Sharon Lee, Voices of Capitalism
Capitalism (from the Latin word capta, meaning “head”) is a social system based on individual rights that unleashes the power of the human mind.
Productiveness is your acceptance of morality, your recognition of the fact that you choose to live–that productive work is the process by which man’s consciousness controls his existence, a constant process of acquiring knowledge and shaping matter to fit one’s purpose, of translating an idea into physical form, of remaking the earth in the image of one’s values–that all work is creative work if done by a thinking mind, and no work is creative if done by a blank who repeats in uncritical stupor a routine he has learned from others–that your work is yours to choose, and the choice is as wide as your mind, that nothing more is possible to you and nothing less is human–that to cheat your way into a job bigger than your mind can handle is to become a fear-corroded ape on borrowed motions and borrowed time, and to settle down into a job that requires less than your mind’s full capacity is to cut your motor and sentence yourself to another kind of motion: decay–that your work is the process of achieving your values, and to lose your ambition for values is to lose your ambition to live–that your body is a machine, but your mind is its driver, and you must drive as far as your mind will take you, with achievement as the goal of your road–that the man who has no purpose is a machine that coasts downhill at the mercy of any boulder to crash in the first chance ditch, that the man who stifles his mind is a stalled machine slowly going to rust, that the man who lets a leader prescribe his course is a wreck being towed to the scrap heap, and the man who makes another man his goal is a hitchhiker no driver should ever pick up–that your work is the purpose of your life, and you must speed past any killer who assumes the right to stop you, that any value you might find outside your work, any other loyalty or love, can be only travelers you choose to share your journey and must be travelers going on their own power in the same direction.”
― Ayn Rand
Black Lives Matter activists and allies descended on the California seaside community of Marina del Rey over the weekend as part of the group’s annual ‘Black Xmas’ protest to disrupt “white capitalism.”
This year, organizers targeted Amazon and its founder, Jeff Bezos, the world’s wealthiest person with a net worth of $182 billion.” [Daily Wire]
Wow. It looks like the Marxist Black Lives Matter is on a collision course with the elite corporate socialists in the Democratic Party. Joe Biden will have a lot of healing to do. By the way, actual, unregulated capitalism lifts the standard of living for everyone. Only a racist would suggest that blacks cannot benefit from economic freedom, while whites can.
Michael J. Hurd, Daily Dose of Reason
Professor Walter E. Williams passed away some two weeks ago. Among other things, he was called “The People’s Economist.” He spent his life trying to enlighten us on our Founding principles, individualism, and the morality of free-market capitalism. One of his last contributions to liberty is the attached YouTube video “Suffer No Fools.”
Its message is universal and transcendent.
The Artful Dilettante
Liberals stressed the importance of the individual. The 19th-century liberals already considered the development of the individual the most important thing. “Individual and individualism” was the progressive and liberal slogan. Reactionaries had already attacked this position at the beginning of the 19th century.
The rationalists and liberals of the 18th century pointed out that what was needed was good laws. Ancient customs that could not be justified by rationality should be abandoned. The only justification for a law was whether or not it was liable to promote the public social welfare. In many countries the liberals and rationalists asked for written constitutions, the codification of laws, and for new laws which would permit the development of the faculties of every individual.
A reaction to this idea developed, especially in Germany where the jurist and legal historian Friedrich Karl von Savigny (1779–1861) was active. Savigny declared that laws cannot be written by men; laws are developed in some mystical way by the soul of the whole unit. It isn’t the individual that thinks—it is the nation or a social entity which uses the individual only for the expression of its own thoughts. This idea was very much emphasized by Marx and the Marxists. In this regard the Marxists were not followers of Hegel, whose main idea of historical evolution was an evolution toward freedom of the individual.
From the viewpoint of Marx and Engels, the individual was a negligible thing in the eyes of the nation. Marx and Engels denied that the individual played a role in historical evolution. According to them, history goes its own way. The material productive forces go their own way, developing independently of the wills of individuals. And historical events come with the inevitability of a law of nature. The material productive forces work like a director in an opera; they must have a substitute available in case of a problem, as the opera director must have a substitute if the singer gets sick. According to this idea, Napoleon and Dante, for instance, were unimportant—if they had not appeared to take their own special place in history, someone else would have appeared on stage to fill their shoes.
To understand certain words, you must understand the German language. From the 17th century on, considerable effort was spent in fighting the use of Latin words and in eliminating them from the German language. In many cases a foreign word remained although there was also a German expression with the same meaning. The two words began as synonyms, but in the course of history, they acquired different meanings. For instance, take the word Umwälzung, the literal German translation of the Latin word revolution. In the Latin word there was no sense of fighting. Thus, there evolved two meanings for the word “revolution”—one by violence, and the other meaning a gradual revolution like the “Industrial Revolution.” However, Marx uses the German word Revolution not only for violent revolutions such as the French or Russian revolutions, but also for the gradual Industrial Revolution.
Incidentally, the term Industrial Revolution was introduced by Arnold Toynbee (1852–1883). Marxists say that “What furthers the overthrow of capitalism is not revolution—look at the Industrial Revolution.”
Marx assigned a special meaning to slavery, serfdom, and other systems of bondage. It was necessary, he said, for the workers to be free in order for the exploiter to exploit them. This idea came from the interpretation he gave to the situation of the feudal lord who had to care for his workers even when they weren’t working. Marx interpreted the liberal changes that developed as freeing the exploiter of the responsibility for the lives of the workers. Marx didn’t see that the liberal movement was directed at the abolition of inequality under law, as between serf and lord.
Karl Marx believed that capital accumulation was an obstacle. In his eyes, the only explanation for wealth accumulation was that somebody had robbed somebody else. For Karl Marx the whole Industrial Revolution simply consisted of the exploitation of the workers by the capitalists. According to him, the situation of the workers became worse with the coming of capitalism. The difference between their situation and that of slaves and serfs was only that the capitalist had no obligation to care for workers who were no longer exploitable, while the lord was bound to care for slaves and serfs. This is another of the insoluble contradictions in the Marxian system. Yet it is accepted by many economists today without realizing of what this contradiction consists.
According to Marx, capitalism is a necessary and inevitable stage in the history of mankind leading men from primitive conditions to the millennium of socialism. If capitalism is a necessary and inevitable step on the road to socialism, then one cannot consistently claim, from the point of view of Marx, that what the capitalist does is ethically and morally bad. Therefore, why does Marx attack the capitalists?
Marx says part of production is appropriated by the capitalists and withheld from the workers. According to Marx, this is very bad. The consequence is that the workers are no longer in a position to consume the whole production produced. A part of what they have produced, therefore, remains unconsumed; there is “underconsumption.” For this reason, because there is underconsumption, economic depressions occur regularly. This is the Marxian underconsumption theory of depressions. Yet Marx contradicts this theory elsewhere.
Marxian writers do not explain why production proceeds from simpler to more and more complicated methods.
Nor did Marx mention the following fact: About 1700, the population of Great Britain was about 5.5 million; by the middle of 1700, the population was 6.5 million, about 500,000 of whom were simply destitute. The whole economic system had produced a “surplus” population. The surplus population problem appeared earlier in Great Britain than on continental Europe. This happened, first of all, because Great Britain was an island and so was not subject to invasion by foreign armies, which helped to reduce the populations in Europe. The wars in Great Britain were civil wars, which were bad, but they stopped. And then this outlet for the surplus population disappeared, so the numbers of surplus people grew. In Europe the situation was different; for one thing, the opportunity to work in agriculture was more favorable than in England.
The old economic system in England couldn’t cope with the surplus population. The surplus people were mostly very bad people—beggars and robbers and thieves and prostitutes. They were supported by various institutions, the poor laws,1 and the charity of the communities. Some were impressed into the army and navy for service abroad. There were also superfluous people in agriculture. The existing system of guilds and other monopolies in the processing industries made the expansion of industry impossible.
In those precapitalist ages, there was a sharp division between the classes of society who could afford new shoes and new clothes, and those who could not. The processing industries produced by and large for the upper classes. Those who could not afford new clothes wore hand-me-downs. There was then a very considerable trade in secondhand clothes—a trade which disappeared almost completely when modern industry began to produce also for the lower classes. If capitalism had not provided the means of sustenance for these “surplus” people, they would have died from starvation. Smallpox accounted for many deaths in precapitalist times; it has now been practically wiped out. Improvements in medicine are also a product of capitalism.
What Marx called the great catastrophe of the Industrial Revolution was not a catastrophe at all; it brought about a tremendous improvement in the conditions of the people. Many survived who wouldn’t have survived otherwise. It is not true, as Marx said, that the improvements in technology are available only to the exploiters and that the masses are living in a state much worse than on the eve of the Industrial Revolution. Everything the Marxists say about exploitation is absolutely wrong! Lies! In fact, capitalism made it possible for many persons to survive who wouldn’t have otherwise. And today many people, or most people, live at a much higher standard of living than that at which their ancestors lived 100 or 200 years ago.
During the 18th century, there appeared a number of eminent authors—the best known was Adam Smith (1723–1790)—who pleaded for freedom of trade. And they argued against monopoly, against the guilds, and against privileges given by the king and Parliament. Secondly, some ingenious individuals, almost without any savings and capital, began to organize starving paupers for production, not in factories but outside the factories, and not for the upper classes only. These newly organized producers began to make simple goods precisely for the great masses. This was the great change that took place; this was the Industrial Revolution. And this Industrial Revolution made more food and other goods available so that the population rose. Nobody saw less of what really was going on than Karl Marx. By the eve of the Second World War, the population had increased so much that there were 60 million Englishmen.
You can’t compare the United States with England. The United States began almost as a country of modern capitalism. But we may say by and large that out of eight people living today in the countries of Western civilization, seven are alive only because of the Industrial Revolution. Are you personally sure that you are the one out of eight who would have lived even in the absence of the Industrial Revolution? If you are not sure, stop and consider the consequences of the Industrial Revolution.
The interpretation given by Marx to the Industrial Revolution is applied also to the interpretation of the “superstructure.” Marx said the “material productive forces,” the tools and machines, produce the “production relations,” the social structure, property rights, and so forth, which produce the “superstructure,” the philosophy, art, and religion. The “superstructure,” said Marx, depends on the class situation of the individuals, i.e., whether he is a poet, painter, and so on. Marx interpreted everything that happened in the spiritual life of the nation from this point of view. Arthur Schopenhauer (1788–1860) was called a philosopher of the owners of common stock and bonds. Friedrich Nietzsche (1844–1900) was called the philosopher of big business. For every change in ideology, for every change in music, art, novel writing, play writing, the Marxians had an immediate interpretation. Every new book was explained by the “superstructure” of that particular day. Every book was assigned an adjective—”bourgeois” or “proletarian.” The bourgeoisie were considered an undifferentiated reactionary mass.
Don’t think it is possible for a man to practice all his life a certain ideology without believing in it. The use of the term “mature capitalism” shows how fully persons, who don’t think of themselves as Marxian in any way, have been influenced by Marx. Mr. and Mrs. Hammond, in fact almost all historians, have accepted the Marxian interpretation of the Industrial Revolution.2 The one exception is Ashton.3“Everything the Marxists say about exploitation is absolutely wrong! Lies! In fact, capitalism made it possible for many persons to survive who wouldn’t have otherwise.”
Karl Marx, in the second part of his career, was not an interventionist; he was in favor of laissez-faire. Because he expected the breakdown of capitalism and the substitution of socialism to come from the full maturity of capitalism, he was in favor of letting capitalism develop. In this regard he was, in his writings and in his books, a supporter of economic freedom.
Marx believed that interventionist measures were unfavorable because they delayed the coming of socialism. Labor unions recommended interventions and, therefore, Marx was opposed to them. Labor unions don’t produce anything anyway and it would have been impossible to raise wage rates if producers had not actually produced more.
Marx claimed interventions hurt the interests of the workers. The German socialists voted against [Otto von] Bismarck’s social reforms that he instituted circa 1881 (Marx died in 1883). And in this country the Communists were against the New Deal. Of course, the real reason for their opposition to the government in power was very different. No opposition party wants to assign so much power to another party. In drafting socialist programs, everybody assumes tacitly that he himself will be the planner or the dictator, or that the planner or dictator will be intellectually completely dependent on him and that the planner or dictator will be his handyman. No one wants to be a single member in the planning scheme of somebody else.
These ideas of planning go back to Plato’s treatise on the form of the commonwealth. Plato was very outspoken. He planned a system ruled exclusively by philosophers. He wanted to eliminate all individual rights and decisions. Nobody should go anywhere, rest, sleep, eat, drink, wash, unless he was told to do so. Plato wanted to reduce persons to the status of pawns in his plan. What is needed is a dictator who appoints a philosopher as a kind of prime minister or president of the central board of production management. The program of all such consistent socialists—Plato and Hitler, for instance—planned also for the production of future socialists, the breeding and education of future members of society.
During the 2,300 years since Plato, very little opposition has been registered to his ideas. Not even by Kant. The psychological bias in favor of socialism must be taken into consideration in discussing Marxian ideas. This is not limited to those who call themselves Marxian.
Marxians deny that there is such a thing as the search for knowledge for the sake of knowledge alone. But they are not consistent in this case either, for they say one of the purposes of the socialist state is to eliminate such a search for knowledge. It is an insult, they say, for persons to study things that are useless.
Now I want to discuss the meaning of the ideological distortion of truths. Class consciousness is not developed in the beginning, but it must inevitably come. Marx developed his doctrine of ideology because he realized he couldn’t answer the criticisms raised against socialism. His answer was, “What you say is not true. It is only ideology. What a man thinks, so long as we do not have a classless society, is necessarily a class ideology—that is, it is based on a false consciousness.” Without any further explanation, Marx assumed that such an ideology was useful to the class and to the members of the class that developed it. Such ideas had for their goal the pursuit of the aims of their class.
Marx and Engels appeared and developed the class ideas of the proletariat. Therefore, from this time on the doctrine of the bourgeoisie is absolutely useless. Perhaps one may say that the bourgeoisie needed this explanation to solve a bad conscience. But why should they have a bad conscience if their existence is necessary? And it is necessary, according to Marxian doctrine, for without the bourgeoisie, capitalism cannot develop. And until capitalism is “mature,” there cannot be any socialism.
According to Marx, bourgeois economics, sometimes called “apologetics for bourgeois production,” aided them, the bourgeoisie. The Marxians could have said that the thought the bourgeoisie gave to this bad bourgeois theory justified, in their eyes, as well as in the eyes of the exploited, the capitalist mode of production, thus making it possible for the system to exist. But this would have been a very un-Marxist explanation. First of all, according to Marxian doctrine, no justification is needed for the bourgeois system of production; the bourgeoisie exploit because it is their business to exploit, just as it is the business of the microbes to exploit. The bourgeoisie don’t need any justification. Their class consciousness shows them that they have to do this; it is the capitalist’s nature to exploit.
A Russian friend of Marx wrote him that the task of the socialists must be to help the bourgeoisie exploit better and Marx replied that that was not necessary. Marx then wrote a short note saying that Russia could reach socialism without going through the capitalist stage. The next morning he must have realized that, if he admitted that one country could skip one of the inevitable stages, this would destroy his whole theory. So he didn’t send the note. Engels, who was not so bright, discovered this piece of paper in the desk of Karl Marx, copied it in his own handwriting, and sent his copy to Vera Zasulich (1849–1919), who was famous in Russia because she had attempted to assassinate the police commissioner in St. Petersburg and been acquitted by the jury—she had a good defense counsel. This woman published Marx’s note, and it became one of the great assets of the Bolshevik Party.
The capitalist system is a system in which promotion is precisely according to merit. If people do not get ahead, there is bitterness in their minds. They are reluctant to admit that they do not advance because of their lack of intelligence. They take their lack of advancement out on society. Many blame society and turn to socialism.
This tendency is especially strong in the ranks of intellectuals. Because professionals treat each other as equals, the less capable professionals consider themselves “superior” to nonprofessionals and feel they deserve more recognition than they receive. Envy plays an important role. There is a philosophical predisposition among persons to be dissatisfied with the existing state of affairs. There is dissatisfaction, also, with political conditions. If you are dissatisfied, you ask what other kind of state can be considered.
Marx had “antitalent”—i.e., a lack of talent. He was influenced by Hegel and Feuerbach, especially by Feuerbach’s critique of Christianity. Marx admitted that the exploitation doctrine was taken from an anonymous pamphlet published in the 1820s. His economics were distortions taken over from [David] Ricardo (1772–1823).4
Marx was economically ignorant; he didn’t realize that there can be doubts concerning the best means of production to be applied. The big question is, how shall we use the available scarce factors of production. Marx assumed that what has to be done is obvious. He didn’t realize that the future is always uncertain, that it is the job of every businessman to provide for the unknown future. In the capitalist system, the workers and technologists obey the entrepreneur. Under socialism, they will obey the socialist official. Marx didn’t take into consideration the fact that there is a difference between saying what has to be done and doing what somebody else has said must be done. The socialist state is necessarily a police state.
The withering away of the state was just Marx’s attempt to avoid answering the question about what would happen under socialism. Under socialism, the convicts will know that they are being punished for the benefit of the whole society.
It is difficult to see the difference between an actual free market and the interventionist system under which we live because so many across the political spectrum refer to ours as a “capitalist” society.
When most people put on their “reality” hats about politics, there are few among them who do not cynically see the power-lusting, the corruption, and the hypocrisy in most of what is said and done by those running for or sitting in political office. A constant point of dispute and disagreement is over how and why it is that governments have this seemingly inescapable tendency. The all too frequent answer in modern democratic societies is the claimed nefarious influences of businessmen to use government at the expense of most others everywhere around the world.
The latter is a near permanent theme in literature, movies, and the mass media. Widely used political and ideological rhetoric is portrayed as a false cover for what is really an often-successful attempt to dupe most people into thinking that what is “good for business is good for America.” Far too many politicians are the partners and accomplices to these private sector abusers of the public trust, it is said, since government is supposed to assure fairness and “social justice” for the many rather than privileges and favors for the capitalist few.
While mostly left unstated in any explicit or direct manner in movies and on television, the implicit message is that businessmen are inherently exploiting oppressors and abusers of their workers, their customers, and “the earth” due to their physical harms to the planet that threaten environmental sustainability. “Business” has to be heavily regulated and restricted if public harm is not to be done. Or . . . maybe there are just some if not many sectors of everyday life that must be placed outside of private reach through government production and provision of publicly necessary and needed goods and services. Otherwise, not just public harm, but human death and destruction will come in the wake of allowed private enterprise.
“Roadkill’s” Twisted Conception of a Libertarian
One example of these views may be seen in the recently aired four-part Season One of “Roadkill,” broadcast as part of Masterpiece Theater on PBS, starring Hugh Laurie (known to many American television viewers for his role as the medical doctor, “House,” which ran from 2004 to 2012). In this latest outing, Laurie plays Peter Laurence, a British Conservative Party cabinet member who serves, at first, as Minister of Transportation.
He is “hip” and “progressive,” saying that in his personal life and in his politics, he always looks at what’s ahead, and not at what has happened or what might otherwise tie you to the past. He regularly appears on a radio talk show with glib remarks outside of the seeming mainstream of even his own party’s politics. The first episode opens with him having won a libel case in which a newspaper reporter had accused him of corruption and bribery in the service of a consortium of businessmen wanting to make the world safer for their ill-gotten profits.
It seems that our Minister of Transportation may have been in cahoots with American medical companies who want to “privatize” parts of the British National Health Service (NHS). What could be more damning than the idea of replacing socialized medicine with private enterprise health care and service? Oh, the horror!
At one point when he is challenged about whether he is really innocent of the accusation, he insists that the charge was absurd, since, after all, what he is all about is personal freedom and choice. He declares, how could he be guilty, why, he views himself as a “libertarian.” When he is mildly injured in a car accident with a deer, he praises the heroes of Britain’s NHS as he leaves the hospital where he has been treated. Clearly, there are limits to his public libertarianism.
Personal and Political Corruption Envelops the Main Character
In his personal life, he cheats on his wife, lies to his two daughters, views his mistress as a convenience rather than a commitment, and faces a new potential scandal just as he is made Minister of Justice in a cabinet reshuffle, when he discovers that he has a previously unknown daughter from an illicit relationship with a black woman 20 years earlier, a daughter who is in prison for major bank fraud. But don’t worry, he gets ahead of it by going public on television saying he is pleased to find out about this daughter and hoping to get to know her better; after the show, Peter Laurence tells his personal assistant that that should get his public support up a bit.
But things are not all blue skies for our main character. The news reporter who brought the corruption charges against him won’t give up; she finds a witness who can confirm that Laurence was where he said he wasn’t, working for an Anglo-American lobbying group and earning a $500,000 “speaker’s fee” for an hour’s presentation; but the witness mysteriously dies. However, the news reporter doggedly heads over to Washington, D.C. to still get the goods on Laurence; alas, she is killed in a hit-and-run on the streets of the U.S. capital.
Not that Peter Laurence is, himself, behind the murder of the young reporter. Oh, no, that has been taken care of by an arms consortium and others, because they have bigger plans for our Minister of Justice. When it turns out that weapons used by the Saudi Arabian government that have killed three British NGO representatives in war-torn Yemen were sold by those U.K. armament manufacturers to the Riyadh government, the Conservative Party Prime Minister orders a temporary arms sale embargo to calm public outrage.
British Prime Ministers may come and go, but the pursuit of private profits never comes to an end, even if it kills innocent fellow citizens doing humanitarian work in a faraway country. The armament consortium engineers a vote of no confidence in the British Parliament to oust the current Conservative Prime Minister from 10 Downing Street.
Your Political Friends Can Get You to 10 Downing Street
Peter Laurence meets with the head of the British Conservative Party and one of the leading U.K. armaments manufacturers; he is reminded about how the three of them have been such good friends for, oh, so long a time. Yes, what a tragedy about the unfortunate death of that British reporter while she was over in the States. But, well, that just means one less thing for everyone to worry about. They just need to remember that without the tourist trade and the armaments industry there is no British economy, so what’s good for armament manufacturers is good for Great Britain. They just know they can count on Laurence not forgetting that.
The final episode of Season One ends with our “hero” stepping into 10 Downing Street as the newly elected Prime Minister of Great Britain. What could go wrong? The betrayed wife is beside him as they enter their new residence, many in the public look on him as that “progressive” forward-looking Conservative Party leader, and, clearly, his “friends” in British industry have shown their appreciation for his right-thinking by helping his arrival at that lofty political position of power and privilege.
But shadows of his personal and professional past that he says he always tries to put behind him are still looming just ahead. So how and what will bring about the downfall of Peter Laurence, or the misstep from his past that he says might make him the next “roadkill” in the processes of political power-lusting, corruption, and abuses of positions in high governmental authority?
The answers await Season Two, if there is one, because the show’s producers have not yet announced whether it will be back next year.
All the Marxian Messaging About “Capitalism” is There
All the elements of the standard anti-capitalist tale are here, with its subliminal Marxian presumptions. Public statements of believing in personal choice and individual liberty, and a claimed “public good” arising from profit-pursuing private enterprise are all part of the rhetorical “false conscience”-creating manipulators of public opinion. It is all a smokescreen to hide the “real” power relationships of greedy businessmen using politicians and government organs of power to acquire their ill-gotten gains by wanting to undermine national health care and make millions by manufacturing the means by which innocent people are killed in various conflicts around the world.
Self-labelling libertarians like Peter Laurence in “Roadkill” are corrupt and manipulative people using the rhetoric of freedom to live their own comfortable lives in government positions that are theirs only because they serve and work with the “real” power behind “the system,” that being evil, murdering businessmen. The honest people, like that truth-seeking reporter, end up dead as their reward for trying to unmask the powers-that-be. Governments are put in place and torn down by capitalist wire pullers behind the curtain.
It is of note that far less frequently in such movies and on television is corruption and abuse of power shown to be in socialist or left-of-center governments in office. Rarely if ever is their rhetoric portrayed as the cover to advance the special interests of labor unions wanting closed shops, or leftist-friendly businesses wanting subsidies to cover their unprofitable enterprises, or socialist ideologues hungry for power to coercively socially engineer the lives of tens or hundreds of millions of ordinary people.
The heroic person in almost all movies and television shows with some political message imbedded in it is the lone person trying to stand in the way of lumber companies destroying the rainforests, or oil companies poisoning the land, sea and air, or businessmen willing to murder their own grannie for an extra buck. If there is a “good” businessman, he is always someone who in some way sacrifices his profits for a higher and more socially just cause. But even one of these is few and far between. Or if there is a good businessman, he is the small underdog enterpriser who, also, is a victim, just like the other “little people” against “big” business.
The Free Market and Its Institutional Premises
What all such films and shows are portraying are the intrigues and workings of the Interventionist State, not the nature and reality of a functioning free market economy in which governments actually are limited to the few functions of securing and protecting the individual rights of each person to their life, liberty and honestly acquired property. And a system of an impartial rule of law, under which there are the same equal individual rights for all, but privileges and favors for none.
Under such a true political-economic system of classical liberalism, politicians like Peter Laurence in “Roadkill” have no role to play because there are no special favors to give or take away. A way to see the difference, perhaps, is by laying out an eight-point contrast between the liberal free market economy and the interventionist state. The institutional presumptions and premises of a liberal market economy are:
- All means of production are privately owned.
- The use of the means of production is under the control of private owners, who may be individuals or corporate entities.
- Consumer demands determine how the means of production will be used.
- Competitive market forces of supply and demand determine the prices for consumer goods and the various factors of production (including labor).
- The success or failure of individual and corporate enterprises is determined by the profits or losses these enterprises earn, based on their greater or lesser ability to satisfy consumer demand in competition with their rivals in the marketplace.
- The market is not confined to domestic transactions and includes freedom of international trade.
- The monetary system is based on a market-determined commodity (for example, gold or silver), and the banking system is private and competitive (neither controlled nor regulated by government).
- Government is limited in its activities to the enforcement and protection of each individual’s life, liberty and honestly acquired property under impartial rule of law.
Under such a system there are no possibilities for corrupt acts by politicians to bestow special privileges and favors on some at others’ expense, since by definition and institutional constraint there is nothing to politically buy or sell from the government, for as long as these “rules of the game” are recognized, abided by, and enforced.
The Interventionist State and Its Institutional Premises
Contrast this with the institutional presumptions and premises of the interventionist state that more closely resembles the type of world with its personalities and incentives as represented in Masterpiece Theater’s “Roadkill.” In the interventionist state:
- The private ownership of the means of production is restricted and abridged.
- The use of the means of production by private owners is prohibited, limited or regulated.
- The users of the means of production are prevented from being guided solely by consumer demands.
- Government influences or controls the formation of prices for consumer goods and/or the factors of production (including labor).
- Government reduces the impact of market supply and demand on the success or failure of various enterprises, while increasing its own influence and control over market outcomes and earned incomes through such artificial means as pricing and production regulations, limits on freedom of entry into segments of the market, and direct or indirect subsidies, and compulsory redistribution.
- Free entry into the domestic market by potential foreign rivals is discouraged, restricted, or prohibited through import bans, quotas, or tariffs, and other means.
- The monetary system is regulated by government for the purpose of influencing what is used as money, the value of money, and the rate at which the quantity of money is increased or decreased. These, and other policy instruments, are used for affecting employment, output, and growth in the economy.
- Government’s role is not limited to the protection of life, liberty, and property.
Here, in the political arena, is a potential cesspool of corruption and abuse. With the government’s hand increasingly in more and more aspects of everyday economic life, the future of every enterpriser’s business now depends on what, how, and for whom the political interventions are introduced and secured. Politics rather than markets more and more determines the fortunes and fate of any private enterprise. Businessmen find it necessary to cultivate the qualities of political entrepreneurship, rather than simply that of a market-oriented entrepreneur.
Ludwig von Mises on the Workings of the Interventionist State
This was explained nearly 90 years ago by Austrian economist Ludwig von Mises (1881-1973), at the twilight of the interventionist and corrupt Weimar Republic in Germany, shortly before the coming to power of Adolf Hitler and his National Socialist (Nazi) Party. In 1932, during the Great Depression and amid a wide belief that the prolonged and severe economic downturn was “proof” of the failure of a capitalist economy, Mises explained the institutional nature and behavioral characteristics of those attempting to get ahead in the interventionist state:
“In the interventionist state it is no longer of crucial importance for the success of an enterprise that the business should be managed in a way that it satisfies the demands of consumers in the best and least costly manner. It is far more important that one has ‘good relationships’ with the political authorities so that the interventions work to the advantage and not the disadvantage of the enterprise.
“A few marks’ more tariff protection for the products of the enterprise and a few marks’ less tariff for the raw materials used in the manufacturing process can be of far more benefit to the enterprise than the greatest care in managing the business. No matter how well an enterprise may be managed, it will fail if it does not know how to protect its interests in the drawing up of the customs rates, in the negotiations before arbitration boards, and with the cartel authorities. To have ‘connections’ becomes more important than to produce well and cheaply.
“So the leadership positions within enterprises are no longer achieved by men who understand how to organize companies and to direct production in the way the market situation demands, but by men who are well thought of ‘above’ and ‘below,’ men who understand how to get along well with the press and all the political parties, especially with the radicals, so that they and their company give no offence. It is that class of general directors that negotiate far more often with state functionaries and party leaders than with those from whom they buy or to whom they sell.
“Since it is a question of obtaining political favors for these enterprises, their directors must repay politicians with favors. In recent years, there have been relatively few large enterprises that have not had to spend very considerable sums for various undertakings in spite of it being clear from the start they would yield no profit. But in spite of the expected loss it had to be done for political reasons. Let us not even mention contributions for purposes unrelated to business – for campaign funds, public welfare organizations, and the like.” (Ludwig von Mises, “The Myth of the Failure of Capitalism”  in Selected Writings of Ludwig von Mises, Vol. 2 , pp. 188-189)
Ayn Rand and the Mindset of the Politically Privileged and Powerful
The psychological atmosphere of the interventionist state and its users and abusers was also captured in Ayn Rand’s famous novel, Atlas Shrugged (1957), when a group of the business plunder participants meet for a drink to discuss how they cannot be held responsible for the bad times through which the country is passing. That their failing businesses and falling profits, their inabilities to meet contractual obligations and commitments, are not the fault of the poor management of their enterprises.
No, it’s “the system,” it’s the unreliability of others, it is due to business rivals not willing to sacrifice for the “common good” and contribute a “fair share” to others in the industry, with, instead, those “selfish” rivals attempting to compete more effectively for consumer business that leaves these others financially less well off. “The only justification of private property,” one of them says, “is public service.” Another insists that, “After all, private property is a trusteeship held for the benefit of society as a whole.” One other points to “the blight of unbridled competition,” while still another argues, “It seems to me that the national policy ought to be aimed at the objective of giving everybody a chance at his fair share . . .” (pp. 49-50)
Represented here are the politically oriented businessmen about whom Mises was referring. People not focused on making better and less expensive goods, or whose attention is directed at meeting consumer demands, and at those from whom they buy and to whom they sell as the basis upon which any profits may be earned. No, their interest is in gaming the interventionist state to hinder their competitors, gain subsidies and protections through government regulations, and to weaken respect for and belief in private property rights by insisting that coerced sharing and service to a “common good,” as the ideological means of rationalizing the political interventions to win those privileges and favors that without the government would never be theirs on an open and free market.
Confusing Free Market Capitalism with the Corrupt Interventionist State
This points to one of the most commonly made and dangerous confusions in modern society, that being the assumption that the economic system under which we have been and currently are living, represents and reflects a liberal free market economy. It is difficult for many people to see the difference between an actual free market and the interventionist system under which we live because so many across the political spectrum refer to ours as a “capitalist” society.
If we use as a benchmark the institutional characteristics defined, above, as the meaning of a free market economy, the U.S. is very far from that conceptual idea and ideal. Our system possesses and operates in the context of all the institutional characteristics outlined as defining the interventionist state.
Is there favoritism and privilege? Is the “system” manipulated by those who know how to “play the game” of political entrepreneurship at the expense of consumers and competitors? Do politicians rise to and retain power and position in government through political pandering and offer plunder to those special interests who can get them elected? Are false promises, often outright lies, and frequent appeals to irrational emotionalism and primal envy frequently the avenues to political success?
Yes, to each and every one of these. The events of the last year under the coronavirus crisis have only reinforced and intensified this trend down the interventionist road. No corner of society or the economy has been free of a hyper-politicization in which governments have determined who may work and under what conditions, what goods may be manufactured and sold and at what prices, and who may stay open for business and with what restrictions on how they may operate their enterprise.
This is the breeding ground for even more of the political hypocrisy and corrupt privilege and favoritism portrayed in programs like “Roadkill.” How can it be otherwise when everyone’s life and fate are in the hands of politicians like that fictional Peter Laurance, and the ideological and special interest groups that want to use government to get what might never be theirs under a real system of free market capitalism?
The important task for those who value personal freedom, economic liberty and the free market economy is to disabuse our fellow citizens from thinking that what we have is a fully capitalist system, and to appreciate that what critics of capitalism call for and want in the form of even more and bigger government would only magnify the corrosive trends already in play in the modern world.
Richard Ebeling, Capitalism Magazine
Under real capitalism, there is no government policy at all regarding how people are to conduct themselves in a pandemic. With no barriers to innovation, production, and distribution, the pharmaceutical industry would be rocketing us into an almost disease-free future.
Before we start taking for granted the statist perspective on the vaccine and its delivery, let’s look at how a free, rights-respecting government and society would be behaving right now.
Prices of anything in short supply (where I am it’s Bounty paper towels) rise until supply meets demand. The supermarket shelves remain full. The businesses producing and selling these items reap windfall profits, which draws capital to ramp up production, so that in a few weeks prices fall back to where they were.
The same is true of medical services: in a free society doctors are not licensed; consequently, their supply can be expanded; hospitals are not regulated, so they can handle surges in demand as they wish. No fire marshals, building inspectors, environmental impact assessors can interfere with any temporary build-out a hospital decides to make. In fact, no one would dream of even asking to be informed of any decision a hospital makes regarding how to use its own property on its own land.
Tests and vaccines are developed by pharmaceutical companies, in their labs, and get whatever private voluntary certification they choose to get (probably none—why do Pfizer or Johnson & Johnson need any stamp of outside approval?).
As they develop these new tests and vaccines, they distribute early versions of them to their own network of forward-looking individuals, including doctors, medical staff, and researchers, willing to take a little extra risk to get innovative products sooner.
The new tests and vaccines are sold for “all the market can bear.” That means: high prices to early-adopters; then, as safety and efficacy become established by tracking the experience of the early-adopters, the items are sold at progressively lower prices to wider and wider segments of the general population.
Since a free society’s government never compels anyone to get a doctor’s prescription, there are no such things as pharmacies in the traditional sense. Rather, CVS, Walmart, Walgreens have a pharmaceutical area, perhaps staffed by specially knowledgeable people (who don’t require a government license) to advise you. If you don’t need this kind of service, and just want pills to swallow, you can just grab a bottle off the shelf and go to the cash register. Or you can go on Amazon or other sites and buy them just the way you do books, T-shirts, and canned peas.
The “delivery system” for the new vaccines and tests is the same profit-making firms that already deliver everything in a capitalist society. Think: UPS, Amazon, FedEx—but even better, because they are not regulated.
To get products, new or old, we don’t need four-star generals to be in charge of “logistics.” Even today, under semi-capitalism, the task is handled by purchasing managers, inventory managers, buyers, and vendors—and no shortage ever develops, except where government holds prices below market.
Under pure capitalism, there is no such question as: “Who is going to get the vaccine first?” If it were asked, the answer would be the same as for “Who is going to get the new C8 model Corvette first?” Whoever shows up with the money. If there’s a rush, the price goes up to where demand matches supply. Then supply is expanded to reap the resulting high-profit rate.
And there is no such question as: “What if a segment of the population is afraid to take the vaccine?” People are thinking, not of collective outcomes, but of individual ones. It would never occur to them to worry about people who don’t take the vaccine, because they know that by choosing to get vaccinated, they themselves will be protected.
Under real capitalism, there is no government policy at all regarding how people are to conduct themselves in a pandemic. Not only are there no lockdowns, no curfews, no group quarantines (on the basis of group statistics), but also no thought of government having any role to play. “Public health” is no more connected in people’s minds to government than is “public entertainment.” Health is understood to be a personal matter—just as entertainment is.
Even where there are “social problems,” free citizens of a free society regard it as widespread individual problems, not as problems justifying government coercion.
Take the rising divorce rate, which is widely regarded as a “social problem.” Even today, no one thinks divorce is something to be combatted by government directives. The prospect of government getting involved in marital problems would fill us with horror. For the citizens of a laissez-faire society, the idea of government dictating people’s behavior in a pandemic would be equally as horrifying.
In practice, the laissez-faire utopia I’m envisioning would be tremendously healthier than the regulatory state we live under in America today. Without the dead hand of the FDA, medical experimentation and data-collection from ordinary citizens (via their smartphones, perhaps) would produce vastly more data for AI to use in discovering what works and what doesn’t. With no barriers to innovation, production, and distribution, the pharmaceutical industry would be rocketing us into an almost disease-free future.
Harry Binswanger, Capitalism Magazine
I’ve always been a “big picture” kinda guy. I would rather read a general overview of history than a detailed analysis of the Battle of the Bulge. I would prefer reading a concise, insightful summary of human nature rather than the most in-depth study of child development. I would prefer watching a Discovery Channel program on The Big Bang than one on the solar system. For me, the Big Picture is just more fun to think about than the little stuff. Continue reading