It is conventional to refer to the great tycoons of our own and earlier times as capitalists.  The term has a complicated history, heavily influenced by Marxist diatribes against the accumulation of wealth and the influence of those who possess it.  Today, though capitalism is defended stridently by neoconservatives, the first generation of neocons found the word hard to stomach.  Irving Kristol, aping E.M. Forster, could only give it two cheers,

and when my colleagues at The Rockford Institute wanted to use the word in an annual report, Richard Neuhaus was at first rather disturbed.

Like most words of mystical power (faith, democracy, social justice), capitalism comes to us redolent with associations and attitudes.  To make any sense of what it means, we have to begin on the simplest level by distinguishing at least three separate notions: 1) capital, 2) the economic system that is typified by owners of capital and which is misleadingly known as capitalism, and 3) the ideology of Capitalism.

Capital is simply a fancy word used to describe the stock a man has to sell and the necessary means for setting up and maintaining his enterprise.  Let us imagine a truck gardener, who takes his vegetables to a farmer’s market.  His capital consists of such things as the vegetables he has to sell, the pickup truck he uses to take them to market, his tractor and other farm implements, the 10 acres he farms, etc.  The time comes when he wishes to expand his business by buying another ten acres, but he does not have the cash, either for the land or for the additional seed and implements.  The widow next door gives him $100,000 in return for a fourth of the business and a fourth of the profits.  She is now part-owner, though she does no work.

The new field and expanding operations, however, require two illegal Mexicans to work.  Where previously the farmer had done everything himself, he now has employees.  In other societies he might have bought the employees, who would be known as slaves.  The situation of the two is not so different.  Slaves in many societies  had a good deal of free time and independence, while the Mexicans have no more income and a good deal more insecurity.

In any event, capital is universal in all but the most primitive societies, and some form of “capitalism”, that is, ownership of the means of the production and control of laborers, is almost as universal. The Romans were great capitalists in this slightly erroneous sense of the word, though Roman social life and ideology was not Capitalist, that is, Romans liked to think of themselves either as patriotic gentlemen or farmers, much as an 18th century English capitalist liked to become a country gentleman as soon as he could afford it.

Capitalism with a capital C, however, is the system and ideology that grew up with liberalism, and it emphasizes the unrestricted rights of capitalists, whose activities  more or less define the society, as, for example, fighting noblemen defined parts of Medieval Europe.  Let me quote from my students’ book on socialism:

Liberals usually (though not always) support capitalism, but liberalism and capitalism must be distinguished.  Capitalism, although it is often confused with liberal theories of the free market, is actually an economic system that emphasizes capital, that is, the money invested into a company that pays wages to its employees.  In principle, capitalism is incompatible with socialism, because capitalism presupposes private property and laws protecting property, while socialists traditionally have advocated public ownership of the great economic interests.  In reality, however, capitalism and socialism have tended to merge.   In countries that have nationalized large businesses, capitalist managers were often hired to run the corporations, while in countries that are officially capitalistic, large corporations cooperate closely with government agencies and often secure important benefits to themselves and to the detriment of smaller rivals.  Adam Smith, the first theorist of capitalism, noted that rival  businessmen would rather combine to control, by fixing wages and prices, than compete in the marketplace.  In the 20th century this has usually meant a close collaboration of business and government, in capitalist as much as in socialist countries.

A conservative, then, may be wildly enthusiastic about free enterprise while—for the very reason that he favors free enterprise–entertaining grave suspicions about capitalism, either as a practice or as a theory.