Against the word "Capitalism"

What if we called capitalism "savingism" instead? Mark Davis asked the question last year, and I strongly recommend his piece.

Davis's point is that capital is really just savings, or surplus. Civilization grows when people work to the point that they have more than they need. They then save the surplus, trade with it, or invest it in order to create even more surpluses with which to trade and consume. Work now, enjoy the fruits later. Davis also argues that what most people call capitalism today is its exact opposite: creditism. Under this system, the economy is supposed to grow by people borrowing and enjoying the fruits now, and working later to pay off the debts.

At the same time, banks lend far more money than they have on deposit (fractional reserve banking), and charge interest. In a true capitalist/savingist economy this would be considered fraud. But it drives the economy of creditism.

I'm tempted to go one step further than Davis. Let's junk the word "capitalism" altogether. "Liberal" once meant an individualist who favored small government; now it means one who favors large government. "Conservative" once meant preservation of traditional social norms; now it means militarism. And "capitalism" once meant producing greater wealth through savings, yet now it means producing and consuming by borrowing.

The words "liberal" and "conservative" are now virtually useless beyond a religious context. "Capitalism," however, is worse than useless. People who debate it often have exactly opposite definitions.

We should have greater clarity if we instead changed the terms of the debate to "savingism vs. creditism."

Creditists believe that forcing the people to pay for government debt, and to incur debts themselves for everything from homes to college to cars, is a dandy way of keeping an economy and a nation humming. Whether it's called progressivism or Wall Street Republicanism, we have seen the results of this ideology.

Savingists, however, prefer freedom from debt over excessive levels of consumption. A result of this, of course, would be less environmental destruction, as savingists are reluctant to consume more than what they need. They won't buy houses or cars they can't pay for. They would rather live in crowded houses and cooperate with neighbors until they have saved enough to better their condition.

If this model, this lifestyle, appeals to those on the left, then they really should learn more about fractional reserve banking and the Federal Reserve. The same institutions that drive consumer debt are the same that drive government debt. And the beneficiaries of government over-spending - Big Government - are definitely not "the people."