Capitalism FAQ

  • What is capitalism?
    Capitalism is the moral (rational-self-interest), political (individualism), legal (rule of law), economic (free-market) social system based on the principle of individual rights that results in peace, progress, and human flourishing.
  • What is a capitalist?
    Politically, a capitalist is an advocate of laissez-faire capitalism, regardless of how rich or poor they are.
  • Isn’t capitalism an economic system based on the market?
    The term capitalism is used here in the broader philosophical, political sense (social system), and not in the narrower economic sense (market economy). Capitalism is not just an economic system (the free market) that can be grafted onto any political structure. Capitalism is an integrated social system that depends on a specific non-contradictory ethical, political, legal, ...
  • What is the moral-ethical foundation of capitalism?
    Capitalism is the ideal social system as it leaves the individual free to be moral — free to act rationally in the pursuit of happiness — so long as one respects the equal right of others to do the same.
  • What is the political foundation of capitalism?
    If capitalism is the expression of individualism; statism is the expression of collectivism.
  • What is the legal system of capitalism?
    Under capitalism, it is the powers of the government that are regulated so that the inalienable rights of the individual are protected.
  • What is the economic system of capitalism?
    Economically, when freedom under the rule of law is applied to the sphere of production and trade, its result is the free market in goods, services, relationships, and ideas.
  • What is the cultural result of a society built on capitalist principles?
    Capitalism is the ideal moral, ethical, political, legal, economic social system of the Enlightenment that results in peace, progress, and human flourishing.
  • What is the philosophy of capitalism?
    “Corresponding to the four branches of philosophy, the four keystones of capitalism are: metaphysically, the requirements of man’s nature and survival—epistemologically, reason—ethically, individual rights, politically, freedom.” — Ayn Rand
  • Why do intellectuals oppose capitalism?
    The intellectuals despise Capitalism because it stands a monument in opposition to their fundamental principles.
  • What is laissez-faire capitalism?
    Laissez-faire capitalism should not be confused with anarchism, where the government does absolutely nothing.
  • What is life?
    Life, according to philosopher Ayn Rand, is “a process of self-sustaining and self-generated action.”
  • What is morality?
    Morality is the “science of self-preservation” and human fulfillment.
  • What is rational self-interest?
    Self-interest indicates the end (the self) of one’s actions; rational indicates the means (reason) of obtaining that end.
  • What is virtue?
    Virtues are the mental and physical actions necessary to obtain the values necessary to sustain one’s life and achieve happiness.
  • Why does one need moral principles?
    If one desires consistent results, one must act consistently. That is, on principle.
  • What is ethics?
    Ethics is individual morality applied to living life in society.
  • What is a ethics of sacrifice?
    Rational self-interest does not mean sacrificing oneself for others (what philosopher Auguste Comte coined as altruism or “otherism”) or sacrificing others for oneself (what is smeared as “selfishness”).
  • What is the trader principle?
    Rational self-interest means to live by the trader principle.
  • What is political freedom?
    Freedom, not to act by permission of another individual or group of individuals, but the freedom to act by right.
  • What is individualism?
    Individualism does not mean living a “rugged life” on a desert island or as a “lone wolf” in the wilderness, but like its antithesis, collectivism, specifies the nature of the relationship of the individual to the rest of society.
  • What is a right?
    “A right,” as defined by Ayn Rand, “is a moral principle defining an individual’s freedom of action in a social context.”
  • What is the right to life?
    The right to life is the fundamental right from which all other rights logically derive.
  • What does it mean for rights to be inalienable?
    Inalienable means the right may not be alienated from the person who possesses them.
  • What is the right to property?
    Rights are not guarantees for successful action but are only guarantees to freedom of action.
  • What is the right to pursue happiness?
    Rights are not guarantees for successful action but are only guarantees to freedom of action.
  • Why are rights universal/equal?
    Rights belong to each individual equally by their nature as a rational being.
  • Why are rights not self-evident?
    Individual rights are not self-evident but are objective discoveries.
  • Why are rights not permissions granted by government or society?
    Individual rights are not permissions granted by the government.
  • Why does a society need government?
    The purpose of government is to protect the individual’s right to life, by banning the initiation of physical force.
  • What is the purpose of government under capitalism?
    Under capitalism the government is banned from initiating force.
  • What are the functions of government?
    A proper government consists of a military, a police force, and a court system.
  • What is the difference between economic power and political power?
    Economic power is the positive power to create and trade values; political power is the negative power to expropriate and destroy them.
  • Does laissez-faire mean anarchy?
    Laissez-faire capitalism does not mean anarchy.
  • How is government financed under capitalism?
    In today’s mixed economies, the removal of taxation would be the last step to implement in the transition to a 100% capitalist society.
  • What is the “public interest”?
    “The public interest, c’est moi!”
  • What is lobbying and cronyism?
    Under laissez-faire capitalism, there would be no buying of political favors from politicians because politicians would not have any favors to offer.
  • What are laws?
    To place the use of force under objective legal control.
  • What is the constitution?
    A written constitution objectively defines the nature, scope, and limitations of government powers serving as the individual’s protection against the government.
  • What is a constitutional republic?
    “A republic if you can keep it.” — Benjamin Franklin
  • What is federalism?
    Federalism is the principle of dividing political power vertically between federal and local governments.
  • What is the separation of powers?
    The separation of powers is the principle of dividing political power.
  • What are the branches of federal government?
    The federal (central) government consists of three branches.
  • What are “checks and balances”?
    “Ambition must be made to counteract ambition.”
  • Political Power
    Under capitalism, it is the actions of the government that are regulated so that the rights of the individual are protected.
  • What is democracy?
    Pure democracy is collectivist mob-rule.
  • Collectivism
    Collectivism holds that the individual is not an end in oneself, but is a tool to serve the ends of collective.
  • Statism
    Statism is a political-economic system where the individual lives not by inalienable right but by permission of the state.
  • Socialism
    Socialism is a collectivist-statist form of government where the state owns the economic system leading to the eventual destruction of civilization.
  • Communism
    Communism is a radical form of statism that is totalitarian/authoritarian.
  • Racism
    Racism is a form of collectivism that ascribes moral and political significance to an individual’s race and/or ancestry.
  • What is the anarchism?
    Anarchism is not a form of capitalism; anarchism is a form of collectivism, where individual rights are subject to the rule of competing gangs.
  • What is “State Capitalism”?
    “State capitalism” is not capitalism, but capitalism crippled by statism (government controls).
  • What is “Crony Capitalism”?
    “Crony capitalism” is not capitalism, but political cronyism: the granting of political favors by the government to one’s friends (“cronies”) at the expense of the rights of others.
  • Right to Self-Defense
    The use of physical force, in and of itself, is not evil — but to initiate (start) force is.
  • Solution to Crime
    Under capitalism, a crime is any act that is a violation of the rights of another.
  • Cause of Crime
    Criminals are those who choose to violate the rights of others.
  • Death Penalty
    Justice’s first purpose is not to punish evil; it is to reward the good.
  • Drugs
    As the sale or use of any drug is not a violation of anyone’s rights, government’s role in such matters is laissez-faire — to leave them alone.
  • Guns and Crime
    A gun is a non-volitional object. Guns have no power of choice.
  • Wars
    A capitalist country is not a pacifist, and neither is it an aggressor (initiator), but it will defend itself.
  • Isolationism/Imperialism
    “Isolationist” is a smear term, used against countries that don’t wish to interfere in other countries. If the country does interfere it is called “Imperialist”.
  • Foreign Policy
    “Peace, commerce, and honest friendship with all nations-entangling alliances with none.”
  • Draft and Voluntary Army
    Under capitalism, the army is made up of volunteers.
  • Immigration Under Capitalism
    A capitalist country warmly welcomes all rights-respecting individuals regardless of color, religion, sex, nationality, creed, race, etc.
  • Right to Immigration
    There is no “right” to travel onto someone else’s property without permission of the owner — and by extension, no one has the “right” to enter a given nation.
  • Immigration
    Under capitalism, it is the government’s responsibility to prevent the entrance of terrorists and other rights-violating individuals from entering the country by securing a nation’s borders.
  • Immigration Burden
    The government may not limit entry due to quotas, and other collectivist forms of immigration restriction.
  • Ideological Profiling
    ‘Ideological profiling’ to the extent that it is used should be severely delimited to searching out those who will commit violations of individual rights, and not as a blunt instrument to collectively ban peaceful individuals by group association.
  • Language
    Government’s job is not to mandate what languages one speaks, no more then it is to mandate the content of what one says.
  • Open Borders
    A capitalist country secures its borders just like an individual secures their property: borders are closed to rights-violating individuals, and open to rights-respecting individuals.
  • Economics
    Economics is the science of production and trade under a division of labor (market) society.
  • Economic Actor
    The economic actor — the entity that performs all economic decisions and actions — is the individual.
  • Economic Value
    The economic value of a good or service is what an individual would exchange for a given good or service.
  • Production
    Production is the act of creating — shaping materials into values –– goods and services for future consumption.
  • Consumption
    Consumption is the act of consuming or using (up) values.
  • Wealth
    Wealth is a material good or service that has value to human life (that has economic value.)
  • Division of Labor
    In a division of labor society, individuals create values for future trade as opposed to self-consumption.
  • Trade
    Trade is the act of voluntarily exchanging one value for another. (Theft is when the value is exchanged involuntarily).
  • Prices
    The price of a good or service are the values it is exchanged for.
  • Money
    Money is an asset used in a division of labor society as a medium for indirect exchange.
  • Free-Market
    A free-market is a market free from the intiation of physical force, where all exchanges are voluntary.
  • Market Competition
    Market competition is a peaceful form of cooperation.
  • Business Enterprise
    A business (enterprise) is an organization that creates products/services to sell on the market with the goal of making a profit for its owners.
  • Profit and Loss
    A business makes a financial profit/loss when its revenues are more/less than its costs.
  • Savings
    Savings is wealth that is not consumed.
  • Capital
    Capital is savings from production reinvested in an industry to produce wealth.
  • Entrepreneur
    A capitalist (or entrepreneur) invests (and risks) capital in a business concern in the hopes of earning a profit in the future.
  • Interest
    Interest is the premium on a loan, that is added to the principal when the loan is due.
  • Capital and Consumer goods
    Capital goods are those goods that businesses use to create products and services for consumers.
  • Profits
    A profit is made by creating something of economic value that is more than the cost of producing it.
  • What is the “Trickle Down Economics” Smear?
    “Trickle Down” Economics is a straw man argument used to attack those who advocate tax cuts.
  • Great Recession of 2008
    The 2008 Financial Crisis was caused not by the free-market, but by government intervention in the marketplace.
  • Great Depression (1930s)
    The government’s Great Intervention into the economy was the cause of the Great Depression of the 1930s.
  • Inflation
    Inflation is the general increase in prices caused by a government currency monopoly increasing (inflating) the money supply with fiat ‘money’ (money not backed by actual physical wealth).
  • Capitalism and Depressions
    The economy crippling, nationwide cycles of “booms” followed by “busts” are the result of the only agency that has the power to act on a nationwide scale: the government.
  • Booms and Busts
    How state currency monopolies tend to promote booms and busts.
  • Smoot-Hawley Tariff Act (1930)
    Tariff Act of 1930 led to the reduction of American exports and thus jobs.
  • Central Bank Instability
    Why central banks, far from being bulwarks of financial stability, are inherently destabilizing.
  • Free Banking
    The spontaneous evolution of money, the rise of banks, bank self-regulation under competition and crisis management in the absence of a central bank.
  • Freedom of Competition
    Under capitalism, free-competition means freedom from the initiation of physical force.
  • Competition and Coopeartion
    Capitalist competition is a peaceful and practical form of social cooperation.
  • Consumer and Producer Rights
    One does not lose one’s rights when one becomes a producer; one does not gain rights by becoming a consumer.
  • What is an “Equal Playing Field”?
    Equality under free-competition means “equal protection and respect for rights.”
  • Corporations
    All the rights of a corporation are derived from those of its members; as such, an individual neither gains nor loses rights in their capacity as members of a corporation.
  • Insider Trading
    In a free-market, investors choose the kinds of companies they want to invest in (rather than have the SEC choose for them): a company which allows insider trading, or a company that prohibits it, or a company somewhere in-between.
  • Environment
    Capitalism is the greatest protector of the environment — for human beings.
  • Safety
    Under Laissez-faire Capitalism, one would expect products to be safer and to work better.
  • Monopolies
    A monopoly — a single agent in a specified area — is judged good or evil by how it obtained its market share: by economic freedom or by political coercion.
  • Antitrust and Economic Freedom
    Anti-trust are non-objective laws that punish trusts (business enterprises, corporations) for being successful, i.e., dominant.
  • Education
    Education is the means of providing a child with the knowledge they require to become an independent adult.
  • Right to Education
    The ‘right to free education’ makes slaves of those who are physically forced to pay for someone else’s so-called right.
  • Education and the State
    Under capitalism, the indoctrination of the young by government officials is illegal.
  • Funding Education
    Under capitalism, a child’s education is paid for by their guardians (parents), or by voluntary donations by private individuals or groups of private individuals.
  • Private Schools
    State schools are run politically, as opposed to economically, leading to financial-funding and intellectual-content ramifications.
  • Public Education
    The goal of education under capitalism is independence; under state education dependence (or the euphemism called “socialization.”)
  • Improving Education
    Tax credits for education, and the separation of education and state.
  • Women Under Capitalism
    Capitalism leads to the freedom of all individuals — including women.
  • Feminism and Capitalism
    Sadly, post-modern feminists are basing a woman’s right to life, not on individualism, but on a form of collectivism known as sexism.
  • Is abortion a right?
    Under capitalism, a women’s right to abortion is inalienable, because there is no such thing as the right to live inside another.
  • Religion and Capitalism
    Religion affirms the supernatural, faith, and altruism leading to theocracy.
  • Religious Freedom
    Under capitalism, the state neither supports nor opposes religion, as long as those religious practices do not violate the rights of others.
  • Free-Market Health Care
    Under capitalism, there is a separation of health care and state.
  • Right to Healthcare
    The battle against socialized medicine depends on the doctors speaking out against it–not only on practical grounds, but, first of all, on moral grounds.
  • Intervention in Medicine In this 1985 lecture Leonard Peikoff shows how government intervention in medicine is reducing the quality of medical care while increasing the cost.
  • Child Factory Labor
    Capitalism did not create child labor working in fields or factories, but inherited child labor from the previous political systems.
  • Progress Under Capitalism
    Capitalism is the only “progressive” system, in the proper meaning of the term. The historical evidence to support this thesis is irrefutable. Capitalism is the only system that led to the freedom of slaves, the end of feudalism, the equal rights of all individuals, regardless of race, color, and sex. Capitalism is the system of laissez-faire ...
  • History of Capitalism
    A pure laissez-faire capitalist society has never existed. The closest any country has come to pure capitalism is 19th century America. Twentieth-century America is not a purely capitalist country but is a “mixed economy”: a mixture of freedom and controls. i.e., crippled capitalism, i.e., a hampered market economy. Capitalism is not utopian, but it is practical. ...
  • Exploitation
    “In proportion to the mental energy he spent, the man who creates a new invention receives but a small percentage of his value in terms of material payment, no matter what fortune he makes, no matter what millions he earns. But the man who works as a janitor in the factory producing that invention, receives ...
  • Involuntary Unions
    Capitalism only permits voluntary unions.
  • Price of Labor
    The general price of labor under capitalism is not set by any particular businessman, but by the free-market. It is competition between businesses for labor that pushes wages up; it is competition between laborers that pushes wages down. (To reduce this competition between laborers unions use the power of government to create closed “union shops” which physically ...
  • Minimum Wage Laws
    Minimum wage laws create unemployment. If passing minimum wage laws are the secret to raising wages, then why doesn’t the government make everybody rich by setting the wage to a million dollars? Would this solve poverty in third world countries, or would this make everyone — who produces less than the million-dollar minimum wage — unemployable? The truth ...
  • Price of Labor 2
    No. Under capitalism, one’s wages depend on how much one can produce. That is why Michael Jordan — or a doctor — gets paid millions of dollars more than the minimum wage. It depends on how well and how much they produce. The reason why factory laborers receive more wages in America is that they ...
  • Marriage
    The right for individuals to civilly marry, regardless of sex, race, ancestry or religion is protected under capitalism.
  • Poverty
    Observe the poorest countries are those where freedom is lacking.
  • Charity vs. Welfare
    Welfare is the forcible transfer of wealth by the government from those who produced the wealth to other individuals who “need” that wealth. Welfare is the forcible transfer of wealth (usually by taxes) by the government from those who produced the wealth to another individual (or group of individuals). Where private charity is voluntary, the “paternalism” of ...
  • Nation’s Wealth
    Wealth is not a “collective resource” to be distributed by some totalitarian or his cronies, but is produced by individuals. Wealth is the product of the individual mind. It is the result of man’s ability to think applied to the sphere of production and trade. Wealth belongs to the individual who produced it. It is not an ...
  • Distribution of Wealth
    No. Capitalism “distributes” wealth justly, i.e., to those who earned it, in proportion to how much they produced. Wealth must not be distributed, but created and earned. What is wealth? Wealth, like its corollary knowledge, is not a static quantity but is potentially limitless. The only limit to one’s wealth, in a capitalist society, is ...
  • Money Meaning
    Money is a tool of exchange that allows men to indirectly trade goods and services that they have produced in a market economy. In a laissez-faire society, uncrippled by government bureaucrats, money is a symbol of man’s unspent production, which has yet to be consumed. When money has been earned (as opposed to looted, stolen, and ...
  • Unequal Income Tax
    It is the principle of equal treatment under the law that a graduated “progressive” income tax violates.  “A heavy progressive or graduated income tax.” — Plank 2 of the Communist Manifesto A so-called graduated “progressive” income tax is a violation of the principles of justice as it punishes those who are successful at creating wealth. The advocates of ...
  • Inheritance Tax
    The right to dispose of one’s income belongs to the producer of that wealth.
  • Child Labor Laws
    Mandatory child labor will only cease when parents have the means to support their children.
  • Say’s Law of Markets
    Say’s Law of Markets is the principle that supply constitutes demand. In Jean-Baptiste Say’s words: “products are paid for with products.”
  • Certificate of Need (CON)
    In a free-market, if an entrepreneur wished to organize a group of doctors, nurses and assorted personel to put their capital together a form a hospital there would be no prohibition from doing so. This is not the case in today’s American state regulated system. In the present regulated (un-free) health care system before a company can: ...
  • Progress
    Progress is an improved state of affairs that results in the betterment of human life. Progress is potentially unlimited thanks to the power of reason to innovate.
  • Innovation
    Innovation is the process of practically satisfying a human need by either inventing some ‘new’ product (such as the telephone) or process or more commonly improving an existing one (smartphone). In the cases of the invention of products such as the telephone, they often implement existing technologies, such as those used with the telegraph, and ...
  • Invention
    An invention is the creation of a new product or process that accomplishes a specific task. An invention differs from innovation, which is a broader term that can subsume invention, whereby inventions are made into practical products and services that benefit human life.
  • Technology
    Technologies are those processes and entities that increase human productivity. For example, a human being can catch a fish with his bare hands (without technology), but with a spear, the process requires less effort and has a far greater probability of success, and with a net or fishing line and bait — and knowledge on ...
  • Equality
    “Economic equality” is only possible by treating people politically unequal. Capitalism is the social system based on individual rights, with a free-market operating under objective law. In capitalism, the government’s job is not to regulate the individual’s affairs, but to act as an impartial referee, who equally protects the right to life of all individuals by banning ...
  • Freedom of Speech
    “Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the government for a redress of grievances.” — U.S. Constitution What is freedom of speech? The right to speak ...
  • Do Individual Rights Come From The Gods?
    Individual rights (political rights) do not come from the government, the Gods, or society, any more than the laws of gravity do.
  • Rights are non-contradictory
    Rights apply to all individuals equally, as no right — properly defined — contradicts any other right.
  • Censorship
    Censorship means the suppression of speech by, and only by, the government. Its chief concern is political speech.

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