What is capitalism? Toward a working definition

Abstract

Since the 2007–2008 financial crisis, capitalism has returned as a major concept within the social sciences. While this has led to important interventions, there is yet to be a widely accepted definition of the concept. Such a definition matters, both for assessing the merits of recent scholarship but also because attempts at thinking ‘beyond capitalism’ require an understanding of what one is trying to overcome. For it to be of use, we need a definition of capitalism that serves to encompass its varieties yet circumscribed enough to remain meaningful. In this article, we review existing definitions of capitalism and offer our own approach, in the form of a Weberian ideal-typical definition of capitalism. Our approach is to view capitalism as being based on an economic logic consisting of seven elements: (1) free enterprise and the competitive market, (2) the pursuit of profit and its private appropriation, (3) wage labor and the production of commodities, (4) property rights, (5) the financial infrastructure of money and investment that makes possible credit and debt, (6) a highly variable degree of state regulation, and (7) a propensity for growth as the productive re-investment of profit. The economic logic of capitalism interacts with other institutional orders of society to produce the overall shape of capitalism. We argue that this approach can meaningfully help researchers consider the extent to which a given society is capitalist, based on how closely it approximates the ideal-typical definition we have provided.