Is it time to abandon the word capitalism? Not so fast


“Why do you always talk about capitalism and not about the market economy? The mere mention of the word liditalism puts so many people off.”

That’s a critical question I’ve often been asked. First of all: Yes, it is true.

“Capitalism” has a bad connotation to many people, probably around the world. This is certainly the case in the 14 countries where I commissioned Ipsos MORI to conduct a survey on attitudes towards capitalism. The survey showed that support for capitalism increases significantly everywhere if one just avoids mentioning the irritating word itself and rephrases one’s questions to describe what capitalism means. That was no surprise; it was exactly what i expected. But what is much more interesting is that in nine of the 14 countries surveyed, there is no pro-capitalism majority, even if the word is not used in the questions. In most countries, anti-capitalist views found more support than pro-capitalist views, even if we avoided using the word itself.

But wouldn’t it be wiser to omit the word when it irritates so many people? The economist I respect, Deirdre McCloskey, suggested years ago that the term “innovism” could be used as an alternative because it better describes what “capitalism” actually means. It didn’t catch on. It is difficult, almost impossible, to introduce a completely new term into the public debate. After all, 99.99 percent of people don’t even know what such a new word means.

In some countries one prefers to speak of a “market economy”. In Germany one often hears of a “social market economy”. However, the meaning of the term has evolved since it was originally popularized by Ludwig Erhard, then Germany’s Economics Minister (1949-1963). For Erhard, “social market economy” did not mean – as is interpreted today – a third way between socialism and capitalism. The freer the economy, Erhard was convinced, the more social it was. At the end of the 1940s, the formula of the “social market economy” served primarily to make the return to the capitalist economic system palatable to the Germans, which was by no means a matter of course at the time. Because the National Socialists had used a strong anti-capitalist rhetoric, and “social” aspects were already being strongly emphasized in Germany at that time.

Contrary to its modern meaning, Erhard viewed the market economy as such as “social” – notwithstanding later redistribution efforts, of which he was skeptical. The more successful economic policy is, the more social policy in the traditional sense becomes superfluous.

However, the term “social market economy” has long since been usurped by its opponents. Today (apparently) everyone in Germany is in favor of the “social market economy”. Even representatives of the anti-capitalist left-wing party Die Linke are committed to it. That’s why I prefer to speak of capitalism, even if perhaps a term like “entrepreneurial economics” would better describe what I mean by “capitalism”.

If a term has negative connotations, there is no point in focusing solely on changing the word. On the other hand. Anyone who avoids a word for fear of criticism only demonstrates their inner insecurity and weakness. And there is not the slightest reason to feel insecure or weak. Before capitalism emerged, most of the world’s people lived in extreme poverty—90 percent in 1820. Today it has fallen below 10 percent. The remarkable thing is that the decline in poverty has accelerated more rapidly in recent decades than in any previous period in human history. In 1981 the rate was still 42.7 percent; by 2000 it had fallen to 27.8 percent and was below 10 percent in 2021. With such a track record, no supporter of capitalism should feel the need to be ashamed or to hide.

Too often I’ve heard people “defend” capitalism, arguing, “Yes, capitalism is far from ideal and has so many disadvantages, but the bottom line is that it’s still better than other systems.”

Why so defensive?

I’ve had good experiences being aggressive as a defender of capitalism. I speak on this topic at events around the world and often wear my I love Capitalism t-shirt. Even if there are many young people in the audience who are more anti-capitalist, they generally respect that there is someone who clearly states his opinion and doesn’t mince his words. And if the term provokes some – so much the better: Because then the discussion about the advantages of capitalism can start immediately!


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