The Problem With Capitalism
Contrary to Ayn Rand s dreams,
Capitalism is neither free nor moral. It is a form just another form of statism
that differs only in details from Communism. Specifically, it is a complex web
of coercive legal structures and controls that abrogates individual freedom and
responsibility and enriches some persons at the expense of others. It is a form
of authoritarianism (institutionalized violence). Its artificial legal
structure destroys and perverts everything that is normal and natural in human
life and relationships. To Ayn Rand, coming from the Communist Soviet
Union, Capitalism seemed to be freedom incarnate. It was certainly a better
system in some ways. However, she failed to see the coercion in Capitalism. She
failed to see the hand of the State.
Historically, Capitalism began with certain basic abrogations
of free and consensual contract among persons. These created distortions that
were answered by new regulations, that created different distortions requiring
additional regulations, and so on. I call this the Slippery Slope of Interventionalism. It is an unavoidable problem because
you cannot mix incompatible moralities. Human social interaction has two
possible forms: consensual or coerced. Once one introduces an element
of coercion into a consensual system, then the consensual
self-regulation of society no longer functions properly. The distortions
introduced by coercion (laws, rules, regulation, etc.) produce a ripple effect
of further distortions, leading to a cry for additional interventions. Society
enters into a slippery slope towards total control of all aspects of
life--which is the condition of the United States today. There is no
middle ground between consensualism and coercion in
our relationships. Force (coercive government) must always expand its
powers and its distortion of cooperative society until that society suffers
socio-psychological collapse and some new, less destructive government takes
its place. Then the slide down the Slippery Slope begins again.
What are the original sins of Capitalism? What are the coercive
interventions that form its foundations?
1.
Granting
ownership of land to a small group of persons--this had its beginning in
feudalism.
2.
Granting
the monopoly control over money creation, and the profits of money creation to
a group of private persons instead of to the government and people this
abomination in America is the Federal Reserve banking system. It concentrates
money and therefore power in the hands of a small group. This MONEY POWER
thereby controls the media and the electoral process.
3.
Granting
banks the right to engage in fractional reserve banking. This is the ultimate
scam whereby banks create loans from thin air and with these loans they enslave
the borrowers who must work for 30 years to pay interest on a principal that
was created from nothing and disappears when repaid. Slavery has not been
banished in Western societies, it has simply taken on a new form that makes it
harder for the slaves to realize that they are slaves.
4.
Taxing
the citizen-slaves to pay the interests on the government’s loans, money the
government should have simply created and spent into circulation. It is no
accident that the income tax and the Federal Reserve system were created at the
same time.
5.
Defining
personal relationships as government-enforced institutions marriage being the
more important example.
6.
Granting
monopoly privileges to certain groups as in regulation of the professions,
licensing, etc.
7.
Taxing
some persons in order to support other persons.
8.
Enforcing
a legal system on the population in which fines are paid to the state, not to
the victims.
9.
Government
enforcing of private contracts and civil liability--thereby reducing personal
responsibility for one s decisions.
10.
Patents
and Copyrights: extending the concept of property to ideas in order to enrich
the clever at the expense of everyone else
11.
Regulating
private interactions and business which are then no longer private or
consensual
12.
Creating
government chartered and regulated businesses called corporations
these are for-profit government institutions. Their existence abrogates the
private business model and forces private enterprise out.
13.
Laws
that regulate their behavior in matters that affect no one but the person
involved i.e. personal safety, drug use, gambling, etc.
14.
Laws
that regulate consensual activities i.e. vice laws, loans, drug making and
selling, employment, contracts, etc.
15.
Laws
that force children to labor in schools throughout their formative years
instead of developing naturally as integral parts of a cooperative society.
16.
Allowing
persons to sue other persons in state courts for consequences resulting from
their own uncoerced decisions and behavior violating the logic of personal
responsibility and cooperation among persons, and with it the good will among
persons in the society.
Society needs none of these
interventions, and each intervention has and must create distortions that
require additional interventions. Each intervention removes people
farther and farther from natural morality and cooperation. We can t see what s wrong with our
regulated society unless can have some sort of vision of what a normal
cooperative society would be. So as a thought experiment, consider a small
community of persons cooperating with one another for mutual advantage a
natural human society:
Morality: As no person ever wants anyone to
force them to do things or to surrender their property against their will, this
community naturally values cooperation and non-violence above all other values.
Every transaction between adults is allowed if and only if there is no use of
physical force or threat of same let s call this the Prime Directive.
The Prime Directive is the necessary but not sufficient basis for all human
action and interaction. It means zero tolerance for coercion and complete
tolerance for consensual interactions of every kind. (On the contrary, our
society tolerates coercion and violence of all kinds, yet is extremely
intolerant of freedom in many spheres of life.)
Of course, beyond this most basic
principle of human association, they also have clear ideas about what behaviors
are healthy and productive and what behaviors are self-destructive, but no one
is forced to act in any certain way as long as they obey the Prime Directive
and are not taking values from others against their will. For instance: the
society may disapprove of prostitution and ignorance for good reasons, but it
will not resort to force to prevent prostitution. People will see vices as
psychosocial pathologies and seek to eliminate the causes and rehabilitate
those affected again not by force. They will not view uncoerced behaviors and
interactions as crimes requiring group coercion (government intervention).
Money: The creation and control of the
paper/credit money supply is one of the forms of property that government must
control, and must use to fund its services to the public. However, fractional
reserve banking, as it exists today in most countries, is a criminal syndicate.
Bankers have gradually usurped from governments the power to create money from
nothing by manipulating monarchs and then democracies. The struggle between the
bankers and prominent American politicians (Jefferson, Jackson) is
well-documented:
I believe that banking institutions
are more dangerous to our liberties than standing armies. Already they have
raised up a moneyed aristocracy that has set the Government at defiance. The
issuing power should be taken from the banks and restored to the people to whom
it properly belongs." -- Thomas Jefferson (1743-1826)
The bankers triumphed in America with
the establishment of the Federal Reserve System and the institution of the
income tax to provide the funds to pay for the loans that government had to
take out. Governments must take back the right to create money from nothing,
and use this privilege to pay for its necessary services so that taxation is
unnecessary. The exchange rate of said currency for all commodities and
services should remain completely unregulated, as should the exchange rate
among the various types of currency. The rate of interest charged for any real
loan of real money should also be a completely personal, unregulated
transaction between consenting adults. Beyond preventing violence, the other
legitimate function of governments is to define property rights.
Money is a legally-created,
legally-defined medium of exchange. Precious metals are commodities that can be
minted and stamped and used as money, but they are not themselves money.
The government should define what is used as money and should create that money
and pay its bills, eliminating the need for taxation and tax-slavery. The
government must never grant the power to create money from nothing to private
banks or individuals.
Consensual Transactions: Every interpersonal transaction is
identically free and uncoerced, with full and sole responsibility lying with
the contracting persons. There is no artificial distinction between public and
private. One is just as free to discriminate in one s
choice of employee as in one s choice of marriage
partner and just as completely responsible for the outcome. There is no
government enforcement of private agreements or contracts when people contract
they will agree to arbitration to settle disputes. Surely there will be shared
social norms, but no resort to force if private agreements are not carried out.
Contract law obviously favors the clever and wealthy at the expense of others
one need only think of England s historic debtor s prisons to understand the
true nature of government-enforced private contracts.
Consider the implications of
non-coercive relationships: without the legally enforced marriage
institution, each woman will know that she will have no redress for support
except to the father of the child. She will be far more circumspect in her
choice of mate and her decision to bear a child. People will depend much more
on research and on reputation in their dealings, not suffering from the
delusion that government regulation or institutions somehow guarantee a good
result. If the other party refuses to honor its end of the bargain, the first
party cannot resort to force, either private or public. Each party made an
uncoerced agreement and must suffer the consequences of their mistakes. Being
solely responsible for the results of their actions, persons will be far more
circumspect; they will use their minds to a much greater degree. Public opinion
and private arbitration would perform the tasks now assigned to lawyers and
judges.
Other aspects of a free and healthy
human society are addressed in other articles. I will be happy to add
more detailed treatments of certain issues here if you ask.