What Defines Capitalism?

We are pleased to publish this thoughtful and foundational article by a distinguished member of our Ethical Markets Advisory Board, Shann Turnbull, Sydney, Australia, Hazel Henderson, Editor

What is Capitalism?

Many people consider that capitalism is defined by the existence of markets. But markets exist in primitive, feudal, fascist and socialist societies. Capitalism is better described and identified by the existence of private negotiable property rights. Such rights are not widely available in the type of market economies referred to above.
Ironically, the biggest problem with capitalism is its ability to eliminate, frustrate and/or distort markets. This problem is created by the rules for owning property including money. Rules made by society can be changed by society and so there exists the possibility of designing new rules to mitigate the ability of capitalism to paralyze the “invisible hand” of markets. I outline below a more equitable and efficient set of ownership rules. The rules were presented in my book Democratising the wealth of nations (Turnbull 1975). Details have been updated with “ecological” money added in Turnbull (2011b).
The current widely accepted system of property rights denies efficiency and equity because there are no time limits on the ownership of property except for all intellectual property. Property ownership bestows managerial, economic, social and political powers that undermine democracy. Perpetual ownership rights to realty, corporations and money provide excessive powers and deny establishing localized control to nurture the environment, democracy and progress through continuous change.

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