The Distinction between Capitalism and Liberalism: an Operational Concept

This paper draws a distinction between liberalism and capitalism as two different forms of the market economy. It revisits Smith's conception of the economy in The Wealth of Nations (1776) and compares it with the prevailing economic system. In making such comparisons, the article highlights four major contradictions: 1/ labor without accounting value whereas it is the source of all wealth in Smith's view; 2/ mechanisms of concentration and mergers & acquisitions at the exact opposite of competition in the liberal corpus; 3/ widespread confusion between economic liberalism and a vanishing State; 4/ a horizon of accumulation of wealth and profit far different from the equilibrium approach of Smith and the classics. It then elucidates the difficulty in recognizing these discrepancies in the two systems and connects the issue to an insufficiently clear vision of the economic field. The paper offers to stylize it around four strata: practices, norms, theories, and discourses. In line with Wittgenstein's analysis about language (PI), it stresses the importance of the rules of the game in the economic process. Through such a lens, we can understand that confusion lies in discourses and differences in norms.