CAPITALISM IS WHAT the Dutch call a geuzennaam--a word assigned by one's sneering enemies, such as Quaker or Tory or Whig, but later adopted proudly by the victims themselves.
The word is a Marxist coinage. Karl Marx himself never used the word capitalism, but let's not get pedantic: He freely tossed around capitalist to describe the bosses who were busily reinvesting surplus value on top of their original accumulations of capital.
Like economists and others before and after, Marx claimed that the accumulation of capital was the watchspring of wealthy modernity. The Marxian sociologist Immanuel Wallerstein, for example, wrote in 1983 that "the word capitalism is derived from capital. It would be legitimate therefore to presume that capital is a key element in capitalism."
Actually, it wouldn't. That we insist on ruminating on something called "capital" does not prove that its accumulation was in fact unique to modernity. And it is not. Romans and Chinese and human beings back to the caves have always accumulated capital, abstaining from consumption to get it. What made us rich were new ideas for investing it, not the investments themselves, necessary though they were.
I frequently find myself defending my peculiar form of anti-capitalism to my libertarian friends. Mark Skousen, who hosts the FreedomFest conference every year in Las Vegas, voices typical objections: "You must have capital to advance the economy," he wrote to me in an email recently. "Entrepreneurs have plenty of great ideas and budding technology to change the world, but unless they get financing, they will remain unfulfilled."
That's right, but as Skousen admitted, the financing is merely a necessary condition, not a sufficient one. The explosion of human ingenuity after the turn of the 19th century, by contrast, was sufficient. The ideas were so good that financing was seldom a problem. Necessary conditions are endless, and mostly not pertinent--"having liquid water at the usual temperatures" and "the absence of an active civil war" are necessary too, but nobody wants to call it waterism or peaceism.
The necessary conditions were shared by a great many societies. Those nonetheless did not have anything approaching the Great Enrichment that started in northwestern Europe in...