My husband recently had a letter to the editor published in the National Post in their special section, “What do you want for Christmas?” He wrote: “Pure capitalism everywhere in the world. Failing that, lots of powder snow where I will be skiing.” Luckily, he got his second wish, but unfortunately, there is no pure capitalism anywhere, nor are we headed towards it. Yet, pure capitalism is on my wish list, too, because I want peace, prosperity, and human flourishing around the world.
Pure capitalism, as defined by Ayn Rand in her essay “Capitalism, The Unknown Ideal,” is a social system based on the recognition of individual rights, including property rights, in which all property is privately owned. This is a social system of peace, because government has only a limited role as the protector of its citizens’ individual rights against those who initiate physical force: common criminals, foreign invaders, and fraudsters. In pure capitalism, government uses force solely in retaliation, authorized by the Constitution. Government under capitalism does not initiate force against its own citizens or against foreign countries. The closest the world ever came to capitalism—although it wasn’t pure—was the 19th century, particularly in America where individual rights were protected. That was also one of the most peaceful periods in human history.
Pure capitalism is also a system of prosperity: the private ownership of property and the protection of property rights provide a tremendous incentive for wealth creation. The 19th century America experienced a long boom of wealth creation, facilitated by several significant innovations spurred by capitalist competition: the steam engine, the automobile, electricity and incandescent light, telegraph and telephone, among others.
The wealth generated during the era of relative freedom increased everybody’s prosperity: mass production of goods—possible due to all the innovations—made them affordable to a large number of people, reduced the hours people needed to work, and created jobs that paid much better than the agricultural labor prior to the Industrial Revolution. The wealth creation made possible by capitalism not only boosted people’s standard of living, it also increased their overall well-being. Medical discoveries funded by the newly created wealth led to the prevention of many infectious diseases, improving people’s health and longevity. Increased productivity meant more time for education and leisure, and more enjoyment of life overall.
But after the 19th century, capitalism has not fared so well. Despite of continuing wealth creation and innovation, individual rights have been increasingly eroded by the expanding government, fueled by the philosophy of altruism—the idea that we are our brother’s keeper—and of distributive justice. Government regulation has hindered wealth creation and innovation, and its forced “redistribution” of wealth from those who produce it to those who do not has had a similar impact. The most regulated industries, such as health care and financial services, are held back the most in terms of innovation (imagine how advanced we would be in terms of medical innovation and low cost of health care without regulated, socialized medicine), or experience government-induced dysfunction such as the 2008 financial crisis. Contrast the stultified progress and dysfunction in these industries to the rate of innovation and wealth creation in the least regulated industries, such as computers and consumer electronics. But the trend toward increasing government violation of property and other individual rights is continuing—more regulation, more cronyism, more income “redistribution,” less freedom—limiting our ability to live our lives and to flourish.
To turn around the development of the ever-growing government that violates our rights, we need to reject the philosophy altruism that enables it and to embrace pure capitalism—for more peace, prosperity, and well-being. To get my new year’s wish, however, people need to learn about the destructiveness of altruism and the virtues of capitalism. Please spread the word!