Rand, Ayn – Capitalism

When great industrialists made fortunes on a free market (i.e., without the use of force, without government assistance or interference), they created new wealth—they did not take it from those who had not created it. If you doubt it, take a look at the “total social product”—and the standard of living—of those countries where such men are not permitted to exist.

Observe how seldom and how inadequately the issue of human intelligence is discussed in the writings of the tribal-statist-altruist theoreticians. Observe how carefully today’s advocates of a mixed economy avoid and evade any mention of intelligence or ability in their approach to politico-economic issues, in their claims, demands, and pressure-group warfare over the looting of “the total social product.”

It is often asked: Why was capitalism destroyed in spite of its incomparably beneficent record? The answer lies in the fact that the lifeline feeding any social system is a culture’s dominant philosophy and that capitalism never had a philosophical base. It was the last and (theoretically) incomplete

product of an Aristotelian influence. As a resurgent tide of mysticism engulfed philosophy in the nineteenth century, capitalism was left in an intellectual vacuum, its lifeline cut. Neither its moral nature nor even its political principles had ever been fully understood or defined. Its alleged defenders regarded it as compatible with government controls (i.e., government interference into the economy), ignoring the meaning and implications of the concept of laissez-faire. Thus, what existed in practice, in the nineteenth century, was not pure capitalism, but variously mixed economies. Since controls necessitate and breed further controls, it was the statist element of the mixtures that wrecked them; it was the free, capitalist element that took the blame.

Capitalism could not survive in a culture dominated by mysticism and altruism, by the soul-body dichotomy and the tribal premise. No social system (and no human institution or activity of any kind) can survive without a moral base. On the basis of the altruist morality, capitalism had to be—and was—damned from the start8

For those who do not fully understand the role of philosophy in politico-economic issues, I offer—as the clearest example of today’s intellectual state—some further quotations from the Encyclopaedia Britannica’s article on capitalism.

Few observers are inclined to find fault with capitalism as an engine of production. Criticism usually proceeds either from moral or cultural disapproval of certain features of the capitalist system, or from the short-run vicissitudes (crises and depressions) with which long-run improvement is interspersed. [Italics mine.]

The “crises and depressions” were caused by government interference, not by the capitalist system. But what was the nature of the “moral or cultural disapproval”? The article does not tell us explicitly, but gives one eloquent indication:

Such as they were, however, both tendencies and realizations [of capitalism] bear the unmistakable stamp of the businessman’s interests and still more the businessman’s type of mind. Moreover it was not only policy but the philosophy of national and individual life, the scheme of cultural values, that bore that stamp. Its materialistic utilitarianism, its naive confidence in prog-

“For a discussion of the philosophers’ default in regard to capitalism, see the title essay in my book For the New Intellectual.

ress of a certain type, its actual achievements in the field of pure and applied science, the temper of its artistic creations, may all be traced to the spirit of rationalism that emanates from the businessman’s office. [Italics mine.]

The author of the article, who is not “naive” enough to believe in a capitalistic (or rational) type of progress, holds, apparently, a different belief:

At the end of the middle ages western Europe stood about where many underdeveloped countries stand in the 20th century. [This means that the culture of the Renaissance was about the equivalent of today’s Congo; or else, it means that people’s intellectual development has nothing to do with economics.] In underdeveloped economies the difficult task of statesmanship is to get under way a cumulative process of economic development, for once a certain momentum is attained, further advances appear to follow more or less automatically.

Some such notion underlies every theory of a planned economy. It is on some such “sophisticated” belief that two generations of Russians have perished, waiting for automatic progress.

The classical economists attempted a tribal justification of capitalism on the ground that it provides the best “allocation” of a community’s “resources.” Here are their chickens coming home to roost:

The market theory of resource allocation within the private sector is the central theme of classical economics. The criterion for allocation between the public and private sectors is formally the same as in any other resource allocation, namely that the community should receive equal satisfaction from a marginal increment of resources used in the public and private spheres. . . . Many economists have asserted that there is substantial, perhaps overwhelming, evidence that total welfare in capitalist United States, for example, would be increased by a reallocation of resources to the public sector—more schoolrooms and fewer shopping centers, more public libraries and fewer automobiles, more hospitals and fewer bowling alleys.

This means that some men must toil all their lives without adequate transportation (automobiles), without an adequate number of places to buy the goods they need (shopping

centers), without the pleasures of relaxation (bowling alleys) —in order that other men may be provided with schools, libraries, and hospitals.

If you want to see the ultimate results and full meaning of the tribal view of wealth—the total obliteration of the distinction between private action and government action, between production and force, the total obliteration of the concept of “rights,” of an individual human being’s reality, and its replacement by a view of men as interchangeable beasts of burden or “factors of production”—study the following:

Capitalism has a bias against the public sector for two reasons. First, all products and income accrue [?] initially to the private sector while resources reach the public sector through the painful process of taxation. Public needs are met only by sufferance of consumers in their role as taxpayers [what about producers?}, whose political representatives are acutely conscious of their constituents’ tender feelings [1] about taxation. That people know better than governments what to do with their income is a notion more appealing than the contrary one, that people get more for their tax money than for other types of spending. [By what theory of values? By whose judgment?]…

Second, the pressure of private business to sell leads to the formidable array of devices of modern salesmanship which influence consumer choice and bias consumer values toward private consumption . . . [This means that your desire to spend the money you earn rather than have it taken away from you, is a mere bias.] Hence, much private expenditure goes for wants that are not very urgent in any fundamental sense. [Urgent—to whom? Which wants are “fundamental,” beyond a cave, a bearskin, and a chunk of raw meat?] The corollary is that many public needs are neglected because these superficial private wants, artificially generated, compete successfully for the same resources. [Whose resources?]…

A comparison of resource allocation to the public and private sectors under capitalism and under socialist collectivism is illuminating. [It is.] In a collective economy all resources operate in the public sector and are available for education, defense, health, welfare, and other public needs without any transfer through taxation. Private consumption is restricted to the claims that are permitted [by whom?] against the social product, much as public services in a capitalist economy

are limited to the claims permitted against the private sector. [Italics mine.] In a collective economy public needs enjoy the same sort of built-in priority that private consumption enjoys in a capitalist economy. In the Soviet Union teachers are plentiful, but automobiles are scarce, whereas the opposite condition prevails in the United States.

Here is the conclusion of that article:

Predictions concerning the survival of capitalism are, in part, a matter of definition. One sees everywhere in capitalist countries a shifting of economic activity from the private to the public sphere. … At the same time [after World War II] private consumption appeared destined to increase in communist countries. [Such as the consumption of wheat?] The two economic systems seemed to be drawing closer together by changes converging from both directions. Yet significant differences in the economic structures still existed. It seemed reasonable to assume that the society which invested more in people would advance more rapidly and inherit the future. In this important respect capitalism, in the eyes of some economists, labours under a fundamental but not inescapable disadvantage in competition with collectivism.

The collectivization of Soviet agriculture was achieved by means of a government-planned famine—planned and carried out deliberately to force peasants into collective farms; Soviet Russia’s enemies claim that fifteen million peasants died in that famine; the Soviet government admits the death of seven million.

At the end of World War n, Soviet Russia’s enemies claimed that thirty million people were doing forced labor in Soviet concentration camps (and were dying of planned malnutrition, human lives being cheaper than food); Soviet Russia’s apologists admit to the figure of twelve million people.

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