Capitalism in a single line

You can get only what others give you willingly, and you can spend only what you have.

The keyword here is will. No one can force you to do anything. You do anything in a capitalist world solely for your own reasons, not for the demands of others, while keeping in mind that, if what you do is not productive, you won’t get anything out of it, and you cannot force others to sacrifice their time, energy or money for you, for free. The system emphasises a central fact: There is no free food. Someone always pays for it. In a capitalist system, you pay for your own food. There is no way for you to force anyone to feed you.

Ruling principle of the capitalist system is Justice. The market will judge your worth and compensates for your services accordingly. If a stupid employer won’t pay you enough for your worth, the intelligent one will hire you. Better judgement wins. If a stupid employer pays you more than your worth, he’ll waste his wealth, and loses his market share in the competition against his betters, who hired better people for the same cost. Again, better judgement wins.

To understand capitalism by contrast, take a look at the current alternate forms of statism, where the Government forces you to act for reasons which are not your own, forces you to pay for services that you do not want to use or endorse, forces you to hire incompetent people on the basis of their need and not their value to your purpose, forces you to discriminate on the basis of gender or economic status, and constantly infringes upon your right to act on the judgement of your own mind, which is a corollary of your right to your own life.

– Avinash Kumar, 19 July 2020.

Note: This article is originally my answer on Quora to the question: Can you explain capitalism in a single line?

Capitalism and Unfair advantage

What people call “crony-capitalism” is a private party gaining an unfair advantage in the marketplace over his competitors by the means of governmental intervention in trade. This happens by lobbying the Government to pass trade regulations in their favour, creating state sponsored monopolies. But when the Government is accorded such power to intervene in the market, by the citizens, the market is no longer free, and the political-economic system is not Capitalism.

Allowing governmental interference in trade activity will incentivise the private parties to lobby, and makes the bribery of governmental officials possible. Absent governmental interference, there is no way an individual can have an unfair advantage in the market.

Observe that “fairness“ doesn’t mean “equality”. Fairness is a concept to be understood in the context of economic freedom. A free trade is fair trade. It means that the consumer is choosing by his free and voluntary will, with his complete knowledge, the best product in the market he can afford, from the producer he wishes to buy from. The choice is not unfair, if it is not forced upon him.

Competence makes wealth possible, not the other way around. In a capitalist system, wealth is produced through competence, and lost through incompetence. How the individual spends his wealth is completely his choice. If a poor producer is not able to compete with a rich producer in creating and selling a better product at a lower price, it is not unfairness. It is unfairness if you are forced to buy from the poor producer, by the government, because he needs money, though he is incompetent. It is unfairness if any producer, poor or rich, is not allowed to sell his product in the marketplace through governmental interference. It is unfair because then, your choice to trade is no longer free.

In a Capitalist society, the institution that protects the individuals against the abuse by a producer who sells his goods to his customers by cheating or stealing, or by physically forcing his customers to buy from him, or by forcing his competitors out of the market by physical violence, is Government.

Individual rights are the means of preserving an individual’s morality in the society. They are the principles that protect an individual from the immoral choices of his neighbours. The only proper purpose of Government is to protect the individual rights: Life, Liberty and Property, whose meaning is in essence, to safeguard the freedom of action of the individual.

Capitalism is the only morally proper system of economy, because it is the only system that is made possible by, and works on the principle of individual rights.

– Avinash Kumar.

Note: This article is originally my answer to the question on Quora: How can capitalism be a success in India if there are too many people in India who lack proper morals & ethics and thus misuse capitalism to promote crony capitalism in order to cheat and abuse people for their own benefits?

Alleged fulfilment of the American dream in the Nordic countries

The American dream was the ideal that any individual can make his fortune according to his ability, irrespective of his background or lineage, and keep it— by voluntarily dealing with other individuals, absent physical force and compulsion. The forefathers made sure that necessary conditions exist for the survival of a rational individual: the kind who can produce wealth, and keep it without the fear of being robbed or looted of it by others, especially the Government. They laid foundations for a nation to be built on the Principle of Individual Rights— a relatively new concept to grasp.

Individual rights are not entitlements. They are the principles safeguarding a man’s “freedom to take action” in a social setting: the freedom to pursue his own chosen course of action for the fulfilment of his own life without compulsion, freedom to produce and trade his own wealth on his own terms. Such conditions, especially the implicit right to free trade made it possible for the individuals to create unprecedented wealth, improved their living conditions drastically, and anyone who exercised his freedom to voluntarily produce and trade his products, benefitted tremendously, in proportion to his competence.

This was true until the late 19th century, when the Government still maintained a reasonable —but dangerously reducing distance — from the economy, primarily acting to protect the individual rights. It is no longer true today. America is not a capitalist country. It is a highly regulated mixed economy, like most other countries.

The existing conditions, projected as allegedly desirable aspects of Nordic Countries, are in fact, violations of the principle of individual rights. The government providing unearned income— no matter how high or low the amount provided might be— to non-productive individuals: at the expense of productive individuals, maintaining an “accessible” or “free” universal health care system: at the involuntary expense of individuals, including those who do not intend to use or pay for such a service, providing free and “high” quality education to all: at the involuntary expense of individuals, including those who do not intend to use or pay for it, attempting to fix the “gender gap”: when the employment of an individual ought to be a voluntarily made contract exclusively between two free individuals, are all violations of individual rights, by creating systems that institutionalise the involuntary sacrifice of an individual’s life(time, energy, efforts) for the benefit of others.

This is a from of moral cannibalism. It doesn’t matter if they arrive at such a system democratically. A man’s individual rights cannot be voted away through majority will in a society where individual rights are recognised. Unless of course, the meaning and the principle of individual rights is perverted —as it is being done today across the world—by changing it from “freedom to take voluntary actions—and bear the expenses” to “freedom to take the products of actions of others—and pass on the expenses to those who take productive actions.” A rational man would have no choice but to move out of a society which institutionalises injustice.

The Nordics who think that they happily agree with their existing heavy wealth redistribution system —and many think that many do—miss the point that agreement is never an issue in any society. It is the individual’s freedom to disagree with the collective, that requires protection. What choice does a rational man have in Nordic countries other than to leave his country?— A man who only cares to live within his means, neither sacrificing others to himself, nor sacrificing himself to others. Forcing a man to leave the society, not because of his vices, but for his virtues, is not the characteristic of a civilised society.

It has been recently said,—by the World Economic Forum — economists found that people withdraw from economic life if they perceive that opportunities and wages are “shared unfairly”.

The idea that economic opportunities ought to be “shared” fairly or unfairly, can only arise in a society where people accept that wealth earned by a man is not his own by right, and that he is bound by an obligation to spend it in ways prescribed by those who didn’t produce it. In a society where trade and government are completely separate —a Laissez Faire Capitalist society— a man who provides economic opportunities to those who do not deserve them, will lose his wealth in the market. The price for his wrong assessment of an individual’s worth, is paid from his own pocket. It is justice, and no rational man can have any problem with that.

People do not withdraw from economic life if they cannot get an economic opportunity for which they do not qualify according to an employer’s judgement. They are forced to do so, —as is happening across the world today— when it is made impossible for them to get an opportunity from any other employer, who would have employed them,—and they would have taken it—but didn’t, because of some democratically approved “progressive legislation” which forces the employer to pay his employees a wage which he cannot afford, forces him to hire and manage his employees on the basis of gender, and forces him out of existence—qua an employer— through taxation, for supporting the services which he would never otherwise intend to use, offered by those, who he would never voluntarily employ.

Government —as a force that is authorised to appropriate your products— can never solve economic problems. It is the source of all widespread economic problems that plague nations.

– Avinash Kumar, 16 June 2020.

The meaning of political equality

Political equality means that the individual rights of all the citizens are equally recognised, and protected by the Government. It is the essential condition for existence of a free society, and the only kind of equality possible between individuals.

Remember that the concept, “rights” only pertain to the Freedom to take actions: the individual’s freedom to live, to think, and consequently take actions to produce and trade values, without compulsion or intrusion from other individuals, including and especially, the Government.

If a group of individuals is accorded any exclusive rights, that are denied to others, its meaning and unavoidable logical consequence is a state-sponsored monopoly on production and trade.

Observe that the violation of your freedom to produce and trade, by others(especially the government), essentially implies and requires the violation of all your rights: It implies the violation of your right to think(since the purpose of thinking is to take action, and your freedom to think is redundant if you are not free to act and produce values in accordance with your judgements), and the violation of your right to live(your life, ie., a life proper to man: a non-parasitic life, requires that you think and act to produce and trade values, in order to sustain your own life). This is the reason why a free mind and a free market necessitate each other.

In this context, economic equality may be understood only in the sense that all men must possess the same political-economic right: the right to free trade. ie., the freedom to produce and trade any values with other individuals, with the voluntary consent of both the parties involved in the trade.

This doesn’t mean that all the individuals should be equally wealthy. It only means that all the individuals must possess the same freedom to think and act, to produce and to trade: the same freedom to live. In a laissez faire capitalist society, —ie., a society where individual rights are absolutely protected, and the government is completely separated from trade: making the state-sponsored monopolies impossible— your wealth is a consequence of your competence in exercising your freedom to produce.

– Avinash Kumar, 7 June 2020.

Note: This article is originally my answer on Quora to the question: “What is the relationship between political equality and economic equality?”

Nature of Rights

Rights are the fundamental principles governing the conduct of relations among men in a free society. The concept of rights has its origin in the nature of man: that he is a rational animal, and his nature requires that he is to be dealt-with only in ways that are conforming/right to his nature. Rights are neither gifts endowed upon men by non-existing entities nor entitlements granted upon a man at the expense of his fellow men by the establishment.

As required by Man’s nature, his first right in a society is the Man’s right to his own life. Its meaning is, in his capacity as a rational animal, it is right for a man to perform the activities required to maintain and further his own life, without being coerced.

The only rational inference of a Man’s right to his own life is his right to the products of his work. That is the meaning of the right formalised by Man’s right to his own property. A man in his capacity as a rational animal is the sole proprietor of his life, his ability to do productive work using his own rationale, and the sole proprietor of the product of such work, when and only if such work is committed by him. When two individuals in a free society need each others’ products, whatever they are, the only way to exchange them is by Contract: A list of Mutually agreed terms.

Claim to another man’s product in a free society is only through contract.

In a society where anyone can use and dispose of the product of a man’s life, calling their need to consume his product as a claim over his product, no rational man can survive, no rights can exist and such a society is bound to collapse. Observe the fates of monarchies, oligarchies, communist regimes or unlimited democracies throughout the recorded human history as examples.

A state that recognises a Man’s right to his own life, his right to his own property and their applications in its constitution, necessitates an institution of free men to preserve such rights of individuals. That is the reason, Government is needed and elected by men in a free society and only for that reason. It is the only institution which has monopoly over force, and the use of such force is strictly limited to ensure the defence of the individual rights of citizens, while the individuals perform their desired productive activities.

As a compensation for such efforts of individuals that form the machinery of the establishment, citizens are taxed. An establishment in a free society can be said to be corrupt when it starts making laws other than the applications of man’s original rights of life and property, and starts taxing individuals for the services they can perform to each other on their own, through making contracts. Only proper function of Government in this context is to ensure the honouring of contracts made by the individuals involved.

Constant inflation of the bill of rights that place taxing obligations on citizens by stating “needs of the moment” is the hallmark of a society transitioning into the tyranny of an unlimited democracy.

Rights can never be obligations over an individual to perform any activity. They can only be restraints over his fellow men to abstain from activities that violate his rights.

Notice that a man’s right to his own life doesn’t place an obligation over his fellow men that they perform the activities required to maintain his life: that would be slavery. It only means that no one can interrupt a man from performing the tasks he deems necessary to maintain his own life at a standard he desires. A man’s right to his own property doesn’t place an obligation over his fellow men to work and earn properties for him: that would be slavery. It only means that any product of a man’s life and his work is his own property, and that if he earned it, no one can take it away from him without him authorising it through a contract. Such is the Nature of Rights.

Avinash Kumar

Origin of Property Rights

The source of man’s right to property lies in his nature. Man’s supreme potential is the capacity to reason. That is, the capacity of his mind to perceive reality, to integrate and use concepts. Material exists in nature. But wealth doesn’t. It is created by man by the virtue of his productive thought process, and thinking is an independent activity. A group thought doesn’t exist. By exercising his capacity to think and act, man creates wealth by reorganising and reshaping the naturally available material.

Now the question arises, who decides the ownership of that “scarce” natural resource on which he has acted. Until and unless he has discovered the use of a particular material resource in nature for a specific productive activity, everyone else were oblivious to its presence. They have never recognised its value. The first man took it upon himself to invest his time and energy to shape it according to his independent vision.

The very activity of exercising the judgement of his mind and the effort he had put in the wealth production, morally makes the resource, on which he had acted, and the product he has created, his private property.

Any bum passing by, cannot claim the ownership of his product, assuming that the creator has created something at his expense. He didn’t create at the bum’s expense. The bum was sitting on his ass doing nothing(precisely why he is called a bum), all the while the creator was working on the material, producing something of value.

You are not entitled to something for doing nothing. You may not accept nor demand the unearned. This is the principle of  JUSTICE. 

The rational principle to decide the ownership of any untapped natural resource which is proved to be of value by the first man and thus created a demand for it (and pioneered an industry), is “first to produce is the first to own.” The proper function of the government in this respect is to act as a custodian(not owner) of the untapped resources available in nature, openly recognising and entitling the first discoverers of the industry to own the resources on which they have acted for creating their own wealth.

Now, the government as such cannot assume ownership of any resources in its capacity, since state ownership implies the ownership of the material resources by the collective, and that assumed collective ownership of resources will be held as a mortgage on the wealth producer to extort his property by the use of force. This usually happens by forced taxation, at the point of a gun. This precisely is the reason why any collectivist state will always assume ownership of the material resources.

Hatred of Capitalism

If you hate Capitalism, I assume that you do not understand what Capitalism is. Chances are that you are misinformed and no-one else precisely explained it you. So I will.

Capitalism is a Laissez Faire economy, where private individuals consensually trade the value they have for a value they want.

That is all. If your politician, teacher or your parent has fed you anything other than this, they are either ignorant sufferers themselves, or conscious cheats. Beware of them.

Just to make it clear,

Laissez Faire Economy is a system of economic activity that is completely free from any kind of interference by the Government.

Consensually means through your free non-coerced-will.

Value is anything that takes human effort to produce.

Now the things to remember.

If it is not Laissez Faire, it is not Capitalism.

Every kind of economic problem imaginable, which plagues the nation, is a blatantly direct consequence of Governmental interference in the economic activity of the individual. The result of the mixture of capitalism and communism is always communism and it breeds eventual bankruptcy.

Now a communist is someone you must hate. He is the extreme opposite of a capitalist.

A capitalist will always have something that you value, which he deliberately offers to get what he wants from you through trade. A communist will not offer anything that you value to get what he wants from you. Instead, he makes the Government to point a gun at you to extort it.

Observe that a capitalist can only reasonably want to trade with another capitalist. Because a communist cannot understand what a trade is. He can only have needs and demands to offer, not values. At a lower level, he constantly needs producers to suck them dry, and demands more and more welfare schemes from the Government. At the higher level, he plans ways to lobby the Government to pass regulations in his favour, so that he could force his competitors out of business.

If you are a capitalist, chances are you are continually struggling in a communist system, trying to deal with people who do not have anything that you value to offer you, but believe that they own anything you produce. The best course of action for you is to find a capitalist society and move there. Abandon communists. Don’t even try to prove it to them that you are right. Just don’t deal with them. Because a communist is always a parasitic organism. He cannot survive on his own. He always needs a capitalist to suck blood from. Abandon him and he will perish. Do not pity him. He is demanding your voluntary slavery. He is the most despicable creature on this planet.

The article is originally my answer on Quora to the query, “Why do people hate Capitalism?”