Friday, February 27, 2009

Answers to a Reader

After my post, How to Solve the Economic Crisis in 5 minutes, in which I laid out what I would consider to be a laissez faire plan for the federal government, a commenter asked a series of questions that I wish to turn into a full post since it touches on many fundamental issues related to the morality of capitalism. I thank Jen for her comments.

Jen said: I don't understand how this plan translates into prosperity. I have heard the philosophy before ... That if you deregulate everything and take away taxes people and corporations will make decisions that will benefit everyone and the environment , etc.

While it is true that capitalism will lead to prosperity, that is not my fundamental justification for capitalism. Nor does the argument that "people will make decisions that will benefit everyone and the environment" serve as justification. The justification for capitalism is that it is the moral system which I further explain below. Additionally, I'm not sure what you even mean by "decisions" that will benefit the "environment". Whose environment? I do not consider the natural "environment" to be intrinsically valuable, that is, valuable apart from man so I do not understand why you make this distinction. In other words, what would it mean to "help the environment" and why is that important in and of itself, i.e., apart from man?

In order to make my case clearer, let me first define capitalism by referencing a quote from Ayn Rand in the book Capitalism, The Unknown Ideal:
"Capitalism is a social system based on the recognition of individual rights, including property rights, in which all property is privately owned.

The recognition of individual rights entails the banishment of physical force from human relationships: basically, rights can be violated only by means of force. In a capitalist society, no man or group may initiate the use of physical force against others. The only function of the government, in such a society, is the task of protecting man’s rights, i.e., the task of protecting him from physical force; the government acts as the agent of man’s right of self-defense, and may use force only in retaliation and only against those who initiate its use; thus the government is the means of placing the retaliatory use of force under objective control."

Why is capitalism the moral system? First, I consider the "good" morally to be that which furthers man's life which is a philosophy known as rational egoism or rational self-interest (see Ayn Rand's "The Objectivist Ethics" in The Virtue of Selfishness). My standard of morality is not that "which benefits everyone" which is a utilitarian argument nor is my standard of morality "service to others" or "self-sacrifice" which is completely incompatible with life since if you practiced it consistently you would die. I therefore hold that the good consists of pursuing rational values in pursuit of your own self-interest with the goal of achieving your own happiness.

Notice that capitalism as defined above is based on a consistent defense of man's rights: his right to his life, liberty, property and pursuit of happiness. Without such rights, man would be a slave by definition. Man's nature as a reasoning being necessitates the freedom to think - his nature requires him to produce the products needed to survive so he must be free to keep the products of his labor and trade them freely as he sees fit.

Therefore, if the standard of morality is life and man's nature and survival necessitates individual rights then capitalism, which protects individual rights as per above, is the moral system. Now a consequence of such an approach is that it leads to widespread happiness and prosperity. Why? Because it is a system that at a fundamental level is consistent with man's nature in the same way that since man's nature requires air to breathe if you give him air he will survive, but if you cut it off, he will die. Since man's nature requires food to survive he must eat or starve to death. Since man's life requires the freedom to think and produce, if he is free to do so he will survive and flourish, but if is his rights are abrogated he will perish or at best live a life of miserable subsistence.

Historically, to the extent that men have been left free it has led to widespread human happiness and unprecedented economic growth. To the extent that men are enslaved, the result has been misery, death, and stagnation. The entire history of capitalism demonstrates this beyond a reasonable doubt. It is only necessary to look around us to see that this is true. What complicates matters is that there has never been a pure example of laissez faire capitalism in history in the sense of a system existing that was fully consistent with the above conception of capitalism. The closest thing we have was 19th century America and even this was not a perfect example since slavery was legal, the banking system was at various times under government control, and towards the latter half of the 19th century laws such as the Sherman anti-trust act and others gave massive power to the state to intervene in the economic system on behalf of corrupt businessmen or under the premises of the so-called "progressive" movement. To understand economic history properly, one must abstract out the causes and effects to grasp how freedom in a certain context led to economic prosperity and how violations of men's rights in the form of taxes, regulations or any government interference in the economy wrought disaster. (This is not always easy).

As an aside: note that man's nature also requires that he use the earth in order to survive. To the extent that environmentalists hold that the earth is intrinsically valuable, i.e., valuable apart from man, they must regard man as inherently evil. That is, I hold that since environmentalists widely regard the earth as intrinsically valuable, they necessarily must oppose human progress as any action by man affects the "earth" whether you burn a log in a fire or mine silicon for computer chips. This is why I questioned your statement originally. If one is concerned about man's ability to survive and flourish then he should understand that freedom and private property are necessary pre-conditions for human survival. People have a right to use the earth (at least their property) as they see fit unless their actions violate the rights of others. To consider something valuable apart from human life is a contradiction since the alternative of life or death gives rise to the concept of value in the first place. If one enjoys the sight of trees and forest then they should buy acres of land and do nothing to it. But to violate someone else's right to use their property in way that does not violate anyone's rights (for example, a regulation which stops a property owner from cutting down his own tree) is immoral and unjust.

Jen said: How are the infirm, mentally ill, and the elderly cared and provided for?

People are responsible for themselves and their own lives. It is not the moral duty of anyone to care for another and the state has no right to forcibly expropriate the income of one person and give it to another. Such schemes are vicious abrogations of individual rights and a consequence of the morality of altruism. I hold that policies which expropriate funds from someone who has earned their money in order to give it so someone who has not is a grave injustice. What is the moral justification for pointing a gun at someone and telling them to give their money or else because you deem it to be a worthy cause?

Family members should be legally responsible for supporting minors whether healthy or disabled. If there is no one to take care of an adult or child who is unable physically or mentally to take care of them self he must rely on private charity or organizations. The state could intervene to temporally hold someone who is infirm until a private transition is made possible. Those that feel strongly about such matters are free to donate money or to volunteer to help as much as they see fit. However, more importantly, it is not the "moral duty" of one to help another nor should morality or structure of government be built on such a premise. The vast majority of people are not infirm, mentally ill, or elderly. It is more important to positively assert man's right to his own life and property and understand that those in need of help must ask for voluntary charity.

Keep in mind that only a system which results in massive prosperity and human happiness can lead to benevolence in the sense that one might have the time or money to volunteer to help someone who is the victim of an injustice. Capitalism has led to that kind of wealth and benevolence and is only reason people ask such questions. For example, in the Dark Ages, under the feudal system or under Castro's communism or in Soviet Russia, where misery, poverty, and disease were daily realities, would anyone ask such questions? Virtually everyone was infirm , mentally ill or destitute - except the rulers.

Jen asks: What if the people aren't happy with the environmental practices or employment practices of a corporation? Do they have to sue every time that happens (in the absence of regulation)?

If you don't like a corporation then you are free not to buy their product and not to seek employment from them. If a corporation or individual violates your rights in some way (initiates physical force against you or commits fraud against you) then you would have a legal case against them. However, properly, in a court case you must demonstrate specific harms, that is, you must prove who is being harmed and how the defendant is harming them. If you can't prove this, then you have no right to tell someone else what to do with their property nor do you have the right to prevent two consenting adults from entering into contracts either for exchanging goods and services or employment. What would give you the right to tell others what to do whom you can not prove are harming you?

Under laissez faire capitalism as I described in my post, all property would be privately owned. Therefore, if a corporation dumps dangerous chemicals on your property (which is what I assume you have in mind), then you would have a case to sue them. If the damage took place across property it would be a class action claim. If property is privately owned, no one has an incentive to violate other's property rights just as it is rare that your neighbor comes over to your yard and dumps garbage on your lawn since you can have him arrested or sue.

Jen asks: How do we properly protect our country without revenue from taxes?

Taxes would be voluntary and those who wish to have their property protected would voluntarily contribute money to the government in the same way that people voluntarily insure themselves. I also believe their are ways to raise revenue in the form of user fees and for charging to register contracts with the state. Keep in mind what corporations and individuals would have at stake in a free society especially in the context of the kind of prosperity that capitalism would create. Maintaining a strong military which is the proper function of government would cost very little relative to this prosperity and corporations and individuals would gladly donate and raise money to maintain protection. Such a system would also result in greatly reducing the temptation to engage in military "adventures" like the one we witnessed in Somalia or Bosnia. Since the state would rely on voluntary contributions, Americans could vote with their dollars if they thought the military action was unjustifiable. If we were under an actual threat, I have no doubt the kind of effort that would be mounted to protect our freedom.

Who pays to maintain the national highway system - critical to the continuity of commerce?

Those that use the highways should pay for them. Keep in mind, under the system I proposed, all highways and roads would be privatized so that those who use them would pay for them just as those who eat hamburgers should pay for their hamburgers and those who buy bicycles should pay for the bicycle. As I detailed in my post Government Roads and State Pizza a system of private for profit roads would lead to less shortages (traffic jams), less death (traffic fatalities), less waste (gas and wear on vehicles) and to innovations we can not even imagine. As is always the case, a system of free production, trade and profit is the moral and the practical.

I am open as always to further comments and/or to provide further references to justify or add to my arguments.


Jen said...

Interesting. I won't immediately respond to the bulk of this, but just a quick note in response to your argument against environmentalism.

My interest in preserving the earth lies primarily in protecting the air I breathe, the water I drink, and the food I eat.

You argue that "freedom and private property are necessary pre-conditions for human survival." I don't know if I agree with either of those. Slaves and prisoners have and can live long lives in captivity. Hunter/gatherers roamed the earth for many years without property.

I do know, and you also state this fact, that air, water, and food are necessary pre-conditions for human survival (far above and beyond the need for freedom and property). I would think you'd be a wholehearted back-to-the-garden, pro-sustainability advocate.

Burgess Laughlin said...

Jen's questions are appropriate, of course, because the political system we live in today is very far from capitalism. Such a system is hard to imagine at first.

I would like to generalize Jen's questions in a form I sometimes hear it expressed:

Under laissez-faire capitalism, who will do x?

The general answer to this general question is:

Whoever wants to.

The one activity not open to everyone is the very activity that should be the exclusive concern of government: responding with force to threats of aggression and its corollary, fraud. Government has a "monopoly" on police, military, courts, and legislature, for example. Everything else is up to individuals outside of government.

Doug Reich said...


Thanks for you comment as always.

If your interest is truly to protect "the air I breathe, the water I drink, and the food I eat, I would suggest you run as fast as you can from any "environmentalist" organization and as Ayn Rand once said "kiss the nearest smokestack".

Do you have more food available to you now than you would have had at any point in history? It is easier to obtain clean water now (from a sink or at any convenience store) than it was for anyone in history? What is the life expectancy of someone living since the industrial revolution versus someone living a few hundred years ago despite the so-called "pollution"?

The "earth" per se is not what has brought about this bounty as man has subsisted for millions of years usually in a state of chronic poverty, disease, and short life expectancy. What has changed over the past 200 years? What has brought about the incredible production that most take for granted is man's mind, coupled with the political pre-conditions that unleash the power of knowledge and production. Those political preconditions are individual rights.

When I say freedom and private property are pre-conditions for human survival you are correct that I did not qualify that statement properly. I should have said "proper human survival" or something to that effect since you are right that a prisoner can subsist. Freedom, properly defined, means the freedom to think, produce, and trade without interference as long as you do not violate the rights of others. Even the semi-capitalism we have had in America and most of the Western world has brought about untold prosperity.

In fact, we have so much prosperity and so much wealth that people no longer fear nature but have time to contemplate spending time in it. In other words, a few hundred years ago, the sun setting would not have been a beautiful site. It would have meant that you needed to seek shelter immediately or risk the ravages of the elements and predators. "Nature" was an unrelenting nemesis that ravaged mankind with epidemics, plagues, drought, natural disasters, etc. It is only because of the phenomenal production and technology unleashed by semi-capitalism that one could even consider such ideas as going back to "nature". People consider ideas like that because they know they can go back to civilization.

If environmentalists were truly concerned with "man" then they would recognize that capitalism, i.e., freedom and individual rights, has brought man unprecedented prosperity and realize that under freedom, man can adapt and will adapt to any condition. They would also recognize that private property rights are necessary not only as a pre-condition of human life but are also the best guarantor of solving and giving recourse to those truly harmed by someone else's actions by enabling them to use the courts to sue violators of their rights. When the state "owns" property, no one has recourse. When roads are privately used and people who use them are required to pay for them it will ration their use. If people had to pay to store their garbage they might throw away less, etc.

However, environmental groups do no such thing. They lobby for stopping human progress at every turn. They stop the construction of more roads, housing, and research facilities. They oppose new energy refineries, offshore drilling, and driling in the ANWR. They oppose nuclear power, logging, pesticides, etc. all for what? To protect man? No, it is to protect "nature" in and of itself. That is why I oppose the environmentalist philosophy. This movement is anti-man and is profoundly more destructive to human life than any vapor from a smoke stack or to the alleged effects of a rise in temperature in 100 years.

Burgess, thanks for that greatly concise answer. If one could apply that principle consistently it would pretty much answer anyone as to my position. But, as you say, it's difficult to apply unless you have really integrated it for awhile and applied that principle to a great many issues.

Thanks again for all comments and I hope to get many more.

madmax said...


This is an excellent post and you gave excellent responses to Jen's questions. But let me give to you the common argument I get from Leftists/environmentalists. Jen says:

"My interest in preserving the earth lies primarily in protecting the air I breathe, the water I drink, and the food I eat."

The argument that the greens so often give is to posit the possibility (which they say is a reality today) that collective industrial/capitalist action by mankind is doing irreparable damage to the planet which threatens life itself. So, they say, carbon emissions from industrial activity is raising global temperatures and threatening mankind with all sorts of dangers: hurricanes, rising sea levels, the greenhouse effect, no protection from solar radiation, etc. The upshot of this, they argue, is that no harm is done to a specific person but to the earth as a whole and therefore it is necessary for the government (usually all of the world governments - its leftists that we are talking about after all) to intervene and regulate industry.

So, in essence: man's collective actions are destroying the environment in a way which can't be remedied under the framework of private property and capitalism (these are the main problems they assert). The solution therefore must be government regulation of the world's economy. A further implication of this is that humanity must not be thought of as ultimately consisting of "atomistic" individualism but of a worldwide ecosystem of interwoven "diverse" species, each serving their purpose.

This is the type of argument that I get often when I try to explain Objectivism and laissez-faire. As much as I hate to admit it, its not an unreasonable question/objection. One could conclude that collective action could result in damage to the whole earth. I'm curious as to how you would respond.


Beth said...

How can anyone justify holding an individual responsible for actions over which they do not have direct control?

I can and should be held fully accountable for any harm my actions cause to the person or property or others, if such actions occur via the initiation of force. But most of what environmentalists want to hold individuals (and individual companies) accountable for are actions that in-and-of themselves do not cause measurable harm. The "harm" usually occurs because of the cumulative effects of many individuals (or companies) peaceably pursuing their lives or businesses--air pollution, overcrowding, CO2, erosion, etc. But no one's individual actions cause harm.

The cumulative effects of individual peaceful actions must be treated as an "act of nature." We are only morally accountable for our own individual actions. To argue otherwise is to support collectivism: to make us individually responsible for the actions of the collective--over which we have no moral claim or control. The only moral alternative is to try to convince individuals of the harm their cumulative actions are causing, in the hope that you can persuade them of the need to voluntarily change their behavior. Anything else leads to initiating force on the innocent.

Harold said...

There's an essay by George Reisman on this topic if anyone's interested.

Doug Reich said...

Below I have excerpted some of Reisman's posts related to this topic. I do not accept the premise that global warming is occuring nor do I accept the claims of environmentalists regarding any of the other so-called disasters facing us a result of the collective actions of humans. However, granted that some issue comes along, I believe Dr. Reisman has addressed this superbly.

A Free-Market Response to Global Warming

Even if global warming is a fact, the free citizens of an industrial civilization will have no great difficulty in coping with it—that is, of course, if their ability to use energy and to produce is not crippled by the environmental movement and by government controls otherwise inspired. The seeming difficulties of coping with global warming, or any other large-scale change, arise only when the problem is viewed from the perspective of government central planners.

It would be too great a problem for government bureaucrats to handle (as is the production even of an adequate supply of wheat or nails, as the experience of the whole socialist world has so eloquently shown). But it would certainly not be too great a problem for tens and hundreds of millions of free, thinking individuals living under capitalism to solve. It would be solved by means of each individual being free to decide how best to cope with the particular aspects of global warming that affected him.

Individuals would decide, on the basis of profit-and loss calculations, what changes they needed to make in their businesses and in their personal lives, in order best to adjust to the situation. They would decide where it was now relatively more desirable to own land, locate farms and businesses, and live and work, and where it was relatively less desirable, and what new comparative advantages each location had for the production of which goods. Factories, stores, and houses all need replacement sooner or later. In the face of a change in the relative desirability of different locations, the pattern of replacement would be different. Perhaps some replacements would have to be made sooner than otherwise. To be sure, some land values would fall and others would rise. Whatever happened individuals would respond in a way that minimized their losses and maximized their possible gains. The essential thing they would require is the freedom to serve their self-interests by buying land and moving their businesses to the areas rendered relatively more attractive, and the freedom to seek employment and buy or rent housing in those areas.

Given this freedom, the totality of the problem would be overcome. This is because, under capitalism, the actions of the individuals, and the thinking and planning behind those actions, are coordinated and harmonized by the price system (as many former central planners of Eastern Europe and the former Soviet Union have come to learn). As a result, the problem would be solved in exactly the same way that tens and hundreds of millions of free individuals have solved greater problems than global warming, such as redesigning the economic system to deal with the replacement of the horse by the automobile, the settlement of the American West, and the release of the far greater part of the labor of the economic system from agriculture to industry.**

ANOTHER LINK*************

Even if you are absolutely convinced that human activities are responsible for global warming and, if nothing is done, will ultimately result in an intolerable rise in temperature, there is a very simple test that you need to apply. Pretend, for just a moment, that that same global warming is coming about independently of human activities, that it is strictly the product of natural forces. Then ask yourself, what would be the best fundamental method of coping with it? Maintaining a free market or establishing a centrally planned socialist system?

More fundamentally, what is the appropriate method for Man to use in dealing with Nature in general? Is it the motivated and coordinated human intelligence of all individual market participants that is provided by a free market and its price system? Or is it the unmotivated, discoordinated chaos in which one man, the Supreme Dictator, or a handful of men, the Supreme Dictator and his fellow members of the Central Planning Board, claim a monopoly on human intelligence and on the right to make fundamental decisions?

Suppose even that the warming caused by Nature were such that what was required to deal with it was some sort of space program, perhaps emitting thousands of tiny mirrors that would prevent some sunlight from reaching the earth by reflecting it back into space. Suppose further that as a practical matter, given our present state of social organization, the only realistic means of carrying out such a program was through governmental action—a kind of public works project, as it were. In which circumstances, would such a program be more likely to be feasible: in those of the primitive economies characteristic of third world countries or in those of advanced industrial economies? And would they not be more likely to be feasible in an economy substantially more advanced than our own is at present?

The answer to the question of how best to cope with intolerable global warming caused by Nature is obviously the maintenance of the free market, not its replacement by Socialist central planning. Indeed, the answer is to make the free market freer than it now is—as much freer as is humanly possible. This is because while the primary reason for advocating a free market is the greater prosperity and enjoyment it brings to everyone in the course of his normal, everyday life, a major, secondary reason is to have the greatest possible industrial base available for coping with catastrophic events, whether those events be war, plague, meteors from outer space, intolerable global warming, or a new ice age.

In effect, what the environmentalists would have us do as the means of preparing for coping with a coming global warming is analogous to the imaginary absurdity of the United States in the 1930s having reduced its economy to the level, say, of Poland’s economy. Then, when World War II came, our country would have had to fight the war with horses instead of tanks and planes. In the same way, the environmentalists would have us cope with global warming by waving little fans instead of using air conditioners, refrigerators, and freezers.

Now what, if anything, changes if we assume that global warming is an unintended by-product of the human productive activities that make life possible and enjoyable? How does it possibly follow from this that the only means of stopping this much-less-than-certain outcome is by suffering the absolutely certain impoverishment and death that will come from the destruction of most of our present sources of energy?

Is there absolutely no other way to deal with global warming than the destruction of our economic system? Is that how we would deal with it if global warming were the product of Nature, and not the by-product of our activities? Would the environmentalists then ask us to engage in what in the circumstances would be a merely ritual sacrifice incapable of accomplishing anything beyond itself?

If they would not do that, then they would have to look for other alternatives as the means of coping with global warming. Why aren’t they looking for those other alternatives now? Why on earth should the first and only solution for global warming as a by-product of human activity be the scuttling of our energy base? Do we deserve to be exterminated for our unintended by-products? Must we really choose to live in poverty and misery, surrounded by death, in order to avoid excessive heat? Can absolutely no other way be found? (The likely answer is actually no more complicated than having the greater energy base required to build and power bigger and better air conditioners.)

Beth said...

Thank you for the links and for your thoughtful posts.

You state:
"I do not accept the premise that global warming is occurring nor do I accept the claims of environmentalists regarding any of the other so-called disasters facing us a result of the collective actions of humans."

I have spent considerable time trying to understand the global warming issue--including reading basic climatology texts, primary scientific literature, attending scientific conferences and lectures, reading the IPCC reports and dissenting analyses, and following the scientific blogs on both sides. I am as of yet unable to decide whether or not there is a human contribution to temperature trends. I have not found sufficient data or arguments to support a conclusive yea or nay (The lack of solid evidence in favor anthropogenic climate change is not being made clear to the general public and this is creating considerable inappropriate political turmoil.) Upon what basis are you able to so unequivocally state that human-induced climate change is not occurring? I would love to access that information.

That said, I would heartily agree that there is no evidence of any human-induced impending disasters, and even if there was, I agree with Reisman's assessment that the proper response would be to unleash the power of human intelligence via the mechanisms of freedom and the free market.

I do not understand why those who honestly care about humans and their environment (and I believe there are many such individuals) are unwilling to treat the cumulative effects of the acts of humans as part of nature. Our ability to think, choose and plan does place us in a position different than other animals, but it does not remove us from nature. We are not super-natural nor extra-natural nor supra-natural.

I hope Jen will stay in this discussion and respond to the comments. I truly want to understand just where and how our thinking diverges.


Doug Reich said...


Thanks for your thoughtful comments as always.

The fact that you have read the IPCC report and primary scientific literature puts you far and above not only the politicians, environmentalists, and their cheerleaders in the media but probably in the top decile of most climate scientists in terms of your knowledge of the subject.

I have been blogging/reading about this issue for years and my conclusion was that "I do not accept the premise that global warming is occuring" which is quite different than saying that I "unequivocally" claim that it is "not" occuring. So I don't think your characterization of my position was accurate. In other words, the burden of proof is on those who assert the theory. I am simply stating that I reject the claim that they have met their burden of proof.

I agree with you for many reasons that the evidence is far from conclusive. I would go even further and say that in many cases I believe the science is sloppy from a methodological perspective and I flat out reject many of the claims that rely on computer model forecasts of weather for the next 100 years. Some of my posts over the past few years have hilighted such cases in more detail and I won't rehash it here but I can direct you to places in my archive if you are interested. Suffice to say I believe the science is not conclusive and I believe the proponents have a massive political and economic incentive (they get funding from the government) to perpetuate apocalyptic claims.

Also, more importantly I think the science is a smoke screen to obscure a socialist agenda and that if these people were truly concerned then they would recognize that freedom is the solution - not the problem which is what you and Dr. Reisman are both saying.

Beth said...


Thanks for the clarification.
I would fully agree with you that the burden of proof is on those who are claiming there is a crisis, and that they have failed to provide adequate proof, that much of the science is methodologically sloppy, in particular the use and heavy reliance on the computer modeling for climate forecasting, and that alarmist claims assist researchers in obtaining funding (at taxpayer expense) and activists in achieving unrelated political-social goals.
Sorry to have read more into your statement than you intended.
I would like to read your archived posts on this topic.

Doug Reich said...


here are most of my GW posts - some of these are more scientific and some more philosophical - i can direct you more if you lie

madmax said...


Thanks for the links to Reisman's articles. They're awesome. I'm shocked that I missed them up till now. They provide an excellent counter to the "collective actions of mankind are causing irreparable harm" argument. I never agreed with that argument but I always found it difficult to answer. No longer.