----------------- HES POSTING ----------------- Mircea, it seems to me that you are using two different meanings of the term "capital." > My personal belief is that 'capitalism' described well the developed world economy in 19th century to just about 1950; _capital_ was the main scarce factor of growth and it justified profits. Here, capital is a factor of production. > 'Market economy' describes better the current state of the world: capital can be obtained plentifully through a well-developed market; but the scarce factor to make it work are favorable _markets_, i.e. intense consumer desires and/or cheap, organized resources (technology, labor, nature). Here, capital appears to be money. Of course money can be used to buy machines, tools, buildings, etc. but it can also be used to buy technology, labor, and rights to "natural" resources. In light of this, what does "capitalism" mean? Ludwig von Mises (Human Action, 1966: 230) had an interesting answer. He suggested that we associate the word "capitalism" with capital accounting -- using money and estimates of future returns on saving and investment to determine the current value of resources and goods. Capital accounting enables individuals in a social setting to compare expected wealth. It enables them to make informed choices about which investments are likely to be more profitable. Without money and loan markets, such choices would be much more difficult to make. Mises also claims that the term "capitalism" was employed to deprecate the free enterprise system (or what Adam Smith called "the system of natural liberty.") This claim seems to be based on the view that to readers who accepted a crude labor theory of value, it would refer to a system in which capitalists captured surplus that rightfully belonged to the hands-on manufacturers. The word "market economy" has a different connotation. I define it as containing three characteristics: specialization, money, and private property rights including the right to the ownership of what one produces and the right to exchange ownership: http://www.gunning.cafeprogressive.com/knowent/mi-1.htm I use the term "pure market economy" to define a market economy in which rights exist to control every action that causes an external effect. In this economy, there are no non- internalized externalities, except in the sense that it is more costly to make the exchanges that would eliminate them than it is worth to the exchanging parties. I know that this does not directly answer all of your questions. But you have placed a rather tall order. Perhaps you could tell why you want to know the origin of these terms. After all, words are just words. Ideas are different. Pat Gunning ------------ FOOTER TO HES POSTING ------------ For information, send the message "info HES" to [log in to unmask]