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 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?
- Granting ownership of land to a small group of persons--this had its beginning in feudalism.
- 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.
- 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.
- Taxing the citizen-slaves to pay the interests on the governments 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.
- Defining personal relationships as government-enforced institutions—marriage being the more important example.
- Granting monopoly privileges to certain groups—as in regulation of the professions, licensing, etc.
- Taxing some persons in order to support other persons.
- Enforcing a legal system on the population in which fines are paid to the state, not to the victims.
- Government enforcing of private contracts and civil liability--thereby reducing personal responsibility for one’s decisions.
- Patents and Copyrights: extending the concept of property to ideas in order to enrich the clever at the expense of everyone else
- Regulating private interactions and business—which are then no longer private or consensual
- 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.
- Laws that regulate their behavior in matters that affect no one but the person involved—i.e. personal safety, drug use, gambling, etc.
- Laws that regulate consensual activities—i.e. vice laws, loans, drug making and selling, employment, contracts, etc.
- Laws that force children to labor in schools throughout their formative years instead of developing naturally as integral parts of a cooperative society.
- 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 with that money, 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. A few moments of contemplation suffice to illustrate how much
this would change the nature of human interactions, and for the better. 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.