I’ve been thinking a lot lately about the insufficiency of our current language or terminology to describe what is happening in the economy and in the government lately. As I described in my previous post, I have been reading a lot about economics lately and have started to formulate my own thoughts better, so I thought I would write down some of the things I was thinking about confusing terminology.

Consider the term market. What does that term mean? I’ll cheat and ask Wikipedia, which describes a market as:

any one of a variety of different systems, institutions, procedures, social relations and infrastructures whereby persons trade, and goods and services are exchanged, forming part of the economy.

That’s quite a mouthful, so does it help us understand what is meant by “market-based solutions” or “market failures” in current discussion about the economy? (For that matter, what is meant by “the economy”?) As I’ve been reading and listening to more of authors/economists like Friedrich Hayek, Milton Friedman, Russ Roberts and Arnold Kling, I’ve come to believe we need some better terms to cover what is meant by the “market” or “free markets”. There is the popular fable that Eskimos have multiple words for snow (though that turns out to be a significant simplification of the real story), so why do we only have one word for a complex concept like markets? And do markets have goals or are they simply a mechanism (or system, institution, procedure, etc. as described above) for buyers and sellers to exchange goods or services without any higher purpose? More thoughts on this later and I will try to provide some links to other blogs or quotations from books that have covered this topic far better than I can.

Now on the other end of the economic or political spectrum, consider the term socialism. This term has come up a lot recently in regard to the health care reform debate in particular, with accusations or insinuations that Barack Obama is a socialist. Socialism traditionally defined means the public or state ownership and operation of the means of production. It seems clear that no matter how harmful the current proposals for health care reform may be, they are not equivalent to socialism as traditionally defined. Obama’s overall policies also can not really be called socialist, but they are clearly much closer to socialism than they are to a laissez faire approach that has been traditionally favored since the founding of the United States (or at least was largely favored until the New Deal). Still, if it is not fair to call Obama’s policies socialist, what are they? Perhaps statist is a better description. Again, let’s ask Wikipedia about statism:

A major state, including government policy, role in the direction of the economy, both directly through state-owned enterprises or other machinery of government and indirectly through the state-directed economic planning of the overall economy.

That certainly seems closer to what we are experiencing right now, with government takeover of automobile companies, government ownership of financial institutions, government regulation of compensation at firms “receiving large sums of government aid”, government ownership and operation of industries such as passenger rail transport, etc. But statism as a term is often closely associated with fascism. But how can that be when fascism is a right wing phenomenon? Actually, fascism has been used as an insult or epithet on both sides of the political spectrum, including against various left wing groups. And what do left wing and right wing really mean anyway? They are used as shorthand for a wide variety of pre-conceived notions about one’s political views but more often used to describe one’s political opponents. I think this sloppy use of terminology is not very helpful in promoting reasonable and thoughtful intellectual discourse. The question is what can we do about it, in particular can we come up with some better terminology that will become widely accepted?