“A government is the means of placing the retaliatory use of physical force under objective control—i.e., under objectively defined laws.” — AYN RAND
Man’s state in nature, where every man is allowed complete discretion in the retaliatory use of force, according to the laws of the jungle, is anarchy — perpetual civil war and gang warfare. If there were no legal agency to carry out such a task, each man would be forced to carry out retaliation at his discretion. Writes Ayn Rand on the need for government:
“If a society left the retaliatory use of force in the hands of individual citizens, it would degenerate into mob rule, lynch law and an endless series of bloody private feuds or vendettas. If physical force is to be barred from social relationships, men need an institution charged with the task of protecting their rights under an objective code of rules. This is the task of a government—of a proper government—its basic task, its only moral justification and the reason why men do need a government. 
Under capitalism, a proper government’s fundamental responsibility is to protect the rights of the individual, by banning the initiation of physical force, thus making all relations between men voluntary, i.e., free from the threat of violence and fraud.
 Ayn Rand, The Nature of Government
Under capitalism the government is banned from initiating force.
As no individual in his private capacity, as a citizen, may initiate force against others, neither may the individual in his public capacity as a state official start force either, since all powers of government are delegated to it by the people.
Force may only be morally used in retaliation or to defend against those who start the use of force.
A proper government is permitted to use force to retaliate against a thief who has initiated force against someone (by robbing them). A proper government is not permitted to copy the means of private criminals by initiating force against its citizens, no matter how “noble” the alleged goal.
Citizens may not delegate the right to initiate force to the government, as they do not possess the right to start force to beginwith, i.e., the right to violate rights. As Ayn Rand has commented, “there is no such thing as the right to enslave.”
Since govenrment has the legal monopoly on the power to use force, the government must be regulated in its use, so the rights of the individual are protected. It is the purpose of an objective legal system to codify and regulate the permittable uses and conditions wherein government may use force. In doing so, an objective legal system submits might to right.
A proper government consists in practice of three things: a military— to protect against foreign invaders, a police force — to protect against domestic criminals, and a legal/court system — to settle disputes that arise, and to punish criminals according to objectively predefined laws.
“….Economic power is exercised by means of a positive, by offering men a reward, an incentive, a payment, a value; political power is exercised by means of a negative, by the threat of punishment, injury, imprisonment, destruction. The businessman’s tool is values; the bureaucrat’s tool is fear.” — AYN RAND Capitalism: The Unknown Ideal
Power is the ability to act.
What is economic power? The power wielded by businessmen is the power to create wealth through production, and trade. In regard to trade in a free market, businessmen can only entice someone to do their bidding, by offering something to be of equal or greater value in return. Economic power is the power of persuasion: the power to appeal to one’s mind with economic values. Such power comes from creating values–such as when Bill Gates (Microsoft) creates better products at lower prices. The businessmen’s tool is the mind and the material values it can create.
What is political power? The power of a bureaucrat of a statist society is the power of fear — the power to initiate force. He can force you to do his bidding by legally threatening one’s life and freedom. Such power is derived by destroying or threatening to destroy values — such as when the IRS confiscates ones home for not paying taxes, or when the DOJ threatens one with a jail sentence for being too successful.
The difference between political and economic power is the difference between plunder and production, punishment and reward, theft and trade. Plunder, punishment, and theft belonging to the political realm; production, reward, and trade belonging to the economic realm. The symbol of the businessmen is positive — the dollar — given to you voluntarily by trade. The symbol of a bureaucrat is a negative — a gun — pointed at you. The man who prefers the gun to the dollar is the man who thinks he will be holding the gun. The joke is on him — the results are upon all of us.