What Does Capitalism Mean?


America is a country divided—and it’s only getting worse. We’re split across ideology, politics, and faith. We hurl arguments and ad hominems at those across the aisle, grimacing at the result. It seems like the country is heading toward greater inequality and debt with every hour the debate drones on. And we must find it entertaining, since Hollywood sees fit to play (and I see fit to watch) the drama on shows like The West Wing, House of Cards, or Scandal, all of which capitalize on our nation’s political stand-off.

But, let’s not forget that real lives are at stake. Ideas have consequences, and the policies formed from such ideas affect real people. In the midst of the divide, we must hear the other side of the story, be willing to change our minds, and find ways to reach compromises. Paradigms are, to some degree, dependent on peoples particular points of view, and that does not negate the validity of our opponent’s position.

Words like “capitalism” and terms like “the middle class” are commonly used when discussing what’s happening in our country and our economics. “Middle class struggles are capitalism’s fault,” some cry. Others beg to differ: let capitalism have free reign and the middle class will benefit. The meanings of these words could not be muddier.

As we argue and advocate, we do well to define our terms clearly and understand what the same terms mean when used by people on the other side of the aisle. By taking a walk in someone else’s shoes, maybe we can get past the rhetoric and on toward better solutions to grapple with rising inequality and economic uncertainty.

And so I ask, what does capitalism mean anyway?

The strict definition of capitalism is simply an economic system, a way of ordering production and distribution around free trade without government intervention. But the word means so much more than that.

Capitalism spells corruption for some and freedom for others. It creates wealth in some minds and establishes poverty in others. Capitalism is the greatest economic system in townhalls in America and the greatest oppressor to those across the street.

In Nashville this year, a hotel was garnering wages from its staff by not paying them minimum wage or for overtime. Some workers were undocumented immigrants, but some were full citizens. All worked hard and were exploited under illegal conditions—until the workers banded together to sue the hotel.

This story demonstrates the capacity within the capitalist system for some to oppress others. A business can choose to comply with ethical standards, providing a safe working environment and paying a living wage. Or the business can cut corners, risking backlash. When a business cuts corners to earn a profit, the abstract ideal of the free market crumbles into the non-ideal reality of human selfishness.

On the other hand, hotels are a good product of capitalism: they participate in the market and create wealth. Hotels provide low-skilled jobs, decreasing the level of unemployment in the area. Not only that, but hotels that stick to ethical managing practices add to the growth of the area. These businesses also help cleaning professionals move up the ladder into management—an opportunity for economic mobility not otherwise offered.

Capitalism is the defining system of our era. Many economists will say that the United States is in a transition from the service economy to the knowledge-based economy. But our understandings of capitalism are skewed, not just in the broad sense but also in the particulars.

The middle class is one example. “The middle class” may be one of the most overused phrases in American politics. On both sides of the aisle, we want to create middle-class jobs, employing all of those middle-class workers hurt by the 2008 recession. We want to bolster, defend, and encourage the middle class to thrive and succeed, for after all, our nation’s prosperity depends greatly on their work.

For many, the middle class is a hardworking, all-American bunch. Using the phrase “the middle class” immediately causes those listening to associate the imagined group of people with baseball, the Midwest, and Lee Greenwood’s “I’m Proud to Be an American.” It’s the group of people that sits nicely in the middle spectrum of the income scale.

But you need only watch this viral video to destroy this romantic ideal of the middle class. In this short synopsis, the filmmaker explains the wealth inequality in the United States by walking through compelling infographics. The conclusion in the film is that the middle class is not healthy, wealthy, and wise. According to this video, the middle class is relatively broke, especially in comparison to the richest Americans, living in squalor.

But as we consider the difficulty some in the middle class are facing, let’s not forget that the United States is still among the richest and most successful countries in the world. The free market tool is still a wealth creator, empowering the middle class to achieve a greater quality of life. The middle class consists of our teachers, small business owners, and other service workers.

And so the definitions of these words are not straightforward. The words are divisive, and the context in which these words are used reveals much about the speaker. But if we’re going to reach a middle ground, a place where change can happen, we must seek to understand each other. And accept that both definitions could be correct.


Laura Herrod is the associate editor at In Earnest. As our resident community theory nerd, Laura will discuss all things related to changing the world, local communities, relationships, and loving people.