Property Rights x Capitalism – Why Libertarians Should Not Call Themselves Capitalists

Many libertarians, who are in fact real free-marketers, sometimes call themselves “capitalists”. Here I intended to explain why this is an inaccurate and sometime misleading title for those who defend freedom.

The particle ‘ism’ is in general used to indicate a doctrine or philosophical chain. We have, so, ‘fascism’, ‘Nazism’, ‘socialism’, ‘positivism’, as examples of use of the terminology. In a similar way ‘ist’ is used to designate those that follows the referred chain, like ‘fascist’, ‘socialist’, ‘positivist’. In both cases, it is indicated, through the suffix, the existence of an approach of thought, conceptual and historically distinct from others.

An odd circumstance can be perceived, however, regarding the term ‘capitalism’. At first, a purely etymological definition would lead us to believe that capitalism is a philosophical approach, a systematization of concepts and ideals thought by a determinate group, at a determinate time in history: the capitalists.

In fact, the semiotic confusion was well wished by those who rebelled against the productive system that has appeared and developed in the 18th century. In fact, it also has been easily assumed and propagated by virtual defenders of the system. It was claimed by the oppositions that capitalism was a ‘bourgeois ideology’, ideology that would be mined by the new proletarian ideals of liberation. Well, being capitalism just an ideology, it was easier to combat it: all it was necessary was surpassing the ‘values’ of capital accumulation and of mass consumption. The so called oppressive productive relation would ruin, and dictatorship of proletarians would be implanted.

The concept of capitalism as ideology was so propagated and has encountered so few opposites that advanced through times and got to the actual days practically uninjured. Nowadays, it is attributed to ‘capitalism’ ideals coming from chains of thought so diverse as liberalism, mercantilism and imperialism. The semantic association of the word puts it into a condition of a ‘plan’ – some sort of sombrous order, designed and established ‘from above’, imposed by force on individuals, on society, on the state and on the law, through techniques as terrible as the destruction of local cultures and general massing of society.

Nevertheless, I intend to argue that Capitalism can not be defined as a determinate set of ideas. Capitalism is not an ideological chain planned intentionally to achieve the global domination of its followers, the capitalists. Capitalism is simply the term that designates a productive system that is based in four elements: property, labour division, capital accumulation and mass production. Present these elements, in a bigger or smaller scale, capitalism, then, invariably emerges, by the interaction of the most diverse individuals.


Capitalistic Conformations


The capitalist productive system has appeared in the world around the 18th century and, so far, has established itself as the most economically advantageous known method of mass production. In other words, the combination of the four elements – property rights, labour division, capital accumulation and mass production - has generated the greatest productive method – at least, until now – ever experienced by man. Others attempts yet realized have shown to be inutile in the suppression of capitalism as the ultimate productive method, i.e., a mass production method. In such attempts, monetary calculation has shown to be impossible, allocation of resources, inefficient, and it did not take long for the whole system to collapse. In fact, amidst the productive systems known by mankind so far, it is impossible to find one, outside capitalism, that could sustain the huge quantity of human beings that now habits Earth, i.e., it is impossible to find a system that could provide a mass production for a massive consumption.


All of this does not mean, nevertheless, that capitalism has spread its benefits for the entire world. There are places in where capitalism has not been developed, or, if developed, it appears to be a more destructive than beneficial system. I argue that this happens whether by lack of some of its constitutive elements, whether by restrictions opposed to these elements.


In this aspect, among critics, it is interesting to observe how common it is to attribute to capitalism the ‘blame’ for certain people or country to be more or to be less economically developed. It is said that capitalism is ‘excluding’, that is, that it is responsible for leading huge parts of the globe unaware of social economic development. This assertion is extremely misleading. It blames a non-existing system for its own non-existence. Certainly, it is not capitalism per se that restrains capitalism from becoming a dominant system at some place. First, it is the existence or not of its so-called ‘elements’ that defines it; secondly, it is the social-political institutions and the grade of variation that they impose on the ‘elements’ that conform it.


Property is significantly the most important component of individual actions and human’s purposeful behaviour. If we deny property rights, whether the right of some individual to self-ownership, or his ownership of products resulted of his job, we also deny his very existence and prosperity as a human being. Naturally, the extent of property rights respect in a determinate society may vary considerably. For example, a society can be constructed in ways that only a small parcel of its population has virtual property rights, surviving at the expenses and by the expropriation of the majority. This constitutes a violent aggression from some people upon others, and, in this sense, aggression is the opposite of property. I another hand, ideally, a society can have strong property rights values, hence social cooperation and human respect is better improved.


Labour division happens when economies grows to a such an extent that it turns to be more difficult to a person to produce everything he needs by himself than to produce a certain item and engage in exchange procedures with others to get what he needs. Implicit in labour division there is the existence of a stable monetary system, whose absence makes it impossible for people to trade and calculate in a proper way. Again, the intensity and strength of labour division will depend upon the especial characteristics of a society.


Capital accumulation is a step where, whether through work, savings or pillages, a society has become rich enough to achieve. Through capital accumulation a society can take a next step to a bigger stage of production, and so make productive investments. Of course, the means by which a society has acquired its capital resources is also impacting of how this accumulation will be like. For example, in a society that had little respect for property rights and that has acquired its capital through exploitation and pillage, it will be more likely that capital will be badly distributed among its members.


Mass production will occur whereas there is an established labour division and capital accumulation. Hence, it can be said that the existence, to some extent, of mass production and property rights is what defines and conforms capitalism.


Precisely for being defined by elements and conformed by environment – factors extremely variables from one society to another, from a historical time to another – that capitalism can present extreme variations of grade and intensity. Capitalism not necessarily is going to work only in free market conditions; not necessarily is going to work only in free societies. Capitalism, as a productive system emerged by ‘elements’, as said above, is not opposed, a priori, to authoritarianism and coercion. In fact, certain shapes of social institutions can be established in such a way that manages to maintain a capitalist productive system in an environment of tiny respect for property rights. For it could be seen the appearance of mutualism between governments and corporations; for it could be seen authoritarian governments, disrespectful of human rights, developing unprecedented capitalist arrangements; for it could be seen the arisen of a state capitalism, or a corporate state, worldwide.


The “Libertarian” Capitalism


Explained capitalism as a fact, not as a political value or plan, we are ready now to analyze how should be an ideological libertarian defence of a virtuous capitalism; the sentence may sound incoherent in respect to what I have just said initially. I could say, in advance, that this defence is not a self-preservation tool inherent to the capitalist system itself, since what we face – as explained – is an economic regularity that will occur from the mere junction of some elements. What is meant here is establishing to what extent capitalism, as a productive system, from the normative point of view, could be defended, i.e., how should be capitalism’s ethical justification from a libertarian point of view.

The ethical justification of capitalism as the best system of mass production to suppress the needs of a population is essentially utilitarian. But this solely-utilitarian argument is large enough to embrace various different colours of capitalism, since capitalism is flexible and can assume varied forms. In a certain way, it can be said that, by the utilitarian approach, capitalism will vary according to the value that is attached to the different needs of a population. We will then see utilitarian defenders whether in a case for a capitalism that not necessarily corresponds to free market capitalism, whether in a case for a pure capitalism, in conditions of total freedom of interactions.

Justifying capitalism in a solely-utilitarian basis can, then, lead to undesirable social situations under a libertarian point of view. As a matter of fact, in this lies the fundamental error of those libertarians who have always defended capitalism – if we are to create a case for capitalism only in a utilitarian basis, i.e. , by reaffirming its economic excellence in mass production, we could be supporting some sorts of capitalism that are way distant from libertarian ethical values of non-aggression, freedom and respect to property rights.

Hence, labour division, capital accumulation and mass production can all be defended in ways that do not implicate in the defence of a virtuous capitalist system, that is, a free-capitalism. However, unless one incurs in seriously logic errors, a person who defends property rights can not be opposed to the others compounding elements nor to capitalism as a system; in fact, if one defends property, one defends, indirectly, the kind of capitalism that is conformed when this element is plainly disseminated in society: a cooperative, free-capitalism.

In order to create a stronger case for this claim, let us briefly analyze, at an individual level, how a man can possibly interact to another. Murray Rothbard points out the kinds of interaction, i.e., the types of conduct that a man could assume when facing another individual, yet, the types of interpersonal action. In this sense, an interpersonal action can be base on aggression or can be cooperative, or, in other words, can be disrespectful or respectful of property rights.

When there is an aggression, a man expropriates the other by the use of force. It is, to use an expression of game-theory, a zero-sum game, where there is always a looser. The reasons to initiate or restrain an aggressive action can be many, as well as its results. One can be killed or reduced into a condition of slavery, for example. But this kind of interpersonal action is not the one we intend to analyze. Aggressive action always leads to a state of non-cooperation, and the important thing is not to explain how society does not work, but rather, how it does work, and how we can improve cooperation.

Voluntary action happens when two individuals cooperate, voluntarily, whether by donations or exchanges. Between the actors involved, there is no loss. In donation, one gives it voluntarily, and one receives it voluntarily. In exchange, both individuals trade because they want better the thing that is possessed by the other, so that they both gain.

Guiding our thoughts from an individual interaction to a complex global society, we can glimpse that just as in the personal interaction we have two different approaches – aggression and cooperation – in a complex society actions can also be based upon expropriation or cooperation, that is, respect or disrespect to property rights. Then, as seem below, by crossing two axels, which represents the scale by which a society respect property rights and scale by which a society has achieved mass production, we can represent four basic types of capitalism:



As societies advance in their scales of mass production and respect for property rights, they are moving towards the way of a developed and cooperative kind of capitalism. As respect for property right decreases, we can still perceive a developed capitalism, but one of exploitive lines. As mass production decreases, an underdeveloped and exploitive capitalism emerges. Again, if property rights protections increases, maintaining low production, capitalism will be still economically underdeveloped, yet cooperative and non exploitive.

Then, as a libertarian, I do not argue for capitalism. What I argue for is that all conformations assumed by capitalism worldwide should be shifted from those exploitive types to the cooperative one. And this virtuous-cooperative-developed capitalism, the libertarian capitalism for instance, can only be achieved through total respect for property rights. Property right is the ultimate value libertarians should support in order for social cooperation to be brought up among peoples. Developed capitalism is only the natural outcome of property rights and economic development. It can be one of our arguments, but not our claim.