Capitalism: The Ordnance of Rational Ideas

Jim Woods

Jim Woods has over 20 years of experience in the markets from working as a stockbroker, financial journalist, and money manager.

In last week’s lead story, “This Is the True Face of Socialism,” I addressed one of the major philosophic issues confronting the world today — the rise of socialism and the concomitant demonization of capitalism.

More importantly, I addressed a subscriber’s question regarding what one can do to combat the rise of this malicious form of collectivism. As I explained, the only solution to bad ideas are good ideas, and socialism is a very bad idea whose only solution is the very good idea of capitalism.

Make no mistake, the conflict between socialism and capitalism is indeed an epic battle that needs to be fought with all our might. And to fight it properly, we must arm ourselves with the only munitions that can do any real damage — the ordnance of rational ideas.

So, what’s so bad about the essence of the idea of socialism? What’s so good about the essence of the idea of capitalism?

It’s a legitimate question that doesn’t get asked very often, particularly because the “essence” part isn’t usually included in the discussion.

What’s usually discussed in arguments about socialism vs. capitalism are issues such as income inequality, uneven playing fields, the social safety net, government healthcare, breaking up big banks, big tech, big pharma or big whatever the prevailing successful industry is at the time.

These issues all are tangential to the essentials operating underneath the concepts of socialism vs. capitalism. So, when arguing with someone over whether too few individuals “control” most of the wealth, whether government needs to “level the playing field” among industries, or whether healthcare is a “right,” you are arguing from concrete outcomes and not principles.

To argue from principles, you have to argue by identifying the core essence of each concept.

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The essence of socialism is that the individual does not own his or her own life.

Instead, he or she is the property of the collective. A corollary to this is that his or her life, liberty and the byproducts of her mind are not his or hers to dispense with, but rather, they are first and foremost, in principle, the property of the state.

The essence of capitalism is that the individual does own her own life.

This recognition of individual rights comes with its own set of corollaries, one of which forbids of the violation of the right to an individual’s life, liberty and most importantly, property, by means of physical force. Absent the absolute right of an individual to her own life, the state has de facto permission to violate everyone’s rights based on the notion that society “needs it.”

Now, many times when arguments are made on either side of the socialism vs. capitalism debate, capitalism’s defenders argue from pragmatism, citing the tremendous wealth that free markets create and how much good they do for — here it comes — “society.”

Well, as soon as we, capitalism’s defenders, start to engage in that line of argument absent the principle of an individual’s absolute right to her own life, we have already ceded the moral high ground.

As the philosopher and novelist Ayn Rand, who is, in my view, one of the most ardent, eloquent and brilliant articulators of capitalism’s morality, once wrote:

“The moral justification of capitalism does not lie in the altruist claim that it represents the best way to achieve ‘the common good.’ It is true that capitalism does–if that catch-phrase has any meaning–but this is merely a secondary consequence. The moral justification of capitalism lies in the fact that it is the only system consonant with man’s rational nature, that it protects man’s survival qua man, and that its ruling principle is justice.”

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So, to combat the bad idea of socialism, first boil it down to who owns your life.

Do you own your life, or is it owned by society, the group, the collective, the state, the monarchy, the church, the Führer, the Politburo, Parliament, Congress or the White House?

To me, the rational answer is obvious. And sometimes in the battle of ideas, the most-brilliant salvo is the most obvious.

If you want to arm yourself with as much rational ordnance as you can carry when arguing in favor of capitalism’s essence, here are some intellectual munitions that you simply must have in your arsenal.

  • “Capitalism: The Unknown Ideal,” by Ayn Rand
  • “Atlas Shrugged,” by Ayn Rand
  • “Human Action,” by Ludwig von Mises
  • “The Road to Serfdom,” by F.A. Hayek
  •  “Economics in One Lesson,” by Henry Hazlitt
  • “The Big Three in Economics: Adam Smith, Karl Marx, and John Maynard Keynes,” by Dr. Mark Skousen

Although there are countless more brilliant defenses of capitalism, these texts will be more than enough rational ordnance to combat any social justice warrior who claims that government force should be employed for the “good of society.”

Oh, and whenever you hear the term “good of society,” it’s usually a veiled euphemism for “you don’t own your life, it’s the property of the collective.”

If any bad idea needs to be fought with every bit of intellectual valor we can muster, it’s that bad idea.

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