Economic and Political Power

“….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 [1]

Power is the ability to act.

What is the difference between economic power and political power?

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 and the Microsoft corporation creates better products at lower prices, or a Steve Jobs and the Apple Corporation introduce a smartphone to the world. 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 one’s home for not paying taxes, or when the Department of Justice threatens businessmen with fines and a jail sentence for being too successful.

Economic power is the power to create and trade values; political power is the power to expropriate and destroy them.

The difference between political and economic power is the difference between punishment and reward, theft and trade, plunder and production, destruction and creation. 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 under capitalism.

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.

[1] Ayn Rand Capitalism: The Unknown Ideal 48

Recommended Reading:
The Dollar and The Gun by Harry Binswanger

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