Corporatism Is NOT Capitalism

|Peter Boettke|
Several leading classical liberal and libertarian thinkers have over the past few years suggested abandoning the name capitalism because of the connotation that it implies caputre by the corporate elite.  I fully understand the point being made, and I also agree that classical liberals and libertarians should represent themselves as true progressives and not as conservatives in the least.  Hayek's "Why I am Not a Conservative" is as important today, if not more so, then it was in 1960.  And the epistemological point upon which that essay is built --- found in Hayek's "Errors of Constructivism" --- explains both the balance that must be struck between intellectual radicalism and the epistemic constraints we face as social thinkers.
But I think there is an alternative intellectual strategy that should be pursued as well, and that is clarifying the meaning of the term capitalism, exploring its logic, and sorting out the historical record.   Columbia University's Center for Capitalism and Society is more or less accepting that challenge.  And over at Project Syndicate, Edmund Phelps and Saifedean Ammous have posted an article, "Blaming Capitalism for Corporatism".  And they correctly argue that corporatism chokes off the dynamism of markets in the effort to protect various entities from the forces of competition, and they also correctly argue that corporatism permeates western democratic welfare states, including the USA. Furthermore, they point out that the dysfunctions of corporatism are evident throughout the global economy.  As they conclude:

The legitimacy of corporatism is eroding along with the fiscal health of governments that have relied on it. If politicians cannot repeal corporatism, it will bury itself in debt and default, and a capitalist system could re-emerge from the discredited corporatist rubble. Then “capitalism” would again carry its true meaning, rather than the one attributed to it by corporatists seeking to hide behind it and socialists wanting to vilify it.

 
HT: Claire Morgan