to defeat, but irrelevant to the actual content of the original disagreement.
The Straw Man fallacy is well known and fairly easy to spot, so it is often supplemented with a slightly more subtle move I call the Ham Sandwich Argument named for a logical "proof" my Uncle Raymond presented to me when I was a child.
Uncle Raymond is a famous logician. (Also a magician, a musician, and a mathematician. I’m not making this up. His stage name was Five-Ace Monty.) He claimed he could prove to me that a ham sandwich was better than eternal happiness.
"Certainly you would agree," he said, "that nothing is better than eternal happiness."
"But you have to admit that a ham sandwich is better than nothing!"
"And by the transitive property, therefore, we see beyond a doubt that a ham sandwich is better than eternal happiness. Q.E.D."
Well, I thought it was funny and clever so I tried the argument out on my best friend. He did not find it funny. He was annoyed that I’d tried to change definitions mid-argument. That is, the ‘nothing’ in the first statement means, "there is no thing" whereas the ‘nothing’ in the second statement means, "not having anything".
His point was correct, of course, even if humorless.
It is with the same humorlessness that I confront Karl Marx and his ideological descendents, especially the anti-capitalist "liberals" who often don’t even know the origins of their beliefs and assumptions.
Karl Marx, who invented the word capitalism, defined it as a free market and free trade based in "bourgeois property" private ownership of the means of production. Marx’s strict definition is one that proponents of laissez faire and private property would recognize and accept as their own. But the problem is that Karl Marx didn’t stick to his own definition. As Thomas DiLorenzo says in his new book, How Capitalism Saved America, "Marxists [are] constitutionally unable to distinguish between free enterprise and special privilege." (p. 45)
Adam Smith’s Wealth of Nations, published in 1776, is generally considered the first capitalist manifesto, though the term "capitalism" didn’t exist yet. But the system Smith was arguing against which he called "mercantilism" is treated by Marx as a form of proto-capitalism.
If we take Smith’s definition of mercantilism politically privileged trade and profit to the detriment of consumers and Marx’s definition of capitalism, we have to conclude that the two are opposite and incompatible. But Marx did not share this conclusion. Because his theory of history required a feudalistic stage to lead inexorably to a capitalist stage (to be replaced in turn by a socialist stage and finally a communist one), Marx saw Smith’s mercantilism as a transition point between feudalism and pure capitalism. And since mercantilism is based in private property and commerce, it is closer to capitalism and might as well, he decided, be included in the anti-capitalist critique.
Do you see the sleight of hand there? Instead of defining capitalism in obvious straw-man terms, he starts off with a good-faith definition one that pro-capitalists would agree with. But then he manages to shift the argument over to the straw man of mercantilism a system that pro-capitalists are against! And thus did Uncle Karl demonstrate that a ham sandwich is better than eternal happiness …
We can dismiss any argument that uses terms like "free market" when talking about coercively regulated exchange or "free trade" when talking about government treaties and politically managed commerce any argument, in short, that conflates free enterprise and special privilege as a ham sandwich argument.
So how do we talk to the anti-capitalists when we’re not even speaking the same language?
We might start with Franz Oppenheimer’s distinction and terminology:
There are two fundamentally opposed means whereby man, requiring sustenance, is impelled to obtain the necessary means for satisfying his desires. These are work and robbery … I propose … to call one’s own labor and the equivalent exchange … the "economic means" for the satisfaction of needs, while the unrequited appropriation of the labor of others will be called the "political means."
~ Franz Oppenheimer, The State, 1922
The political means to wealth involves the organized use or threat of violence, whether it’s an overt military action, or the complex network of intimidation behind taxation, regulation, licensing laws, and other interventions against voluntary exchange. By political means, wealth is never created only redistributed. It is, at best, a zero-sum game: for some to win, others must lose.
The economic means to wealth involves convincing people to voluntarily part with what you want more by offering them what they want more. This is the basis of laissez-faire capitalism: the peaceful creation of wealth through exchange. (Most anti-capitalists have probably never confronted even the possibility of creating great wealth peacefully.)
The economic capitalist competes with other economic capitalists to satisfy the wants and needs of consumers, who are free to take their business elsewhere.
In contrast, a political capitalist appeals to the State to privilege his position above his competition. The victim of political wealth is both the would-be competition and the consumers themselves.
This capitalism, political capitalism (which we pro-capitalists sometimes call mercantilism, corporatism, state capitalism, crony capitalism, or even fascism), is something we and the anti-capitalists can agree on: it is the exploitation of the productive class by a parasitic class. We might even surprise them with our sample list of parasites: defense contractors, the banking cartel, the steel industry, big agribusiness, Halliburton … But our agreement requires common recognition of the distinction between political and economic means.
The terminology I adopt from Oppenheimer has another subtle benefit. For people who grew up indoctrinated against the evils of capitalism myself included the C-word carries too much bad connotation for us to suddenly accept it as the basis of prosperity and progress for all participants. There is a persuasive power in joining the leftists’ rants against privilege once you’ve insisted that the term they mean is political capitalism. Similarly, it is easier to convince them to open their minds to the potential virtues of economic capitalism than it is to promote only ‘capitalism’ without the distinguishing modifiers.
Finally, the insistence on the distinction can serve as a useful filter for knowing which discussions to pursue and which to avoid. Next time you confront someone’s anti-capitalism, whether it’s the sometimes-subtle knee-jerk variety, or the ardent socialist sort, insist on the distinction between political capitalism and economic capitalism. If the other person can’t follow the distinction, or refuses to use it, you can be sure the argument will be a waste of your time.
September 1, 2004