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Source link: http://archive.mises.org/10728/capitalism-vs-statism/

Capitalism vs. Statism

September 29, 2009 by

If we are to keep the term “capitalism” at all, then, we must distinguish between “free-market capitalism” on the one hand, and “state capitalism” on the other. The two are as different as day and night in their nature and consequences. FULL ARTICLE by Murray Rothbard


Barry Loberfeld September 29, 2009 at 8:44 am

Rothbard: “If we are to keep the term ‘capitalism’ at all, then, we must distinguish between ‘free-market capitalism’ on the one hand, and ‘state capitalism’ on the other. The two are as different as day and night in their nature and consequences.”

From here:

Equally mad are those Marxists who point to the very real problems of partial statism (“state capitalism”) but then perversely propose a tried-and-false “solution” — total statism (socialism) — that would only exacerbate those problems. It’s as if having recognized the danger of drinking polluted water but misidentifying the dangerous element, the Left advocated consumption of the undiluted pollutant. The failings of the mixed economy don’t confirm but confute the claims of socialism. It is the State, not the free market, that doles out political privileges — whether to the nomenklatura or the corporations. And it is the State that condemns whole populations to poverty — as witness activist Russell Means’ comparison of Native Americans, our country’s most socialized community, to the citizens of the Soviet Empire.

In the conflict between monopoly statism and the many organs of the body social (i.e., of a free people), the Left habitually made the malignant choice.

It's A Shame September 29, 2009 at 9:27 am

I think it’s an immense shame that there are no austrian libertarian economists in 2009.

I think it’s a shame that since 1953 and 1972, there are no longer any people who think enough about freedom to write a 2009 article.

Tsk tsk, austrianism and libertarianism are dead.

Look at what free market capitalism has become, it’s a dead ideology, so dead that we have to dig deep back into 1953, 1972 to get some articles.

I long for the day that I could read a brilliant 2009 article on Mises.org

Mike September 29, 2009 at 10:21 am


Mrhuh September 29, 2009 at 10:52 am

What are you talking about? Austrian Economics is on a huge upswing due to the grassroots efforts of Ron Paul and Peter Schiff, along with the Mises Institute’s being able to utilize the vast resources of the Internet, especially YouTube. Also, does anyone know of any good articles on the Ibo Tribe and its own free-market oriented culture?

Barry Loberfeld September 29, 2009 at 10:59 am

Classics — as relevant today as they were in the past.

Shawn Warswick September 29, 2009 at 12:44 pm

To say Austrian economics is dead is quite wrong. As Mrhuh said, it is seeing a revival right now, thanks to Ron Paul, judge Andrew Napolitano, Dr. Woods, etc…
With the summer institutes and other things the institute is doing, I would say we will continue to see the school grow, which is a good thing. There is a LARGE percentage of the population who rejects the ideas of cooperative economics and are open to the ideas of Von Mises and the Austrian economists. Keep spreading the word!

FarSide September 29, 2009 at 1:08 pm

For those that are missing it, “It’s a Shame” is lamenting the fact that older articles from Rothbard and LvM and others regularly appear on the blog.

Of course, I think this is wonderful – I am young enough to not have read them when the authors were alive and the articles first written, and busy enough that don’t have time to search for good stuff like this all day long.

Not to mention that the idea that there is no new content on the site is quite ridiculous.

What should they be writing? When a 50 year old article applies so well that it could be written today, should it be rewritten with references to iPods and Obama, just to make it seem “fresh”?

Michael R Stoddard September 29, 2009 at 1:46 pm

“Less Government, Lower Taxes” – is just Less Filing now. I Agree with Rothbard. We need to be more radical. Perhaps it is time for a new Apolitical Party whose sole purpose is DISMANTLING THE STATE!
Names – how about CAPITALISM. I know – loaded with negative connotations. But perhaps that can be used and turned around. Anybody out there agree with me and murray?

It's A Shame September 29, 2009 at 3:11 pm


“Classics — as relevant today as they were in the past.”

I know, everytime I read one of those outdated articles, they read as if they were written a few minutes ago.

But today is not like yesterday, USA is in deep problems and the economy is in shambles and statism has advanced like never before in America.

Surely if those writers were alive today, they articles would tone up and be a bit more alarmist. Their articles would be less about theorics and more about the emergency to make a 180 degrees turn before it’s too late.

If Austrian libertarianism is so much advancing today like another poster replied, then why are we being served petrified articles from the dark ages ?

How about a fresh edible article for a change.

It's A Shame September 29, 2009 at 3:17 pm

Michael Stoddard,

Forget about your apolitical party, it’s time to refresh Jefferson’s liberty tree before it dies.

P.M.Lawrence September 30, 2009 at 12:27 am

Rothbard’s historical examples are mostly nonsense:-

- ‘Generally, the State has its inception in naked banditry and conquest, after which the conquerors settle down among the subject population to exact permanent and continuing tribute in the form of “taxation” and to parcel out the land of the peasants in huge tracts to the conquering warlords, who then proceed to extract “rent.” A modern paradigm is the Spanish conquest of Latin America, when the military conquest of the native Indian peasantry led to the parceling out of Indian lands to the Spanish families, and the settling down of the Spaniards as a permanent ruling class over the native peasantry.’ Actually, this was rare. More usually, a native group rose up to resist outsiders and became rulers, or some outsiders were invited in to protect against others, then did the same. Even Spanish America has examples of this.

- “There are numerous historical examples of the growth and development of such a purely free-market society. Two may be mentioned here. One is the fair at Champagne, that for hundreds of years in the Middle Ages was the major center of international trade in Europe. Seeing the importance of the fairs, the kings and barons left them unmolested, untaxed, and unregulated, and any disputes that arose at the fairs were settled in one of many competing, voluntary courts, maintained by church, nobles, and the merchants themselves. A more sweeping and lesser-known example is Celtic Ireland, which for a thousand years maintained a flourishing free-market society without a State.” Actually, the fairs were created by the authorities – then given much autonomy because it paid. And the Irish did not have a free market, or indeed much of a market at all, but instead had the “Palace Economy” system: artisans were attached to noble households and supported by them, giving back much of what they produced in return. Only the products of surplus resources could be traded, and then only into a customer base that was crowded out by what the nobles had handed out on a patron-client basis to secure their position.

- “It was no accident that the Industrial Revolution in England emerged, not in guild-ridden and State-controlled London, but in the new industrial towns and areas that arose in the previously rural and therefore unregulated north of England”. That last part is wrong. Mostly, that area was also heavily regulated, and in fact the main driver was the availability and access to cheap coal.

- “An undeveloped and sparsely populated area originally, America did not begin as the leading capitalist country. But after a century of independence it achieved this eminence, and why?” It did no such thing. As at 1883, it still had over twenty years to go to reach that point.

- “Not, as the common myth has it, because of superior natural resources. The resources of Brazil, of Africa, of Asia, are at least as great.” This is plain wrong. The key resources for development then were cheap (usually water) transport and cheap coal, and of course what counts isn’t absolute resources but surplus resources. Those other areas were lacking in one or more of those. In particular, transport in Africa was very difficult.

Mushindo September 30, 2009 at 6:23 am

I have become a bit like a stuck record in this forum on the desirability of discarding the term ‘capitalism’ as a synonym for ‘the free market’, and using it instead to label the ugly nexus between corporatism and the State, thus more accurately reflecting the usual Leftist understanding of the word – a loose synonym for ‘the military-industrial complex. Its just got to be a lot easier to convince a sentimental leftist of the virtues of the free market if you start by agreeing that you also hate capitalism…….before saying ..’Now let me explain the difference between co-operation and coercion…..’

Rothbard’s take on the imprecision of the word leaves me feeling (at least partially) vindicated.

Mushindo September 30, 2009 at 6:34 am

Shawn Warswick said:

‘To say Austrian economics is dead is quite wrong. As Mrhuh said, it is seeing a revival right now, thanks to Ron Paul, judge Andrew Napolitano, Dr. Woods, etc…’

I agree with the sentiment. But sadly the day when we routinely see Austrian-informed opinion leaders in such publications as The Economist and the Financial Times are not ( yet) Upon us. I get really despondent when I consider that in the minds of the editorial staff of journals at the very heart of the western financial world, Austrian economics doesn’t even exist. That’s a crying shame.

fundamentalist September 30, 2009 at 8:31 am

Mushindo, I sympathize with your argument, but consider that whatever term you choose to use, socialists will destroy its meaning. They have no choice. It’s their main method of promoting socialism. You can either play their game by choosing a new name for your system, or you can fight their methodology by calling attention to it. Either way, you will spend a lot of time explaining what you mean. Take “free markets” for example. Socialists have already begun defining that to mean lawlessness and the rule of the biggest, baddest corporations. Socialists have corrupted capitalism and laissez-faire; they’re working on “free markets”. What name will you choose when they have successfully destroyed the meaning behind free markets?

Mushindo September 30, 2009 at 10:09 am


Point taken, but remember the word itself was first coined by Marx as a pejorative! It was handicapped with a negative connotation in the popular consciousness from the start.

Besides, on another view, why single out only one of the ( classical, granted) factors of production to be the label for free markets in all of them? It would be absurd to call the free market market ‘landism’, or ‘labourism’, or even ‘enterpris-ism’. So why call it ‘capitalism’? It positively invites misinterpretation, because the half-educated inevitably infer that owners of capital get preferential treatment in law over the other participants in the economy. Which is exactly what the free market prescription isn’t.

Russ September 30, 2009 at 3:01 pm

Mushindo wrote:

“Point taken, but remember the word itself was first coined by Marx as a pejorative!”

My opinion is that the best way to fight Orwellian word destruction is to embrace the word “capitalism”, even though it was originally intended as a pejorative. After all, what does it really mean? It means that some save up their wealth to buy capital, which they use to increase the productivity of labor, thus giving laborors much higher wages than they would otherwise have. That turns Marx on his head just as much as Marx supposedly turned Hegel on his.

fundamentalist September 30, 2009 at 4:31 pm

Mushindo, I agree completely. But whatever term you choose for the system, you’re going to have to do a great deal of explaning and socialists are going to try to ruin it.

Russ, good points. Capitalism is capital intensive production, or more roundabout production, as Austrians say.

Maybe we should call it roundaboutism.

fundamentalist September 30, 2009 at 4:34 pm

PS, socialists have no choice but to distort the meaning of whatever name you give the system, because socialism can exist only if people misunderstand what the system of natural liberty, as Smith called it, really is. Under no circumstance can socialists allow people to know the truth; socialism would wither immediately like throwing water on the wicked witch. As sunlight kills germs, truth destroys socialism. So socialists have no choice but to keep people in the dark through lies.

Russ September 30, 2009 at 6:06 pm

My point was that if people used the label “capitalism” correctly, there is no way they could say stupid things, like saying that capitalism caused our current recession. Or if they did, I could say “What? Using capital to increase the productivity of labor is what caused the recession?”

Then we can get to the real reasons behind the recession, like the fact that the Federal government forced banks to make home loans that they both knew were bad. In other words, the problem was excessive regulation of the market, not too little regulation. Or maybe they think that the cause of the recession was corporatism, which they confuse with capitalism. Then we can get into what free-market capitalism really is.

(I suppose, now that I’ve written the above, that “free-market capitalism” is more accurate. After all, even the Soviets used capital; they just didn’t do so very efficiently, because they didn’t use the pricing system of the free market.)

Besides, trying to come up with new words for capitalism makes it sound like there is something wrong with capitalism, and we’re trying to evade the socialists’ pointing out what we really believe in. Better to be “in your face”, embrace the words they try to use to denigrate us, and show that there is absolutely nothing wrong with them.

Richard Neva November 30, 2009 at 4:41 am

Capitalism is the scourge of mankind and it makes no difference what the prefix says! What an absurd article. Capitalism must be destroyed by any means necessary and poor and the worker must rise up in revolt. Don’t believe the lies here in this article. This is sham reporting and worthless information!

fundamentalist November 30, 2009 at 8:17 am

Richard Neva’s post is typical of socialists. He confuses verbal diahrea with intellectual debate.

anticapitalist troll November 30, 2009 at 8:57 am

i agree with richard neva capitalism is terrible murray rothbard has it all wrong personally im not only against capitalism but all forms of grammar youll never catch me using full stops commas or any other sort of punctuation much less capitalising anything thank you richard neva for conclusively demonstrating the evils of capitalism i look forward to your future posts where you will hopefully conclusively debunk grammar too kindest regards anticapitalist troll

ps im sorry if i’m off base here but i couldnt tell from his post whether he was against economic capitalism or grammatical capitalism
pps this sort of misunderstanding occurs a lot when i read socialist arguments against capitalism

fundamentalist November 30, 2009 at 11:47 am

anticapitalist troll, Clever!

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