What Capitalism Is
• Moral Foundations
• Moral Foundations
Self-Interest and Egoism
Rationality and Morals
The Initiation of Force as Evil
Capitalism
begins with the individual as the primary unit of
political, social, and economic life. It recognizes
that each individual has moral sovereignty over his
own life. Each man must choose his own course of
action—whether he becomes a CEO or a day
laborer—according to some moral code. In a
capitalist system, it is morally proper for
individuals in general, and businessmen in
particular, to pursue their own self-interest.
Underlying the system of capitalism is a morality
of egoism.
From the inventor who designs a new factory tool to save human labor power to the financier who devises a new method for allocating capital to worthy ventures, those who produce material goods—the lifeblood of capitalism—do so because it serves their own interests. These producers produce not because it serves others or helps the poor; they do so because they have a deep selfish motive for doing so—it advances their own well-being. Each individual faces the same basic choice, he must either act to produce or labor for the values he needs to survive and, ultimately, to flourish, or he faces poverty, sickness, and, ultimately, death. Each must choose to produce the material values necessary for his survival. From the primitive tools used for hunting to advanced factories that create computers, human beings have had to produce in order to survive. Man’s needs—winter coats, MRI machines, apartment homes, televisions, etc.—are not provided by nature, they must be created.
All of these goods came about because some individuals acted in their own interest in pursuing their own survival. Every great producer, from Thomas Edison to Henry Ford to Sam Walton, has been driven by what most satisfies and fulfills his own life. Although each of these men has greatly benefited humanity by providing it with light bulbs, cheap automobiles, or cheap consumer retailing, his motive in working toward these ends must be his own satisfaction and fulfillment. Each of these men, and the millions of producers throughout history, have enjoyed a personal and selfish reward in the act of production itself. The uncountable hours of labor, mental energy, and effort that each put into the act of production could only have been possible if the work itself was personally rewarding. It was for their own lives, first and foremost, that they acted, not for the social consequences of their work.
The act of pursuing one’s goals does not come automatically; these goals must be discovered and chosen. Likewise, the means of pursuing those goals is not built into human nature; they, too, must be discovered. Scientists, businessmen, inventors, and other creative individuals throughout history have had to confront their circumstances and figure out what things are good for human life and what things harm it. They have ascertained, for example, that some foods provide optimal nutrition and others cause disease or even death. They have learned that building homes with good airflow and light promote human life whereas dank and dark hovels do not. At a deeper level, though, their process of establishing these basic requirements for survival points to a deeper truth—that certain methods of making one’s choices and pursuing one’s values leads to success and happiness and that other methods lead to pain, suffering, and death. The method that leads to human flourishing is the method of reason.
From the inventor who designs a new factory tool to save human labor power to the financier who devises a new method for allocating capital to worthy ventures, those who produce material goods—the lifeblood of capitalism—do so because it serves their own interests. These producers produce not because it serves others or helps the poor; they do so because they have a deep selfish motive for doing so—it advances their own well-being. Each individual faces the same basic choice, he must either act to produce or labor for the values he needs to survive and, ultimately, to flourish, or he faces poverty, sickness, and, ultimately, death. Each must choose to produce the material values necessary for his survival. From the primitive tools used for hunting to advanced factories that create computers, human beings have had to produce in order to survive. Man’s needs—winter coats, MRI machines, apartment homes, televisions, etc.—are not provided by nature, they must be created.
All of these goods came about because some individuals acted in their own interest in pursuing their own survival. Every great producer, from Thomas Edison to Henry Ford to Sam Walton, has been driven by what most satisfies and fulfills his own life. Although each of these men has greatly benefited humanity by providing it with light bulbs, cheap automobiles, or cheap consumer retailing, his motive in working toward these ends must be his own satisfaction and fulfillment. Each of these men, and the millions of producers throughout history, have enjoyed a personal and selfish reward in the act of production itself. The uncountable hours of labor, mental energy, and effort that each put into the act of production could only have been possible if the work itself was personally rewarding. It was for their own lives, first and foremost, that they acted, not for the social consequences of their work.
The act of pursuing one’s goals does not come automatically; these goals must be discovered and chosen. Likewise, the means of pursuing those goals is not built into human nature; they, too, must be discovered. Scientists, businessmen, inventors, and other creative individuals throughout history have had to confront their circumstances and figure out what things are good for human life and what things harm it. They have ascertained, for example, that some foods provide optimal nutrition and others cause disease or even death. They have learned that building homes with good airflow and light promote human life whereas dank and dark hovels do not. At a deeper level, though, their process of establishing these basic requirements for survival points to a deeper truth—that certain methods of making one’s choices and pursuing one’s values leads to success and happiness and that other methods lead to pain, suffering, and death. The method that leads to human flourishing is the method of reason.
All
of the goods that man uses in his life have come to
him by a process of thought, i.e., thorough reason.
Consider what it required to build one’s home.
Those who built the home, the architects and
engineers, had to acquire a knowledge of how
material objects act in relation to each other—they
had to know everything from physics to mechanics to
astronomy. They had to learn why only walls of a
certain thickness can support a roof of a given
size, or why windows facing south allow for more
natural light. The suppliers who provided the
materials for the house also had to observe reality
and gain knowledge about it. They had to test and
experiment with different woods to determine which
one made the best framing. They had to discover why
sheetrock makes a good wall surface for insulation
and sound qualities, relying on the fields of
thermodynamics and acoustics. The construction crew
relied on reason to understand the tools that they
use, from air-powered nail-guns to simple levers
and pulleys, to make them work correctly. Reason is
necessary not only for building shelter, it
underlies all of the values that man needs. Nothing
is given to man in nature—he must look out at
reality with his senses, put together what he sees
with his reasoning mind, and come to a conscious
conclusion about how he will shape it to serve his
needs.
The contrast to using reason as a means of survival is to go by some other method—whether this is by wishing, by relying on faith in the powers of a deity, or by ignoring facts and hoping for the best. Whenever man deviates from using reason, the result is not productivity and flourishing, it is stagnation and death. Consider how successful someone like Thomas Edison would have been if he had resorted to feelings or instincts instead of reason. When he was confronted with the problem of designing the filament for his light bulb, would he have succeeded by insisting that corn straw was the best material because he felt it to be true? In fact, he painstakingly investigated every substance he could find, applying the scientific method to each one until he had the results that he needed. Would Henry Ford have prospered if he had arranged his assembly line according to his instinct? Even more simply, would any human survive for long at any stage of economic development without using his mind to discover the facts and evaluate them according to how they affected his life?
To be moral, to pursue one’s self-interest in the clearest possible way, to succeed at producing values, men have to hold an unwavering commitment to live according to the only means possible to them—their reason. This means holding rationality as a virtue. One must accept reason as an absolute, never faking reality or placing feelings and whims above logic, never suspending or abridging rational thought or allowing oneself to be controlled by anything else. This has always been the great virtue of the heroes of capitalism.
To hold rationality as a primary virtue implies a set of other virtues that men must follow, but the most important of these for a system of capitalism is the virtue of productiveness. The system of capitalism, by embracing the moral code of egoism and rationality, makes possible all of the splendor and comfort that is available in the world today. The producers have accepted that man’s happiness on earth is his most moral purpose. They have engaged in transforming the standard of living into what it is today. This productiveness, the selfish pursuit of profit and moneymaking, is only possible under capitalism, the system that frees men to pursue their own self-interest and their own ends.
The moral commitment to achieving happiness through productivity, though, does not mean that one can do whatever one wishes. As all of the great innovators and producers have realized, a human life is inherently long-range. An immediately beneficial action, say, selling a stock because its value has increased, may not be in his interest over the course of his entire life and that no choice, no matter how small, is irrelevant to his survival. Business and production aim to the highest levels of happiness and human flourishing. When Sam Walton developed the management ideas that have helped to make Wal-Mart one of the most successful companies in the world, he did not have in mind what would only benefit him today, next week, or next year. He knew that building a great company meant having a vision for the future, for its growth over time, and that careful thought and planning were necessary to this. The same is true of any human endeavor, from the individual to the largest business, acting long-range—which means acting on principle—is absolutely required for success.
The moral foundation of capitalism is the morality of egoism. By recognizing that, to be fully moral, men must act long-range, in their own interest, according to their own conclusions, capitalism provides a context in which morality is possible because it leaves men free to use their minds and pursue their happiness.
The contrast to using reason as a means of survival is to go by some other method—whether this is by wishing, by relying on faith in the powers of a deity, or by ignoring facts and hoping for the best. Whenever man deviates from using reason, the result is not productivity and flourishing, it is stagnation and death. Consider how successful someone like Thomas Edison would have been if he had resorted to feelings or instincts instead of reason. When he was confronted with the problem of designing the filament for his light bulb, would he have succeeded by insisting that corn straw was the best material because he felt it to be true? In fact, he painstakingly investigated every substance he could find, applying the scientific method to each one until he had the results that he needed. Would Henry Ford have prospered if he had arranged his assembly line according to his instinct? Even more simply, would any human survive for long at any stage of economic development without using his mind to discover the facts and evaluate them according to how they affected his life?
To be moral, to pursue one’s self-interest in the clearest possible way, to succeed at producing values, men have to hold an unwavering commitment to live according to the only means possible to them—their reason. This means holding rationality as a virtue. One must accept reason as an absolute, never faking reality or placing feelings and whims above logic, never suspending or abridging rational thought or allowing oneself to be controlled by anything else. This has always been the great virtue of the heroes of capitalism.
To hold rationality as a primary virtue implies a set of other virtues that men must follow, but the most important of these for a system of capitalism is the virtue of productiveness. The system of capitalism, by embracing the moral code of egoism and rationality, makes possible all of the splendor and comfort that is available in the world today. The producers have accepted that man’s happiness on earth is his most moral purpose. They have engaged in transforming the standard of living into what it is today. This productiveness, the selfish pursuit of profit and moneymaking, is only possible under capitalism, the system that frees men to pursue their own self-interest and their own ends.
The moral commitment to achieving happiness through productivity, though, does not mean that one can do whatever one wishes. As all of the great innovators and producers have realized, a human life is inherently long-range. An immediately beneficial action, say, selling a stock because its value has increased, may not be in his interest over the course of his entire life and that no choice, no matter how small, is irrelevant to his survival. Business and production aim to the highest levels of happiness and human flourishing. When Sam Walton developed the management ideas that have helped to make Wal-Mart one of the most successful companies in the world, he did not have in mind what would only benefit him today, next week, or next year. He knew that building a great company meant having a vision for the future, for its growth over time, and that careful thought and planning were necessary to this. The same is true of any human endeavor, from the individual to the largest business, acting long-range—which means acting on principle—is absolutely required for success.
The moral foundation of capitalism is the morality of egoism. By recognizing that, to be fully moral, men must act long-range, in their own interest, according to their own conclusions, capitalism provides a context in which morality is possible because it leaves men free to use their minds and pursue their happiness.
Capitalism
protects men and makes it possible for them to be
moral by removing the primary social evil, the
means of stopping them from taking moral action,
the initiation of physical force.
The initiation of physical force is evil because it halts the rational mind. A reasoning man cannot pursue a process of thought when he is being held at gunpoint, he cannot grasp reality and analyze facts according to the thug who threatens his life. Under physical compulsion, a man becomes something less than a man; his mind shuts down. He can be forced to act, his body can be compelled to hand over his wallet or work in a factory, but it is not by his choice and his process of reasoning. As the philosopher Leonard Peikoff eloquently explains, force “makes a man act against his judgment. The victim still sees what he sees, values what he values, knows what he knows.” When he hands over his wallet to the robber, the man does not suddenly believe that it rightfully belongs to the robber—he still knows it is his property. Force negates the mind, and thereby negates reality, preventing a man from acting in accord with a fully rational morality.
The initiation of force applies in the same way in the realm of business. For example, when the government prohibits Company ‘A’ and Company ‘B’ from merging because a Justice Department attorney believes it to be anti-competitive, the management of those companies does not suddenly believe that the merger is a bad idea. When the Internal Revenue Service demands payment of capital gains taxes, the taxpayer still knows that it was his effort—the effort of a long-range mind that calculated risks, allocated resources, and managed investments—that created the wealth and that it morally belongs to him, not the public. These are instances of the initiation of force as much as that of a petty thief. Through the voluntary consent of both parties, two companies wished to merge and become a new entity. Through a process of lawful trade and sale, a man wanted to earn money on his business activity. Their action involved no force, only mutual cooperation. Yet the government in this instance initiated force against them by compelling them (under threat of imprisonment) to halt their activity. In effect, the government has detached their rational conclusions from their action. They are no longer acting according to their own best judgment, but according to that of a government bureaucrat.
To pursue his life and his values, a man must be free to use his unique tool of survival—his mind—unhampered and unrestrained. Because force is the only means by which other men can prevent this pursuit, it represents the primary evil in a social context. To have a fully free social system, a society must protect the ability of all men to exercise their own judgment, to make use of their own minds. The means of recognizing and protecting man’s ability to live morally in society is the concept of individual rights.
The initiation of physical force is evil because it halts the rational mind. A reasoning man cannot pursue a process of thought when he is being held at gunpoint, he cannot grasp reality and analyze facts according to the thug who threatens his life. Under physical compulsion, a man becomes something less than a man; his mind shuts down. He can be forced to act, his body can be compelled to hand over his wallet or work in a factory, but it is not by his choice and his process of reasoning. As the philosopher Leonard Peikoff eloquently explains, force “makes a man act against his judgment. The victim still sees what he sees, values what he values, knows what he knows.” When he hands over his wallet to the robber, the man does not suddenly believe that it rightfully belongs to the robber—he still knows it is his property. Force negates the mind, and thereby negates reality, preventing a man from acting in accord with a fully rational morality.
The initiation of force applies in the same way in the realm of business. For example, when the government prohibits Company ‘A’ and Company ‘B’ from merging because a Justice Department attorney believes it to be anti-competitive, the management of those companies does not suddenly believe that the merger is a bad idea. When the Internal Revenue Service demands payment of capital gains taxes, the taxpayer still knows that it was his effort—the effort of a long-range mind that calculated risks, allocated resources, and managed investments—that created the wealth and that it morally belongs to him, not the public. These are instances of the initiation of force as much as that of a petty thief. Through the voluntary consent of both parties, two companies wished to merge and become a new entity. Through a process of lawful trade and sale, a man wanted to earn money on his business activity. Their action involved no force, only mutual cooperation. Yet the government in this instance initiated force against them by compelling them (under threat of imprisonment) to halt their activity. In effect, the government has detached their rational conclusions from their action. They are no longer acting according to their own best judgment, but according to that of a government bureaucrat.
To pursue his life and his values, a man must be free to use his unique tool of survival—his mind—unhampered and unrestrained. Because force is the only means by which other men can prevent this pursuit, it represents the primary evil in a social context. To have a fully free social system, a society must protect the ability of all men to exercise their own judgment, to make use of their own minds. The means of recognizing and protecting man’s ability to live morally in society is the concept of individual rights.
(return to outline)