What is Capitalism? The dictionary defines it as “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.” While accurate enough, this definition fails to capture the essential characteristic which distinguishes capitalism from other economic systems, past and present. For one thing, even in the quintessential capitalist economy – our own – the state intervenes significantly in trade and industry; for another, there have been non-capitalistic economic systems in which trade and industry (or more precisely, craftsmanship) were in private hands, be they those of yeomen, guildsmen, or lords of the manor.
A simpler definition, I think, better captures the essence of Capitalism and that is “an economic system based on the charging of interest for the use of capital”. This is Capitalism’s distinguishing feature, that which sets it apart from prior systems and probably future ones, as well. It is so integral a part of our economic life we forget – or more likely never even considered – how unique in human history such a system is. Who is aware that for most of its history the Christian Church condemned usury as a sin, canon law defining usury as the charging of any interest, not the muddled banking law euphemism, “exorbitant interest”. In fact, all three of the Abrahamic religions condemned usury (though in Talmudic law it applied only to intra-Israelite transactions) and one – Islam – still does.