I have read several reddit threads where it is said that modern economists don't bother with ideas like capitalsm and communism (eg: 1 ,2). However when one looks in a dictionary they get the following definitions:

  1. Capitalism: an economic and political system in which a country's trade and industry are controlled by private owners for profit, rather than by the state.

  2. Communism: a theory or system of social organization in which all property is owned by the community and each person contributes and receives according to their ability and needs.

The above are from oxford language dictionary. So, it seems like the words are well defined... then what do economist mean that they are meaningless to talk about ?


1 Answer 1


I have read several reddit threads where it is said that modern economists don't bother with ideas like capitalsm and communism

This is about 3/4 correct. It is true that most economists do not use words like communism or capitalism.

For example, in Mankiw's Principles of Economics has only 4 instances of word communism (including index at the end) and 3 instances of word capitalism (including index and reference lists) in the whole book. Mankiw's Principles are the most used undergraduate textbook and it is almost 1000 pages long.

Moreover, these terms are almost never used in graduate level textbooks or published papers with exception of some subfields of economics such as political economy.

However, of course they could be rigorously defined. The problem is that currently, within profession, they are not rigorously defined.

The definition from Oxford dictionary is not generally accepted. To my best knowledge the first one to apply the words capitalism and communism to an economic system was Marx (see Marx (1867) Das Kapital - even though adjective capitalist predates Marx and was already employed by Ricardo) However, Marx did not do so rigorously and used the word fluidly. For example, in some places capitalist system is the system of contemporary British empire, in some other places is a system where capitalist class exploits labor class through expropriation of surplus labor and elsewhere it is just a system of free private exchange, private property and trade. On the other hand communism was defined as final stage of socialism which was supposed to only occur after state apparatus died out and society becomes classless, moneyless and property less.

Both of those definitions are not consistent and again different from the Oxford definition. In fact the word capitalism started even as a sort of pejorative that was later reclaimed (like the word queer that was originally an insult but later got reclaimed by LGBTQ+ community).

Milton Friedman, on the other hand, defined capitalism as system that relies on voluntary exchange and free trade. Again yet different definition from the Oxford dictionary one.

Our own Economics.se tag defines capitalism as:

Capitalism refers to the economic system wherein decisions about production, investment, and exchange are made chiefly by private individuals or corporations, especially as contrasted with collective, public, or state ownership. Attributes central to capitalism are private property, the division of labor, voluntary exchange, a money price-system, and competitive markets.

Which is again different, and I think many economists could nitpick some parts of it.

You can see more definitions in this Economics.SE question.

When it comes to communism, again the Marx's own definition was different from Oxford dictionary one and still different from other definitions. There are simply no unified definitions of capitalism or communism, especially not across social sciences. For example, in some strands of political science literature USSR would be called state capitalism, but in other strands of political science it would be considered communism (e.g. see discussion of that in Resnick & Wolff 2009).

The problem is there is no broad agreement on definition of capitalism or communism in economics. Moreover, many people get irrationally attached to labels such as communism and capitalism. Then when you try to provide rigorous definitions they get offended like a religious zealot when some theology professor tries to explain them they don’t follow the branch of religion they think they follow because of some tiny details.

At some point the economic profession just settled on not using these value laden terms and rather use different words such as “free market” or “central planning” that already have widely accepted meanings within econ profession and are less value laden. The terms are simply too toxic and science suffers when people think emotionally and not rationally about a topic.

then what do economist mean that they are meaningless to talk about ?

To sum it up, because the definitions are contentious it’s meaningless to argue about the definitions. I seen whole economic policy debates turned into debates of proper definition of capitalism and communism with no time left to actually debate policies.

Meaningless is probably wrong word, people can find meaning in anything. Perhaps more accurate is to say it’s utter waste of time trying to rigorously define them.

  • 2
    $\begingroup$ I would suggest clarifying meaningless in terms of "lack of testable hypotheses". I can't test which is "better" overall, which is the most common debate topic. I can, at best, point to single issues that are not resolved by free markets and highlight them as needing address - but they can be resolved by a variety of government interventions. Awkwardly, only some issues can only be resolved by government intervention (or free markets), leaving most of the laypeople very mad. $\endgroup$ May 13, 2022 at 1:12
  • $\begingroup$ @RegressForward but is communism when the government does stuff? Or is it more nuanced than that? If you can prove that free markets always lead to catastrophic climate change but governments can stop it (for example) how do you then relate this to the words "capitalism" and/or "communism"? $\endgroup$
    – user253751
    May 13, 2022 at 11:51
  • $\begingroup$ This just returns us to the other problem mentioned by @1muflon1. $\endgroup$ May 13, 2022 at 15:23

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