In the U.S., We Tend to Misuse the Terms “Capitalism” and “Socialism”

Here’s a blurb I came across on social media, in which a boyhood friend makes an important point about the use of the words “capitalism” and “socialism.”  If it seems familiar, it’s because it’s the same concept that I’ve been writing about for years. He begins:

Let’s make sure we are defining “Capitalism” and “Socialism” in the same way so that we’re speaking the same language. Per Merriam-Webster Dictionary:

“In the modern era, “pure” socialism has been seen only rarely and usually briefly in a few Communist regimes. Far more common are social democracies, such as Sweden and Denmark: democratically elected governments that employ some socialist practices but within a capitalist framework in the belief that extensive state regulation paired with limited state ownership produces a fair distribution of income without impairing economic growth. Capitalism is an economic system characterized by private or corporate ownership of capital goods, by investments that are determined by private decision, and by prices, production, and the distribution of goods that are determined mainly by competition in a free market.”

But what is a free market? If a free market is strictly defined as “an economic system in which prices are based on competition among private businesses and are not controlled or regulated by a government,” then price controls, tariffs, etc. would be forbidden. However, a pure free market has never existed. Adam Smith recognized this and that externalities, such as the town commons, exist and must be accommodated. Thus, there has never been pure capitalism. There has always been an element of socialism to handle the inequities of externalities. IMO.

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I would only add that an astonishingly large number of Americans haven’t been able to think this out.  How many of the people who despise our country’s “wokeness” want to privatize things like infrastructure, public education, fire fighting, national defense, criminal justice, disaster recovery, and the dozens of other services that benefit all of us? I think I speak for damn near everyone when I said that, if my house is on fire, I want a taxpayer-funded fire department to come and put it out.