Last weekend, in In Defense of Capitalism, I wrote:

The bakery by the corner, your favorite family restaurant, the grocery store in the neighborhood, the still-surviving small bookshop are all capitalist businesses. Their owners work there along with a few hired workers. The bad news for them is that, for such competitive and traditional lines of business, coming up with new efficiencies is pretty hard, so after paying suppliers, meager wages and taxes, whatever remains for them to bring home for their own survival is probably less than the value produced by their own labor. They're little different from proles themselves, and there are plenty of much larger businesses looking for a cut of their pie. Reinvesting to expand the capital? Some day, they hope.

I want to revisit and challenge my claim that they're capitalist businesses. Sure, maybe they would like to be. But are they?

When we look back in the history of work relations and production and commerce, people making things or rendering services for trade, whether in cash or barter, goes a very very long way back. Even hiring help is an ancient practice. A number of people mistake these ancient subsistence economic practices as capitalism. But they aren't. And despite having long known that, I made that mistake too.

In my understanding, what distinguished capitalism from earlier production for trade, and even from primitive accumulation, is that the goal is no longer the production, or even the subsistence, but the expansion of capital through both extraction of value from production labor and cycles of reinvestment.

Another important factor that enabled capitalism was urbanization: whereas people could previously survive by subsistence farming and some bartering on small patches of unclaimed land (even while having taxes collected by a feudal lord), the development of capitalism pushed people out of now-owned land and into cities, where they had to sell their workforce for wages to earn their living, making them prone to having their labor exploited by capitalists. But this is an enabler, not a defining characteristic.

So the capitalists-wannabe who run the bakery, the family restaurant, the grocery store, the small bookstore, etc, even while hiring workers and exploiting their labor, don't succeed at realizing the capitalist goal of accumulating capital through cycles of reinvestment, because what they earn is barely enough for subsistence, especially after modern feudal lords around them extract the lion's share of their profits.

There's a huge gap between their wish and their reality, and that is IMHO enough to disqualify them as capitalist businesses. They follow much older business traditions. Which is not to say that they don't strive to become capitalists.

I'm growing convinced that capitalist businesses are a myth: the carrot that makes business owners try to achieve the status of capitalists is imaginary. They can't possibly succeed! As long as they keep trying, which the imaginary carrot is meant for them to do, their struggles (are said to) serve society, or at least technological progress, not without exploiting victims. But if they were to ever attain the capitalist dream, what they'd most likely become is unproductive rentiers, i.e., not capitalists but modern feudal lords. Presumably with a capitalist twist of reinvesting their accumulated capital for growth, but unproductive rentiers nevertheless.

Is this really the ultimate defining feature of capitalism?

So blong,