“Laissez-faire capitalism is the only social system based on the recognition of individual rights and, therefore, the only system that bans force from social relationships. By the nature of its basic principles and interests, it is the only system fundamentally opposed to war.”
- Ayn Rand, “Capitalism: The Unknown Ideal”
To speak of capitalism is to speak to individual liberty and fundamental human rights. In doing so one must also speak of the United States of America, for there as nowhere else in the world has capitalism, and therefore individual liberty, been allowed such expression.
Capitalism is an objective moral imperative. In order to best illustrate this it is effective to examine capitalism in contrast to the ideal that is antithetical to individual rights, to liberty, and to the objective morality that requires them. The antithetical ideal I’m referring to is altruism and its political expression, collectivism. We’ll get to that shortly.
I’m writing this essay because I find that few people have any significant grasp of what capitalism is, what it means, what it assumes and requires, and how it works. Many who hold capitalism in high esteem and often repeat the notion that capitalism is the best system will falter when asked to defend it or explain it. Unfortunately, few supporters of capitalism are able to recognize lies about and misrepresentations of capitalism. This, in part, explains why capitalism even in the U.S. has ever been corrupted by collectivist ideals. In this ongoing corruption, ignorance and outright malevolence play as equal partners. I’d like to help address the ignorance component here.
Contrary to what you might have heard or might believe, capitalism is neither an economic system nor a political system. It is a social system that—according to its fundamental morality—defines the moral basis of social relationships (of all kinds, including economics and governance)…and the only system conceived by man that can preserve individual liberty and the singular human right of a man to his own life.
Capitalism is the direct expression of the moral absolute of human life.
What are Individual Rights?
“A “right” is a moral principle defining and sanctioning a man’s freedom of action in a social context.”
- Ayn Rand, “Capitalism: The Unknown Ideal”
In order to understand the morality of capitalism, you have to understand individual rights. Despite the seeming simplicity and likely familiarity of the term, I find that few actually understand this term and the morality associated with it. Clear evidence of this fact is found in the way that so many who claim to be champions of rights routinely support efforts that destroy them (and later in this essay I’ll explain why this happens).
There is, in fact, only one fundamental right: the right of a man to his own life. This is the basis of capitalist morality. All other true rights flow from this singular right and all are mutually-supportive. The example rights cited in the U.S. Declaration of Independence—to life, liberty, and the pursuit of happiness—require this fundamental right as their basis. What’s more, they require others not explicitly cited: an individual’s right to think, to work (no, not to be employed), and to keep and dispense with the product of his work and his genius as he sees fit, unencumbered by force or compulsion. This moral concept, as I will make clear in this essay, is one that only capitalism can uphold and protect.
A real right is one that places no obligation or limitation on anyone else’s rights. A “right” that places a limitation on another’s rights or compels an action from another person is tyranny and a violation of individual rights. Remember this, as every system and ideology other than capitalism will work to deceive you with a dizzying array of false rights as justification for the tyranny that they require.
The rights to life, liberty, and the pursuit of happiness require that a government secure these rights…because a moral government is by its very definition beholden to the individuals it serves. This is, in fact, the only moral purpose of a government: to preserve and protect individual liberties from attacks; foreign and domestic. Remember this, too, as it will help you to recognize the many tyrannies that you and your fellow citizens have been subjected to your entire lives.
Antithesis
Tyranny directed toward individuals comes by way of one system: collectivism. Based on the morality of altruism, the ideological basis of collectivism is expressed in many variants, including communism, socialism, liberalism, fascism, progressivism, and other forms of statism. There are some significant differences and conflicting qualities among some of these variants, but these are all articulations of collectivism.
In order to better appreciate the moral imperatives of capitalism, we should examine how its morality differs from that of other social systems. As I mentioned earlier, the antithesis to capitalism is altruism, and its political expression is collectivism. Let’s get to know this deceptive philosophy and the ideology that forms its subjective morality.
Altruism
In contrast to the capitalist morality of a man’s right to his own life (and all that flows from that), the morality of altruism is that of self-destruction. Altruism dictates that a man exists to sacrifice to others and has an immutable obligation to selflessness. That which he produces according to altruism morally belongs to someone other than himself. You might recognize this subjective morality as something given broad expression at one time in the United States and elsewhere around the world: slavery.
According to altruism, virtue is found only in self-sacrifice. Therefore, the individual has no virtue in and of himself: the self as a standard of evil, the selfless as a standard of the good [1]. Logically, virtue lies only in the utter destruction of one’s own life, as altruism’s morality allows for no other conclusion.
Many think of the term altruism and mistakenly imagine generosity. In fact there are many who routinely describe acts of kindness or generosity as “altruism.” This is a mistake that results only from either shallow thinking or malevolent activism toward the destruction of individual rights. If you have made this mistake in the past let us hope that it is because you once fell into the former category (as I certainly did at one time).
Altruism, in fact, renders impossible and negates generosity. Kindness and generosity are not acts of self-sacrifice, but of free will. Free will cannot coexist with altruism, where the individual has no right to himself, his thoughts, his work, or the property that it produces…any of which generosity would employ. Generosity is sharing; a voluntary act. Altruism demands the redistribution of possessions and as such is wholly involuntary.
The several political expressions of altruism all have one goal: the subordination and subjugation of the individual to the collective. “The collective” is what one has when slaves are bound together by externally-imposed purpose or when groups are said to have rights and thus impose demands upon individuals. Now, ask yourself: what is the logical result of a group having rights and what must be ignored or destroyed for this to happen?
For instance, the U.S. Constitution rightly describes only individual rights and makes no allowances for group rights. Its primary purpose, in fact, is to subordinate the group (government) to the individual. Group rights are wholly unconstitutional and yet every year that passes sees more and more groups given rights that supersede those of individuals. Collectivism grows every year in the United States while individual rights shrink. Is this something you morally agree with?
Collectivism
A violation of individual rights is easy to recognize in most cases, as it typically comes in the form of a requirement for serving “the common good.” In order for “the common good” to be served, individual liberty and rights must be destroyed along with the morality that supports them, else how can individuals logically be required to give up their property (earned income, land, interests, etc…)? “The common good” comes only with the death of objective morality and the destruction of the right of a man to his own life.
When any group is said to have rights, the individual and all of his industry becomes the property of the group or the state; to be used and disposed of according to the whim of the collective’s needs. As an individual under a collectivist system, one is a slave. The only thing that has any moral virtue under such a system is the result of one’s effort as sacrifice to the black hole of need personified by some group or another, or to “society.”
Collectivism receives its mandate from the mere existence of need and the lack of comprehensive equality of results. Collectivism requires, therefore, that “until this need is sated, we all have to sacrifice.” Collectivism is prettified by the deceptively noble goal of “equality” among members of society. Yet even this seeming high ideal is bastardized to obtuse and evil purposes under a collectivist morality (altruism).
The idea of foundational equality among men is something that enlightened people and enlightened nations hold in high esteem. The relevant reference is found in the U.S. Declaration of Independence, with the recognition of the idea that all men are created equal. Collectivists in their many forms have corrupted this notion as a component of their effort to make tyranny palatable with the idea that everyone should remain or become equal, meaning no individual should exceed any other individual. Therefore, all activities that are not devoted to bringing all men into social and economic equality are evil.
Capitalism recognizes that though we are all created equal, we each aspire and will ourselves toward different levels of effort and thus each realize different levels of achievement. Only capitalism holds as inviolate the right of each individual to the results of his efforts and genius. According to the moral imperative of individual rights, there can never be any equality of result among individuals in a society.
Those who have any grasp of individual rights and free will understand that equality of result requires a corruption of morality and is impossible so long as rational men are free to live their lives as they choose.
Corruption of Capitalism
For those of us who do not live under an overt dictatorship or in a communist, fascist, or socialist country, such issues of state-mandated slavery and self-destructive morality might seem foreign or even unthinkable. While this idea might seem unthinkable for many, it exists in every nation on earth. In fact it has always been a significant component in the social mechanisms of the United States, ever expanding in scope and impact.
Surprised? You might think that this idea contravenes reason. How could such a destructive and evil system have a fastness in the capitalist bastion of the United States of America? In fact, your reason is one of the many things that collectivists of all stripes seek to destroy. They must, in fact. To do this, collectivists must destroy definitions of important concepts and redefine ideas toward their opposites while compelling you to act not upon reason, but emotion. In doing so, they render your reason useless.
In the end, he who controls the definitions of words controls ideas. He who controls ideas controls reality as perceived by that most-important thing collectivists must corrupt in order to succeed: your mind.
Reason and Capitalism
“From every aspect, the theory of collectivism points to the same conclusion: collectivism and the advocacy of reason are philosophically antithetical; it is one or the other.”
- Leonard Peikoff
Capitalism is founded in and requires man’s fundamental survival tool: rational cognition. With the foundational moral absolute being the right of a man to his own life, reason must be employed to uphold and defend that right. Therefore, every idea and action must be measured according to its rational consistency with this morality.
So long as reason prevails, the ideals of liberalism, socialism, progressivism, fascism, and communism cannot find a foothold in society. So long as reason prevails, capitalism is allowed full expression and individual liberty is absolutely defended. But capitalism has never been allowed unfettered expression, even in the United States. Why?
The quest for power requires that others be subjugated to that power. Totalitarianism aside, the only political system on earth that allows for this is collectivism. Collectivists have ever assailed the morality and ideals of capitalism with appeals toward emotion rather than reason. After continually working to destroy then redefine key words and core concepts, the resulting application of these redefined words and concepts very obviously contradicts reason and introduces a vertigo of rationality. Collectivists inject into that chaos the notion that emotion then is the most relevant tool of cognition. Since emotion is not a cognitive tool and with emotion being the antithesis of reason, you have your answer to the question posed above.
Lies and misrepresentations are the calling cards of anti-capitalist rhetoric. As a result, common references to capitalism paint a distorted picture. For instance, as Ayn Rand pointed out…
“Capitalism has been called a system of greed—yet it is the system that raised the standard of living of its poorest citizens to heights no collectivist system has ever begun to equal, and no tribal gang can conceive of.
“Capitalism has been called nationalistic—yet it is the only system that banished ethnicity, and made it possible, in the United States, for men of various, formerly antagonistic nationalities to live together in peace.
“Capitalism has been called cruel—yet it brought such hope, progress and general good will that the young people of today, who have not seen it, find it hard to believe.
“As to pride, dignity, self-confidence, self-esteem—these are characteristics that mark a man for martyrdom in a tribal society and under any social system except capitalism.” [2]
Where there is capitalism there must be reason. Where there is collectivism, reason cannot exist.
Fundamental Comparisons and Conclusion
You may note that while the various collectivist ideologies demand that every individual sacrifice for the good of the collective, these systems exempt one special group: the elite rulers of the collective. Collectivist governments do not sacrifice, but instead collect. They are not subject to the same morality as the members of the collective, but exist above it. In fact the government of every system on earth exists, according to its laws, above the morality imposed by the system…all except for one built upon capitalism.
Individual rights are the means of subordinating society (a group or groups) to moral law. [3] This point is important, because until the Constitution of the United States was adopted, no nation in the history of the world had ever subordinated society to moral law. Before that, only individual citizens were subject to that morality. This subordination of the government and of groups to the individual, as Ayn Rand astutely points out, was the most profound revolutionary achievement of the United States of America.
As a morally-sound document, the U.S. Declaration of Independence deliberately recognizes the idea that individual rights come not from men or groups or government, but from our Creator—and thus cannot be taken or negated by men, groups, or government (this is one reason that many collectivist governments work to destroy the idea of God).
Finally, acknowledging the idea that most of us associate with capitalism, where individuals have supreme liberty, free men may pursue their dreams and realize the result and profit of their ingenuity without limits. This is otherwise known as The American Dream. Such men may then freely trade with other men according to mutual agreement and without interference or compulsion from any uninvolved entity. The result of this simple, logical, and moral exchange is the most powerful, wealth-creating system in the history of mankind: capitalism.
Capitalism created the highest standard of living on earth and has never been equaled or exceeded in any positive respect, measure, or manner by any other system. Capitalism is, in fact, the only system ever conceived of by man that creates wealth. Every other system cannibalizes and destroys wealth.
It should be no surprise that the only objectively-moral system known to mankind is also the most positive and powerful system known to mankind. I sincerely hope that you have learned something in this shallow examination of capitalism and are better able to recognize threats to your liberty, your rights, and your reason.
* * *
Notes
1. Ayn Rand, “Philosophy: Who Needs It”
2. “The Voice of Reason”
3. “Capitalism: The Unknown Ideal”
Excellent post Andy, you’ve given me something to think about, and reminded me why The Fountainhead is one of my favorite books.
Wow. This is something to chew on for sure. I was struck by the quote from Ayn regarding Capitalism and greed. The thing that I hear over and over again from more liberal friends is that Capitalism is somehow equal to greed in their minds. I find that difficult because I understand that without Capitalism the masses in the US would not have all of the toys that they have. Cars? Computers? iPhones? all toys that are not necessary for life. And yet most of the people that espouse the ideology that Capitalism is equal to greed usually own all of these things. This is reason that I cannot understand.
Having visited countries like Brazil, Venezuela (pre communist regime) and others of similar economic standing I understand all too well that even slipping a little down the slippery slope can be a dangerous thing. Venezuela was not doing well at all economically when Chavez was made President. And Lula is only a few steps behind in his socialist beliefs. I hear that he has done well by Brazil but I wonder at what cost.
Anyway, a thorough and well written essay Andy. At times I feel our industry is full of liberals and that I am alone in my more conservative views. Glad to know I am not the only one out there ;-)
This is an embarrassing essay, full of ideas that have been discredited for decades. Political economists, sociologists, and historians have advanced so far beyond the obsolete moralizing of this piece that for someone to actually publish it, as a serious opinion, is just mind-boggling.
The entire foundation of the work is premised on a childish misuse and generalization of the term “rights” that, lacking even basic historical and political continuity, combines the definitions of positive, negative, common, social, and private rights into one meaningless phrase.
The entire premise is based on this vacuous conflation, totally disconnected from the actual academic traditions of political economy and history, and the real philosophical frameworks that accurately describe the interplay between institutions that create different rights frameworks under different political systems.
The idea that capitalism somehow grants an infinite level of all forms of rights, and no other system grants any, is just … childish.
I mean, the very fact that Andy posits capitalist human rights framework in opposition to “liberalism” shows an alarming level of historical confusion.
These mistakes would be considered unacceptable in a freshman level political science class, for gods sakes!
Aptly, Andy writes, “In the end, he who controls the definitions of words controls ideas. ”
Actual scholars of political science and history would laugh at the simplistic, generalized definitions of “collectivism”, “socialism”, and “rights” deployed by this essay. Maybe Andy should spend a moment reading an actual book about politics or history before he spends time authoring another high-school level essay.
Honestly, I suggest just going to the library Andy and picking up “Intro to Political Economy” and starting with that.
@ Rosa:
Obviously, you have some expertise here, but you let it blind you.
To take a historic perspective: the middle ages were plagued by a singular line of thought that took the intellectuals of the time far from the truths of day-to-day life. Many spent most of their time ignoring or refuting the common sense of the ancient world. I suppose by your logic, since humanity had already progressed far beyond the quaint, laughable ideals of the Roman and Greeks, then the Renaissance was just a complete waste of time.
History teaches us that all republics crumble in to dictatorships on a long enough time-line, and (depending on your viewpoint) it is the intellectuals that shape History, so I guess it is best that we common folk outside of academia just sit it out and let our betters do what they do best: lead us back in to the myriad complications of theory that strip logic from reality and complicate our lives in order to more finely control us. Yes, simplicity is the obvious enemy here.
Rosa,
I think your comments are compelling, but it could better serve the discourse if they weren’t flagrantly insulting on an individual basis. I don’t agree 100% with Andy politically or philosophically, but talking down to someone is no way to encourage discussion, or would you rather he simply shut up.
[...] This post was mentioned on Twitter by Andy Rutledge, Ian Smith and others. Ian Smith said: Ponderous ponderings RT @andyrutledge: On the logic blog: Capitalism: An Examination http://bit.ly/fUpO8Q [...]
Rosa does make very good points, although a student of politics and philosophy should know how to approach discourse more civilly. Even on teh internet.
Andy, I just wanted to note that you are giving credibility to the people who have claimed the “liberal” label. Liberalism is actually very much in line with what you believe in and is probably the better term to use than Capitalism in the context of this essay. When you say liberalism is in league with socialism, it confuses people who know what liberalism actually means. Yes, today’s politicians say liberal, but they actually mean something close to socialism.
I think you’ll find Mises’ short book on Liberalism interesting and a very quick read.
Sorry, when I said “it confuses people who know what liberalism actually means” I meant “it confuses people who know liberalism by its classic meaning”.
Thanks Kelly. I do know the difference between today’s liberalism and classical liberalism. Classical liberalism has not applied to public discourse for many years. Therefore I cite what is relevant today.
I’m a big fan of Von Mises.
Ah, ok. But whenever I read “liberalism” in your essay I thought, “bwhaaat?”
The modern meaning of liberalism just doesn’t make any sense. I get confused when people say they are conservative as well, which philosophy does that represent? Are they just meaningless convenience terms to describe the brands of the Democrat and Republican parties?
Glad to see you are a fan of Mises :)
This is the best, most in-depth, non-scientific explanation of capitalism I have ever read. It sure is food for thought and an excellent eye opener for today’s societies that declare themselves capitalist.
Bravo!
On the liberalism front, I believe the previous comments are very right. I believe liberalism is the highest form of capitalism; devoid of all collectivism. That is why ‘liberty’ is in the name. Today’s politicians seem to use it as an euphemism for socialism, which is according to me a serious problem.
Hello Andy –
I fully appreciate someone writing so eloquently on a subject they’re obviously passionate about. I hope whatever you do with your beliefs makes the world a better place. I personally and proudly consider myself a socialist, so I find the philosophies you support to be somewhat horrifying, and I’d like to make just a few comments. I apologize in advance for not having the vocabulary that you do, but I believe that the ability to speak well doesn’t always equate to a grasp on The Truth (whatever that is), so I hope the inverse is also possible.
First I just want to say that your philosophy seems to be based on a very black and white view of the world – The idea that Capitalism allows everyone personal freedom and what you’re calling Altruistic/Collectivist societies only allow for a kind of slavery of all to all.
Consider the fact that many people born in Capitalist societies are born into situations without resources (financial, familial, emotional, intellectual, nutritional, etc). These individuals have much less freedom than those born into wealthy families. Where is the free will in a society where the ability to act on it is unequal?
Another thing I’d like to bring up is that your definitions of socialism and communism are very inaccurate, at least according to Karl Marx. It’s true (and highly unfortunate) that the definitions of “communism” and “socialism” have been more than muddied by misuse, so I don’t blame you at all. However according to Marx’s definitions, societies like Stalin’s Russia, Mao’s China and Che and Fidel’s Cuba are NOT socialist or communist – at least Russia and China were totalitarian state capitalist.
To sum up, I believe in a socialist society that is not so black and white as “the subordination and subjugation of the individual to the collective”. As socialism has never really been tried, there is no real blueprint. I envision a society in which everyone is offered the same resources and opportunities, and can do with them what they please, so long as it isn’t a zero-sum game where for some to win, others must lose. I think a society where everyone had the same opportunities would lead to healthier, happier, more intelligent and exciting individuals who could progress far more than people do under Capitalist society, where most people’s physical, emotional, intellectual and financial resources are used up simply trying to survive.
In addition, I think it would lead to a world where decisions are made in the best interest of the people, rather than only in the interest of the wealthy few. Personally I would love to live in a society where I knew that some of the efforts I was making would go to making life better for my family, friends, neighborhood, and the world in general. Under Capitalism, the incentive is to improve one’s own life or business, even if at the expense of others. I have no interest in continuing life in a world where so many are suffering because the bottom line is profit and self interest.
Apologies for the length – it’s a bit rude of me.
I hope you can consider a few of these ideas, as I’ve tried to seriously consider yours. Likely we’ll continue on our ways, but it’s healthy to challenge ourselves.
Really like your Design blog, btw.
Good thoughts for your journey,
Iris*
Andy, this was a great read. When I responded to one of your tweets : “The only objective morality is the right of a man to his own life…and all that goes with that.” I was getting at the reason why you had stated that it is objective. I was about to ask you what you thought made a belief objective, but after having read your article I see that we are in agreement about that:
“As a morally-sound document, the U.S. Declaration if Independence deliberately recognizes the idea that individual rights come not from men or groups or government, but from our Creator—and thus cannot be taken or negated by men, groups, or government (this is one reason that many collectivist governments work to destroy the idea of God).”
I believe that we have all been endowed (by God) with the agency to either ACT or be ACTED UPON. Included in this, is the benefit of acting (in free will) for the Good of others, as well.
In response to Iris’ comment:
If all people, whether children of the rich or poor, were given the same amount of money, and resources, when they were born… there would still be those who SUCCEED by their own efforts, and those who FAIL, by their own efforts.
If another generation was born, where the poor children of rich parents were then given a fresh set of EQUAL resources as the rich children of poor parents… (removing any consequence of the actions of their parents) over time, what motivation would any generation have to succeed?
Providing equal resources for ALL people does not improve the lives of individuals, or societies. All we can do is provide equal FREEDOM TO ACT.
Capitalism achieves this. Thank you, Andy for making an argument for this.
I, too have lived in Brazil (socialist government) and those who succeeded and thrived were those who supported themselves by their own effort. Those who suffered were those who relied on others.
Theory’s all well and good, but as anyone in the web business knows, it’s the metrics and the conversion rate that count – measurable things like numbers of people living below the poverty line, infant mortality, lost productivity due to sick days, preventable diseases running rampant, dropout rates, foreclosures, bankruptcies, violent crime, and income disparity.
As a lifelong Canadian citizen, I can say with certitude that we are certainly a capitalist country with proper billionaires and everything, but we’ve made different collective choices that arguably produce better outcomes for our citizens.
I would recommend that you read the rather cheekily titled The Efficient Society: Why Canada Is As Close To Utopia As It Gets by Joseph Heath. He examines so-called ‘collective action problems’ – those prisoner’s-dilemma types of issues endemic to industrial societies that market systems cannot or will not address – and how Canada chose to deal with them, both in terms of mechanisms and in terms of philosophy and morality. He critiques as much as he praises, so it’s remarkably even-handed and a good read.
@AJ
Thanks for the book recommendation. I’m requesting it via inter-library loan :)
[...] relativism. It has in so many cases replaced actual morality in our government, our public schools, the public discourse, and as I recently observed, has all but destroyed a profession near and dear to my heart. I and [...]
[...] two ideas are fundamentally incompatible; the one describing the very definition of objective morality, the other describing the very definition of evil: the willful destruction of innocent human [...]