Saturday, 27 February 2016

Thought 141: A Definition of Capitalism

Capitalism is
"a system of economics in which production is based on profit for those who control the capital."  
- Carroll Quigley
As Quigley notes, those who control the capital aren't necessarily the owners since in large scale enterprise with widely dispersed stock ownership management is more important than ownership. 

Accordingly, profits are not the same as dividends and, in fact, dividends become objectionable to management, since they take profits out of their control. 

In addition capitalism per se does not equate with free markets. 

You can have free market capitalism but you can also have dictatorial capitalism as occurred under the Nazi regime in Germany. 

Strict free markets may indeed foster prosperity and political freedom but in practice the term 'free market' is lip service paid to what is in fact a rigged, controlled and crony-ist control of wealth and production in a few hands, with heavy governmental input in bed with established profit-driven corporate entities. 

Selling State owned assets to private hands, often at a loss to the taxpayer, is part and parcel of dictatorial capitalism since it is a practice that assumes governmental impetus and governmental oversight. 

Hitler engaged in this practice – as well as the destruction of labour rights and the labour movement – which puts paid to the notion that he was a socialist – despite his movement being termed national socialism – completely at odds with the policies of, say, a supposedly market-friendly, anti-socialist Margaret Thatcher.