What is capitalism?

Capital is money or resources used for production rather than consumption.

When a farmer pauses his work to create a tool to make future labor easier, that tool is a form of capital. Indeed…

Tools were the only form of capital before the advent of money. And tool-creation is still the main use for monetary capital today. In other words…

Capitalism is TOOLISM.

  • We delay gratification (forgo immediate consumption) in order to save money to invest in tools (shovels, drill presses, tractors, assembly lines, robots, computers, etc.)
  • The new tools allow for expanded or more efficient production
  • Increased production allows for more consumption through increased profits, higher wages, and a decreased cost of living

If you have a savings account or any kind of investments, then you’re a capitalist. It’s really that simple — capitalism is a savings account or investment portfolio that’s used to fund tool creation.

Jim Babka

About the Author

Jim Babka

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Jim Babka is co-founder of the Zero Aggression Project and President of DownsizeDC.org, Inc. He’s an author and former talk show host.
Previously, he was the President of RealCampaignReform.org, Inc., defending free press rights all the way to the Supreme Court. He and Susie are the proud, home-schooling parents of three teenagers. He enjoys theology, UFC, target practice, and Tai Chi.

Perry Willis

About the Author

Perry Willis

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Perry Willis is the co-founder of the Zero Aggression Project and Downsize DC. He was the National Director of the Libertarian National Committee on two occasions, and ran two Libertarian Party presidential campaigns. He has an extensive background in marketing and fundraising, and has ghost written direct mail appeals for numerous luminaries, including Karl Hess, Ron Paul, Charlton Heston and Harry Browne.

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Show Comments 6


  1. This is a bit of a stretch. None of the dozen or so competing definitions I found via an Internet search engine made this link between capital and capitalism. It’s a really nice idea, but one that is not shared by enough people to ever make it into common usage. American English is sloppy and imprecise, and people who attempt to communicate are very often lazy or somewhat illiterate, and I don’t see such people making this fine distinction.

    Wikipedia says “Capitalism is an economic system and ideology based upon private ownership of the means of production and their operation for profit. Characteristics central to capitalism include private property, capital accumulation, wage labor, voluntary exchange, a price system and competitive markets.” Now, you could go and edit Wikipedia, but I doubt your edits would survive peer review. If you decide to try this, I will root for you!

    1. Common usage of the word capitalism has evolved, just as has happened with the word anarchy.

      In the beginning, capitalism was a word primarily used by socialists. But even then it had as its root in the word capital. Presumably, then, capitalism is primarily about the use of capital. Left-statists try to make it mean more than that, usually with pejorative intent, and have largely won the linguistic battle. Indeed, I suspect that the definition provided by Wikipedia probably fits common usage for only a minority of the populace, while for the Left capitalism is the keyword for everything they hate. Stated simply the leftist definition would be something like this, “Capitalism is an economic system based on greed that favors the wealthy against the poor.” Since the Left controls both the media and our schools their pejorative definition is currently THE definition, no matter what I or Wikipedia says.

      It seems to me that we can either accept defeat or fight back. Accepting defeat would probably mean abandoning the word altogether (as many libertarian writers have suggested). But the Left will continue to use the word and apply it to us, whether we use the word or not. Given that reality, I think it makes sense to fight for the word (in contrast to the word anarchy, which I think is NOT worth fighting to save). I think we will have the most success in this linguistic contest if we try to center our definition on the root of the word — capital. The other approach, which has been in the ascendency in rightist and libertarian circles for many decades, is to equate the term with all aspects of the market. That approach is more difficult I think, despite its apparent success in the Wikipedia article. Said differently…

      I think we can better retrieve the word from the Left by simplifying its meaning than by expanding it to be a synonym for the entire market process. This simplification allows us to focus on the root of the word and on the fact that most people have capital and are therefore capitalists. This is very useful in one-on-one conversations, which is where linguistic evolution starts.

      1. This term “common usage” is a pet peeve of mine. It literally translates to “slang” and tends to be a symptom of illiteracy. The crime here is that it’s what they’re taught and the only reference material for them to source new information from is printed in “common usage” (think dictionaries and how folks think they settle arguments by actually defining the words). Illiteracy is ingrained into, homogenized into our society/culture. Orwell wrote about it more than once.

  2. If Capitalism is not going to be used to define individual property rights
    Then what word is to be used define individual property rights?

    Toolism appears to have no delineation of ownership.

    1. Hi Tom. If someone creates a tool they are normally assumed to own it. Likewise if they buy one. I also assume that a left-statist owns the savings and investment accounts that make him/her a capitalist. I think that’s what we should tell them. They are capitalists because they OWN a savings or investment account.

  3. Soldiers caught out of uniform are summarily shot.
    Wear the colors and have the brass to defend Capitalism.

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