Philosophical Reflections XIX
The role of government is to uphold individual rights. The type of government this requires is a constitutional republic, in which officials are elected democratically, but their powers are strictly limited by constitution. Those limits are that the government cannot interfere with voluntary relationships between adults: it can (and must) step in only to defend against the initiation of physical force.
Consequently, it may not regulate the economy, nor have any part in charity. As I have shown before, any such involvement – any functions besides the police, armed forces and law courts – require the initiation of physical force against disarmed citizens, and there is no “higher good” that can justify such a violation of human rights. There is no higher good than upholding the rights of each and every individual to live by his or her own judgment, in voluntary relationships with other people.
This follows from the nature of man and the nature of reality: from how a rational being must act to live. All the rest of the philosophy of politics follows naturally from it.
The economic system that is the automatic consequence of such a system is free enterprise, or laissez-faire capitalism. Given the explosive increase in the average, maximum and minimum standards of living that such a system always results in, it might seem amazing that it is so hated and despised, but the simple answer behind the high words is envy: “he has more than me, and I want some of it.”
I have noted before (Philosophical Reflections 15) that a detailed defence of capitalism is far beyond my present scope, and I refer anyone interested to the references given there. In particular, for sheer readability, pertinence and clarity for the layman, I recommend Henry Hazlitt’s books: Economics in One Lesson, The Conquest of Poverty, and The Failure of the New Economics: An Analysis of the Keynesian Fallacies. Another excellent source of data is The State of Humanity, edited by J.L. Simon.
Nevertheless, so much misinformation about capitalism has become the “common wisdom” that some defence is required, so I’ll briefly address some basic concepts and examples.
First, I must clarify my terms. When I say that the government must not initiate force against its citizens, I mean it. What have been called “political entrepreneurs” – men who seek to achieve success and wealth through favours granted by the government, whether by subsidies to themselves or the throttling of their competitors – are not exponents of capitalism. They are just looters like any other, only more cowardly because they hide behind the power of the State. Nor do I mean “economic rationalism”, which as far as I can see means removing all government assistance from businesses while leaving all government impediments in place. By “capitalism” I mean a free enterprise system where all economic relations between people are at the sole and free discretion of the parties involved, and force and fraud are outlawed.
The Rich Get Richer and the Poor Get Richer
One of the major assumptions behind most attacks on capitalism is summed up by the bromide “the rich get richer and the poor get poorer”. This implies there is a fixed cake, so anyone who gets wealthy is doing so at someone else’s expense, and therefore the government has a right to steal some of it back.
The most cursory look at history would show that this is false. It is closest to the truth when people are ruled by force: when there is no incentive to produce beyond the bare minimum, because the beneficiaries of your production are the men riding on your back, men who grow rich by theft and plunder. But when the mind is free to function, to invent and to produce: when the result of the virtues that keep men alive is indeed the achieving of your values and the enhancement of your own life, not the maintenance of your exploiters: then the result is an explosion of wealth.
The core of the matter is that wealth is produced. It is not some static quantity plucked out of the sky. What successful production does is to create wealth where none was before. And how does a man get rich in a capitalist system? The only way is if what he produces is of sufficient value to enough other people! The result is a better standard of living for everyone – at least, for everyone who seeks to live by trading value for value, which is the only way an honest man can live.
It is no accident that the result of capitalism, even the version we have, has been massive, simultaneous increases in both standard of living and population. Nor is it an accident that if you showed the standard of living of today’s “poor” to the poor, or even the average, of a few centuries ago – they would laugh at the appellation “poor.”
Guns or Gold
Another argument is that the successful acquire economic power, which is just another form of power, so it is right for the government to counteract it with political power.
Yet all that “economic power” is, is the power to offer values: to offer goods, services, employment etc to people who want them. To curtail it does not require being stronger, faster or more vicious. All it requires is: don’t buy. To say that the power to produce is no different from the power to rob; that the power to offer values to the free choice of other people is the same as the power to coerce; that the power to offer a man meat is the same as the power to kill him – is such a perversion that it is hard to credit anyone saying it seriously. But like all arguments whose final backup is a gun, such an argument is not a reason, but an excuse. Those who say it, deserve nothing but to learn the difference between gold and guns, between reward and punishment, on themselves. And that reveals the truth of the matter: they have no intention of being on the wrong side of those guns. Anyone who preaches that it is moral to initiate physical force, means that he intends to be its beneficiary.
I have room for only the briefest economic defence of capitalism. My purpose here is not to prove – that would take far too many volumes – but to propose: not to convince, but to make you think: not to answer every critic of capitalism, but to show that answers exist. Those interested can find the answers themselves.
Child labour is often touted as an evil of capitalism. Do people really think that parents then loved their children less than parents now? Why did the children work? Most children in fact worked voluntarily, because the alternative was worse (a major exception were the “altruistic” orphanages, who were responsible for the worst abuses of children). The proof is simple: the rapid growth in population that resulted from the industrial revolution, caused by better health and lower child mortality.
It is claimed that the government needs to protect local industries, by subsidies or tariffs. In fact, completely free trade – whatever your trading partners do – is always best for the local economy. Protecting less efficient industries can only be done by penalising the more efficient, which transfers resources from the best to the worst, and must thereby damage the economy. The simple facts of reality are that trade is better than no trade, and in the long term, exports must equal imports: and the less distortion of the process, the better everyone’s standard of living.
It is said that capitalism results in monopolies. In fact, a monopoly based on anything but consistently superior production cannot last. Governments who bewail “walls of money”, that swamp their “noble” attempts to prop up a currency far above its true worth, should know this. Capital flows to where it can make the most money, so the only way to maintain a monopoly is to actually stay better than everyone else, in which case you deserve it. Historically, destructive monopolies have existed solely by virtue of government interference: special subsidies, grants, licences and permits to political entrepreneurs. And universally, those governments’ response to the resulting abuses has been to further hamstring those who would achieve their heights by unaided ability.
And that is the major point I wish to make. The evils attributed to capitalism are either not evil – such as unequal incomes – or are not the result of freedom, but of government interference – such as monopolies and country-wide depressions, unemployment and inflation. But governments never believe, despite the proof, that an unregulated economy will always function better than one under their central control. They always think they know best. And their response to the problems caused by their own activities has always been, not to leave trade to men’s free judgment, but to blame the victims, and pass yet more laws. The Great Depression is a classic example: the direct result of government policies, yet touted as an example of and excuse for why the economy must be regulated!
What of the poor? What of those who through disability or age cannot work?
Basically, the best thing you can do for the poor is to give them a job. There are very few people so disabled that they cannot do anything well enough to earn at least their food and shelter.
Of course, there will always be some. The only proper answer to that is: private, voluntary charity. All charity must be voluntary, based on the value-judgments of those whose charity is sought. “Compulsory charity” is a contradiction in terms. There is never a justification for initiating physical force, and that is especially true about those on whom you, by your own admission, depend. The only thing more contemptible than the man who thinks his need justifies robbery of those he needs, is he who pretends to the mantle of virtue by practising “charity” with money that is not his, but is taken by force from someone else.
There are only two fundamental ways of dealing with other people: you can deal with their minds, or you can attempt to rule them by force. By the nature of reality and the nature of man, the only moral way – the only way consistent with human life as the fundamental standard of value – is with their minds.
That fundamental choice reflects itself in politics, as it is the branch of philosophy concerned with life in society. The choice is actually quite simple. Deal with men’s minds, which means: all relationships have to be voluntary, by the free agreement of those involved. Or deal with them by force, which means: to you, other people are rightless creatures whose purpose is to serve yourdesires, your values and your whims.
Beneath all the self-righteous mouthings, the latter is the naked essence of any politics which states that the State has the right to initiate force against legally disarmed citizens. It is the desire to exist, not by free trade and voluntary agreement, but by force: by force to take someone else’s money to use for your ends; by force to coerce those you need into dealing with you, not according to their judgment, but according to your demands; by force to hamstring those who are the best among men – best by your own admission, as you wish to tie and bleed them, not stop them – in order to take what you cannot produce yourself. Since the essence of economics is that wealth is produced, and produced by someone, the essence of those who wish to rule the economy by governmental force is the desire to steal that wealth – to use its producers not as men to be honoured, but as cows for the milking.
But every man is an end in himself: not a means to the ends of others, no matter how many there are or what their needs may be. Every person’s proper and moral course is the pursuit of his or her own happiness, to be achieved by the application of whatever ability they have, to be rewarded only according to the free judgment of other people. A free country is the truest democracy there is: because everyone’s reward, of necessity, is solely the sum of the unforced judgments of everyone who buys – or chooses not to buy – his products, services or labour.
Free-enterprise capitalism is the only valid economic system, not because it leads to the greatest good for the greatest number (though it must), not because it has led to the greatest length and quality of life ever seen on earth (though it has), and not because it has done more to improve the lot of the poor and the weak than every altruist ever born (though it does). It is because it is the only moral system – the only system based on freedom not force – the only system in which everyone’s mind, their tool of survival and happiness, is free to function by their own uncoerced judgment – the only system compatible with men living together, not as masters and slaves, but as equal traders of value for value. And the whole essence of its opponents is that they believe the “practical” way to deal with men is by force: and they intend holding the whips.