This Strange Thing Called Capitalism
by Manfred F. Schieder
"The moral justification of capitalism lies in the fact that it is the only system consonant with man's rational nature, that it protects man's survival qua man, and that its ruling principle is: justice."
From "What is Capitalism?", by Ayn Rand.
A recent small and short family quarrel in relation with French president Nicholas Sarkozy's declaration at a party meeting held on September 25, 2008 in Toulon, that "Capitalism has derailed" and must, therefore, be controlled and directed (evidently by politicians and further bureaucratic servants), brought to my attention that not only Sarkozy and his followers on the subject (Germany's Merckel, Venezuela's Chavez and, of course, the United Nations and other such useless organizations) are fully ignorant of what Capitalism (a word that deserves to be written in capital letters by every defender of liberty and personal freedom) means. Many of those holding a position of power and ascribing the present worldwide situation to a Non-existent, namely Capitalism, are definitively malevolent and take advantage of a wrongly evaluated situation to confuse the common citizen, whose own notion of what Capitalism is, taught in schools, colleges, etc. is no less wrong, the whole following a plan to reach the full and total domination of mankind. "Big Brother" is getting close if not already here! The recent approval by 63% of the voters of the new, left wing Constitution in Ecuador confirms this further.
This moved me to write this article, fully aware that others before me presented a much deeper and more elaborate analysis of the subject. Still, there would be little to read and practically no literature at all, if writing on a certain subject were to be left only to a few officially approved intellectuals. Mine is, so to say, a more "popular" approach to the matter.
First of all, I must state, and do so very clearly, that Sarkozy and his henchmen are evidently making a big blunder, since there is no way in which a zero could be botched, for what doesn't exist just doesn't exist and cannot, thus, be "derailed" in any way.
Capitalism has never been applied anywhere anytime up to now and the way things are developing world over it does not look like it has a big chance to be established, at least in the near future. What has existed up to now and continues to exist, is feudalism, a system where an overlord or a synergy of overlords determine the course of action based on their vagaries, allowing or prohibiting what will and how it will be produced and how it will be distributed, following a maze of commands (laws) and taxes (an official racket). However, the nature of personal survival follows its own rules and, thus, a few of the common economic laws of Capitalism have acted in every kind of society and even smuggled themselves, in a very rudimentary form, into nowadays feudalism.
Ludwig von Mises clearly demonstrated the absence of Capitalism in his masterwork "Human Action" (Part I, Chapter 3.2): "The rich, the owners of the already operating plants, have no particular class interest in the maintenance of free competition. They are opposed to confiscation and expropriation of their fortunes, but their vested interests are rather in favor of measures preventing newcomers from challenging their position. Those fighting for free enterprise and free competition do not defend at all those who are rich and wealthy today. On the contrary, what they want is to clear the way to men unknown and lowly today who will be the entrepreneurs of tomorrow and whose ingenuity will raise the life of the masses. All they want is to produce a greater prosperity and the greatest economic improvement. They are the avant-garde of progress."
The so-called "social market economy" also belongs to the area of feudalism and here again the genius of Ludwig von Mises demonstrated it most dramatically in "Human Action" (Part 6, Chapter 27.3): "The interventionists repeat again and again that they do not want to abolish the private ownership of the means of production, of entrepreneurial activities, and of market exchange. In this sense the representatives of the German "Soziale Marktwirtschaft" (Social Market Economy), the most recent variety of interventionism, stress that they consider the market economy to be best possible and most desirable system of society's economic organization, and that they are opposed to the government omnipotence of socialism. But, of course, all these advocates of a middle-of-the-road policy emphasize with the same energy that they reject Manchesterism and laissez-faire liberalism. It is necessary, they say, that the state interfere with the market phenomena whenever and wherever the "free play of the economic forces" produces conditions that appear as "socially" undesirable. They believe that the government must decide in this case what is and what is not "socially" desirable. In making this assertion they take for granted that it is the government which is called upon to determine in every single case whether or not a definite economic fact is to be considered as reprehensible from the "social" point of view and, consequently, amply empower the bureaucracy to determine it."
What, then, is Capitalism?
Since any regulation of the economy and its functions by the government as well as ruling the peaceful, productive tasks and behavior of the individual means, by definition, slavery, Ayn Rand precisely defined Capitalism as a "social system based on the recognition of the individual rights, including property rights, in which all property is privately owned", a statement that even defenders of liberty should recall more often. Rand's assertion signifies that it doesn't merely mean that the means of production and distribution are to be privately owned, for this is also found in Nazi, Fascist, mixed economy and all further socialist forms of society (Hitler told Rosenberg that it was not necessary for his ruling to own the "factory owner's toys", as he called them, for Nazism would own and direct all the individuals themselves, this being one of the reasons why I call dictators in general by the generic name of Stalitlers) but that all peaceful, productive decisions are owned by the individuals that take them in furtherance of their own life. This effectively banishes force from all human relationships (the reader should not forget that taxation, for example, is an enforced procedure of taking a part of the people's money to support the government, a part whose ever increasing percentage is determined by government itself, either directly or covered by the decisions of the "representatives of the people", that is congressmen who actively support the government but not precisely the people!). Remember Ayn Rand's words in relation with the use of force: Nobody has the right to initiate an act of violence against a person or a group of persons, i.e. there is no right that allows to interfere with the life and activities of the peaceful, productive individual.
A government's (notice that the term itself means "to rule") only legitimate function is the protection of man's rights, that is., as Ayn Rand defined, the task of protecting the peaceful individual from physical force. This activity, which, by the way, does not exclude private security forces for its fulfillment, obliges a government to abandon its denomination as such to properly become an Administration of the Means of Defense of the Rights of the Individual.
Within the Capitalist system the duties of the congressmen change dramatically, since basically all they have to do is to design the mentioned means of defense, that is to enact (through the Courts, the police and the armed forces) the main moral law of the Capitalist social system, i.e. to concretize the principle that "nobody has a right to initiate the use of physical force against others". This is achieved by deterring and/or adequately punishing those who break the moral law mentioned.
Specifically in relation with the economy, Judge Narragansett states, while rewriting the Constitution to adequately and properly represent the Capitalist ideals in Ayn Rand's "Atlas Shrugged" (Part 3, Chapter 10): "Congress shall make no law abridging the freedom of production and trade."
The above clearly shows that Capitalism is a truly human system designed for humans as peaceful, productive individuals. It recognizes the metaphysical fact of man's nature, the connection between his survival and his use of reason, as Rand specifically stated in her article "What is Capitalism?" It operates on the basis that all human relationships are voluntary and, thus, rejects all and every authoritarian command of whatever form it may take. It bans force from social relationships, sets up the defense against eventual transgressions and, as Ayn Rand also pointed out, fundamentally opposes war, unless the free, Capitalist system is attacked by a foreign nation, since in that case, the moral law of Capitalism applies, violence having been initiated by the attacking country.
We are still living within statist systems, systems based on the tribal notion that the individual must sacrifice his efforts to a Moloch composed of a faceless collective "represented" by politicians and bureaucrats that uphold the belief that some men have the right to rule others by force through the alleged justification that men must be ruled by others who deem themselves to be "chosen" fit for it. As mentioned before, I call them generically Stalitlers. Such systems are continuously involved in acts of violence whose only result is the hindrance of the development of knowledge and economy and the physical destruction of man and mankind itself.
Hence, as Ayn Rand stated in "The Objectivist Ethics": "Capitalism is not the system of the past; it is the system of the future - if mankind is to have a future."
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