Legal System of Capitalism: Objective Law
Capitalism operates under a rule of objective law (as opposed to an arbitrary rule of men) whose fundamental purpose is the protection of individual rights.
“A government is the means of placing the retaliatory use of physical force under objective control —i.e., under objectively defined laws. . . . If a society is to be free, its government has to be controlled.”
“All laws must be objective (and objectively justifiable): men must know clearly, and in advance of taking an action, what the law forbids them to do (and why), what constitutes a crime and what penalty they will incur if they commit it.” — Ayn Rand
A proper government subordinates force to moral law (reason)
Man’s state in nature, where all are allowed complete discretion in the use of force, according to the “laws of the jungle,” is anarchy — perpetual civil war and gang warfare.
To place the retaliatory use of force under objective legal control, the individuals that makeup society delegate to government, their right to defend and retaliate against those who initiate force.
The objective purpose of the law is the protection of rights
Political power is the power to legally use force,i.e., the police power to kill, i.e., the power of destruction.
Given the inherent dangers such power poses, the use of such power is expressly limited to enumerated powers and regulated according to an objective rule of laws (under statism the government operates under a “fluid,” non-objective “rule of men.”)
In a proper society, the law has one purpose: to protect individual rights.
Such a system holds the individual innocent until proven guilty in a court of law before an impartial judge operating under objectively formulated laws (“rule of law”), as opposed to guilty until “proven” innocent according to the arbitrary whims of a dictating bureaucrat (“rule of men”).
A constitutional republic organized with safeguards to protect the rights of the individual
The political-legal structure of capitalism is not a democracy (“dictatorship of the majority”), but a constitutional republic. (“Democracy” only has value in the limited sense of “universal suffrage” where the majority selects the political representatives to run the government.)
A constitution — the supreme law of a society — is a citizen’s protection against public officials who seek to imitate the private criminal’s methods of coercion to achieve their objectives.
Such a written document objectively delimits, separates, and balances the powers of government amongst its branches (executive, judicial, and legislative), so that political power – the power to legally use physical force – cannot be concentrated in any single branch or faction, with each branch being a check on the power of every other.
The purpose of such constitutional “checks and balances” and “division of powers” is to prevent the majority (“Demos”) in power (“Kratos”) that runs the government from violating the rights of any minority (the greatest minority being the individual).
Government as a referee and not a regulator
The actions of government officials are regulated in minute detail with no room for arbitrary discretion as the government carries the legal power to use force. It is the government official that operates by permission, and it is the private individual that lives by right.
Under capitalism, the powers of the government are regulated so that the inalienable rights of the individual are protected.
The result of such a legal framework is a free-society in the personal, cultural, and economic realms.