Wild Capitalism does not exist!

Ayn Rand, founder of the philosophy of Objectivism, proponent of Laissez-faire Capitalism. It is normal for her critics to promptly forget some part of her philosophy in order to criticize another, especially if the criticism is negative. Image from this site.

Out of curiosity, I’ve searched one of the croatian Internet portals of what it “knows” about the known author Ayn Rand, founder of the philosophy of Objectivism and the person who built upon the philosophy of reason (started by Aristotle). Search engine spat out an article entitled: “Pitt and Jolie will act in a movie anthem to wild capitalism?” I was not surprised that Ayn’s name was connected with capitalism, for she was a strong proponent of laissez-faire capitalism.

The name “laissez-faire” comes from french “Laissez nous faire,” which means “Let us alone.” It was a response of one of the french businessmen named Legendre to a finance minister who asked him what he can do for them. However, I was interested how one could connect this fictitious concept of “wild” capitalsim with the name of Ayn Rand.

There was no explanation, which means the adjective “wild” was arbitrarily added to what Ayn Rand fought for.

What is today known as wild capitalism, for one, is no capitalism at all. What is referred to as “wild capitalism” is, in fact, a slow disintegration of all social systems and a collapse towards complete anarchy. If it can be called a social system, then it is one where all or most men who have political influence try to take as much money as possible for themselves, with no regard for ethics and the long term consequences. The reason they can do that is because they are the ones making laws which suit them.

In true capitalism, political influence is an unknown term. Economy is not meddled in by politicians (which is the true meaning of “Laissez nous faire!”). This means that in an ideal laissez-faire capitalism there are no taxes – the government is compact and efficient because it is being financed by means of voluntary taxes (nobody is forced to pay them), conflicts solved at court and by organizing its own lottery. Its mission, contrary to the popular idea that the task of politicians is to build up the economy of a country, is the protection of the rights of individual from bullies, both domestic and foreign. American economy was built, strenghtened and fortified by businessmen – individuals, not politics – and today’s politicians are dismantling it. Thus, capitalist govenment consists only of the police, the courts and the army – there are no ministries and countless ministers and government offices throughout the land which hand out various blessings (for example, so that an individual may build something on his own land).

Since it is financed by voluntary taxes, it is the government’s imperative to be quick and efficient in its work. It means that courts must be quick in solving their cases, and the enemies threatenning to destroy the country must be subdued as soon as possible, and by endangering as few of its own men as possible. Such a government has no time to suck up to the world as the american government is doing today in regard to the war on Middle East. Its primary goal is to protect its own citizens. As such, it pays off to certain individuals to pay voluntary tax to his country’s government, purely for his own protection.

The government itself is controlled by the people it governs. The principle of the democratic elections might be changed a bit, but that is still largely a theoretical discussion as a government like it never existed. But, while in such a society people try to choose the most efficient government, today in reality people choose the government which gives more promises. If these promises are not fulfilled, then the people go out on streets and demolish and protest, while an inefficient government of laissez-faire is punished by witholding the voluntary donations, which makes a larger source of such government’s financing. This means that the government will have to step down or it will have to start taking its job seriously.

This is the kind of capitalism Ayn Rand was talking about. How similar is this to what is today known as wild capitalism? How similar is it to that instance when the politicians sit on their comfortable chairs at the top of the nation and decide whom to prosecute next for the crimes they will invent; or when they decide whom to secure the monopoly and whom to destroy and remove from the market by means of their political influence; or when they couldn’t care less that the courts do not function at all, as long as they have something which fills their pockets; or when they do not care that the people they govern go through Scylla and Charybdis only to get the permit to build a home on their own land, on their own property and with their own money; or when it does not matter that they suffocate their citizens with ever increasing taxes; or when they hypocritically give fictitious rights to various groups of people, at the expense of those who will never enjoy these rights and they are forced to pay them no matter what? How much do you think the basic principles of laissez-faire (and these are the individual rights) support what people call wild capitalism? Not at all!

Fort Knox is believed to be the instrument which stabilized American economy, while in fact it plunged it in a constant state of flux, and caused the great depression which started in 1929. Photo by Kevyn Jacobs.

Capitalism is being blamed for many alleged evils in the history of mankind. I will only mention one, and this is child labor. Capitalism, contrary to the common belief, is not guilty for it. Children worked because they brought much needed income to their families. They sought work at the request of their own parents and not by being forced to work by the employer (which is a story that many cartoons today are trying to sell to children who watch them). In fact, it was capitalism that created conditions which made it possible for children to stop working! Capitalism shortened the workday from more than 15 hours to a mere 8, and created greater efficiency and brought larger paychecks. If you take a look at history, particularly American history, you will see that most of the companies which today are blamed for the greatest evils of capitalism, in fact had some significant political influence. In laissez-faire this does not happen. An example of this are the great four and their Central Pacific Railroad.

Therefore, wild capitalism is a contradiction in terms. Such a thing does not exist. It would be closer to the truth to say that it is socialism, which cannot be sustained as such, and just as well as this so-called wild capitalism, it sinks towards anarchy slowly but steadily. You might even hear politicians talking about wild capitalism and how they condemn it in public and how wild capitalism is our grim reality. However, none of them will try and do something about it, or it will take a really really long time. The reason is simple – they profit from it. In capitalism, there is no such thing. Political influence and corruption are plagues brought to us by communism and socialism, and the only way to deal with them is to introduce the rule of law, not of men. And when speaking of the rule of law, then we speak of the laws protecting individual rights, thus I am speaking of capitalism.

It is clear then that the greatest proponents of a system that is falling apart will defend themselves from capitalism by telling lies about it. The saddest thing is that many of today’s intellectuals are incapable of seing through these lies, so then they write articles such as I found, where laissez-faire is said to be the same as the greatest fraud of the proponents of socialism. It is said to be the same as something that doesn’t and couldn’t even exist; as something that is contradictory in its essence – wild capitalism.

The Three Branches of Politics

The Courtroom. A place where disputes are settled in a civilized manner, and the truth is determined by the process of reasoning and detailed analysis. Image from this site.

A country with a healthy political system does not exist today. But what is a healthy political system? Is it the one that works, or the one that people don’t want to violate, or is it something else?

What is the function of a government? The government is supposed to uphold the principle of individual rights by protecting them. Since there is only one means of violating this principle, and this is by force, this means that the government must protect its citizens from force. The only means to do so is by force. Therefore, the government must have an exclusive monopoly on the usage of force.

By what means should a government exert this protective force? Let’s dissect force to get to this answer. There is something called initiation of force. This is always bad because utilizing force against a human being is a violation of his rights. Then there is retaliatory force. After force has been initiated, the damaged party uses retaliatory force against the initiator. Something similar to retaliatory force is self-defense. However, self-defense is not neccessarily force – in certain occasions one can talk his way out of trouble.

The government may use these types of force to protect against criminals and invaders. It can, of course, protect to the extent to which it can apply such force. The best government then is exactly the one which invests everything it has in force and the means to apply it.

To build an efficient government, let’s first look at where it will have to apply force. But the first principle to look at is that the government must never be the initiator of force. Therefore, it can only use force against those who have already initiated it.

There can be citizens of a country which apply force against other citizens. This is where a part of the government can interfere. Actually, it’s two branches of the government which may interfere here: the police and the courts; the police catches the criminal, the courts determine whether or not he really is the criminal. There are cases where the courts will not be necessary. For example, if the criminal is shot during the chase or as he threatens to kill one of the policemen. The courts may then, in fact, examine the policeman who shot the alleged criminal in order to determine whether the shooting was justified.

Another kind of an initiator of force is a foreign invader. If with anything, the anals of history are filled with wars. How does the government protect from foreign invaders? By means of the army. Countries with strongest armies thus have the most means by which to protect their citizens. As with all other branches of a government, so must a government not use its military to initiate force – both against its own citizens, or against the citizens of other countries.

These are the basics of how a government should be construed. Functions of individual branches of the government are only superficially described here, and are a topic for further discussions.

Basic constructs of Laissez-Faire

Every social system rests on some kinds of principles. The topic of this post is to show what these principles are in Laissez-Faire and how they give rise to the three branches of a Capitalist government. The metaphysical, epistemological, and ethical justification for these principles is beyond it. Nonetheless, it is worth mentioning that it is exactly these branches of philosophy which show why only Capitalist principles are moral.

Liberty is indigenous to capitalism. No social system has ever shown as much respect for individual rights as did capitalism in the 19th century in America. However, today this liberty is being stifled as the government forces ever more controls on a once-free market. Image from this site.

Laissez-Faire Capitalism rests on the principle of individual freedom. Freedom is practiced by practicing individual rights, which are the right to life, liberty, and property. Each individual, no matter what his profession, his job, his IQ, his ethnic origin, etc. is, has these rights and is thus free to act in accordance with them. Important to note is the fact that in order to practice one’s right one has to act. It is today’s common misconception (which is why I’m even bringing this up), that one’s right to life means that others must sustain his life no matter what the costs. This misconception doesn’t work in any way; it fails both logically, and socially. Logically because the very definition of rights entails that they sanction actions of an individual, and socially because there is only one way in a society to enforce such a vulgarity – by force. This very force is then the undoing of what individual rights stand for – freedom; everyone becomes a slave.

All social systems, whether they are moral or not, regard certain conduct as unacceptable. The virtue of Laissez-Faire is that unacceptable behavior is only that which is immoral. However, Laissez-Faire government will not tend to punish all that is immoral, rather a smaller subset of all possible immoral actions. For example, robbing a bank is both immoral and punishable by Laissez-Faire law. However, knowingly investing into a lost cause, while immoral, it is not punishable; neither is thrashing your own property; or endangering your own life for no apparent reason. This suggests that there is a line that is drawn somewhere, which distinguishes punishable immoral actions from those that are immoral, but not punishable.

This line is defined simply. Laissez-Faire Capitalism does not accept, and punishes that conduct which is a violation of the principle of individual rights.

This could be a working definition of punishable conduct in any social system, however there is a difference. All social systems can, at least in theory, sustain themselves by consistently practicing the principles on which they rest. The difference is that the principles behind Laissez-Faire are the only principles of a social system that can be practiced consistently. Consistent practice of Communist, Socialist or other system’s principles inevitably leads to collapse of these systems (I will not here go into details why, but there are good examples of it in human history). Even today, there is the European Union, which is collapsing unto itself; you can see it in Germany, for example. The social system they have, with all the social “benefits” to those without job, and with the unemployment rate as high as it is, it is all but clear that such a social system cannot be practiced. But alas, I am no expert in politics! I’m sure that a person more versed in this field will find even more finer points which will support my story.

Land Ownership as it should be

The Sears Tower of Chicago. Capitalism has already shown its beauty in many aspects of human life. The most spectacular one is architecture. Its buildings have long defined the skylines of the world’s most beautiful cities. This is because people are free to build on their own land, and ideally there are no government enforced restrictions. Image from Wikimedia Commons (author unknown).

Capitalism is a social system based on individual rights. These rights are rights to life, liberty and property. Consistent practice of these rights, taking into account the fact that each and every one individual has them, leads to Capitalism. Capitalism, therefore, is the only moral social system. However, I will not discuss how or why right now. Read the works of Ayn Rand for this. For this discussion in particular, I recommend Capitalism: The Unknown Ideal.

Since in a Capitalist system no control over a privately owned land is exercised and it is necessary for some record to exist of whom the land belonged to and at what period of time, I have come up with the following system. The historical archives may be held privately by libraries*. This is appropriate, as the government may not be able to, in a Capitalist system, finance maintenance of such archives. Current information on who owns the land now is directly accessible to the government, in form of trade agreements between individuals.

The government’s function is to uphold individual rights. Therefore, they must be able to protect the property of the individual, should the need arise.

To start somewhere, let’s say that a certain patch of land is not privately owned. The government can issue a land deed on this patch of land. They cannot sell the land, however, as land is not a man-made product. The metaphysically given cannot be sold. They can, however, set the terms on which they are willing to issue this land deed. For example, they may request of the potential owner to build a farm there, to build a recreational center, or whatever else they wish. As long as the deed is not issued, this patch of land is not owned. This means that it is open for everyone.

Creating a man-made value, such as growing crops for example, on an unowned land is allowed if the land deed to this land does not exist. If it exists, it is also allowed, but it is a risk to create value there, as the deed could be issued at which point the land becomes privately owned. Should there be no deed for a patch of land, but there is man-made value created on it, the land should then be owned by whoever created this value. Thus, the government cannot issue a deed for the land, if someone already lives there, or has created some other value upon it, except if it is given to the man who created this value.

If the deed has been created, but it wasn’t issued within 6 months from its creation, it must be destroyed. This is due to the fact that the government may set unrealistic terms under which they will issue the deed. Also, if the deed was issued and within the time predicted by government’s terms no value was created on the land, the deed must be revoked by the government and issued to another owner. The previous owner can then be penalized according to the terms which were set at the time when the deed was issued to him. The government can, but doesn’t have to, also issue deeds without obligating the future owner to create value there.

A land with the potential – what do you want to do with it? Use it for farming purposes? Build a road; a home; an airport; a skyscraper? Under Laissez-Faire Capitalism, all of these – and much more – are your options. Image from Agriculture and Agri-Food Canada.

Any individual may seek from the government to be given the deed for a certain patch of unowned land where no value has been created by others. In such case he may already have created value on this land, or plans to, which is why he sets the terms of what the land will be used for.

Only one land deed can exist for a certain patch of land. Should forgery of the deed occur, historical archives should be consulted, as well as the government records of when a land deed was created and first issued.

Once the land is privately owned, it is someone’s property. It means that, unless there were prior arrangements with the government, the owner may sell it or utilize it in some way. The owner of the land may, without intrusion of the government, build anything he wants within the boundaries of his patch of land. Government regulation of “private” property under Capitalism is a no-no, for it undermines the principles on which Capitalism rests, and these principles are individual rights.

Another thing which is possible is that one person owns two adjacent patches of land. In this case he may treat them as one single patch, and freely build a single structure that spans throughout both of them.

Selling the deed, and thus the land, should always be done with a contract. The contract must state who sells the land and to whom it is sold. Every contract in a Capitalist system is protected by the government. Should issues arise between the two parties, they will then be settled in court. Another thing that the contract must state is what is being sold. Certain value may have been created on the land, so the contract will state whether this value too will be sold and which part of it. A copy of the contract should be sent to the government, which will later pass it on into the historical archives.

What is important to note here is that the government under Capitalism isn’t a nuisance you have to pay to get rid of, thus in effect destroying value, but instead is the perpetrator of the creation of value. They have no power to damage any one individual in any way. Their job is protection, and initially, the distribution of unowned land – but only to the individuals who are willing to create value there. The government will not force you to gather consents, and you do not have to seek permits to build. Building irresponsibly under Capitalism is dealt with in another fashion, not through regulation.

* So it was conceived at the time of writing. Not really the happiest solution, as there may be no privately owned libraries which would want to hold such archives. Better is that such archives are held by the government.

Land Ownership as it is

Croatian government tells its citizens who wish to build on their own land how many stories they may build, how large a building has to be, and many other details concerning the design of the building itself. These requirements drastically increase the cost of construction and maintenance, so it wouldn’t surprise me if people started living in shacks such as this in order to cut costs. Image from this site.

One of the most horrible things that could happen to you in Croatia is that you buy land from someone and then it turns out not to be his. This, however, need not happen through intentional fraud, but because the local government office doesn’t have the papers describing the history of who owned the land some hundred years ago, to whom it was passed on or sold, and who owns it now. In other words, government has made criminals of other people, and if you want to keep their paperwork up-to-date, be prepared to spend more cash. Very often, doing their paperwork costs you more than the land you bought.

Another atrocity you must endure when owning land in Croatia is that all you can do there legally is mow the grass. If you want to build something there, you must be prepared to spend additional $10000 at least. Moreover, you will run into lazy bureaucrats who won’t move a finger to do anything unless they see more cash (read: unless they are bribed). However, getting them off your back is least of your worries; that is if you carry a suitcase filled with cash. What you then need are consents from various companies, like Gas Company, Phone Company, power and water distributing companies. Apparently you need these because it would be most unfortunate for you if one of these refused to give you their services once you’ve built your home. It indeed would be most unfortunate, but who in the world builds a home or any kind of bigger building without making the necessary preparations by himself? The thing I want to point out here is that you are committing a crime if you start building before you have these papers, and you will be fined as the local government office sees fit. Most likely, they’ll tear down whatever you built.

The most ridiculous thing you need to do before you start building, however, is gathering consents of your neighbors. Yes, you must go to their houses, knock on their doors and ask them “Could you please allow me to build a house next to you, on my own land?”

Trying to build a home in Croatia feels like throwing your money away, as you waste most of it moving the bureaucrats out of your way. Image from this site.

Interestingly, you can collect all of these consents only after your house has been designed by an architect, so if you don’t get them, you’ve wasted your money on an architect. You could try buying land someplace else and use the same project, but if you’re an architect, or if you have at least read The Fountainhead, you will know that this is impossible without making some changes to the design or spatial plan, or both, in which case you will need to spend additional money on an architect.

Even when you’ve collected all these papers, the story with government regulation isn’t over. Law in my country dictates that you must leave 4 meters of space from the bounds of your land, 5 if building next to the road. Furthermore, you can’t build skyscrapers. Well, you can technically, but a skyscraper in our country is a 20 story building, which is utter nonsense. If you want to build something else afterwards on the same patch of land, you must go through the entire process of getting a permit all over again.

What makes things worst of all is that bureaucrats who work in government offices are often corrupted, lazy, and one of the following is true: either they don’t know their job, or they intentionally send you for the necessary documents one by one. They will never tell you what the entire process of getting a permit looks like, or what it should look like when in accordance with law, but instead they give you bits and pieces and see if you can put them together. They are a nuisance and they cost you money, as it is the taxpayers who earn them salaries, not their clients.

In other words, building something in Croatia is a horror story you don’t want to find yourself in the middle of. My advice is for you to stay away. Companies have already gone bankrupt because of negligence of bureaucrats working in local government offices, and honestly, the only way you can currently achieve some end is by bribing them.