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?

Theories and Concepts

A Theory is an abstract structure of non-contradictory statements based on an assumption. Its purpose is to explain a fact of existence, or to make a calculated prediction about a future event, or to create a new structure from other existents, that has no existence of its own, till then. For example, Theory of Relativity was used to predict the motion of the planet mercury. Theory of GOD was used to create caste system which was in turn used to maintain inequality of men before the establishment of the days past.

The assumption, which is the first statement of the theory being stated, can be a reasonable one, ie., which does not contradict the known facts of existence: like in the case of theories of physical sciences. Or a blatant contradiction of the fundamental laws of existence, especially the law of identity: like in the case of the theory of God (Refer my previous article, “Atheistic nature of an objectivist”). If the assumption contradicts existence, the assumption is false, so must be the entire theory built on it.

Validity of a theory is judged by its conformity to knowledge. And all valid knowledge exists in terms of concepts, the integrations of facts of existence. A concept can be an integration of either previously defined concepts, or it can be an integration of percepts: the data directly gathered by the senses, and processed by the consciousness.

Hence a concept cannot be formed by integrating non-existents, since that which doesn’t exist cannot have characteristics(let alone defining characteristics), and no definition can be framed to describe it.

The goal of sciences is to establish and further the knowledge by means of concepts. It is done by collecting and subsuming the evidence into a defined concept, and only when that cannot be done, develop a new theory by making a reasonable assumption to explain the collected evidence, with an understanding that a new definition(a new concept) will be framed in the future, which makes the assumption, and the associated theory, redundant. Till the day a concept is defined and integrated into the entire knowledge by a human consciousness, it must be cautiously observed to never accept the theories as concepts. Theories are what they are: reasonable(or contradictory) assumptions. Concepts are valid knowledge.

Root of human suffering lies in trying to counterfeit science. ie., creating and propagating false theories as concepts and accepting the associated false assumptions as facts of existence. The creation part is done by conscious cheats, propagation is done by ignorant liars, and this entire business is silently accepted by billions of sufferers.(Refer my previous article: “You are what you are”).

The trick to rule over men is to make them accept the false theories as concepts, particularly and especially in two major fields of science: Economics and Politics. The typical bright student anywhere in the world will readily find these two sciences nonsensical and boring right from the beginning in majority of the countries, and in majority of the countries these fields are not considered sciences at all. This is not happening by accident.

Popular economic and political theories taught in the university classrooms are devised ambiguously, by purpose, and PhDs being awarded are to those who are the most dissociated from existence, by purpose. To create the so called “experts” of Economics and Politics that will make the masses accept: that the only way to lead lives is to maintain the status-quo, or to not deviate too much; that suffering is eventual to anyone and must be accepted by everyone at some scale, irrespective of any crime being necessarily committed; that it is the purpose of the Government to offer free services to the non-productive at the expense of the productive; that Man’s authentic rights, especially his right to his own property are not necessarily valid all the time; that the new rights being conferred by the constitution of the country can sometimes “acceptably” contradict the Man’s right to his own life.

An objectivist will never betray the law of identity, and every theory he is being thrown at, he will, independent of others, verify its truth or falseness by means of valid concepts, ie., with existence as the standard. He can’t be made to lie that A is not A. He can’t be made to conform to anything less than a completely free society, where authentic individual rights are absolutely respected.

Avinash Kumar