Manhattan, Wikimedia Commons
According to Congressman Jim Moran (D-VA), Americans must abandon “this simplistic notion that people who have wealth are entitled to keep it.”1 Congresswoman Maxine Waters (D-CA), addressing oil company CEOs, openly threatens to socialize their industry: “Guess what this liberal would be all about. This liberal will be about socializing. . . . all of your companies.”2 Philosopher Noam Chomsky insists that “putting people in charge of their own assets breaks down the solidarity that comes from doing something together, and diminishes the sense that people have responsibility for each other.”3
All such assaults on free markets and property rights proceed from the recognition of the fact that these key elements of capitalism enable selfishness. As Karl Marx explained: “The right of man to property is the right to enjoy his possessions and dispose of the same arbitrarily, without regard for other men, independently from society, the right of selfishness.”4 And as President-elect Barack Obama intimates, who would dare “to make a virtue out of selfishness”?5
How do so-called advocates of capitalism respond to accusations of its inherent selfishness? Some, such as George Gilder, simply deny it. Selfishness is not the essence of capitalism, writes Gilder, “Altruism is the essence of capitalism. . . . Capitalism begins with giving. . . . The deepest truths of capitalism are faith, hope, and love.”6 This, of course, is ridiculous. Capitalism begins not with giving but with producing—and then moves on to keeping, using, and trading the product of one’s efforts for other values in the marketplace. Nor is capitalism based on faith or hope; rather, it is based on reason and long-term planning, which are the means by which businessmen succeed and grow rich. And although love is certainly essential to capitalism, the relevant object of love in this context is money. Capitalism is the system of the selfish pursuit of profit, and to deny this, as Gilder does, is to abuse the meaning of words.
Other “defenders” of capitalism, such as Michael Novak, attempt to reconcile its selfish nature with conventional morality:
While recognizing that no system of political economy can escape the ravages of human sinfulness, [capitalism] has attempted to set in place a system which renders sinful tendencies as productive of good as possible. While basing itself on something less than perfect virtue, reasoned self-interest, it has attempted to draw from self-interest its most creative potential. It is a system designed for sinners, in the hope of achieving as much moral good as individuals and communities can generate under conditions of ample liberty.7So, by freeing sinners to pursue their reasoned self-interest, capitalism taps into the creative potential of these depraved souls and thereby achieves moral good. This, too, is absurd. To concede the immorality of a social system is to concede the argument for it. The attempt to defend capitalism on the grounds that it is morally bad (or, at best, neutral) but economically good is precisely what has failed the aforementioned economists.
The practicality of capitalism is insufficient grounds for its defense against those who assert its immorality. We who wish to advocate capitalism must do so on moral grounds. The moral grounds on which we must advocate capitalism, however, are not those of conventional wisdom.
Capitalism enables everyone to act in a consistently self-interested manner. Rather than shying away from this unassailable fact, we must embrace and emphasize it. We must do so not on the pragmatic grounds that doing so will work to defend capitalism (which it will), but on the principled grounds that the selfishness-enabling characteristic of capitalism is, in fact, what makes it the only moral social system on earth.
To see why this is so, let us begin by observing how capitalism enables economic selfishness and what this means in practice.
Under genuine capitalism—not the mongrel system operative in America today, but pure, unregulated, laissez-faire capitalism—the government prohibits citizens from using physical force against each other, and the Constitution prohibits the government from using force against citizens except in retaliation against those who initiate its use. Thus everyone is fully free to act on his own judgment for his own sake.
Consider the activities of a bank under capitalism. If an individual or corporation chooses to create a bank, he or it is free to establish the policy that the bank will offer loans only to individuals and businesses the bank regards as creditworthy. The government may not force the bank to lend money to those it regards as unable to repay a loan or as too risky for business. Nor may the government dictate or limit the interest rates or other terms or conditions that the bank chooses to offer. The government may not force the bank to do anything, because under capitalism, the government is forbidden to initiate force against citizens or businesses.
The bank owner or owners are free to decide how they will run their business at every step and turn; free to open new branches, to purchase other banks, to purchase insurance companies, and to expand or diversify their bank in countless other ways. They are free to maximize their profits and to grow and thrive and prosper to the best of their ability. The only thing they are not free to do is to use physical force or fraud (indirect force) against people, because, under capitalism, physical force is banned from social relationships.8
If the bank employs rational policies and succeeds, its success is good for the bank, good for its owners, and good for its customers. If the bank engages in irrational policies—if, for instance, its risk-assessment procedures are such that it regularly lends money to people who cannot repay their loans—the bank suffers negative financial consequences. If its policies lead the bank to failure, it may not seek a bailout from the government; nor may the government offer to “rescue” the bank. Under capitalism, bankers and banks, like all individuals and businesses, are responsible for the consequences of their decisions, whether good or bad, profitable or not. Consequently, under capitalism, if a bank fails, it files bankruptcy or offers itself for sale on the cheap or goes out of business; its owners suffer losses; and its customers find other means through which to save or borrow money. Under capitalism, everyone is free to benefit from his rational choices and actions, and no one may force others to suffer the consequences of his irrational decisions.
Capitalism encourages rationality in the marketplace. Those who act in a rationally self-interested manner tend to succeed, and those who do succeed are free to enjoy the fruits of their rationality.
Consider the case of an automaker. Under capitalism, an automaker is free to manufacture and market cars in whatever way it sees fit, and the company is free to succeed or to fail accordingly. The government may not force the company to sell a particular kind of car, nor force it to pay its employees a particular minimum or maximum wage, nor force it to contract with a particular vendor, nor a union, nor anyone else. The automaker is free to make all such decisions according to its own judgment (i.e., the judgment of its owners). If the automaker uses good judgment and succeeds, it is free to keep, use, and dispose of its profits. If it uses poor judgment and fails—or if its competitors outperform it such that it cannot remain profitable—the automaker may file for bankruptcy or offer itself for sale or close its doors. But it may not seek a bailout from the government. Under capitalism, individuals and corporations legally own not only their profits but also their problems, and the government is prohibited from intervening in the marketplace.
As to unions, under capitalism, individuals are free to band together and to stipulate that members of their group will work only on certain terms and under certain conditions. But such groups may not force others to contract with them, nor may the government employ such force on their behalf. Under capitalism, everyone is free to set his own terms and conditions of contract; no one may infringe on the freedom of others to set theirs; everyone is equally free to be fully selfish.
Capitalism is the system of mutual self-interest and mutual non-interference. Everyone who wishes to live well and prosper is free to do so to the best of his effort and ability; no one may stop another from pursuing his values or goals.
Consider a real-estate development company. Under capitalism, the company is free to build condominiums or pharmaceutical plants or whatever else it wants to build, and its owners are free to use and dispose of their profits according to their own judgment. But if the company needs to acquire real estate on which to build, it may acquire that property only from willing sellers. If, by mutual consent to mutual advantage, it can acquire the property from those who own it, the company is free to develop that property. If, however, the owners of the property in question do not want to sell it to the development company, the company may not force them to “sell”—nor may it enlist the government to do so. The company may increase its offer or change its plans or proceed peacefully in another manner, but it may not resort to coercion because, under capitalism, coercion is forbidden.
Capitalism is the system of private property and voluntary exchange. Those who are willing to interact peacefully with others are free to produce, trade, and prosper accordingly. Those who wish to use force against their fellow men are precluded from doing so—and punished if they try.
Under capitalism, the initiation of physical force is barred from human relationships; citizens delegate the use of retaliatory force to the government, which may use force only in retaliation and only against those who initiate its use; and those who initiate force against others are met with force by the law.9 This arrangement leaves everyone free to act on his own judgment for his own sake as a matter of principle. This is what makes capitalism the system of selfishness—and this is what distinguishes capitalism from all other social systems.
Consider the alternative systems in this regard. Under communism, the government forces individuals and businesses to act against their judgment for the sake of the “workers” or the “community”; hence the term “communism” (e.g., the USSR). Under socialism, the government forces individuals and businesses to act against their judgment for the sake of the “collective” or “society”; hence the term “socialism” (e.g., present-day Sweden). Under theocracy, the government forces individuals and businesses to act against their judgment in obedience to “God’s will”—or whatever His earthly “representatives” deem His will to be; hence the term “theocracy,” which means literally “rule by God” (e.g., present-day Iran). Under fascism, the government forces individuals and businesses to act against their judgment for the sake of the “nation,” the “race,” the “people,” the “elderly,” the “poor,” or some other “group”; hence the term “fascism,” which means literally “group-ism” (e.g., Mussolini’s Italy).
Under capitalism (which has yet to exist),10 the government is forbidden from forcing individuals or businesses to act against their judgment. In a capitalist society, everyone is legally free to act on his own judgment for his own sake. The government serves only to protect individuals and businesses from physical force by banning it from social relationships and by using retaliatory force as necessary against those who initiate its use.
America today is a motley mixture of all of the above. Our federal, state, and local governments force citizens to act against their judgment in myriad ways: for the sake of the community (e.g., the Community Reinvestment Act, which forces banks to lend money to unqualified borrowers); for the sake of the workers (e.g., the United Auto Workers union, whose demands the government forces on automakers and other businesses); for the sake of society (e.g., Social Security, through which the government forces some citizens to fund the retirement of others); for the sake of “God” (e.g., faith-based initiatives, through which the government forces Americans to fund “God’s” earthly agents); for the sake of the nation (e.g., the Federal Trade Commission, through which the government forces businesses not to be too successful because too much business success allegedly would harm consumers); for the sake of race (e.g., affirmative action laws, through which the government forces businesses and schools to hire or admit people on the basis of genetic lineage); for the sake of the people (e.g., eminent domain laws, through which the government forces property owners to relinquish their homes, businesses, and land for so-called public purposes); for the sake of the elderly (e.g., Medicare, through which the government forces younger Americans to fund the health care of older Americans); for the sake of the poor (e.g., Medicaid, through which the government forces working Americans to fund the health care of allegedly destitute Americans); and for the sake of the group in general (e.g., the Food and Drug Administration, through which the government forces doctors, patients, drugmakers, food producers, and consumers to act against their judgment on the grounds that the group’s judgment, as represented by the “experts” at the FDA, is better for everyone). Granted, this list barely scratches the surface, but it indicates the enormity of government coercion against Americans today.
Despite all this force, however, Americans are, in some respects, still free to act on their judgment for their own sake: free to choose their careers, their hobbies, and their residences—providing that their choices do not “harm” the “environment”; free to marry their lovers—unless their lovers happen to share their gender; free to have an abortion—unless doing so would involve intact dilation and extraction; free to speak their minds—except with respect to certain kinds of political speech, broadcasting, and advertising; free to keep, use, and dispose of their earnings—except the large percentage taken by federal, state, and local governments via taxation; and free to offer employment to whomever they choose—except would-be immigrants from countries that have reached their quotas for emigration to the land of waning liberty.
In short, Americans are partially forced to act against their judgment and partially free to act in accordance with their judgment.
What is the moral status of this arrangement? The arrangement is immoral—immoral because, insofar as the government forces people to act against their judgment, it impedes their ability to live fully as human beings.
Man lives by acting on his rational judgment. In order to survive and prosper, he must observe reality, integrate his observations into concepts, identify causal relationships, form principles about the kind of actions that are good and bad for his life, and act on his best judgment. This is true in every area of human life and observable at every stage of human history.
Man’s rational judgment is the means by which he learned to make tools for hunting and fishing, to lash together branches and build shelters, to make and control fire, and to shape and bake bricks. It is the means by which he grasped the nature of plants and soil, developed irrigation systems, discovered the principles of agriculture, and proceeded to mass-produce food. It is the means by which he discovered the chemical elements of the earth, the principles of chemistry, and how to produce plastics, medicines, energy, and countless other life-serving values based on that knowledge. It is the means by which he learned about wings and flight, discovered the principles of aerodynamics, and proceeded to build and fly jumbo jets. It is the means by which he discovered the need for money and credit, the principles of banking, and how to evaluate borrowers and assess risk. It is the means by which he learned how to manufacture and market automobiles, how to manage employees, and how to assess their worth in the context of a corporation. And it is the means by which he discovered the need of private property, voluntary trade, and a government that protects each individual’s right to life, liberty, property, and the pursuit of happiness.
Reason is man’s basic means of living, and reason is an attribute of the individual. Although individuals can work together in groups—and can do so to great benefit—the fact remains that only individuals can think, because only individuals have minds. Excepting the mentally retarded, each individual’s own mind is his own basic means of living, and each individual is faced with the alternative of choosing to use his mind or not. If he chooses to think, he can live and prosper. If he chooses not to think, he either dies or survives parasitically on the efforts of those who do choose to think. Either way, reason is man’s basic means of living, and if an individual is to live as a human being, rather than as a parasite, he must think rationally and act accordingly.11
So the crucial question in the realm of politics is: What can stop an individual from acting on his rational judgment? There is only one thing that can stop an individual from acting on his judgment: other people. And there is only one means by which they can do it: physical force. Physical force used against a person stops him from employing his basic means of living: the judgment of his mind.
If a man judges that he should build a house, he is free to do so—unless another person, group, or government forcibly stops him from doing so. If a woman judges that she should start a business in her home, she is free to do so—unless another person, group, or government forcibly stops her from doing so. If a banker judges that he should withhold loans from those with insufficient income or poor credit, or if an automaker judges that he should refrain from hiring employees at rates that will drive him out of business, or if an individual judges that he should accept employment at an entry-level rate offered by an employer, or if a property owner judges that he should retain his property, the individuals or owners in question are free to act on their own judgment—unless a person, group, or government forcibly stops them from doing so.
Because an individual’s judgment is his basic means of living, physical force, to the extent that it is used against him, causes him to lead a less than human life. This fact gives rise to man’s need of a principle that precludes people, groups, and governments from using force against individuals. That principle is the principle of individual rights.
The principle of individual rights is the recognition of the fact that in order to live fully as a human being, an individual must be fully free to act on his own judgment for his own sake.12 If recognized and upheld, however, this principle would enable everyone to act consistently selfishly as a matter of principle—and this possibility runs counter to conventional morality.
This brings us to the crux of the battle for capitalism.
If human beings are to act on their rational judgment, they must be free to act on it. Capitalism is the social system that recognizes this fact and upholds the principle of individual rights. But according to the dominant morality today, altruism, the individual does not and cannot have a right to act on his own judgment for his own sake, because the individual has a “duty” to sacrifice his judgment and thus his life for the sake of others.
Altruism holds that being moral consists not in being selfish but in being selfless, not in self-interestedly pursuing and protecting one’s life-serving values but in self-sacrificially serving others. (“Alter” is Latin for “other”; “altruism” means “other-ism.”) And because pushers of altruism frequently equivocate on the meaning of the concept of “service,” it is crucial for advocates of capitalism to grasp the actual meaning of this concept as it relates to altruism.
Altruism does not call merely for “serving” others; it calls for self-sacrificially serving others. Otherwise, Michael Dell would have to be considered more altruistic than Mother Teresa. Why? Because Michael Dell serves millions more people than Mother Teresa ever did. The difference, of course, is in the way he serves people. Whereas Mother Teresa “served” people by exchanging her time and effort for nothing, Michael Dell serves people by trading with them—by exchanging value for value to mutual advantage—an exchange in which both sides gain.
Trading value for value is not the same thing as giving up values for nothing. There is a black-and-white difference between pursuing values and giving them up, between achieving values and relinquishing them, between exchanging a lesser value for a greater one and vice versa.
A sacrifice is not “any choice or action that precludes some other choice or action.” A sacrifice is the surrender of a greater value for the sake of a lesser value or a non-value.13
For example, if a parent forgoes a game of golf with his friend in order to spend the morning preparing for his son’s birthday party that afternoon, he has not committed a sacrifice. If his son’s party means more to his life than does the game of golf, then the sacrifice would be to forgo the preparation and play the game.
Similarly, if a student knows that his education is more important to his life than is a night on the town with his friends, then staying home to study for a crucial exam, against the urgings of his buddies, does not constitute a sacrifice. The sacrifice would be to forgo his judgment, hit the town, and botch the exam.
Likewise, if a man wants to become a banker because he is fascinated by the profession and thinks he will love that career, and if he forgoes his second choice, a career in law, in order to create a bank, then he has not committed a sacrifice. He has pursued the greater of the two values. If however, he decides to quit banking and become a bureaucrat on the grounds that selfless “public service” is the “right thing to do,” then he has committed a sacrifice. He has abandoned what he regards as his ideal career in order to selflessly serve others—and, consequently, he will lead a less happy life.
Life requires that we regularly forgo lesser values for the sake of greater ones. But these are gains, not sacrifices. A sacrifice consists in giving up something that is more important to one’s life for the sake of something that is less important (or non-important) to one’s life. A sacrifice results in a personal loss.
Whereas capitalism is the politics of self-interest and personal gain, altruism is the ethics of self-sacrifice and personal loss. And altruism does not countenance self-interest or personal gain. This is not a caricature of altruism; it is the essence of the morality. As philosophy professor Peter Singer, an arch advocate of altruism, writes: “To the extent that [people] are motivated by the prospect of obtaining a reward or avoiding a punishment, they are not acting altruistically. . . .”14 As philosophy professor Thomas Nagel, another advocate of altruism, explains, altruism entails “a willingness to act in consideration of the interests of other persons, without the need of ulterior motives”—“ulterior motives” meaning: personal gains.15 And as the philosopher Ayn Rand, the arch opponent of altruism, succinctly put it: “The basic principle of altruism is that man has no right to exist for his own sake, that service to others is the only justification of his existence, and that self-sacrifice is his highest moral duty, virtue and value.”16
On the principle of altruism, a banker has no right to withhold a mortgage loan from someone on the selfish grounds that providing the loan would result in a loss; it is not moral to be “motivated by the prospect of obtaining a reward or avoiding a punishment”; it is wrong to selfishly pursue profit. He must serve others “without the need of ulterior motives”; he must self-sacrificially serve others—in this case, those who want to own a home.
Likewise, on the principle of altruism, an automaker has no right to pay employees an hourly rate that makes selfish sense for the business; it is wrong to establish terms and conditions with the “ulterior motive” of making money or remaining viable. The automaker must self-sacrificially serve others—such as union workers.
Nor on the principle of altruism does a property owner have a right to keep, use, and dispose of his belongings. If others—such as a real-estate development company whose proposed project would lead to higher tax revenues for the municipality—need the property owner’s property, he has no right to withhold it for his selfish interests. According to altruism, he must “act in consideration of the interests of other persons”; he must sacrifice himself, his judgment, his property for the sake of others—in this case, the community-minded development company and the community it aims to “help.”
Altruism, the morality that forbids people to act in a self-interested manner, is entirely incompatible with capitalism, the system that enables and encourages everyone to act in a consistently self-interested manner. Acceptance of the altruistic premise that being moral consists in self-sacrificially serving others is what gives rise to and supports the various forms of statism—communism, socialism, theocracy, fascism—and it is what is driving America toward tyranny today.
The good news for lovers of liberty is that altruism is false. There are no facts that give rise to the notion that one should self-sacrificially serve others, which is why no one has ever presented such facts. Consequently, adherence to altruism is irrational. There is no reason to sacrifice, which is why no one has ever given a reason. As Ayn Rand pointed out:
There is one word—a single word—which can blast the morality of altruism out of existence and which it cannot withstand—the word: “Why?” Why must man live for the sake of others? Why must he be a sacrificial animal? Why is that the good? There is no earthly reason for it—and, ladies and gentlemen, in the whole history of philosophy no earthly reason has ever been given.17Of course, alleged reasons have been given, but not legitimate ones. And those who wish to advocate capitalism need to understand why the alleged reasons are illegitimate. Here they are, along with the reasons why they are not reasons:
1. “You should sacrifice because God (or some other voice from another dimension) says so.”
This is not a reason—certainly not an earthly one. At best, it is an appeal to authority—that is, to the “authorities” who claim to speak for God. Just because a preacher or a book makes a claim does not mean the claim is true. The Bible claims, among other things, that a bush spoke. More fundamentally, this non-reason is an arbitrary claim because there is no evidence for the existence of a god. But even those who believe in a god can recognize the fallacy of appealing to an authority.2. “You should sacrifice because that’s the general consensus.”
This is not a reason but an appeal to the masses. Matters of truth and morality are not determined by consensus. That slavery should be legal used to be the general consensus in America, and is still the consensus in parts of Africa. That did not and does not make it so. Nor does consensus legitimize the notion that you or anyone else should sacrifice or be sacrificed.3. “You should sacrifice because other people need the benefit of your sacrifice.”
This is an appeal to pity. Even if other people did need the benefit of your sacrifice, it would not follow that this is a reason to sacrifice. More importantly, however, the notion that people need the benefit of your sacrifice is false. What people need is to produce values and to trade them with others who produce values. And to do so, they and others must be free to produce and trade according to their own judgment. This, not human sacrifice, is what human life requires.184. “You should sacrifice because if you don’t, you will be beaten, or fined, or thrown in jail, or in some other way physically assaulted.”
The threat of force is not a reason; it is the opposite of a reason. If the force wielders could offer a reason why you should sacrifice, then they would not have to use force; they could use persuasion instead of coercion.5. “You should sacrifice because, well, when you wise up or grow up you’ll see that you should.”
This is not a reason, but a personal attack and an insult. It says, in effect, “If you don’t see the virtue of sacrifice, then you’re stupid or childish”—as if demanding a reason in support of a moral conviction could indicate a lack of intelligence or maturity.6. “You should sacrifice because only a miscreant or a scoundrel would challenge this established fact.”
This kind of claim assumes that you regard others’ opinions of you as more important than your own judgment of truth. It is also an example of what Ayn Rand called “The Argument from Intimidation”: the attempt to substitute psychological pressure for rational argument.19 Like the personal attack, it is an attempt to avoid having to present a rational case for a position for which no rational case can be made.Such are the “reasons” offered in support of the claim that you should sacrifice. Far from being reasons, each is a textbook logical fallacy.
There is no reason to sacrifice—but there is a reason to act in a self-interested manner: your life and happiness depend on it. And there is a reason to advocate a social system that enables you and everyone else to act in a self-interested manner: your life and happiness—and the lives and happiness of all your loved ones—depend on it. Reasons do not get any better than these.
Advocates of capitalism must come to see that self-sacrifice is not moral but evil—evil because it is irrational and anti-life. Man’s life does not require that he give up the values on which his life depends. It requires the opposite. It requires that he pursue and protect his life-serving values. And it requires a social system that enables him to do so. Human life requires capitalism: the social system of universal selfishness and prosperity. And if we are to defend capitalism, we must repudiate the morality of self-sacrifice and embrace the morality of self-interest: rational egoism.
Rational egoism calls not for self-sacrifice but for rational self-interest (the only kind of self-interest there is). It calls for everyone to pursue his life-serving values while respecting the rights of others to do the same.
Egoism does not call for “doing whatever one pleases” or “doing whatever one feels like doing” or “stabbing others in the back to get what one wants.” Those are caricatures of egoism perpetrated by pushers of altruism who seek to equate egoism with hedonism and subjectivism. Egoism does not hold pleasure or feelings as the standard of value. It holds man’s life as the standard of value—and reason as man’s basic means of living.20
According to rational egoism, that which promotes man’s life is good, and that which harms or destroys man’s life is evil. There are several highly developed principles involved in this morality—including the supreme value of reason; the crucial need of purposeful goals and self-esteem; and the virtues of productiveness, independence, honesty, integrity, justice, and pride.21 But the key political principle of rational egoism is the principle of individual rights.
Whereas egoism identifies the fact that people must think rationally and act accordingly in order to live and prosper, the principle of individual rights identifies the fact that if people are to act in accordance with their judgment, they must be free to do so. Whereas altruism underlies and supports statism, egoism underlies and supports capitalism.
As the politics of self-interest, capitalism cannot be defended with the ethics of self-sacrifice—nor can it be defended apart from a moral foundation (e.g., via libertarianism or mere economics). We who wish to advocate capitalism must advocate it explicitly on moral grounds. We must unabashedly explain to our allies and potential allies (i.e., people who are willing to think) that human life requires rationally self-interested action; that each individual has a moral right to act on his own judgment for his own sake, so long as he does not violate the same rights of others; that capitalism is moral because it enables everyone to act in a rationally self-interested manner; and that a mixed economy—in which no one’s rights are fully protected, and everyone’s rights are partially violated—is immoral because it precludes people from acting fully as human life requires.
We who wish to advocate capitalism must take the moral high ground—which is ours by logical right—and we must never cede an inch to those who claim that self-sacrifice is a virtue. It is not. Self-interest is a virtue. Indeed, acting in one’s rational self-interest while respecting the rights of others to do the same is the basic requirement of human life. And capitalism is the only social system that fully legalizes it. Grounds do not get more moral than that.
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