“No one should attempt to describe a utopia unless he’s recently reread, for example, the works of Shakespeare, Tolstoy, Jane Austen, Rabelais and Dostoevsky to remind himself of how different people are.”—Robert Nozick

The term “capitalism” has multiple meanings. Unfortunately, very few people make it sufficiently clear which one they mean before supporting or criticizing capitalism.

The term “capitalism” has both descriptive and normative senses:

  1. Descriptive sense: A society or economy characterized by for-profit enterprise, markets, a price system, trade and so on. (Imagine Wall Street and stock market tickers.)
  2. Normative sense: The proposition that it is morally permissible for individuals to own the means of production.

How we use the term “capitalism” is not merely a semantic quibble; it bears significant consequences for political philosophy. Let us, as an example, take right-libertarianism in its standard philosophical formulation, and label the descriptive usage of capitalism “d-capitalism” and the normative usage “n-capitalism.”

Although most people think libertarians are committed to defending d-capitalism, it is demonstrably untrue that libertarianism requires, or otherwise entails, d-capitalism. It is therefore false that a libertarian is someone who must, in virtue of being a libertarian, endorse d-capitalism. Rather, libertarianism only entails n-capitalism.

What this implies (and it may be surprising) is that libertarianism is compatible with socialism

Let us unpack this a little bit:

Libertarianism contains the view (i.e., it analytically entails, by definition) that it is permissible for individuals to own the means of production (i.e., n-capitalism). It does not entail the proposition that it is obligatory for individuals to own the means of production, nor from this does it follow that according to libertarianism, private ownership of the means of production is, say, desirable or good. All n-capitalism means, more concretely, is that it is permissible for an individual to own a bakery.

Indeed, libertarianism does not require that society resemble or be organized according to some market order; it does not obligate, approve of, find praiseworthy, etc. the world described by d-capitalism. In fact, even d-capitalism’s juxtaposition—e.g., a world without profit-seeking, or a world in which all firms are owned by its workers, or one where economic life is centrally planned, etc.—is fully compatible with libertarianism. Libertarianism simply does not decide between the two.

If this is right, then most critics of libertarianism do not actually disagree with libertarianism to the extent they believe they do, for insofar as one’s disagreements with libertarianism are reducible to objections against d-capitalism, one is not disagreeing with libertarianism proper. But more interestingly, this also means that many (if not most) libertarians have misunderstood the view to which they subscribe.

This raises the obvious question: “Why, then, do so many libertarians defend free market capitalism with such vigour? How can so many be systematically mistaken about their own views?” I think this question has an important metaphilosophical answer: one philosophers—such as the great liberal-egalitarian political philosopher, John Rawls—have explored in their discussions of reflective equilibrium. But for the sake of brevity, it is a question to be explored another time.

—Chris Nguyen