Structure of Capitalism

“I am not primarily an advocate of capitalism, but of egoism; and I am not primarily an advocate of egoism, but of reason. If one recognizes the supremacy of reason and applies it consistently, all the rest follows.”

— Ayn Rand

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):

The science of government it is my duty to study, more than all other sciences; the arts of legislation and administration and negotiation ought to take the place of, indeed exclude, in a manner, all other arts.

I must study politics and war, that our sons may have liberty to study mathematics and philosophy.*

Our sons ought to study mathematics and philosophy, geography, natural history and naval architecture, navigation, commerce and agriculture in order to give their children a right to study painting, poetry, music, architecture, statuary, tapestry and porcelain.

(*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.

*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.