Introduction

Capitalism, everyone talks about it, sometimes unkindly. But what is it really? The victorsince the end of the USSR some 25 years ago, it is said to have been born during the Industrial Revolution and has theoretical roots stemming from the Enlightenment. Since this time, virulent critics have lived with it, still unable to deter and defeat it. But those critics' powerlessness against capitalism could be the result of the unappealing proposed solution, a State-controlled economy, rather than the supposed wrongness of their criticisms. What is in fact capitalism? It looks like a system with an apparent dual face: a good one based on freedom, progress and efficiency, and a bad one based on abuse of power, environmental destruction, society annihilation, perhaps even the end of true humanity, since only driven by greed. The hypothesis here, still to be confirmed, is that this capitalist system we live in hides two different concepts instead of one. When looking at the pure theory a disconnect appears between the concepts of market and capitalism, leading to a new idea of capitalism. "Market against capitalism" is the master idea and observation emerging from both a conceptual and historical analysis of capitalism. Hence a clear and precise understanding of these two notions is needed, as well as an awareness of their interaction and myths before a clear separation is possible. From this separation, a liberal alternative to capitalism emerges, a market solution named Equinomy.

 

Resulting from a detailed research on the definition and characteristics of capitalism, the book summarized here is not a blunt critique of capitalism. Instead, when capitalism is rethought and extracted from the idea of market, it reveals itself as a flawed but potentially perfectible system once balanced and not undermined by a dominant power and interest. The enemy is named power, because it goes against freedom for everyone. Capital is not the problem, it only hides power, power of a minority over a majority. With this idea of power, the understanding of capitalism - and of all the economy - disrupts older criticisms and brings a new horizon, a balance of powers in a free market . The market transforms into a normal and natural solution to capitalism, and is no longer considered as its ally and savior.

 

Since capitalism won against communism, with the crucial help of the market (economic symbol of freedom, progress, competition), what happens when it is left alone, without that market? A new liberal alternative appears, a new Equilibrium Economy (Equinomy) where powers are balanced and free competition and free cooperation are promoted. The summary here presents Equinomy's conceptual birth and argues the necessity of its existence based on a simple fact: capitalism is not the result of free market and it can no longer be confused with the market economy. It is time for everyone to open their eyes and see what capitalism clearly is: a power. And it is time to fight against it, for our freedom.

 

Reasoning 

The search for a precise definition of capitalism is at the same time a search for a definition of the market, even if both terms were used interchangeably for a large part of the 20th century. In this dual search in which competition is a critical concept, freedom and power are opponents. Within these two ends, the idea of using capitalism against the market gains a strong appeal, explaining the real economic world and illuminating the theory. Following the idea of competition, new definitions arise, helped by the recent analysis of corporate governance and neoliberalism. Competition is the feature of capitalism that has disappeared over the last two hundred years, resulting in a concept of capitalism without competition, without market. Four important and different definitions of capitalism illustrate this major evolution, the exit of competition from the concept of capitalism. Marx, in the middle of the 19th century, considered competition as a capitalist law, while Weber at the end of the same century sees it as just a characteristic, not a necessity. A first opposition between competition and capitalism is acknowledged, and even more, accepted by Schumpeter during the 1940's when imperfect competition is recognized to be created by capitalist companies on the market to create rents. Finally, terminating the exit of competition from capitalism, Braudel argues in the 1980's in favor of a distinction between market and capitalism based on history and geography.

 

Max Weber, at the turn of the 20th century, is one of the first thinkers to report the capitalist tendencies toward bureaucracy against the idea of a competitive market. Competition is the means which can be used to split capitalism and market economy. With this distinction, neoliberalism, as a theory once thought to be on the capitalist side, reveals itself as a theory against capitalism and in favor of the free market. Neoliberalism was born in the 1930's in the context of fascism and Nazism. It was a solution for the evident failure of Manchesterian liberalism or "laissez-faire" liberalism, while refusing to accept a State-controlled economyas was the case in Europe at that time witheither communism, fascism or nazism. Neoliberalism, even if in the 1980’s it became a theoretical means for capitalism, is at first and in its heart against capitalism. Hayek and Friedman, two of the most prominent pro-capitalist economists of the 20th century, are in fact more in favor of the competitive free market than in favor of the capitalist power. Their most famous books, Capitalism and Freedom for Friedman and The Road to Serfdom for Hayek, clearly indicate that power is their enemy and that freedom is their solution. But capitalism is not freedom, it just pretends to be.

 

On the opposite side of capitalism, the market is not just this old idea of a perfect competitive market stemming from the neoclassical theory in the late 19th century , but an equilibrium of powers and prices, balancing powers thanks to the freedom, cooperation, competition, progress that exist in a realistic free market. The market is not aimed towards a maximum of competition, an utopian perfection, but towards a practical equilibrium created between competition and cooperation, where freedom is optimal, economy is efficient and progress thrives. The market economy is not anymore theoretically aimed at a maximum of competition but at an optimum of freedom (limitation of powers) through competition and cooperation. In this new rationale, the current design of the financial markets is wrong. It leads to an excessive volatility and a weakening of the real economy because of the over-competition existing in this very special market with an over-competition destabilizing production and consumption because of prices which become too volatile. Actually, originally, an excess of competition is as bad for the market as is an excess of cooperation (with monopolies, oligopolies, etc.). Equilibrium, or balance, is the objective.

 

New strategies to control capitalism appeared recently,  such as Corporate Social Responsibility, as part of this new understanding of capitalism as power. These strategies aim to control the capitalist tendencies but also to drive capitalist companies towards not only profit but other interests which should be viewed as equally important . Unknowingly, they reveal this new liberal horizon, a new equilibrium made of competition and cooperation andsolving the capitalist abuse of powers. Hence, market economy is defined as an economy aiming at freedom, with free competition and free cooperation, and not at all perfect (impossible) competition. This market economy is proactively guaranteed by the State. Just as the original neoliberalism willing to save liberalism in the 1930's from capitalism entitled the State to intervene and promote competition, the State supervises the market to help freedom be at its optimum.

 

Consequently, this book is a journey to understand the real-world economy from an original framework of power, and not efficacy or property. In relation with power, appears the idea of freedom and independence, rejecting the idea of coercion in a liberal economy in a true free market. Economy as a space of freedom for individuals is not a new idea, since it was already exposed as such in the 18th century, to push away the political power from economy and let prices, transactions and production be free[1]. The free market was a tool for the liberation of individuals before capitalism became associated with it. Capitalism, a word used quite late, not until the turn of the 20th century, by Werner Sombart and Max Weber, arises as a dominant system post-18th century after the market ideas and arguments have paved the way for its supremacy. The eruption of power in economic analysis, after its disappearance from the neoclassical theory (where perfection annihilates market power) but its nonstop presence in reality, transforms the idea of this economic system we're living in.

 

The come-back of power at the heart of economics (it was always at the heart of economy) allows for an answer to the pessimistic statement from Gauchet on modern liberalism: "The madness of power we don't have to fear anymore, but instead the ravages of powerlessness"[2]. The market economy was a theory filled with the absence of power, an utopia both unrealistic and unrealizable. Gauchet's quotation was highly understandable since without power, all onecould do in theory was watch, and this was the goal. Now that power is exposed, this utopia can be left behind, and power can reclaim its spot where it belongs, right at the center of economics. A balance of powers, an equilibrium much like in politics, is the new objective, giving back means of action to individuals in their pursuit of happiness via economic freedom.

 

Two confused concepts, capitalism and market economy, are separated, unveiling a new and different understanding of the economy, each one with a unique leading feature: freedom for the market economy or power for capitalism. Competition seems like a fruitful feature to follow in particular since it belonged historically to capitalism before evolving to finally be considered as outside of it and then opposed to it. Studying the evolution of competition in economics reveals a progressive historic separation between capitalism, characterized by power, and market economy, symbolized by freedom. This separation must become complete, opening the way for new definitions of capitalism and of market economy, reflecting economy better and reconciling economics and economy. After the supremacy of capitalism, hidden behind the ideas and positives of the market economy, it is time to start a new supremacy, a supremacy of liberty, of the post-capitalist market economy. Named Equinomy and ignoring the sterile and outdated opposition between communism and capitalism since it was rather a state-controlled economy against a market-driven economy, this complete market economy goes back to the origin of the market, to independence, via free competition and free cooperation. Practically, a balance of power in companies is promoted, a change in corporate governance with board members representing customers, employees and shareholders so that no interest becomes dominant and abusive against the others, as is the case in capitalism with shareholders' interest. The Economy of Equilibrium inside and outside the companies is the natural descendant of political liberalism of the 18th century and the end of capitalism as power. Capitalism is indeed an impostor which historically succeeded to divert the arguments and benefits of market economy in order to deploy its own power and interest.

 

Following competition

From Karl Marx in the middle of the 19th century to Fernand Braudel at the end of the 20th century, capitalism's definition evolves deeply becoming more and more narrow and precise. This book aims to reveal and examine this evolution and to understand its consequences--leading to the separation of capitalism and market economy--and finally to Equinomy. Capitalism, newly defined as 'the socially authorized shareholder power', stands against the new definition of market economy, as freedom obtained via competition and cooperation. Older imprecise definitions of capitalism such as: private property in the means of production, the objective of unlimited accumulation, the wage relation, the liberation of private interest and social acceptance of profit, the rational and peaceful enterprise via exchange in an objective of profit represent only characteristics of capitalism instead of its essence. Only power gives capitalism its first and most sufficient characteristic, its tool as a concise definition. Market power is essential to capitalism as it allows it to reach its goal, maximum profit, thanks to the control of the exchange price and of the process of production. Customers and employees are abused. Marx criticized only the abuse of employees however, this customer part is as important. Wage relations and exchange relations are two distinct capitalist relations where capitalism shows its power in order to earn always more profit. The monopolist tendencies of capitalism through M&A and other barriers to competition are a perfect example of these strategies. Instead of creating an optimization of customers' interest thanks to competition, the goal and result of capitalism is an oligarchy where the superior interests are, though not always perfectly aligned, those of the shareholders. Capitalism is not at all what we understand when we say free market economy, because of their different goals and means.

 

Opposed on their respective goals, maximum profit against an optimum of customer satisfaction, capitalism and free competitive market have been too often confused because of the idea that profit was the positive consequence of customer satisfaction, the right remuneration of capital employed the right way. But this abusive causality between profit and customer satisfaction is an exaggeration of the idea of mutually beneficial exchange, since profit can be obtained from an exchange price fixed by power and not perfect competition. The vast majority of capitalist profit comes rather from a market power endured by customers and employees, where interests of the customer and the employee are not fully considered, but rather used towards profit. The diverging tools of capitalism and market economy, market power and competition, illustrate even better the opposition that allows the distinction between theses two concepts.

 

Competition, the first and main tool for customers to defend themselves against the producers' power (not only shareholders but also employees that find some interest in monopolies and oligopolies), reduce illegitimate profit by forcing producers to sell a better product at a lower price for the fear of disappearance of profit or, worse, of the entire company. Competition, praised by the most distinguished economists, finds itself in the role of an absolute weapon or of a modern Invisible Hand. It is supposed to prevent abuses of power against customers and to drive the whole economy towards progress while being fought against by capitalism. It is in this conception that it is being idealized, because competition is not perfect and cannot happen instantly in every part of the economy. It is indeed opposed directly by capitalists through strategies so visible that they do not even pretend not to pursue them on the microeconomic (company) level and in strategy books where barriers to entry, products' differentiation, brands and patents, etc. are the priorities. 

 

The divergence between capitalism and market economy, market power and competition, was clearly demonstrated historically, first at the turn of the 20th century by the need of anti-trust laws against monopolies, thus giving birth to the competition laws, and later by the neoliberal theory, using the State as a promoter of competition. Capitalism tends towards monopolies, as it is one of the most, if not the most, efficient ways of creating huge profits through managing both prices and volumes of production. Against capitalism, history proves that competition is preferred and is promoted in developed countries because market economy is the positive concept instead of capitalism. The defense of competition is not naive, transmitting the idea that freedom is also better than a planned economy controlled by the State. Criticizing capitalism on the basis of competition is not however promoting a planned economy in this sense but quite the opposite. Power in a planned economy is even stronger than in capitalism, explaining why communism or any State-controlled economy is not at all a solution since the old remedy is worst than the disease in terms of powers.

 

As was already stated above, competition is not almighty. However, another opposite economic means on the market can help counter capitalism to the profit of the market economy and customer satisfaction. Competition, the unique object of neoclassic market economy is completed with a voice, the fundamental tool for cooperation in this new market economy of balance of powers through free cooperation and free competition. In this new conception, companies are natural extensions of the market because companies are the normal outcomes of cooperation where work and capital is needed to provide goods and services to customers. Companies are no strangers to market, they're part of the market, the crystallization of long term cooperation that is indispensable for the production process. With free cooperation, which is a feature of a working free market as much as free competition, companies are no longer considered as opposed to the market. They are normal components of the market. Customer satisfaction is not only reached by free competition, but also by free cooperation. Agents are not mute like they were in the neoclassical theory and they're not driven only by prices anymore. They communicate directly and join forces to produce, consume and modify the behavior of other agents towards what they want. Indeed, agents can regroup to defend their mutual interests in funds, associations and syndicates. And the best place for them to regroup and defend their shared interest is inside the companies, especially directly where decisions are taken, at the board level.

 

Governance in a capitalist company is pretty simple since it ensures that the management is aligned on shareholder's interest. The board is composed of representatives of shareholders and independent members (independent from the management) who all together control the pay of the management and the decisions that they take. This governance clearly exposes the dominance of one interest over the others, profit over customer satisfaction or wages, and hence the abuse of power in capitalism. This capitalist governance must change to reach a balance of powers where every interest is represented and is opposed anddecisions taken are based on compromise and not on the domination of a single interest such as profit (or wages in cooperatives). The history and evolution of governance over the last two centuries show how changes of power and responsibilities in companies affected the ways of doing business and allowed capitalism to even exist and dominate. The theory of Corporate Governance, born at the end of the 1970's, coincides exactly with the era of finance capitalism by setting the decisive idea of control of the management by the shareholders. Management could be let go if/when they didn't do what was beneficial for short-term profit, but largely compensated if/when they did what was expected via stock-options, bonuses and huge raises. Even if shareholders have lost formal power over the company in favor of the management, the new Corporate Governance allowed them to regain power thanks to the direct control of managers. It could come at a huge cost, such as incompetent managers being paid millions to destroy companies, but for the companies where it worked, profits were multiplied at the expense of customers and employees. This new Corporate Governance, very successful for the shareholders but not so much for the economy as a whole, is a clear proof of one error: competition is not sufficient to achieve one's interest. If competition were to be sufficient, Corporate Governance would have never existed since financial markets would have oriented companies towards profits through prices and competition between companies. However, this is not the case. Capitalists needed a voice and direct power over cooperation in addition to competition on financial market, to achieve their goal: the maximization of profit. Everyone needs a voice to defend one’s own interests.

 

This governance evolution opens up another idea, that companies can be (and were) directed not towards only profits, but also in different ways. An equilibrium can be reached, in a liberal company and not a capitalist company, where representatives of shareholders, employees and customers are equally present on the board of companies (1/3 of the seats each). This liberal governance would not put profit over other interests, as all interests would be equally considered. Every interest would be heard, and a compromise would be sought to satisfy the majority of board members. Of course, the management would be paid not only in relation with profit, but also with wages and customer satisfaction. This new liberal governance would result in the end of the capitalist abuse of power, for example lay-offs to maximize profit or customers’ price and quality manipulations. Instead of surveillance of the management, the board would act as the place of compromise, where decisions are taken with all interests in mind and at the very least, not thinking only about profit. 

 

The equilibrium of power obtained inside companies through free cooperation, as well as the equilibrium obtained outside companies through competition, shape the objectives of a strong market economy, completely separated from capitalism and its dominant power. However the existence of new liberal economy, Equinomy, is not guaranteed, without customers' associations or syndicates ready to represent them on the boards of companies, nor without the help of the State to maintain competition (as in neoliberalism) and limit speculation (too much competition is not good for the market). Avoiding abuses of power is an ancient idea for the market, since it was established in the 18th century to put a stop to the economic domination of the State. In this old idea of the market, freedom has only been partially realized until now because of the power of money and of capital in companies. And now the market can also balance this capitalist power with a more realistic theory, aiming to reach an equilibrium of powers and giving freedom to everyone in between competition and cooperation.

 

Equinomic Basic Income

Before every economic discussion, whether about capitalism, market economy or anything else, there should first come a preliminary question which is so fundamental that leaving it unanswered makes the rest of the reasoning meaningless: How do you justify property? Without property there can be no economy since violence will replace exchange. Violence is an historic explanation of the actual distribution of property and not at all a satisfactory justification. Violence would still be the only solution to own goods and people, without a sound justification of property. In fact, the greatest criticism of Marx against capitalism lies in our view at this crucial founding point: the absence of means of production for workers means that they are obliged to sell their workforce for a wage instead of the product of their work.

 

Since workers at the beginning of the Industrial Revolution couldn't sell the product of their work, for a lack of capital to pay for the machines, the raw materials, or even them during the time necessary for production and sale, they had to sell their workforce, for a wage. Capitalist dominance comes finally only from this wrong distribution of property, especially of capital with some men being very wealthy and a lot of others being miserable. The distribution of property is an historical explanation of capitalism but does not justify it, rather the opposite. It is an undeniable fact of history, for example land enclosures and colonization, that capitalism didn't start on a morally solid ground. And in fact, economy as a whole bears no such ground, as long as ownership property is unjustified. It is not because it is a product of the past that the distribution of goods and men (because property applies also to human beings, Human Rights being a property of yourself over yourself) has to be accepted. It needs to be justified so that violence is taken away from the economic equation. Otherwise violence would be prevented only by more violence, and no economy could be immune from violent grabs destroying the idea of exchange.

 

As mentioned in the preceding paragraph, property embraces self property as well as property of the world, without reference to natural rights that would make someone owner of himself. Slavery existed for too long (and still exists) to hide the idea that men can be without property of themselves. It has to be included in the justification of property, as well as the randomness of talent, of place of birth, social classes, etc. In fact, here the very idea of merit is dismissed as being a perfect argument for the upper classes, the bourgeoisie, to grab the maximum out of democratic societies even if they owed their fortune to their wealth, superior education and network more than their innate intelligence or hard work. Here property will be a cynical concept, everything being potentially a property of someone, such as land, goods, ideas and men. And merit will be considered as another word for chance, to be distinguished from effort which is the only true driver for reward.

 

The inalienable modern human right of your self is not a natural or divine right, but a positive right imposed by a State to its members and to other States. It can, and will be seen as nothing more than another right of property that needs justification. One needs to know why it is just to give someone else a full property of himself when there is such a discrepancy in potential like birth place, family, wealth, network, education and talent. Property is understood extensively. Older theoretical justifications of property, such as an inalienable natural right of self-property or a right stemming from work or goods or a right as a first mover on land, don't prevent the unpleasant reality of the actual property, which is the result of human violence. Real human history of property is one made of wars, conquests andunilateral appropriation where these justifications have no point or, worse, are used as a posteriori explanations. Revolutions that result in change of property share the same criticism of violence as the only tool creating property. New property is as weak as old property when violence instead of agreement is the justification.

 

Since past property arose from violence and cannot be changed without violence, it will be left out as an irrefutable and unchangeable fact, but still considered as an unfair distribution. Is it possible to build a justification of property that starts from an unfair distribution? Instead of trying to change a distribution that would always be unfair and would stand against any idea of free voluntary exchange (since it would require the regular modification of the distribution to make it just again for new generations), it is better to concentrate on production. Production is the result of the use of all types of property, self property in wages, money in capital, a lot of materials that come from land property, etc. If property is unfair, so is production. However, it is much easier to work on production to try to find an idea of justice that could make property acceptable for everyone.

 

Justice here is minimally defined as 'what is agreed upon':, if you agree on the deal presented to you, as would reasonably do everyone else, then the contract is just and property is justified. To that effect, a free efficient market is needed, one that could modify the distribution of property over time to put property in the hands of the most efficient agents (it is often the case since the most efficient agents are able to buy at a higher price the assets they will better exploit). In this idea of justice with a free market, past property would be left as is and production, the result of property, would be shared. Property is a stock, and production is a flux, and it is not so important anymore to own a big stock if the flux is just. As long as I get my fair share of production, property is less of a concern and can be unfair. It would answer the question that everyone could ask: "Nobody ever asked for my agreement on property, so what are you giving me for my agreement? Otherwise, I would be entitled to use violence to gain property, as much as it has been the case in the past". Justice of property is also a matter of peace, the birth place of economy.

 

Starting from this idea of justice in the results of property instead of property itself, a monthly redistribution of production can be seen as good enough to allow for a rational agreement on property. Giving to everyone a part of the production all the time is the same as giving them a share on property, except that you don't have to use violence to redistribute property and that you solve the time issue with new generations being seamlessly integrated into the redistribution. A form of contractual justice appears, where men agree on past property in exchange for a part of the production. This procedural justice, a rational agreement between individuals to accept past property, gives freedom to everyone to make real choices. Property is legitimized (even it is born out of violence, or chance for self-property) by the agreement on redistribution. This is a form of rational exchange, legitimacy against redistribution. In this exchange, all individuals waive their capacity to use violence to grab property since property becomes accepted. With the end of violence, economy can really restart on a sound basis.

 

The individual agreement around this "social property contract" leads directly to a question of amount: the minimum amount necessary to obtain agreement from non-owners, to be matched with the maximum amount acceptable from owners to accept the deal and to exploit to the best of their abilities and their property (talents, wealth, networks, etc). Justice comes from the existence of this amount, this numeric minimum and maximum at the same time. The title of owner as well as the non-owner is held byeveryone at the same time, depending on the positions in which he or she wants to think about the contract. The basic income that would arise from this contract has to be high enough to make non-owners accept the past property, while also being low enough to make owners want to produce. It would free everyone from misery, opening new ways of living freely and independently. Determining this amount is of course very dependent on social and cultural conditions, but the number of 50 % stands out.

 

50 % of GDP, half the production to redistribute to every person against half to the producers, is the equal share by definition and answers the two main questions that surround the contract: ‘What do you give me as the non-owner so that I accept your property?’ and ‘What do you leave me as the owner of the production so that I accept to use my property?’. 50 % of the production is the amount upon which they could agree. Agreeing on an amount would be renouncing violence, present and future, while accepting the result of past violence and property. Even revenge would be forbidden. The amount has to be high enough for the non-owner but also has to be equitable and equilibrated for the owner in order to reward his efforts. The most rational number then is 50 %.

 

It can be seen as a huge number compared to actual social nets in different countries, but it is a gross number before taxes for the State (army, police, justice), healthcare and education. In fact, it would replace the numerous different redistributions systems in one clear payment for everyone, every month. Salary and other revenues would come on top of this. The idea of justice that comes from such a contract--a rational agreement on property against benefits such as freedom and peace--is a very practical one since it starts from the reality of this world, appropriated by use of violence, and gives a chance to create a peaceful future through the idea of "what is acceptable is just". This idea of justice might seem quite weak, but it allows to solve otherwise impossible problems such as the one here, property. An equinomic basic income of 50 % of the GDP for every adult is the starting point of a free and just economy.

 

Conclusion

The idea of capitalism in this book is complete, integrating its two main criticisms, one from the employee and one from the customer. One being Marxist, or socialist, the otherone liberal. It creates a larger and more complex denunciation since the guilty party, capitalism, has accomplices against the weaker agents. For example, monopolies can be often understood as an alliance between producers (shareholders and employees) against customers because every producer benefits from the market power originating from the monopoly. Employees enjoy higher wages and better protection as well as some sort of rent. Shareholders benefit from a similar increase of protection since customers cannot leave and have to pay the price set without any competition. Capitalism in this dual critique loses its major arguments of defense, since the advantages of the market economy escape its grasp, and even turn against it. The distinction between capitalism and market economy leads to a different understanding of the ideal of a free market, mixing cooperation and competition instead of imagining perfect agents in a perfect competitive market.

 

Identifying the actual economic system as a capitalist market economy rather than capitalism underlines the duality of this economic system, where a contradiction exists between customer satisfaction and the search for maximum profit depending on the powers of each party. The results of this ambivalent system are thus logically ambivalent: very positive in terms of misery, life expectancy, health, production increase, etc. but also very negative owing to the explosion of inequality, destruction of the environment, loss of meaning for normal people in economic life or fear of loneliness and poverty due to individualism promoted by the idea of competition only. Actually, most of the advantages of our present economic system are derived from the market economy, and most of the defects are the products of capitalism. When transparency is present, all the negative outcomes are corrected in the best way possible, while capitalism hides its wrongdoings through the concealing of information. Since capitalism cannot be defended with arguments from the market, its supporters need to find ways to explain its abuses of power, or else to accept to balance it. Criticisms are no longer made null by the advantages of the market.

 

Separating market economy and capitalism led to a new definition of each concept, capitalism as a power and market economy as a balance of powers (an equilibrated economy) and not as an utopia of a perfect competitive market. It may seem that this evolution of a market economy from not only competition but cooperation and balance is a sort ofreturn to the historic idea of a market, one from the 18th century when the concept of free association between men was so alive and new as opposed to the preceding conception in which the State and civil society were confused. At the same time, this evolution goes further than the historic idea of market from the Enlightenment because of the way it looks for a balance of powers and interests both inside the companies and on the market, where each tool has a link towards power. In a liberal idea of independent individuals, market economy is a place where powers and conflicts exist all the time and shape the exchanges between agents, especially the prices. But the idea of market economy contains an ideal of equilibrium through competition and cooperation giving way to freedom.

 

Diminishing the abuse of power is not only the solution to free individuals, it is also of course the way for economic efficiency with resources being allocated in a much better distribution thanks to optimized competition and cooperation (resources as diverse as financial, human, material, technological, etc). Efficiency is a positive consequence of freedom, as it was demonstrated in the 20th century with the victory of the market economy over planned economy (and even if it was understood at the time as a victory of capitalism over communism). As one could say, the greater the freedom, the better the economy.

 

Capitalism is indeed criticized here in the name of freedom itself and efficiency with arguments that were until now still in its favor, balancing its many defaults such as inequalities, misery, environmental destruction, etc. The idea of a more liberal, post-capitalist economic system is a new criticism, never encountered by the spirit of capitalism since the market economy was never before opposed like that to capitalism. The new theoretical framework for understanding what is really capitalism and market economy leads to a new hierarchy of economic systems based on power. The worst system is communism, for its lack of freedom and efficiency and because the political and economical powers are concentrated in one hand, the Communist State. Slightly less worse is socialism, where the State intervenes constantly on the market, mainly for political reasons, but where private initiatives can and do exist. Depending on the degree of freedom in a socialist country, capitalism can be considered in its purest monopolistic form as a system as good as - or as bad as - socialism. Capitalism is better than communism since it does not combine political and economic power, even if strong lobbying can lead to that. But in its actual form a capitalist market economy, our economic system, is much better because it is freer than pure capitalism and pure socialism. And finally, the best economic system possible is the one where competition and cooperation exist and powers are balanced, where freedom is at its maximum, an equinomy.

 

The most liberal system does not give power to shareholders. Nor does it give it to employees or customers either. It gives power to a compromise and it gives balance. To that end, three actions have to be taken. First, the governance of companies must change to create a balance of powers and interests. Second, the existing markets must allow cooperation and competition in equilibrium, less competition and more cooperation in financial markets and less cooperation and more competition in large technological markets. Third, a substantial basic income must be created, equivalent to 50 % of the GDP of a country, and distributed to each adult, whatever his or her wealth or revenues so that property is justified and economy can be validated.

 

From this new liberal framework for understanding economy and economics, capitalism is not the worst system, but it is not the best either. Capitalism is a power which, like all others, leads to abuse if it is not balanced by counter-powers. Free market economy, where counter-powers such as competition and cooperation exist, is a solution to capitalist abuses, through the three changes laid out above. Despite its theoretical discourse, capitalism is not a freedom defender but a profit and power offender. After the liberal revolutions at the end of the 18th century in the name of freedom, economy needs to follow the same route: a liberal revolution to free us all.

 

[1] Albert O. Hirschman, The Passions and The interests : Polticial Arguments for Capitalism before Its Triumph

[2] Marcel Gauchet, La révolution moderne, l'avènement de la démocratie I., p. 32.