What is capitalism and is it a good thing? The OED gives the following definition under “capitalism”: “an economic and political system in which a country’s trade and industry are controlled by private owners for profit, rather than by the state” (the word “capital” comes from a Middle English word for “head” or “top”). Two features of this definition may be noted: trade and industry under capitalism are owned and controlled by private individuals and not the state, and they are run for profit and not (say) for charity or amusement. The reference to private owners is indeterminate as to who those owners might be, so long as they are not “the state”, which is itself quite vague. The owners could be company executives, or they could be workers, or they could be shareholders, or they could be the royal family, or the folks next door. The essential point is that they are not the state. The reference to profit is an additional condition not contained in the first and logically independent of it: an industry or corporation could be privately owned and not run for profit, or it could be run for profit and not privately owned. So we need to consider economic and political systems that have one of these features but not the other: would these count as capitalist or are both features necessary (as well as sufficient)? The OED appears to think they would not be, since it mentions both features, proposing a conjunctive definition. Then an industry run for charity and owned by workers would not count as capitalist, even though it is not publicly owned. Likewise, an industry run for profit and owned by the state would not count as capitalist either. In order to qualify as capitalist, an organization needs to be owned in a certain way and be motivated in a certain way—by non-state actors and in order to make a profit. Thus nationalized industries are not capitalist and charitable foundations are not either, by virtue of failing to satisfy one of the stipulated conditions. That sounds reasonable enough by way of definition.
But where does this leave the system known as “state capitalism”? Presumably, the phrase must be convicted of outright contradiction, since it violates the private ownership condition. The word “state” here might be interpreted to mean an autonomous sovereign state or a regional part of a federation such as the United States of America. If a profit-making organization is owned by a state in either sense, it is not counted as a capitalist enterprise. But that sounds wrong: surely such an organization should count as capitalist. For one thing, it is run for profit; for another, such organizations can be in competition with each other in just the way intra-state organizations can be. Thus two companies existing in different states (sovereign or federal) might compete for profits in just the way two companies operating in the same state may. The important point is that these state-run companies would not be owned or controlled by some further collective or individual—as it might be, a hereditary king or a democratically elected world government. Thus, for example, the steel industry in China can compete with the steel industry in America: these are separate organizations run to out-compete the other for profit. Structurally and logically, there is no difference between this type of set-up and companies operating within a given state. That is why the phrase “state capitalism” does not strike as immediately oxymoronic. So the definition of capitalism given by the OED is inadequate—it ignores state capitalism. What would not count as capitalist (following the spirit of that definition) is an industry owned and controlled by the entire world—“world capitalism.” For then there would be no competition for profits with separately owned organizations—unless, that is, we consider possible competition with organizations from other planets. That would introduce the structure needed to create a capitalist system. The concept of competition among a plurality of companies is not mentioned by the dictionary definition, but it is crucial to the definition—it doesn’t matter whether the plurality consists of private individuals or states or even planets. Nor does it matter who the owners are: worker-owned businesses can be as capitalist as other forms of business, so long as the ownership doesn’t extend to everybody in the universe. We can already see from this point that capitalism is not by definition exploitative of workers; it all depends on how those workers are treated and what their role is. A company owned by shop-floor workers who pay their managers low wages relative to their own is not thereby anti-capitalist: it is merely one form that capitalism can take, properly understood. We should, therefore, amend the dictionary definition to read: “an economic and political system in which trade and industry are run for profit and are owned by an entity that exists in competition with other such entities.”
But even this definition isn’t quite right, or at least it misses an important conceptual point. Do we really want to say that a system of world government in which trade and industry are globally owned is not a form of capitalism? There would be the same factories, workers, bosses, banks, accountants, lawyers, and so on, despite the fact that ownership was collective. People would still go to work every day, just as they do now, earning their daily bread by selling their labor. The system would still be geared towards maximum productivity, with the same emphasis on profits (whole industries could still go extinct as technology advances). There would still be competition among different manufacturers to make a superior product. The ownership structure would make little difference to how things operate. So we might want to amend the definition to capture this common thread: we could say that a system is “capitalist*” if and only if it operates by competition among industries to produce things that generate profits. Call this condition CIPP (Competition among Industries to Produce and Profit): then capitalism* is that economic and political system that conforms to CIPP—whatever its ownership structure may be. Intuitively, it is that type of system in which people maximize productivity for profit. If we drop the asterisk for ease of pronunciation, we can say that capitalism in its broadest sense is the system that requires people to use their time (their lives) working to produce profitably. Industrial capitalism is the system that does this by means of machinery, plants, shifts, and paid labor. Ownership is irrelevant.
Marx found that the capitalism of his day exploited workers, and that was its chief evil. But that is not integral to capitalism as such—at least, it isn’t the exploitation of workers by owners (as opposed to the system itself). So is there no objection to forms of capitalism that don’t exploit workers in this way? Marx felt that capitalism was historically inevitable and inherently desirable, but that it should be prevented from allowing workers to be exploited by owners—hence the desirability of worker-owned businesses. And indeed the system has conspicuous merits, which is why it has spread almost everywhere. It may be that no conceivable economic system is better. But that doesn’t mean that it has no downside, no difficulties—it may yet have substantial negative impacts. And these may be remediable once they have been recognized, or at least mitigated. So what would a non-Marxian critique of capitalism look like? I think the answer is obvious: capitalism tends towards a type of hegemony of productivity and profit. Not that there is anything wrong with these things in themselves; the danger is that they come to assume too prominent a place in human life. Life comes to be shaped entirely around these activities and values with other things squeezed aside. The urge to be more productive and more profitable eats into time and temperament. The result is (or can be) distortion and alienation, discontent, and spiritual malaise. Human life becomes one-dimensional, driven, and desiccated. Simply put, we end up spending too much time and effort in producing and profiting. In this respect capitalism does not differ from other social systems: all tend towards a narrowing monism of purpose. Thus consider militarism and religiosity, as exemplified by Sparta and a medieval monastery. In both systems one value comes to dominate the rest, reducing human possibility. It is not easy to flourish humanly under unrestrained capitalism, even the “socialist” kind (collective ownership). Capitalism serves its purpose admirably (economic well being) but that isn’t all there is to life—there needs also to be leisure, art, contemplation, family, or whatever else you think belongs on the list of the Good. So the real flaw in capitalism (broadly understood) is that it tends to be all-consuming, not that it is intrinsically exploitative or unjust. It, therefore, needs to be restrained, moderated, and kept in its place. This is not out of the question, and historically is what has happened: shorter hours, more humane working conditions, automation, better wages, holidays. But there is still plenty of room for improvement—the beast has yet to be tamed. Not eliminated–but tamed, tinkered with, humanized. Enthusiasm for something is never incompatible with criticism of it. Recognizing weaknesses is consistent with asserting strengths.
Social systems tend to generate ideologies, not vice versa (a Marxian theme). These may include theories of history, of human nature, of divine will. Capitalism is no exception (compare monarchy, feudalism, theocracy, militarism). The ideology associated with capitalism posits a theory of human motivation, a theory of value, and a vision of human progress. We should be alert for distortions and mistaken emphases in the capitalist ideology, as in all ideologies. This doesn’t mean that it is intellectually or morally bankrupt, just that it may be unduly hegemonic and narrow-minded. Capitalism generates an ideology to justify its hegemony, just like other de facto social systems. Critical reflection on it serves to counter its possible defects and limitations while accepting its undeniable strengths.
 It is a consequence of this definition that monopoly and capitalism are logically incompatible. When companies have monopolies, whether by law or force, they are not part of a capitalist system—capitalism requires the “free market”.
 It is hard for people at this point in history to discuss the merits and demerits of capitalism without descending into ideological rigidity, but it is the job of the philosopher to consider the matter clearly and impartially without regard for dogma and special pleading. Inevitably this can result in his pleasing no one.
The author of over two dozen books including The Character of Mind, Consciousness and Its Objects, and The Making of a Philosopher, he has written for the London Review of Books, The New Republic, Wall Street Journal, The New York Review of Books, and other publications. His latest book Philosophical Provocations: 55 Short Essays was recently released by MIT Press.