Sunday, December 17, 2006

Etymological evolutions - economics and politics

A mail in from one of the active participants in our Land Café. Reactions? I suggest that you might add them both as Comments here, and copy to Dan via Eric Britton

From: Dan Sullivan []
Sunday, December 17, 2006 4:11 PM

I am interested in the evolution of English-language words, particularly when that evolution is related to political agendas.

George Orwell said that he developed *1984* by simply extending trends to their logical extreme. With regard to language, he wrote,

The purpose of Newspeak was not only to provide a medium of expression for the world-view and mental habits proper to the devotees…, but to make all other modes of thought impossible. It was intended that when Newspeak had been adopted..., a heretical thought... should be literally unthinkable, at least so far as thought is dependent on words. This was done... chiefly by eliminating undesirable words and stripping such words as remained of unorthodox meanings....

Economics, particularly, suffers from an ambiguity of terms that other sciences do not allow. Economists sometimes take pains to qualify their use of these terms for greater precision, but politicians glom onto the results while substituting misleading definitions. Some of the substitutions are as follows.

* "Invest" for "acquire" or "control." Encouraging investment is seen as a good thing, but this is in the sense of "putting something into," as distinct from "acquiring" or "controlling." A clear example of this usage is the parent who "invests in his child's education." In many cases, investment and control or acquisition go hand-in-hand, as when a person invests in his own business, etc. However, acquisition can occur without investment, as when one purchases stock without transferring money into the company purchased or property without making improvements to that property.

* "Income" for "earnings." "Income" used to mean "that which comes in," especially of its own accord -- what we now call "passive income." When people in the 18th and 19th century debated the merits of income tax, passive income is what they had in mind. Today we speak of the "earnings of stock" and the "income of labor," completely reversing the original definitions and thereby clouding the issue. Today's so-called income taxes are actually earnings taxes, and are to a significant degree payroll taxes.

* "Wealth" for "obligations." When Adam Smith wrote *Wealth of Nations*, he was careful to distinguish between actual wealth that made the entire nation more prosperous and obligations between one citizen and another that had no effect on wealth. Today we encourage "savings" of money in banks at the expense of inventory in warehouses. As some deposit money and others borrow it, we are increasing obligations, not wealth.

* "Value" for "utility." Smith was also careful to distinguish "value in exchange," or what we now call market value, from "value in use," or utility. Popular arguments that "all value is subjective" stem from confounding market value with utility.

* "Capital" for "assets." This is similar to the confounding of wealth and obligations. Economics is predicated on three factors of production, land, labor and capital. For capital to be intelligently discussed as a factor of production, its definition must, at the very least, distinguish it from other factors. Yet we frequently see all assets, including land and debt obligations, described as capital.

* "Human capital" for "labor." This is just an extension of the previously described ambiguity.

* "Labor" for "unions." As a factor of production, labor must include all people whose input, whether physical or mental, contributes to the productive process. However, both the supporters and detractors of labor unions use the term "labor" to mean "unionized labor," or, at least, "wage labor."

* "Spending" for "exchanging" or "rendering"

When a candle is spent, the candle no longer exists, but when money is spent, it is merely in someone else's hands. While increasing the circulation of money is considered to be good for the economy, spending money, which means exactly the same thing, is treated as bad for the economy. While wasteful government spending can indeed be bad for the economy, the presumption that spending money is a negative unto itself comes from this confounding of meanings.

* "Savings" for "loans." This is an offshoot of confounding money with wealth. Putting money in a bank is not saving wealth, but is making a loan to a borrower with the bank as an intermediary.

* "Rights" for "privileges." Rights in the sense of free speech, universal suffrage, due process, etc., are fundamentally different from privileges that are conferred, such as "the 'right' to operate a taxi, etc. Terms like patent rights, broadcast rights, contractual rights, property rights, etc., are given weight and sanctity by their sharing a term that also applies to universal human rights.

* "Privatization" for "patronage." Privatization is one of the more recent euphemisms. It rarely means government stepping out of the picture or even giving up control. More often, it means government hiring a company to provide a service instead of hiring individuals directly. Tammany Hall, the most notorious patronage machine in American history, was based almost entirely on contract patronage. The switch to direct employment and civil service was one of the great reforms of the progressive era.

* "Common" for "government" or "collective." Prior to Marx, "common rights" were individual inalienable rights that each person held as a human being and a member of a society that respected those rights. Both the left and the right are quick to confound the two. (I wrote an essay on this at:

* "Free market" for "status quo." The left and the right both refer to the status quo of business relationships as the free market -- one in attacking it and the other in defending it. One libertarian wag even argued that the emancipation of slaves was an interference in the free market, which would have solved the slavery problem on its own. The absurdity of a free market in slaves was lost on him, and less obvious ways in which the status quo cannot be called a free market are lost on many people from across the political spectrum.

* "Capitalist" for "landlord." An owner of a $9 million apartment building on a $1 million dollar lot is referred to as a landlord, even though his asset is 90% capital and only 10% land. Yet an oil company is referred to as capitalist even if its assets are 90% land and natural resources and only 10% capital.

* "Single owner" for "monopoly." The term "monopoly" used to refer to any asset that was controlled by a subset of the population to the detriment of the rest of the population. Thus, import tariffs gave domestic producers the ability to charge a monopoly premium, etc. Neoclassical economists deflected anti-monopoly sentiments by simply redefining the term. However, the original term is still understood in common speech, as when women complain that the louder, more aggressive men tend to monopolize the conversation.

This evolution of terms has a variety of causes, I think. In some cases, mere self-image concerns are sufficient to cause the substitution of a more flattering term. Certainly a person would rather describe himself as "an investor" than "an acquisitor." Other times it is common usage spilling into usage as an economics term, as when an apartment owner is referred to as a landlord. Sometimes it is ad-hominem analysis substituting for process analysis. Is a capitalist someone who owns capital or someone who believes in capitalism, and why is analyzing that person a substitute for analyzing the process in the first place? And, sometimes it is part of an intentional effort to deceive, as when the neoclassical school of economics was founded by people who had explicitly stated their interests in changing the debate from being pro or anti monopoly to being pro or anti socialist.

In any case, I am looking to trace these etymological changes back to their roots. Some words go back even farther, and are quite interesting:

"Mail," "impost" and "tax" were close synonyms. (The tax collector used to supplement his income by carrying letters and goods from one taxpayer to another, which is how the tradition of government employees carrying the mail began.) Those who could pay their taxes in silver were paying "white mail." As poorer people who had no money were taxed by portions of their goods being taken, it was called "black mail."

The OED says that "real," as in "real property" or "real estate" comes from the Latin "res," and is unrelated to "royal." Yet the word arose when real property was distinguished from the commons as "property held by the Crown" (or held by a landlord under the auspices of the Crown) at a time when "royal" was indeed spelled "real." It therefore seems odd that the obvious connection to royal property is not the recognized connection.

Similarly, the title to land originated as part of the royal title. For example, the lands of Sussex went to the Earl of Sussex, and when the king granted the one title, he automatically granted the other. My understanding is that the official ceremony, wherein the king laid his sword on the shoulders of the person being titled was called the "deed," from which the term of title deed arises.

These etymological evolutions and etymologies have a great deal to do with the fuzzy thinking that dominates economics and politics. If anyone has other examples, I would like to add them to this list. If anyone has ideas on how to further research the evolution of these terms, I would also be interested in that.

Sincerely, Dan Sullivan


Anonymous Simon Norton said...

On Behalf Of Simon Norton

When words change meaning it is surely often because the new meaning is more
useful. Either a distinction that has been made in the past is considered no
longer relevant, or one needs to introduce a new distinction.

For example, the word invest. If A buys shares in a company from B, then A is
investing and B is disinvesting. Therefore no net money is put into the company, but that doesn't mean that A personally isn't putting money in. After all, if B put money in at an earlier date, then the net result after A has bought his shares is the same as if A had done so.

For "income" or "earnings", I think we need another word to describe money taken from a company by its management without any assurance of value received.

I won't bother to go through the list as I think those two illustrate what I

On the "newspeak" theory, I wonder if it would make any difference to our
transport mix if the word "car" was abolished. Does the existence of a
monosyllabic description of a machine that is very complicated both in its
engineering and in its impact on society make it easier for people to think of it as the "default" means of transport ?

Simon Norton

Mon Dec 18, 10:39:00 AM GMT+1  

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