Subscriber-only Content

This audio content is accessible only to current Audio or Premium subscribers. For access, login, subscribe or upgrade your subscription.

Get Access...

Subscriber-only Content

This ebook content is accessible only to current Ebook or Premium subscribers. For access, login, subscribe or upgrade your subscription.

Get Access...

Capitalism Because Science

Capitalism leaves a woman to create products with a 3D printer.

If science overwhelmingly supports a particular social system to the exclusion of all others, shouldn’t we embrace and advocate that system?

Such is the case with capitalism.

Although some advocates of capitalism claim that it is rooted in religion, faith, and God—and although some advocates of socialism, communism, and other forms of statism claim that those systems are supported by science—we can see, on examination, that capitalism, and only capitalism, is rooted in and supported by science.

To concretize this point, we’ll consider several sciences in relation to capitalism and statism. But let’s first define some key terms and draw a crucial bright line.

Capitalism is the social system in which government protects individual rights by banning the use of physical force from social relationships, and by using force only in retaliation and only against those who initiate its use. Consequently, capitalism leaves individuals and businesses fully free to act in accordance with their judgment—so long as they do not initiate or threaten to initiate physical force against people (i.e., so long as they don’t violate rights).1

Pure capitalism—laissez-faire capitalism—has yet to exist. It was approximated in the United States for a few decades after the Civil War. But, beginning in the 1890s (with the Sherman Antitrust Act), government intervention in the economy continually expanded; and today government coerces and controls virtually every business in America to some extent—through rights-violating laws, regulations, and taxation. Granted, in regard to certain social and personal issues, government coercion has decreased and rights protections have expanded (e.g., equal treatment of blacks under the law, legalization of abortion, legalization of gay sex and marriage). But in regard to property rights, business, and economics, government coercion has increased and rights violations have expanded (e.g., antitrust applications, import restrictions, civil forfeiture, occupational licensing, regulations, taxation). Which brings us to statism.

Statism encompasses any social system in which government is legally permitted to initiate physical force against individuals or businesses—whether for the (alleged) sake of the nation, the community, society, a race, a class, a tribe, or “God.” Unlike capitalism, which leaves people fully free to act in accordance with their judgment, statism forces people to act against their judgment to some extent.

The force initiated by statist governments varies immensely in degree, and the degrees matter.2 Some governments—such as those of Soviet Russia, National Socialist Germany, and present-day North Korea and Saudi Arabia—initiate extreme degrees of force against people, such that they cannot live at all or can “live” only as puppets or property of the state, the tribe, or an alleged deity. Others, such as those of present-day South Africa, Greece, and Guatemala, initiate substantially less force, such that people can live something closer to a human life. And still others, such as those of present-day Norway, Canada, and the United States, initiate still less force.3

Countries in which governments initiate relatively small degrees of force may be called “mixed systems”—but they are statist. Any system in which the state legally initiates physical force against individuals is by that fact and to that extent statist. This is the bright line that distinguishes all forms and degrees of statism from pure capitalism: Under statism, government is legally permitted to violate rights. Under capitalism, government is legally forbidden to do so.

Finally, we must be clear about the nature of science. In the broad sense relevant here, science is the systematic use of reason (i.e., observation, integration, and logic) toward understanding some aspect or sphere of reality in terms of principles (general truths). The science of biology, for instance, is concerned with the nature, development, structures, and survival modes of living organisms. The science of psychology is concerned with the nature of the human mind and the requirements of mental health and happiness. And the science of morality is concerned with the nature of values, the standard of good and evil, and principles of proper action.

With those preliminaries in mind, let’s see what science has to say about capitalism and statism. Toward that end, we’ll consider a broadly representative set of sciences, including economics, business, psychology, biology, morality, epistemology, and metaphysics. In each case we’ll focus on a few basic aspects of the science in question, but similar analysis can be applied with respect to other aspects and other sciences as well.

Economics and Capitalism

Although economics is a relatively obvious instance of science supporting capitalism, it is an important one and a good place to start because it is an area in which the consequences of freedom and force are manifestly evident.

Economics is concerned with supply, demand, and pricing in a marketplace. The basic principle of this science is Say’s Law, which holds that supply constitutes demand—or, as the economist Jean-Baptiste Say himself put it: “Products are paid for with products.”

According to this fundamental truth, if one wants to have purchasing power (i.e., demand) in the marketplace, one must first produce something (i.e., supply) with which to trade. If a person (or business) doesn’t produce goods or services that others want and are willing to buy, then (gifts aside) he won’t have goods or services with which to trade. If he does, he will.

Applied to the marketplace as a whole, this principle means that the more values people produce, the more wealth they will have for trade and consumption. It also means that the more freedom people have to produce and trade, the more wealth they can create and enjoy. Thus, in order to maximize wealth and prosperity, people and businesses must be fully free to produce and trade.

Capitalism recognizes and upholds this fundamental law of economics. Statism ignores and violates it.

Under capitalism, government leaves people and businesses fully free to produce goods or services and to offer them for trade. For instance, under capitalism, if a company chooses to produce and sell a new drug that curtails cancer, the company is free to do so. It need not get permission from the government, nor may the government stop the company from producing or selling the drug. So long as the company does not violate rights—by engaging in aggression, fraud, false advertising, or the like—it is free to produce and trade as it sees fit.

Similarly, if an automobile manufacturer wants to build cars outside the country because labor is cheaper abroad, the company is free to do so. Government may not force the company to build cars “at home”; nor may government punish the company with tariffs on cars that it imports for sale. As long as the company does not initiate force against anyone, it is free to produce cars wherever it sees fit and to import and sell them as it sees fit.

Likewise for all individuals and companies in a capitalist system: Whether they choose to produce gasoline, educate children, build computers, provide transportation, sell insurance, practice dentistry, make movies, offer loans, or sell tacos—under capitalism people and businesses are fully free to produce and trade in accordance with their abilities, choices, and efforts.

Not so under statism.

Under statism, government, in various ways, forbids people and businesses to engage in their choice of economic activity. In a statist system, for instance, government might forbid businesses to produce or sell certain kinds of drugs or medical devices—as is the case in the United States under FDA regulations. It might forbid individuals or businesses to offer car rides or bedrooms in exchange for money—as is the case in cities that ban Uber, Airbnb, or the like. It might forbid people to develop or market their land as they see fit—as is the case under EPA “wetland” regulations. Or it might forbid people to produce or sell certain books, such as the Bible, which is banned in North Korea and Saudi Arabia.

Because statism forbids people and businesses to act fully freely in the realm of economics, it stops them from maximizing production and trade.

All of this is borne out historically. Although the United States and other relatively free countries have never been fully free, the extent of freedom they have enjoyed relative to less-free countries is clearly and causally reflected in their general prosperity.

Consider, for instance, the difference between the United States and the Soviet Union during the 20th century. While Americans produced unprecedented wealth and enjoyed a quality of life that the most opulent kings of the past could not have dreamed of, Soviets produced next to nothing and suffered in wretched poverty—that is, if they were fortunate enough not to have been murdered by their government for “the greater good.”

Likewise, consider the contrast between West Berlin and East Berlin, which, as Ayn Rand noted, was “like a laboratory experiment for all to see.” And consider the present-day difference between relatively free South Korea and extremely coercive North Korea—as well as the difference between relatively free Venezuela before it opted for full-blown socialism, and after. It is all perfectly vivid.

Production and trade require freedom—and maximum production and trade require full freedom.

Capitalism is the only social system that leaves people fully free to produce and trade. Thus, it is the only system that leaves people fully free to embrace and employ the basic principle of economics.

The science of economics calls for capitalism.

Business and Capitalism

The science of business is concerned with value creation, marketing, sales, and profit. Its basic principles include truths such as:

  • In order to create values that others are willing to buy, one must address people’s needs, appeal to their psychologies, and satisfy their desires.
  • In order to generate profit, one’s sales revenues must be greater than one’s expenses.
  • In order to motivate and retain employees, one must appeal to their values, treat them justly, and pay them what they’re worth.

The art of business—the process of applying such principles—is a highly complex and creative process.4 In order for businessmen to succeed, they must apply principles with respect to the particular intricacies and full context of their business—including the needs and desires of their existing or prospective customers, the offerings and plans of their existing or potential competitors, and the ever-changing conditions of the marketplace as a whole. In order to make the best business decisions, businessmen must be free to plan, produce, hire, and contract in accordance with their judgment. Capitalism leaves them fully free to do so, as long as they do not engage in coercion, fraud, extortion, or the like.

For instance, under capitalism if a fuel company wants to produce and sell gasoline made exclusively from petroleum, it is free to do so. Government may not force it to include some percentage of ethanol in its fuel, as the EPA does today. Likewise, if a business wants to import supplies or labor from abroad, or build a casino and profit on gamblers, or grow marijuana and sell it to adults, or engage in any other rights-respecting business activity of which some might disapprove, it is free to do so. Capitalism leaves people and businesses fully free to engage in business—so long as they don’t violate rights in the process.

Statism does not. Under statism, government forcibly prohibits certain forms of rights-respecting business altogether, and it forces state-sanctioned businesses to act against their judgment in various ways. For instance, a statist government might require businesses to pay employees at least a certain, government-mandated minimum wage, as do federal and local governments in the United States. It might forbid corporations to pay their executives more than some government-specified maximum compensation, as does the government of Israel. Or it might forbid corporations to engage in certain kinds of mergers or acquisitions, product integrations, sales contracts, or the like—as do many governments via antitrust laws.

To the extent that government forces businessmen to act against their judgment, they cannot engage in business. Just as trade and theft are opposites, so too are business and coercion—and for the same reason. Business refers to the principles and practices of voluntary production and trade. Production or trade enacted at the point of a government gun is not properly called business. It is not even properly called production or trade. Rather, it is properly called compliance with tyranny, or involuntary servitude, or people being treated like chattel, or the like.

Again, there are degrees of coercion, and the degrees matter. But degrees of coercion are degrees of coercion. If government coercion is so extensive that businessmen cannot act in accordance with their judgment at all, then they cannot do business at all; insofar as they take action in such a context, they are acting not as businessmen applying principles of business, but as puppets of the state obeying orders from the state. This was the case with “businesses” that were fully controlled by the government of Soviet Russia—and their lack of productive output reflected the fact. If government coercion is such that businessmen can act partially in accordance with their judgment but must also act partially in accordance with the coercive dictates of the state, then they can do business only to the extent that they are free to act on their judgment. To the extent that they are forced to obey orders, they are not doing business; they are obeying orders. This is the case with most businesses in the United States and throughout the world today—and their productive output is mitigated accordingly. Unless a business is fully free to produce and trade as its owners see fit, it is not able to do business in the full sense of the term.

Business requires freedom—and fully robust business requires full freedom: a condition delivered exclusively by capitalism.

The science of business calls for capitalism.

Psychology and Capitalism

The science of psychology is concerned with the nature of the human mind and the requirements of mental health and happiness. Among its basic principles are:

  • Happiness is a consequence of choosing life-serving goals and values, and achieving some measure of success in pursuing them.
  • Self-esteem (the conviction that one is able to live and worthy of happiness) is a key component of happiness.
  • Neither self-esteem nor happiness can be given to someone; these psychological values must be earned by means of one’s own rational effort.

By means of such principles, psychology tells us, for instance, that if an individual thinks rationally about what he wants in life, chooses to pursue a career in engineering, earns a degree in the subject, takes a job or starts a business in the field, and substantially succeeds in his work, then (excepting personal tragedies or life-throttling vices) he will gain self-esteem along the way and achieve some measure of happiness. If he proceeds in this same manner with regard to his other life-serving values—friendships, romance, recreation, and the like—then he will gain more self-esteem and greater degrees of happiness. And if he continues in this manner as a matter of principle throughout his life, then he will enjoy ever-increasing self-esteem and make his life the best, happiest life it can be. Capitalism leaves him fully free to do so.

And government under capitalism not only leaves people free to pursue and achieve their life-serving values; it also refrains from giving them unearned handouts, such as welfare checks, food stamps, “free” medical care, “free” cell phones, or the like. Thus, in addition to enabling people to choose and pursue their values fully as they see fit, government under capitalism refrains from demotivating people by making thought, effort, productivity, and self-responsibility seem unnecessary.

Statism, by contrast, not only forces people to act against their judgment and in contradiction to their chosen aims, it also forces some people to provide others with unearned goods or services. This violates the rights of those forced to provide the goods, and robs the recipients of the self-esteem and happiness they could have achieved if they had worked to earn such values rather than having been given them for “free.”

Self-esteem and happiness are consequences of choosing and pursuing one’s goals in accordance with one’s judgment. In order to achieve these vital psychological values, a person must be free to think and act on his judgment, to pursue the goals of his choice, to reap the rewards of his efforts, to suffer the consequences of his non-efforts, to learn from his errors, and to correct his course as he sees fit.

In short (as the American Founders recognized), the pursuit of happiness requires freedom—a condition provided exclusively by capitalism.

The science of psychology supports capitalism.

Biology and Capitalism

Biology is concerned with the nature, development, structures, and survival modes of living organisms. One of the basic principles of this science is that all living things, including humans, have specific means of survival and must enact those means in order to sustain and further their lives.

Trees, for instance, survive by means of photosynthesis; rabbits survive by burrowing into the ground, nibbling on plants, and fleeing from predators; owls survive by flying, preening, and preying on small animals; and people survive by observing nature, using their faculty of reason, integrating their observations into concepts and principles, and transforming the raw materials of nature (e.g., clay, aluminum, petroleum) into the requirements of human life (homes, automobiles, energy).

Human beings have evolved to the point that our lives are highly complex and multifaceted. To live a fully robust human life, we need more than a cave, a mate, and a bone on which to chew. We need purpose in the form of chosen goals that make our life meaningful—we need beautiful environments to match our vision of the way things might and ought to be—we need effective medicines and life-enhancing technologies to enable us to live long and prosper—we need art to provide us with spiritual fuel and inspiration—we need friendships and recreational activities for the kinds of enjoyment they provide—and we need romantic love to celebrate life and enjoy the highest levels of ecstasy with another person. To achieve such values, we need to think rationally, with respect to our long-range and wide-range material and spiritual needs; and we need to act accordingly, in concert with our best judgment. Such is the nature of the animal called man.

Just as an oak tree must absorb sunlight and water in order to live the life of an oak, and just as an owl must preen and hunt in order to live the life of an owl, so too a person must act in accordance with his judgment and pursue his life-serving values in order to live the life of a human being. And—in order for a person to do all of this—he must be free to do so.

If a person is not free to act on his judgment at all and thus is unable to achieve the values on which his life as a human being depends, he will suffer and die—as did countless people in the communist and socialist slave pens of the 20th century, and as do countless people under the thumb of Islamic theocracies and other dictatorships today. If a person is partially free to act in accordance with his judgment and partially forced to act against it, he will live a correspondingly retarded life—as do billions of people who are subject to varying degrees of government coercion across the globe today. Only when a person is fully free to act in accordance with his rational judgment can he live fully as a human being.

The political condition necessary for man to live in accordance with his biological nature—the condition necessary for him to use his mind, to act on his judgment, and to pursue and achieve the material and spiritual values on which his life as a human being depends—is freedom, which is provided exclusively by capitalism.

The science of biology supports capitalism.

Morality and Capitalism

Scientific morality (as against faith-based or feeling-based moralities) is concerned with the nature of values, the standard of good and evil, and principles of proper action—as derived by means of observation and logic. The basic principles of this science include the following (which were formulated initially by Ayn Rand):

  • Values are objects that living things act to gain or keep in order to sustain or enhance their lives (e.g., nutrients, shelter, money, happiness, freedom).
  • The only reason living things need values is in order to live. (If you don’t want to live, you don’t need anything; you can simply stop acting and you will soon die.)
  • The ultimate goal of values for a living thing is to sustain and further its ultimate value: its life. (A tree, for example, absorbs sunlight, water, and nutrients—so that it can engage in photosynthesis—so that it can live. Likewise, an owl preens so that it can fly well—so that it can catch its prey—so that it can sustain and further its life.)
  • The standard of value for any living organism is the requirements of its life given its nature. (An owl’s standard of value is the requirements of its life as an owl; a person’s standard of value is the requirements of his life as a human being.)
  • The standard of moral value—value pertaining to human beings in the realm of choice—is the requirements of human life as set by human nature. Choices and actions that promote or protect human life are moral (e.g., thinking, producing, trading); those that harm or destroy it are immoral or evil (e.g., evading, stealing, murdering).
  • Because each person is an individual—with his own body, his own mind, his own life—each person’s own life is properly his own ultimate value; and making his life the best, happiest life it can be is his highest moral purpose.
  • Each individual is an end in himself, not a means to the ends of others; thus he has a moral right to act in accordance with his own judgment, to live for his own sake, and to pursue his own happiness—neither sacrificing himself to others, nor sacrificing others to himself, nor being sacrificed by others for some alleged greater good.

The most immediately relevant of these principles for our present purpose is that last one, which is the fundamental principle at the base of capitalism: the principle of individual rights.

In order for people to live as human beings—rather than as masters and slaves, aggressors and victims—they must be free to act in accordance with their basic means of living: the judgment of their reasoning minds. Capitalism (i.e., pure, laissez-faire capitalism) recognizes and upholds this principle. Statism (of every variety) ignores and violates it.

Whereas socialism and communism hold that government should coercively redistribute wealth and values “from each according to his ability, to each according to his needs”—whereas nationalism holds that government should force individuals and businesses to act in the “interests of the nation”—and whereas theocracy holds that government should enforce the dictates of an alleged God—capitalism holds that government should protect each individual’s moral right to act on his own judgment for his own sake.

By banning initiatory physical force from social relationships, and by leaving people fully free to act in accordance with their reasoning minds, capitalism legalizes scientific morality.

The science of morality supports capitalism.

Epistemology and Capitalism

Epistemology is concerned with the nature and means of human knowledge. Objective epistemology (i.e., observation-based epistemology, as against faith- or feeling-based epistemology) shows that human beings achieve knowledge by means of reason: perceptual observation, conceptual integration, and logic.

It is by means of reason that men discovered the principles of mechanics, engineering, and physics, and how to produce tractors, air conditioners, suspension bridges, airplanes, nuclear energy, and iPhones. It is by means of reason that men discovered the principles of biology and chemistry, how to produce medicine, cure diseases, and prolong life. It is by means of reason that men discovered the principles of music and how to create and play pianos and violins; the principles of dance and how to perform and teach ballet and tango; the principles of agriculture and how to grow crops and improve yields; the principles of psychology and how to analyze emotions and improve thought processes; the principles of morality and how to pursue happiness and define rights; the principles of politics, and how to establish freedom and defend rights. And so on.

People acquire and apply knowledge by means of reason. And, in order for people to use reason, gain knowledge, and apply their minds to advance their lives, they must be free to do so.

The science of epistemology calls for capitalism.

Metaphysics and Capitalism

The final science in our brief survey, metaphysics, is concerned with the most basic laws of existence. It asks and answers the questions: What are the most fundamental facts of reality? What is true of everything that exists? The two most basic principles of this science are the laws of identity and causality.

The law of identity holds that everything is something specific; everything has properties that make it what it is; everything has a nature: A thing is what it is. (An oak is an oak; an owl is an owl.) The law of causality is the law of identity applied to action: A thing can act only in accordance with its nature. (An oak can grow; it cannot preen. An owl can fly; it cannot photosynthesize.)

Applied to man, these laws mean (among other things) that man has a specific nature, including his specific means of knowledge and his basic means of survival (see above)—and that he can act and live only in accordance with his nature and only to the extent that he is free to do so. Man cannot acquire knowledge by nonrational means (e.g., faith, ESP, or mere believing), and he cannot thrive by acting irrationally. If he wants to live and prosper, he must acknowledge his actual nature, employ his rational faculty, and act accordingly. And, in order to do so, he must be free to do so.

Capitalism treats man as what he is: a being who lives and thrives by using reason. Capitalism also treats coercion as what it is: a retardant that stops a person from fully employing his basic means of living a human life. In recognition of such metaphysically given facts, capitalism leaves people fully free so that they can think, act, live, and prosper fully as human beings. As Ayn Rand summarized the point, “It is the basic, metaphysical fact of man’s nature—the connection between his survival and his use of reason—that capitalism recognizes and protects.”

The science of metaphysics calls for capitalism.

What does this all mean for people who are pro-science? And what does it mean for those who are pro-capitalism? The answers are clear. Anyone who is genuinely pro-science must advocate the social system mandated by science: capitalism. (You’re not really for science if you reject its proven conclusions.) And anyone who is genuinely pro-capitalism must defend that system with science. (You’re not really for capitalism if you don’t support it with observable facts, valid principles, and logic.)

People for science and people for capitalism are one and the same. Let’s make this union known.

Related:

Endnotes

1. The use of physical force (aka coercion) can be direct (e.g., a punch in the face, burglary, imprisonment) or indirect (e.g., fraud, extortion, defamation). For more on the nature, kinds, and degrees of physical force, see “A Civilized Society: The Necessary Conditions,” in my book Loving Life: The Morality of Self-Interest and the Facts that Support It (Richmond: Glen Allen Press, 2002).

2. For rankings of present-day governments regarding degrees of political freedom and economic prosperity, see “The Human Freedom Index, 2016,” co-published by the Cato Institute, the Fraser Institute, and the Liberales Institut at the Friedrich Naumann Foundation for Freedom, https://object.cato.org/sites/cato.org/files/human-freedom-index-files/human-freedom-index-2016.pdf.

3. Some may claim that the degrees of force used in countries such as the United States and Great Britain today do not warrant categorizing those political systems under the concept of “statism.” But they would be wrong. A social system is properly defined in terms of its essential distinguishing characteristic: its operative position on the purpose of government. Does the system uphold the principle that the sole purpose of government is to protect individual rights by banning physical force from social relationships, and by using force only in retaliation and only against those who initiate its use? Or does it uphold the notion that government may initiate force against individuals for other purposes of the state, such as spreading the wealth around, or advancing the “master race,” or ensuring obedience to “God,” or the like? If the former, the system is capitalist; if the later, it is to that extent statist. For more on this, see “Political ‘Left’ and ‘Right’ Properly Defined,” https://www.theobjectivestandard.com/2012/06/political-left-and-right-properly-defined.

4. Business is both a science and an art. Whereas a science is a body of principles pertaining to a given sphere of reality, an art is an application of relevant principles to a given endeavor. Business is a science insofar as it involves principles about value creation, marketing, sales, and profit; and it’s an art insofar as people apply such principles to create, market, sell, and profit.


Comments submitted to TOS Blog are moderated and checked periodically. To be considered for posting, a comment must be civil, substantive, on topic, and no longer than 400 words. Ad hominem attacks, arguments from intimidation, misrepresentations, off-topic comments, and comments that ignore points made in the article will be deleted. Thank you for helping us to keep the discussion intellectually profitable.