Laissez-Faire Capitalism

Structure of Capitalism

The Intellectual Framework of Capitalism

This section assumes you have taken the Capitalism Tour (takes about 10 minutes). If you have not as yet I recommend you browse the Capitalism Tour first.

Capitalism is not just an economic system (the free-market) that can be grafted onto any political structure. Capitalism is an integrated philosophical-ethical-political-legal-economic-cultural social system.

Like the human body, capitalism is an integrated system with specific hierarchical dependencies: cut out essential organs (like the brain or heart) and the human body will die.

This notion of integration and hierarchy is expressed in a letter by John Adams to his wife, Abigail Adams (12 May 1780):

(\*Bear in mind that the word ‘science’ was not coined until William Whewell in 1834 and was previously referred to as ‘natural philosophy.’)

The fruits of one’s culture are in part dependent on one’s economic system, which is dependent on one’s legal system, which is dependent on one’s political system, which is dependent on one’s ethical premises which are dependent on how one views the fundamental nature of the world.

(Moreso, a vibrant culture will allow the expansion of one’s philosophy to new areas, an economic system that functions properly will aid in the implementation of the legal system; in this sense, there is an inter-dependence between these areas as the entities they represent all exist simultaneously in reality.)

Structure of social systems

Visually, one way the structure of any social system in terms of fundamentals appears is like this:

Culture

Economic System

Legal System

Ethical/Political System

Philosophical-Moral System

Structure of anti-capitalism

All forms of anti-capitalism (communism, socialism, nationalism, democracy, fascism, etc.) introduce these elements to varying degrees:

Human Destruction

Command Economy

Non-Objective Law

Collectivism/Statism

Philosophy of Anti-Reason & Self-Sacrifice (Altruism)

To the degree, such elements are introduced is the degree of dysfunction in the system: some systems merely amputate a healthy limb, others go all out and cut out an essential organ.

These forms of anti-capitalism, or hybrid, hyphenated, “Frankenstein” social systems — to follow the human body analogy — will be covered in the Q&A section.

Structure of capitalism

For laissez-faire capitalism the elements are as follows:

Human Flourishing

Free Market Economy

Objective Law

Individualism/Individual Rights

Philosophy of Reason & Self-Interest (Egoism)

In the case of capitalism, its culture of human flourishing is a result of the foundation below it, much like the success of a flower is in part a result of the soil and environment it grows in. The economy of capitalism — the free market — depends on a specific legal (objective law), political (individual rights), and ethical (rational self-interest) foundation. It is these fundamentals that result in capitalism’s culture of human flourishing.

To explore the structure of capitalism, I recommend you start with the morality of capitalism (a philosophy of reason is assumed for the scope of this presentation): rational self-interest.

* The Structure of Capitalism is based in part on Ayn Rand’s philosophy Objectivism. For Ayn Rand’s views in her own words, the reader is recommended to read her works — especially her revolutionary series of essays in Capitalism: The Unknown Ideal.

Morality of Capitalism: Rational Self Interest

“The purpose of morality is to teach you, not to suffer and die, but to enjoy yourself and live.” – John Galt quoted from Ayn Rand’s Atlas Shrugged

Survival for human beings, unlike other animals, is not automatic.

Unlike other organisms — bacteria, elephants or apes which act by instinct — humans beings have no automatic knowledge and must discover the principles needed to survive.

Human beings have no “instincts” on how to grow food for nourishment, to drive a car or airplane for transport, build a house for shelter, operate a ventilator to help the lungs breath during an infection, or to interact with one’s fellow human beings in a division of labor economy. Such knowledge must be discovered and learned.

Humans are conceptual beings

Concepts are a human being’s distinctive tool of cognition.

One forms concepts by abstracting from the relationships amongst the perceptual data one observes in reality by a process of induction; one can then later apply those concepts to other instances by a process of deduction. For example, when one has grasped the concept car, one does not have to relearn everything from scratch when one encounters a new car, even though that car may differ in some aspects. Or, when a child grasps that water satisfies thirst (induction), when the child is thirsty it can seek water to satisfy that thirst (deduction).

Concepts expand a human being’s awareness beyond the perceptual level allowing a human to project beyond the immediate place or moment, whether into the past and future. For example, when one has conceptually grasped the concept mile (and the ability to count, etc.), one can then grasp a hundred or even a million miles even though one cannot perceptually see a million miles. This allows humans to grasp tiny particles the size of atoms or as large as a galaxy. Such is the power of concepts.

Reason is a human being’s means of survival

Reason is one’s means of conceptually grasping reality based on the evidence of the senses. By the use of reason one can rearrange the objects in their environment to create the values — shelter, food, ventilators, books, energy, medicine — one requires to survive.

Rationality means to be guided only by reason in one’s thought and action

To be rational, as philosopher Ayn Rand has observed, is to accept reason as one’s only source of knowledge, and as one’s only guide to action (as opposed to going by one’s emotions, whims, or on faith).

Self-interest is to regard oneself as the primary beneficiary of one’s actions

Where our physical body automatically acts to preserve our life (to the extent that it is able) such as the heart pumping blood, or the lungs breathing air, our conceptual mind does not act automatically.

As a being of free-will, one can choose to take those actions that preserve one’s life (from eating healthy food, to engaging in rewarding relationships) or choose to engage in actions that result in one’s destruction (from consuming poison to engaging in sacrificial, destructive relationships). If one wishes to live, one must choose to act to preserve one’s life.

Self-interest (egoism) means to choose to hold one’s own life as the standard of value, regarding oneself as the primary beneficiary of one’s actions.

Rational self-interest is to live by an objective code of moral principles so one may live a happy, fulfilling, and flourishing life on earth

Rational self-interest means choosing to act according to an objective moral code of principles that serves as one’s guide to action, so that one may live a happy, fulfilling, and flourishing life on earth.

A moral code, according to philosopher Ayn Rand, is a set of universal, rationally discovered, reality-based principles that one must apply to the particular concretes of one’s everyday life if one wishes to live.

Self-interest indicates the end (the self) of one’s actions; rational indicates the means (reason) of determining and carrying out those actions.

SUMMARY

Rational self-interest is to live by an objective code of moral principles so one may live a happy, fulfilling, and flourishing life on earth.

KEY POINTS

Reason is a human being’s means of survival

Rationality means to be guided only by reason in one’s thought and action (objectivity).

Self-interest is to regard oneself as the primary beneficiary of one’s actions.

Rational self-interest is to live by an objective code of moral principles so one may live a happy, fulfilling, and flourishing life on earth.

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