Earlier this week Dylan Pahman reflected on the question, “Which capitalism?” He helpfully explores the nature of capitalism and the importance of definitions.

This conversation reminded me of a point made by Michael Novak during his conversation with Rev. Sirico earlier this year at Acton University. In the Q&A session, he argues that it is essential to understand the nature of what distinguishes capitalism from other economic systems:

Novak says that “markets don’t make capitalism,” but rather that “enterprise, invention, and discovery” are its characteristic features.

Whether not Novak is actually right about what distinguishes capitalism as such (and I do think he is on to something), he is right to point out the qualitative differences between the definitions usually offered of socialism vs. capitalism. In The Spirit of Democratic Capitalism, he observes that socialism has been effectively reinterpreted: “Socialism is not a set of political or economic programs; it is a set of political and economic ideals.” By contrast, the definitions of capitalism that are often offered in textbooks are precisely about economic and political institutions and programs rather than ideals or goals.

Consider, for instance, the definitions offered by Craig Blomberg in his recent essay, “Neither Capitalism nor Socialism: A Biblical Theology of Economics.” Citing the Oxford Dictionary of Economics, capitalism is “the economic system based on private property and private enterprise.” Socialism is identified as involving “the idea that the economy’s resources should be used in the interest of all its citizens.” One definition is focused on structure, the other is connected with moral ideals.

In discussing his move away from socialist thinking, Novak admits that previously “I tended to give socialists credit for pure idealism. Capitalism might be justified because it works better, but–I tended to agree–it represents an inferior ideal.” Its true that capitalism as defined by Novak does have its own ideals, but they are rather more chastened than that of the ideals of socialism, rather less utopian and eschatologically-freighted. This idealistic bent of socialism inures it to many of the critiques based on real-world failure and sets forth a moral purpose that can galvanize social protests and movements. “The socialist world is predominantly literary,” writes Novak. “It is far easier to organize words on paper than to organize workable programs in reality.”

But if modern socialism’s idealism is one of its strengths, then it is also its fatal flaw: “Socialists typically judge democratic capitalism by the strictest standards of performance, while extending extraordinary sympathy to even the flimsiest claims of socialist revolution elsewhere.” Socialism just doesn’t work, and that has to mean something.