Capitalism in a single line

You can get only what others give you willingly, and you can spend only what you have.

The keyword here is will. No one can force you to do anything. You do anything in a capitalist world solely for your own reasons, not for the demands of others, while keeping in mind that, if what you do is not productive, you won’t get anything out of it, and you cannot force others to sacrifice their time, energy or money for you, for free. The system emphasises a central fact: There is no free food. Someone always pays for it. In a capitalist system, you pay for your own food. There is no way for you to force anyone to feed you.

Ruling principle of the capitalist system is Justice. The market will judge your worth and compensates for your services accordingly. If a stupid employer won’t pay you enough for your worth, the intelligent one will hire you. Better judgement wins. If a stupid employer pays you more than your worth, he’ll waste his wealth, and loses his market share in the competition against his betters, who hired better people for the same cost. Again, better judgement wins.

To understand capitalism by contrast, take a look at the current alternate forms of statism, where the Government forces you to act for reasons which are not your own, forces you to pay for services that you do not want to use or endorse, forces you to hire incompetent people on the basis of their need and not their value to your purpose, forces you to discriminate on the basis of gender or economic status, and constantly infringes upon your right to act on the judgement of your own mind, which is a corollary of your right to your own life.

– Avinash Kumar, 19 July 2020.

Note: This article is originally my answer on Quora to the question: Can you explain capitalism in a single line?

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Alleged fulfilment of the American dream in the Nordic countries

The American dream was the ideal that any individual can make his fortune according to his ability, irrespective of his background or lineage, and keep it— by voluntarily dealing with other individuals, absent physical force and compulsion. The forefathers made sure that necessary conditions exist for the survival of a rational individual: the kind who can produce wealth, and keep it without the fear of being robbed or looted of it by others, especially the Government. They laid foundations for a nation to be built on the Principle of Individual Rights— a relatively new concept to grasp.

Individual rights are not entitlements. They are the principles safeguarding a man’s “freedom to take action” in a social setting: the freedom to pursue his own chosen course of action for the fulfilment of his own life without compulsion, freedom to produce and trade his own wealth on his own terms. Such conditions, especially the implicit right to free trade made it possible for the individuals to create unprecedented wealth, improved their living conditions drastically, and anyone who exercised his freedom to voluntarily produce and trade his products, benefitted tremendously, in proportion to his competence.

This was true until the late 19th century, when the Government still maintained a reasonable —but dangerously reducing distance — from the economy, primarily acting to protect the individual rights. It is no longer true today. America is not a capitalist country. It is a highly regulated mixed economy, like most other countries.

The existing conditions, projected as allegedly desirable aspects of Nordic Countries, are in fact, violations of the principle of individual rights. The government providing unearned income— no matter how high or low the amount provided might be— to non-productive individuals: at the expense of productive individuals, maintaining an “accessible” or “free” universal health care system: at the involuntary expense of individuals, including those who do not intend to use or pay for such a service, providing free and “high” quality education to all: at the involuntary expense of individuals, including those who do not intend to use or pay for it, attempting to fix the “gender gap”: when the employment of an individual ought to be a voluntarily made contract exclusively between two free individuals, are all violations of individual rights, by creating systems that institutionalise the involuntary sacrifice of an individual’s life(time, energy, efforts) for the benefit of others.

This is a from of moral cannibalism. It doesn’t matter if they arrive at such a system democratically. A man’s individual rights cannot be voted away through majority will in a society where individual rights are recognised. Unless of course, the meaning and the principle of individual rights is perverted —as it is being done today across the world—by changing it from “freedom to take voluntary actions—and bear the expenses” to “freedom to take the products of actions of others—and pass on the expenses to those who take productive actions.” A rational man would have no choice but to move out of a society which institutionalises injustice.

The Nordics who think that they happily agree with their existing heavy wealth redistribution system —and many think that many do—miss the point that agreement is never an issue in any society. It is the individual’s freedom to disagree with the collective, that requires protection. What choice does a rational man have in Nordic countries other than to leave his country?— A man who only cares to live within his means, neither sacrificing others to himself, nor sacrificing himself to others. Forcing a man to leave the society, not because of his vices, but for his virtues, is not the characteristic of a civilised society.

It has been recently said,—by the World Economic Forum — economists found that people withdraw from economic life if they perceive that opportunities and wages are “shared unfairly”.

The idea that economic opportunities ought to be “shared” fairly or unfairly, can only arise in a society where people accept that wealth earned by a man is not his own by right, and that he is bound by an obligation to spend it in ways prescribed by those who didn’t produce it. In a society where trade and government are completely separate —a Laissez Faire Capitalist society— a man who provides economic opportunities to those who do not deserve them, will lose his wealth in the market. The price for his wrong assessment of an individual’s worth, is paid from his own pocket. It is justice, and no rational man can have any problem with that.

People do not withdraw from economic life if they cannot get an economic opportunity for which they do not qualify according to an employer’s judgement. They are forced to do so, —as is happening across the world today— when it is made impossible for them to get an opportunity from any other employer, who would have employed them,—and they would have taken it—but didn’t, because of some democratically approved “progressive legislation” which forces the employer to pay his employees a wage which he cannot afford, forces him to hire and manage his employees on the basis of gender, and forces him out of existence—qua an employer— through taxation, for supporting the services which he would never otherwise intend to use, offered by those, who he would never voluntarily employ.

Government —as a force that is authorised to appropriate your products— can never solve economic problems. It is the source of all widespread economic problems that plague nations.

– Avinash Kumar, 16 June 2020.

Origin of Property Rights

The source of man’s right to property lies in his nature. Man’s supreme potential is the capacity to reason. That is, the capacity of his mind to perceive reality, to integrate and use concepts. Material exists in nature. But wealth doesn’t. It is created by man by the virtue of his productive thought process, and thinking is an independent activity. A group thought doesn’t exist. By exercising his capacity to think and act, man creates wealth by reorganising and reshaping the naturally available material.

Now the question arises, who decides the ownership of that “scarce” natural resource on which he has acted. Until and unless he has discovered the use of a particular material resource in nature for a specific productive activity, everyone else were oblivious to its presence. They have never recognised its value. The first man took it upon himself to invest his time and energy to shape it according to his independent vision.

The very activity of exercising the judgement of his mind and the effort he had put in the wealth production, morally makes the resource, on which he had acted, and the product he has created, his private property.

Any bum passing by, cannot claim the ownership of his product, assuming that the creator has created something at his expense. He didn’t create at the bum’s expense. The bum was sitting on his ass doing nothing(precisely why he is called a bum), all the while the creator was working on the material, producing something of value.

You are not entitled to something for doing nothing. You may not accept nor demand the unearned. This is the principle of  JUSTICE. 

The rational principle to decide the ownership of any untapped natural resource which is proved to be of value by the first man and thus created a demand for it (and pioneered an industry), is “first to produce is the first to own.” The proper function of the government in this respect is to act as a custodian(not owner) of the untapped resources available in nature, openly recognising and entitling the first discoverers of the industry to own the resources on which they have acted for creating their own wealth.

Now, the government as such cannot assume ownership of any resources in its capacity, since state ownership implies the ownership of the material resources by the collective, and that assumed collective ownership of resources will be held as a mortgage on the wealth producer to extort his property by the use of force. This usually happens by forced taxation, at the point of a gun. This precisely is the reason why any collectivist state will always assume ownership of the material resources.