When I Say Capitalism

I am switching gears to wax philosophical today.

Or political, depending on your view. But politics is philosophy in action, so look at it however you prefer.

Don’t worry; I’ll keep it short.

I doubt it would surprise you to learn that the editor of an investing service called The Capital List considers himself, well…a capitalist.

Guilty as charged.

I’d go so far as to say I’m a fierce defender of capitalism. Though, I think it’s important to clarify what I defend.

As Socrates said, “The beginning of wisdom is the proper definition of terms.” So, allow me a moment to define capitalism as I see it.

To some, capitalism may seem like a religion. A set of dogmatic beliefs you simply don’t question.

It’s not. It’s an acknowledgment of how things work in a free society.

When society values (and protects) individual property rights, capitalism results.

It’s an emergent property of personal liberty.

When I say capitalism, I mean free markets—unfettered choice and competition that precludes only violence and fraud. Your capital is your property, and so is the income from that capital. You and your skills are your capital, and no one can lay a claim on you.

I don’t mean corrupted capitalism – like laws that favor corporate property over individual property rights. I don’t mean legislation in the name of the “Greater Good.”

Capitalism, at least when I use it, doesn’t mean government/corporate collusion — i.e., corporatism, Mussolini’s preferred term for fascism.

It’s free enterprise and free association, plain and simple.

When companies compete for capital free from government manipulation, society wins.

When a company’s capital outperforms its competition, shareholders win. 

This capitalist is on the hunt for the best competitors.

How companies manage their capital matters. It’s the number one factor determining a stock’s long-term price.

The Capital List peels through the regulated accounting noise to give you a clear picture of who’s winning and losing the capital performance game.

We might even make society better in the process.

Think Free. Be Free.

Don Yocham, CFA

Managing Editor of The Capital List