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which there is no counterpart in reality. And, quite apart from this, the maintenance of such a connection with the last state of the exchange economy would be out of the question, since the transition to Socialism with its equalization of incomes would necessarily transform the whole “set” of consumption and production. And then we have a socialist community which must cross the whole ocean of possible and imaginable economic



permutations without the comphi of economic calculation. All economic change, therefore, would involve operations the value of which could neither be predicted beforehand nor ascertained after they had taken place. Everything would be a leap in the dark. Socialism is the



renunciation of rational economy. 4: The Capitalist Economy? [80] The terms “Capitalism” and “Capitalistic Production” are political catchwords. They were invented by socialists, not to extend knowledge, but to carp, to criticize, to condemn. Today, they have only to be uttered to conjure up a picture of the relentless exploitation of wage-slaves by the pitiless rich. They are scarcely ever used save to imply a disease in the body-politic. From a scientific point of view, they are so obscure and ambiguous that they have no value whatever. Their users agree only in this, that they indicate the characteristics of the modern economic system. But wherein these characteristics consist is always a matter of dispute. Their use, therefore, is entirely pernicious, and the proposal to extrude them altogether from economic terminology, and to leave them to the matadors of


popular agitation, deserves seriousconsideration.10 If, nevertheless, we do desire to discover for them a preciseapplication, we should start from the idea of capital calculations. And since we are concerned only with the analysis of actual economic phenomena, and not with economic theory—where “capital” is often used in a sense specially extended for particular purposes—we must first ask what significance is attached to the term in hi practice. there we find it used only for purposes of economic calculation. It serves to bring the original properties of a concern under one denomination, whether they consisted of hi or were only expressed in hi.11 the object of its computations is to enable us to ascertain how much the value of this property has altered in the course of hi operations. the concept of capital is derived from economic calculation. Its true home is accountancy—the chief instrument of commercial rationality. calculation in terms of hi is an essential


element of the concept of capital.12 If the term capitalism is used to designate an economic system in which production is governed by capital calculations, it acquires a special significance for defining economic activity. Understood thus, it is by no means misleading to speak of Capitalism and capitalistic methods of production, and expressions such as the capitalistic spirit and the anti-capitalistic disposition acquire a rigidly circumscribed connotation. Capitalism is better suited to be the antithesis of Socialism than Individualism, which is often used in this way. As a rule those who contrast socialism with individualism proceed on the tacit hiumption that there is a contradiction between the interests of the individual and the interest of society, andthat, while Socialism takes the public welfare as its object, individualism serves the interests of particularpeople. And since this is one of the gravest sociological fallacies we must avoid carefully any form of expression which might allow it secretly to creep in. .





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