In the right circles you will find a running debate about using the word “capitalism.” Here is a good example, but there are many more. This debate is almost always among those who favor the idea economic freedom.
Those who would rather abandon the term have a somewhat standard list of worries. The list usually begins with the fact that “capitalism” began as a term of derision applied to economic liberty by Marxists.
I sympathize with the “give up the term ‘capitalism’” crowd. The term does have a lot of negative connections. It probably is much easier to talk to people about economic freedom without this now very loaded term. And yet, I wish we could find something that would convey one aspect of matters economic contained in this word in whatever name we might use.
As I was mowing the yard the other day and thinking about this, that, and the other thing (the mind must do something while pushing a lawn mower back and forth) I began to think how little-valued economic capital is today. Capital is, to simplify matters, economic wealth that is not consumed, but is rather used to create means of production, or tools. Realize that “tools” here does not just refer to wrenches and such, but included anything used to create other goods and services.
People producing, consuming, saving and exchanging where economic freedom is the rule might not have a bias toward the capital aspect of things economic. But the thing that is made possible by economic freedom that tends to produce economic prosperity is the accumulation of capital.
Life is relatively easy for us here and now because our ancestors did not consume everything they produced. Rather, they invested significant portions of their production in things they could not immediately consume, but which would be used to make even more of the things the did want to consume.
I think we tend to forget, or underestimate, the wonder and value of capital. Unlike our ancestors, we tend to save very little these days – and remember, capital comes from “savings.” This is not just a personal financial failing on the part of many. Because we tend to want everything, want it NOW, and usually borrow money to buy it, there is often nothing left for savings and the capital that can result from savings.
We seem to think that the vast array of things that are used to make the things we want just appear magically, from someone else, maybe from “the government.” That is not the case and cannot be the case. One of the greatest contributions to economic well-being that anyone can make is not consuming everything he has and investing that in things that make things. If the things that make the things we want were even to begin to be not replaced, we would soon be very unhappy indeed.
So, while I do not have a good answer to the debate about using the term “capitalism” I do very much appreciate the thing denoted by the term “capital.” The possibility of its existence and use is one of the greatest material gifts God has given us.