“When I say ‘capitalism’, I mean a full, pure, uncontrolled laissez-faire capitalism – with a separation of state and economics, in the same way and for the same reasons as the separation of state and church.” Ayn Rand, ‘The Objectivist Ethics’ The Virtue of Selfishness
“In a capitalist society, all human relationships are voluntary. Men are free to cooperate or not, to deal with one another or not, as their own individual judgments, convictions, and interests dictate. They can deal with one another only in terms of and by means of reason, i.e., by means of discussion, persuasion, and contractual agreement, by voluntary choice to mutual benefit. The right to agree with others is not a problem in any society; it is the right to disagree that is crucial. It is the institution of private property that protects and implements the right to disagree – and thus keeps the road open to man’s most valuable attribute (valuable personally, socially, and objectively): the creative mind.” Ayn Rand, ‘What is Capitalism?’ Capitalism: The Unknown Ideal
“Observe the paradoxes built up about capitalism. It has been called a system of selfishness (which, in my sense of the term, it is) – yet it is the only system that drew men to unite on a large scale into great countries, and peacefully to cooperate across national boundaries, while all the collectivist, internationalist, One-World systems are splitting the world into Balkanized tribes. 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 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.” Ayn Rand, ‘Global Balkanization’, The Voice of Reason
Since my columns are so favorable to laissez-faire capitalism, let me define the term more precisely, picking up on the above-outlined thoughts of Ayn Rand. For without question, I share her enthusiasm for the economic system that enabled the United States to achieve its former greatness as a nation; a greatness that now has been squandered in a rush to state capitalism and progressive socialism. For the United States economy has not remotely resembled laissez-faire capitalism since Woodrow Wilson used World War I as an excuse to build a command economy. Since March 21, 2010 the United States is a social market economy, virtually indistinguishable from Germany, France and the United Kingdom. Under progressive anti-capitalist leadership, it is headed towards liberal fascism in a manner not at all dissimilar to Mussolini’s Italy during the 1930s.
Laissez-faire, a French term that translates loosely as ‘let things alone’, originated in the eighteenth century with a school of French economists known as the Physiocrats, who opposed trade restrictions that supported mercantilism. Adam Smith popularized the term and gave it added influence in his 1776 book, The Wealth of Nations. Smith argued that a nation’s well-being and economic progress are assured when individuals are free to apply their capital and labor, without state intervention, in a competitive market economy. He outlined how the self-interested activities of individuals promotes the general welfare under such conditions. The doctrine of laissez-faire thus involves not only a policy implication of non-intervention by the state, but also a positive philosophy that recognizes a natural harmony between individual and social interests.
In the hands of Jeremy Bentham, the doctrine of laissez-faire became a philosophy of individualism and of utilitarian ethics. The doctrine reached its zenith during the nineteenth century, in the writings of the young John Stuart Mill, who defined what has become accepted (with the exception of anarchists in the tradition of Murray Rothbard) as the minimum level of state intervention. Among such interventions for the greater good, Mill included the power to secure property rights and to enforce contracts, as well as to provide for internal order, protection from external threats, and such public goods as transport systems, sanitation, public health and state-supported education. Throughout the second half of the nineteenth century, following the Repeal of the Corn Laws, Great Britain epitomized the system of laissez-faire capitalism, thus creating the wealth that enabled it to become the greatest Empire that the world had ever known.
The United States never adhered unconditionally to the doctrine of laissez-faire, either theoretically or practically. Tariffs were key revenue-raising components of American trade policy almost from the country’s independence. Antitrust laws – in the form of the Sherman Act (1890) and the Clayton Act (1914) similarly violated laissez-faire principles. During the first half of the twentieth century, numerous examples of state intervention – minimum wage laws, workers’ compensation statutes, hours legislation, and social security laws belied professed allegeiance to laissez-faire principles. Since the Great Depression and World War II, only a small minority of Americans espouse laissez-faire capitalism, correctly defined.
Truth, however, is not to be found necessarily in numbers. In my judgment, the Remnants are correct in their judgment that laissez-faire capitalism is the only system known to mankind that simultaneously promotes individual freedom and the wealth of a nation to the highest feasible levels. As such, the doctrine is to be revered and not derided, as is the current unfortunate, irresponsible tendency throughout the United States.