The apologists for capitalism face a fundamental dilemma in their definition. If capitalism means "purely voluntary exchange", then no such system has ever existed historically, and therefore since all real distributions of property involve past coercion, all existing markets rest on prior violence/appropriation, therefore, there's no empirical evidence for the claimed benefits of capitalism and ergo “pure" capitalism becomes an untested theoretical construct, that may in fact, be impossible, unless it is possible to erase from the present all the effects of coercion and violence of the past.
If capitalism refers to actual existing systems, then these systems all involve coercion and state violence; property rights require state enforcement, markets depend on state-backed contracts, and historical capitalism involves colonialism, slavery, and enclosure, and therefore modern capitalism requires ongoing state intervention.
This creates a fatal contradiction for the advocates of capitalism; they can't claim capitalism's historical successes while also defining it as "purely voluntary", or they can't defend actually existing capitalism while claiming it's voluntary, and therefore they can't argue for capitalism's efficiency based on theoretical models that have never existed.
The equivocation made by the apologists of capitalism works like this:
When defending capitalism: Point to historical economic growth
When critiquing capitalism: Claim "real capitalism" hasn't been tried
When facing ethical challenges: Define capitalism as purely voluntary
When facing practical challenges: Point to existing markets
This rhetorical strategy of the apologists of capitalism allows them to:
- Dodge responsibility for capitalism's historical crimes
- Claim credit for economic developments
- Dismiss critiques as "not real capitalism"
- Maintain theoretical purity while defending practical exploitation
But the apologists of capitalism can't have it both ways:
- Either capitalism is purely voluntary (and has never existed)
- Or capitalism is historical (and involves coercion)
- Either way, the defense of capitalism as both voluntary and historically successful fails
This reveals how "voluntary exchange" serves as an ideological shield for actually existing systems of power and exploitation, rather than a meaningful description of any real economic system.
Further analysis reveals another significant inconsistency in capitalist apologetics: the inability to reconcile the theoretical purity of "purely voluntary exchange" with the historical and ongoing reality of state-enforced systems of property and market relations, when we apply the theory of the second best from welfare economics.
The theory of the second best posits that when one optimality condition (such as the absence of coercion in markets) cannot be satisfied, correcting other distortions in isolation may not lead to a more optimal outcome. In fact, introducing certain interventions, even those that seem counterintuitive (e.g., progressive taxation or redistributive policies), may produce greater overall efficiency by mitigating existing inequities.
If capitalism is defined as "purely voluntary exchange," then it has never existed because all historical markets have been shaped by violence, coercion, and systemic distortions such as, enclosures that expropriated common land, colonial exploitation and slavery, state-supported suppression of labor rights, monopolies and state-backed corporate entities.
These coercive interventions created the modern distribution of wealth and property, rendering any claim to "voluntary exchange" in existing capitalism fundamentally flawed. Every transaction today is shaped by the residual effects of these historical injustices.
The implications of these facts for the apologists of capitalism are far-reaching. Given this context, apologists for capitalism face a dilemma:
1. If they object to policies like wealth taxes or redistributive programs because they deviate from "purely voluntary exchange," they are defending the current system as if it was non-existent idealized system they claim to only defend, then they are logically inconsistent with their claims that they only are defending “purely voluntary exchange”.
2. If they accept existing systems as if these represent proxies for “voluntary exchange”, then since the existing systems are products of historical coercion and intervention, then they cannot logically object to further interventions aimed at mitigating the inequities caused by those very distortions, and therefore they are rejecting their own definition.
For example, increasing taxes on the wealthy might appear to "deviate" from voluntary exchange. However, if these taxes help counteract past coercion (e.g., wealth accumulation rooted in colonialism or slavery), then the intervention may align closer to an equitable economic order that would have emerged from “purely voluntary exchange” than the status quo. By the logic of the second best, redistributive policies can paradoxically bring markets closer to fairness by addressing systemic imbalances.
The theory of the second best undermines the purist defense of capitalism as "voluntary exchange" and highlights the incoherence of opposing policies aimed at rectifying historical and structural inequities. Capitalism as it exists relies on state intervention and the legacy of coercion, making it indefensible on the grounds of voluntarism. If voluntary exchange has never existed, then apologists have no basis to object to interventions like progressive taxation, wealth redistribution, or regulation, as these may move us closer to correcting the foundational distortions of historical capitalism.
Pyotr Malatesta - Jan 16