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Is capitalism kaput?

In this article, we examine metaphors in economics, specifically looking at the at the term capital and its family of metaphors, and investigate the role they play in a capitalist economy. Serving as a means of communicating complex ideas and outstripping their literal meanings, metaphors become a part of the developing knowledge in a discipline. We demonstrate how a metaphor constitutes an active interchange between a word and the complex idea it signifies, and, by extension, the formation of yet another idea results. We show how, the parent metaphors capital and capitalism, there developed a number of derivative (i.e., sibling or relational) metaphors related to different functions and forms of capital in capitalism. And we point out metaphors related to different types of goods and property that exist in a capitalist economy. Are the family of metaphors of capital helpful or harmful to capitalist? To the extent that metaphors enrich and expand its language, we submit that they do indeed contribute to the survival of the capitalist society which spawns them.

According to the Oxford English Dictionary, the earliest use of the term "capitalism" was in 1854 and referred to the condition of processing "capital." The term capital was first defined in an economic sense in 1611 in Randle Cotgrave's A Dictionarie of the French and English Tongues (The Oxford English Dictionary, 1971). He defined capital as "wealth, worth; a stocke, a man's principall, or chiefe, substance" (Ibid.).

There are now many definitions of capitalism as an economic system, and Maurice Dobb has identified three prominent ones. The first is Max Weber's definition of capitalism as something "present wherever the industrial provision for the needs of a human group is carried out by the method of enterprise" (Dobb, 1963:5). The second is Professor Earl Hamilton's definition of capitalism as "the system in which wealth other than land is used for the definite purpose of securing an income" (Ibid.:6). And the third is Karl Marx's definition of capitalism as "a system of production ... under which labour-power had |itself become a commodity and was bought and sold on the market like any other object of exchange" (Ibid.:7).

Robert Heilbroner writes that capitalism is "an economic system in which the means of production - factories, farms, mines, etc. - are owned by private individuals or firms, and in which the primary method of distributing incomes in the competition of the marketplace" (1976:22). But he argues that capitalism is actually a dynamic process and that capital, too, is "not a material thing but a process that uses material things as moments in its continuously dynamic existence" (Heilbroner, 1985b:36-37; see also Heilbroner, 1976:22).

Metaphors abound in our language and, in this discussion, we will show how economists frequently use figures of speech as mere syntax, not recognizing them as metaphors. I. A. Richards wrote that "... when we use a metaphor we have two thoughts of different things active together and supported by a single word, or phrase, whose meaning is a resultant of their interaction" (1965:93, 117, 125). Metaphors can actually be a part of the developing knowledge in a discipline, serving as a method of communicating ideas and explaining the active exchange of complex ideas. We will examine metaphors in economics, specifically looking at the term capital in a capitalist economy and its family of metaphors. We will develop the metaphors as linguists do. However, for taxonomy and ordering, we will use a biological frame. The first use of a metaphor is a parent metaphor, and the derivative metaphors are progeny to the parents, or siblings to themselves. Therefore, metaphorically speaking, capital and capitalism are the parent metaphors; we will simply refer to the derivative metaphors as sibling or relational metaphors.

Donald McCloskey writes that each step in economic reasoning is metaphoric and that the more obvious metaphors are "those used to convey novel thoughts, one sort of novelty being to compare economic with noneconomic matters" (1985:75-76). In addition, he argues that economic metaphors frequently consist of two sets of ideas which mutually illuminate each other by exchanging connotations (Ibid.:77). He also writes that metaphors (including allegory, a type of metaphor) are analogies, and that mathematical reasoning in economics are metaphorical (Ibid.:78-79).

Classical economists considered capital, in a capitalist economy, one of the major factors of production, which implies both its physical nature and its technological function (Phelps, 1985:6). In a broad sense all tools, machines, stores of merchandise, houses, means of transportation, lands, stocks, and bonds can be called capital (Ibid.; see also Heilbroner, 1985a:84). Looking at the term capital in a capitalist economy as the parent metaphor, we are able to trace the origins of the term capital back to the word "kaput" in the Indo-European language, which meant the head of the body (The Oxford English Dictionary, 1971).(1) The metaphor here is interesting. The most obvious similarity is that while the head is upper extremity of the body, capital is the head or top of a column. The head can signify intellect, mind, or aptitude which can be likened to the ability of capital to signify an asset, advantage, or wealth. Other similarities can be found in the adjectival for, of the words. Head as an adjective refers to being foremost in importance or placed at the top or front. Capital as an adjective also refers to being first and foremost, chief, first-rate, or excellent. In addition, capital may be regarded as being to the net worth of a business, as thought (carried out in the head) is to the individual (residing in the body).

In order to identify other family metaphors, we will now briefly look at some of the different functions of capital in the economic system of capitalism. While capital existed in the sense of private wealth even before capitalism, economists have generally stated that capital yields a flow of services over a period of time (Heilbroner, 1972:26; see also Asimakopulos, 1978:157). Heilbroner writes that capital is able to enhance an individual's power to perform more productive labor (1985a:84). Adam Smith wrote that capital can yield a profit or revenue for an individual (1937:262-263, 265-266). In addition, Smith wrote that capital can increase or diminish a country's annual produce (Ibid.: 321). Smith identified four functions of capital - to procure rude produce, and to manufacture, transport, and distribute goods (Ibid.:341-342).

While the theory of "human capital" was developed by Gary Becker, other distinguished economists have looked upon human beings as capital in a capitalist economy. Adam Smith included the acquired and useful abilities of all of the inhabitants of a country as part of its capital (Ibid.:341-355; see also Schultz, 1971: 27). Alfred Marshall contested that human beings are capital at least from an abstract and mathematical point of view (Schultz, 1971:27).

Becker identified investments in human capital which influence both earnings and consumption of individuals in a capitalist economy. On-the-job training, schooling, medical care, and migration are just a few of the investments (1975:9). While they differ in their effects on earnings and consumption, Becker argues that they all improve skills, knowledge, and/or health and, therefore, increase earnings and consumption (Ibid.). Human capital is important economically for a number of reasons. The primary reason is that more highly skilled and educated individuals tend to earn more than other individuals (Ibid.:10). Another example is that the unemployment rate is very much inversely related to the level of education (Ibid.).

The term human capital is a sibling metaphor and involved an analogy between humans and capital. Both humans and capital are able to render future services, satisfactions, or earnings of some value (Schultz, 1971:48). Heilbroner's argument that capital is a process leads us, then, to conjecture that humans as productive agents are a process (1985b:36-37; see also Heilbroner, 1976:22). Further, if process is property, then humans must be property.(2) McCloskey writes

In the phrase "human capital" the field in economics treating human skills was as a stroke unified with the field treating investment in machines. Thought in both fields was improved - labor economics by recognizing that skills, for all their intangibility, arise from abstention from consumption; capital theory by recognizing that skills, for all their lack of capitalization, compete with other investments for a claim to abstention (1985:77).

Marx argued that human capital is a commodity, not a process (Marx, 1965:134-142; see also Marx, 1955:17-19). He wrote that "Differences of age and sex have no longer any distinctive social validity for the working class. All are instruments of labor, more or less expensive to use, according to their age and sex" (1955:17). If capital is a commodity, and humans are capital, it follows, then, that humans are also a commodity.

By taking the analogy between humans and capital a little further, we are now able to recognize the term "head tax" as a relational metaphor. The function of a head tax in a capitalist economy is, in addition to raising revenue, to create an incentive for people engaged in an activity to substitute another activity that is taxed less heavily (Posner, 1977:364-365; see also Phelps, 198:319). A flat head tax has minimal effect on the efficiency with which resources, including human capital, are being employed (though this effect is not zero because it may also induce some people to leave the taxing jurisdiction to avoid the tax - the value of their economic activity may have been greater had they stayed).

Yet another relational metaphor we are now able to identify is the term "capitation tax." In a capitalist economy, the function of a capitation tax is to afford a sure revenue to the state (Smith, 1937-821). Smith argues that is capitation taxes are proportioned to the revenue of each individual they are arbitrary, and if they are proportioned to the rank of each individual they are unequal (Ibid.:819). This metaphor, like its sibling metaphor head tax, raises the specter of the government demanding human heads as a contribution for government support.

Another sibling metaphor is "capital flow." In a capitalist economy, capital flow functions as international payments for American capital investments abroad (Heilbroner, 1978:54; see also Hughes, 1970:145-152). These investments have resulted in rising international demand for commodities (Hughes, 1970:237-238). This metaphor creates the vision of capital, in this case money, moving or running freely as if in a stream.

Are there additional forms of capital that have been derived from the use of the term capital? As previously discussed, human capital is one example. "Physical capital" may be another example. This term is a sibling metaphor and involves an analogy between capital and something pertaining to the body (as distinguished from the mind or spirit) or to material things. Phelps w rites physical capital in a capitalist economy includes photocopiers, typewriters, and word processors (1985:417). Heilbroner writes

Capital can, and indeed must, assume physical form, but its meaning can only be grasped if we perceive these material objects as embodying and symbolizing an expanding totality. A human being cannot exist without flesh and blood, but the essence of humanness is that flesh and blood are in the service of an organizing purpose, a life force. So it is with capital (1985b:37).

"Child capital" is a sibling metaphor that involves an analogy between children and capital. This sibling metaphor is very closely related to the sibling metaphor human capital which was discussed earlier. Schultz believes that children are a form of human capital in a capitalist economy even before they are old enough to attend school, and they provide old age security for their parents and are a substitute for retirement bonds (1971:198-199).

Let us now turn to the different types of goods and property people have in a capitalist economy and, by identifying these commodities, attempt to determine other family metaphors. Phelps argues that goods satisfy humans wants and are either produced from current resources or are themselves existing resources (1985:4). Adam Smith wrote that the most scare and inviolable property an individual has is his own labor (1937:121). Heilbroner believes than human labor and property are commodities as a result of the emergence of the market society (1985a:54). He writes "Property became capital, manifesting itself no longer in specific goods, but as an abstract of infinitely flexible use whose |value' was its capacity to earn interest or profits" (Ibid.). A few examples of goods or property are labor, homes, automobiles, appliances, children, land, machinery, and diamonds. All are considered durable because they are long-lasting and yield a flow of services over a period of time (Posner, 1977:207-208).

Gary Becker argues that "children are durable goods" in a capitalist economy (Becker, 1976: 172-173, 175, 188-189, 195-204, 226; see also McCloskey, 1985:76). This sibling metaphor involves the analogy of a child with a durable good (cars, homes, machinery, etc.). Both are initially costly to acquire. In addition, both last for a long time, are a source of pleasure, are expensive to maintain and repair, do not have their own opinions, and provide a utility. Families tend to purchase more durable goods at higher income levels. Additionally, other things being equal, an increase in income would lead to an increase in family size (Becker, 1976:174).(3)

The most obvious difference between children and durable goods in the ability of a consumer to "purchase" them. In order to purchase a durable good, a consumer must make a down payment with his/her own resources and finance the remainder with his/her own borrowed resources (Ibid.:188). And, if economic conditions are poor, some purchases of durables might be postponed until conditions improved. However, notwithstanding the practice of certain segments of society, the "purchase" of a child is less likely to be postponed because expenditures on children are spread over time. The initial cost of a child is a smaller fraction of its cost than is the initial cost of most other durables (Ibid.). Apart from the obvious "not to be denied" nature of the reproductive act itself, another reason why the "purchase" of a child is less apt to be postponed than the purchase of durable goods is the extended, but predictable, construction and delivery period.(4) On the other hand, the relative lack of liquidity (no pun intended) of children is one reason that the purchase of children is more apt to be postponed than that of other durable goods.(5)

Another sibling metaphor that Becker uses is that "children can be considered consumption goods" because they are a source of psychic income or satisfaction (Becker, 1976:172). In addition he considers "children to be production goods" not only because they may provide monetary income, but because neither the outplays on children, nor the income yielded by them, are fixed (Ibid.).

"Capital goods" may be yet another sibling metaphor. This term refers to goods (tools, equipment, machines, building, etc.) produced by a capitalist society to expedite production (Heilbroner, 1985a:84). Capital goods make human capital more productive because the individuals who constitute human capital use capital goods to supplement their own capacities (Ibid.).

By extending the idea of the kind of property or goods an individual has, we are able to include parts of the human body, which are existing resources for individuals, as property or goods. Therefore, the term "invisible hand" would also be a sibling metaphor (in the sense that the hand is the agent of the head). Heilbroner writes that the invisible hand of capitalism grips the activities of businesses and propels the business world in the direction of growth (1985b:16). Adam Smith argues that an invisible hand guides each individual to promote an end which was not part of his intention - his own gain (1937:423).

In addition, the human brain can be considered an individual's commodity. The term "brain drain," which refers to the transfer of human capital between countries, is also a sibling metaphor. This transfer, migration, or international flow of highly skilled individuals reduces the economic and military power of the country that is the net loser of human capital (Kiker, 1971:455, 477-484; see also Schultz, 1971:161). This metaphor suggests the image of a human brain gradually being emptied or downloaded as data banks are in transfers.

What is the future of capitalism? Will it continue to develop? Where is it going? Marx argued that capitalism would destroy itself and, unknowingly, breed its own successor (Marx cited in Heilbroner, 1972:142). Joseph Schumpeter, too, believed that capitalism would not be able to survive and would evolve into managerial socialism (Schumpeter cited in Heilbroner, 1972:309-310; see also Heilbroner, 1985b:144). Adam Smith forecast a deep and lengthy decline for society when capitalism reaches a plateau (1937:111).

While Heilbroner believes that it is impossible to predict the future of capitalism, he has identified three reasons for the possible demise of capitalism - the end of business expansion, the extension of planning into every corner of economic life, and the prospective erosion of the "spirit" of capitalism (Heilbroner 1976:107-117; see also Heilbroner, 1978:88; Heilbroner, 1985b:199).

Are the family metaphors of capital helpful or harmful to capitalism? We have shown that metaphors, by allowing us to look at words and their complex ideas as an active exchange, result in the creation of yet another idea (McCloskey, 1985:77; see also Richards, 1965:93-94). This active exchange and creation of ideas supports Heilbroner's idea of capitalism as a process (Heilbroner, 1985b:36-37; see also Heilbroner, 1976:22).

We argue, therefore, that, in the main, the family metaphors of capital are helpful to capitalism. We have seen how the first use of the parent metaphors capital and capitalism led to their progeny. As previously shown, the terms human capital, head tax, capitation tax, and capital flow evolved as metaphors to help describe the different functions of capital in capitalism. In addition, the terms physical capital and child capital are metaphors which describe additional forms of capital in capitalism. And lastly we identified metaphors related to different commodities in a capitalist economy - children as durable goods, children as consumption goods, children as production goods, capital goods, the invisible hand, and brain drain.

Capitalism is a particular view of economics which describes reality and depends, in turn, for its own social reality, indeed for its very existence, on the language which describes and defines it. To the extent that metaphors enrich and expand that language, they contribute to the survival of capitalism. Capitalism is wrapped up in the language and culture of the societies which espouse it, and the continuing evolution of the language we use to describe it will, in our view, contribute to its continued existence.


(1.) The Indo-European term "kaput" has yielded many other words such as cadet, cape, capitate, capitation, capitulum, captain, cattle, chapter, chief, chieftain, biceps, decapitate, kerchief, mischief, precipitate, recapitulate, and triceps (The American Heritage Dictionary of Indo-European Roots, 1985:27). (2.) Looking at both human and nonhuman capital, we find a number of similarities. First, both enhance the productive capacity of society (Peterson, 1983:302). Humans, without tools or knowledge, are unproductive. In addition, in order for nonhuman capital to be produced, human capital must exist. Second, is that they both pay off over a long period of time (Ibid.). Third, human capital and some nonhuman capital require a lengthy building period (Ibid.). For human capital the building period can extend to between eight and 20 years depending on the levels of education an individual pursues. A fourth similarity is that both kinds of capital tend to depreciate (Ibid.). Forgetting, obsolescence, growing old, and, ultimately, death are examples of depreciation for human capital. (3.) Thomas Malthus argues that child mortality would decrease with increases in income and, therefore, more children would survive (Malthus cited in Becker, 1976:174). Second, he contends that increasing income increase fertility by inducing people to marry and procreate earlier (Ibid.). (4.) Becker defines ceteris paribus as "the demand for a good with a lengthy construction period" (1976: 188). He contends that since the construction and delivery period for durable goods is short compared to the construction and delivery period for children, the demand for durable goods is more sensitive to temporary economic movements than the demand for children, since delivery is likely to occur when the temporary movement has passed. (5.) Becker argues that children are less liquid than other durable goods because they cannot be bought and sold (Ibid. 189). Therefore, during times of economic uncertainty, the preference for other durable goods would increase because they are more liquid.


The American Heritage Dictionary of Indo-European Roots. 1985. s.v. "kaput." Asimakopulos, A. 1978. An Introduction to Economic Theory: Microeconomics. New York, NY: Oxford University Press. Becker, Gary S. 1975. Human Capital. New York, NY: Columbia University Press. _____. 1976. The Economic Approach to Human Behavior. Chicago, IL: The University of Chicago Press. Dobb, Maurice. 1963. Studies in the Development of Capitalism. New York, NY: International Publishers Co., Inc. Heilbroner, Robert L. 1972. The Worldly Philosophers. New York, NY: Simon and Schuster. ______. 1976. Business Civilization in Decline. New York, NY: W. W. Norton and Company, Inc. ______. 1978. Beyond Boom and Crash. New York, NY: W. W. Norton and Company, Inc. ______. 1985a. The Making of Economic Society. Englewood Cliffs, NJ: Prentice-Hall, Inc. ______. 1985b. The Nature and Logic of Capitalism. New York, NY: W. W. Norton and Company, Inc. Hughes, Jonathan. 1970. Industrialization and Economic History: Theses and Conjectures. New York, NY: McGraw-Hill Book Company, Inc. Kiker, B. F. 1971. Investments in Human Capital. Columbia, SC: University of South Carolina Press. Marx, Karl and Engels, Friedrich. 1985. The Communist Manifesto. New York, NY: Appleton-Century-Crofts. Marx, Karl. 1965. Das Kapital. Chicago IL: Regnery Gateway. McCloskey, Donald N. 1985. The Rhetoric of Economics. Madison, WI: The University of Wisconsin Press. The Oxford English Dictionary. 1971. s.v. "capital" and "capitalism." Peterson, Willis L. 1983. Principles of Economics, Micro. Homewood, IL: Richard D. Irwin, Inc. Phelps, Edmund S. 1985. Political Economy, An Introductory Text. New York, NY: W. W. Norton and Company, Inc. Posner, Richard A. 1977. Economic Analysis of Law. Boston, MA: Little, Brown and Company. Richards, I. A. 1965. The Philosophy of Rhetoric. New York, NY: Oxford University Press, Inc. Schultz, Theodore W. 1971. Investment in Human Capital. New York, NY: The Free Press. Smith, Adam. 1937. An Inquiry Into the Nature and Causes of the Wealth of Nations. New York, NY: Random House, Inc.
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Author:Diehl-Callaway, Linda
Publication:American Economist
Date:Mar 22, 1992
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