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One of the primary goals of the Crass Commercial collection of articles was to encourage people to think about the distinction between "capitalism" and "the free market."
Most writers operate as if the words were synonyms. I believe, however, that there is a sharp distinction between the two terms, and that proponents of the free market would do well to learn the distinction so that they can avoid the pitfalls that appear when one lets the enemies of the free market define the terms of the debate.
To help this process I will give two abbreviated definitions that highlight the different thinking going into the terms. The next article (The Failure of Capitalism) will explore the issue in greater deapth.
The Free Market refers to a socio-economic system where people are free to trade. This system is premised on the idea that, as the individual optimizes their resources, they effectively optimize the resources of the community.
In the American system of free trade, people are allowed to own property. People use money as a tool to facilitate trade.
Capitalism is a socio-economic system centered on the flow of capital. In capitalism, people themselves are reduced to capital. In such a system, people are controlled by money.
At first glance, the distinction between the "free market" and "capitalism" appears to be one of perception. If you hold that people have free will and use money as a tool, then you have the free market.
If you look at the same model and say that people don't have free will and that capital is the driving force of the market, then you have capitalism.
The minor distinction appears at first to be little more than a slight of semantics; However, when one digs deeper, one finds a chasm between two entirely different style of thinking.
The terms "capitalism" and "free market" are parts of entirely different frameworks of thought. I will refer to these two frameworks as the "classical liberal view" and the "modern liberal view."
The classical liberal view is based on western tradition from Socrates and Aristotle through to Adam Smith and the American Revolution. The modern view is based on the works of Kant, Hegel, Marx and the bulk of modern academic thought.
Proponents of the free market have the problem that when they adopt the modern terminology, they run the risk of adopting the modern framework, and this framework is troubling as we will find in the next article The Failure of Capitalism.
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