by Caleb Nelson
Suppose you own and run a small market. One night, a robber comes in with a gun and demands all the money from your cash register. You comply in order to save your own life. The robber then asks if there is any more money anywhere in the store. You know you keep a safe hidden in the back with much of your savings in it. You have no reason to believe that the robber knows anything about it. What do you do? Will you bow to your commitment to honesty and inform the robber of the additional cash reserve? Wouldn’t it be considered moral to tell the truth like that? If you were an altruist, would you not have to consider his needs and wants above your own?
What if, instead, you lie to the robber, telling him that you have no more money? Is it immoral to lie like that, knowing that statement is untrue?
How do you decide if lying is moral in this situation? A look at your hierarchy of values will help to determine the answer. Which is your highest value, to be honest, or to have a happy life? If your life is your highest value, you will need to have many other lesser values that will support, and help you to enjoy it to its fullest. Such values include reason, self-esteem, friendship, as well as honesty. All these lesser values are subordinate to the highest value of your happy life; they exist to serve and achieve it.
What if you reverse those values and place honesty as the highest one? You could tell the robber about the safe and thus live according to your value hierarchy, but what will the result be? You will be broke and probably not very happy. We choose to be honest because it helps us achieve our overarching goal of a happy life. We do not live for the purpose of being honest. To do so would be to place the cart before the horse.
In this case, lying to the robber is an action that rationally supports both your life and your central major purpose. You sacrifice the lower value of honesty in order to uphold and protect the higher values of your life and livelihood. This must be considered a rational and moral decision. On the other hand, if you chose to sacrifice your savings and future productivity, your progress in your career, and much of your means to support your own life, in preference for the lower virtue of honesty, that could be considered an immoral and irrationally self-destructive decision.
Remember, the art of living morally consists of learning to never sacrifice your higher, life-serving values in favor of any lower values. Rationality consists in learning how to accomplish this in your life with consistency and without contradiction.
Philosophy is important because it guides the way we live. It teaches us what to value, how to interact with the world and people around us, and what goals to seek. It is vital to do our best to live our lives without contradiction.
In matters of truth, there is no room for ego. One thing most lacking in the world is intellectual humility. By humility we do not mean capitulation and uncertainty, only commitment to truth at the expense of conceit. It is a very rare thing to find someone willing to admit that they don’t know something, or that their opinions have not been thought out, or that they have never bothered to question their beliefs. Most people feel threatened by questions to their belief structure because their sense of self, and self-worth, is tied to those beliefs. It takes emotional stability to be able to admit you were wrong, or don’t know something. A person’s ability to recognize and accept truth is most often tied to their level of emotional maturity. (See Appendix A for more on teaching others.)
Because there are no contradictions, and because truth does not change, neither do the demands of our lives, nor the actions we must take to further our lives. This means that there will never be a time or circumstance in which we will need to give up a greater value for a lesser one (i.e. choose evil). There is no such thing as a necessary evil or a justification for taking an immoral action. This is true in every decision we will ever make as long as we are freely using our uncoerced agency.
Review
Q1: What is money? How is that different than currency?
Q2: What does it mean to be wealthy, happy, and prosperous?
Q3: How does exchange create wealth?
Q4: What is Human Life Value and how does it create property value?
Q5: How does our perspective determine our actions?
Q6: How is money earned?
Q7: What does profit validate?
Q8: Why should productivity be the standard of your actions?
Q9: How can you use a Hierarchy of Values in your life?
Q10: What is your central major purpose?
Q11: Contrast victim and steward, freedom and security, producer and consumer.
Q12: Explain the theories of value.
Chapter 12: The Attack on Capitalism
“The United States cannot claim to be exempt from manifestations of economic slavery, of grinding the faces of the poor, of exploitation of the weak, of unfair distribution of wealth, of unjust monopoly . . . and of a preference of the material over the spiritual.”
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Why do we need to discuss and answer attacks against capitalism? Because widespread attacks on the liberty of the individual and the rights of man are escalating. To overcome an opponent, we must first understand what they are saying, and that means being able to articulate the position of the opponent so clearly that they agree with us, saying, “Yes, that’s what I believe!” To stand for something, we must also understand its opposite.
We may be sold on the concept of capitalism, but soon we will be confronted with difficult questions, “What about depressions, monopolies, child labor, corporate welfare, and the elderly?” To be effective, we must have the answers, especially since there are many who would agree with the moral idea of capitalism, but mistakenly think that morality and practicality are somehow disconnected.
The entire political philosophy of capitalism is built on observable facts and the observable requirements of life. It doesn’t depend on anything invisible or unprovable. It has a foundation rooted in the bedrock of existence, and brick by brick, each proposition is rationally built on the preceding principle.
Before we dive into critiques of capitalism, let’s review briefly what we have already learned about it. It has been demonstrated that existence exists, and that the only way to gain knowledge is by integrating your perceptual information through reason.
The moral purpose of your life is to be happy and is achieved by pursuing your rational self-interest.
To do this, you must be able to follow your own judgment and to keep and dispose of the property you create and acquire.
To enjoy your life, liberty, and property you must be kept free from the forceful interference of others.
To best be kept free from the force of others, there must be an objective government whose sole job is the protection of rights.
This government must hold a monopoly on the use of retaliatory force, only acting to protect individual rights of those within its borders.
With its scope thus defined, government will have no dealings in the economy except to prosecute any initiation of force and violation of contract.
In such a system, all citizens are free to buy and sell whatever and with whomever they want so long as they do not deceive or coerce. They are free to try, fail, buy, sell, and to accomplish and earn as much or as little as their desire and capability allows. This is capitalism—unfettered freedom to rationally pursue your own life.
MORAL vs. PRACTICAL
One of the lies about capitalism is that it works in principle but not in practice. This contradiction is called the moral/practical dichotomy. It is a false pairing of alleged opposites.
To call something practical you must first define what it is you wish to practice.
Since the proper standard of value is man’s life, then to be considered practical an act must be objectively seen to further and protect that life. That which is objectively moral is always practical. Since the definition of morality is that the “good” is that which is proper to human life (i.e. for its existence and happi
ness), then, by definition, that which is moral must be practical in furthering that life.
Some people might see the morality vs. practicality argument another way. They may see that the theory is sound but they think the majority will not accept or comply with it. They are letting morality be held hostage by circumstance. They are saying that they will not try to do the right thing because not everyone will accept it. This line of thinking is dangerously close to the logical fallacy “Appeal to Consequences”—rejecting the moral premise because the consequences may not be desirable. Letting the projected consequences determine what you do and believe means you don’t have integrity. As comedian Jon Stewart put it, “If you don’t stick to your values when they’re being tested, they’re not values—they’re hobbies. You know, one of the genius moves of The Founders was not writing The Bill of Rights on the back window of a dusty van.”
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The Founders pledged their sacred honor and their lives for the truth, and many of them paid a steep price for their beliefs. If people never fight for their values when the odds are against them, then our world is truly doomed.
Recall how Pragmatism denies the existence of truth, but only focuses on what seems most effective at the moment. Those who claim to be “pragmatic,” even without knowing about the philosophy of Pragmatism, share its fatal flaw of short-term thinking. Pragmatists do not see the big picture and generally accept the options before them at face value. They fail to consider alternatives. One common example is Presidential elections. Many Republicans do not like the Republican candidate very much (e.g. John McCain), but vote for him anyway because “he’s better than a Democrat.” This is an example of the long term blindness of Pragmatism, as well as the weakness of Sensors (see Chapter 1) who only focus on concrete facts in the present.
· They know they don’t want a Democrat in office.
· They know they don’t agree with the Republican either.
· They know the third-party candidate who most closely represents their values might have little chance of winning.
· They feel if they vote their conscience, they may end up with the Democrat.
Therefore, they make their choice based on the likely effects rather than on their values.
This scenario played out in the 1992 election that brought Bill Clinton into office. Many Republicans were livid that Ross Perot split the vote, citing that if Perot voters had chosen George Bush, we could have avoided Clinton. What the Republicans fail to consider is the long-term consequence of continually backing someone who doesn’t share your values. As we have shown, despite any apparent differences, Republicans and Democrats both share the same belief in statism which denies individual rights. Year after year, we vote for the ideology of statism, and the assault on our rights has advanced. In the battle for our liberties, it doesn’t matter whether a Republican or Democrat is in the White House—either way our rights continue to be eroded. Those accustomed to voting for the lesser of two evils will soon learn that the difference between the two has lost all meaning.
There is a story told of men cutting down trees. Some of the lumberjacks noticed that one man was often sitting down, not cutting any lumber, but instead sharpening his saw. They scoffed at this seeming waste of time, only thinking of all the work he was not getting done while he sharpened his saw. But at the end of the day, the man was able to cut down more trees than the other lumberjacks who worked steadily with their dull tools. To the casual observer, sharpening the saw looked like a step backwards. Yet moving forward relied on it. When it comes to elections, Conservatives have been furiously sawing without taking a break. The once sharp teeth have become dull and useless. The teeth are now no more than rounded, ineffectual nubs. Though the nubs are doing nothing, they still seem better than using the back of the blade. One may be marginally better than the other, but in the end, it is not enough and will make no difference to our lost freedom.
Some Pragmatists are willing to sell out principles for the illusion of safety. For example, Conservative parents want to reduce the risk to their children as much as possible, so they support laws that make drugs illegal. They will support these laws even though they deny the right to liberty. On the other hand, Liberal parents want to reduce the risk to their children as much as possible, so they support laws that make guns illegal. What is the difference? There is no difference. Both ideologies throw rights under the bus because of Pragmatic concerns which destroy safety and liberty for the fleeting promise of security.
Doing the right thing sometimes requires hardships in the present. Doing the right thing might not produce immediate results. Doing the right thing might mean uncertainty, danger, or less than satisfactory living circumstances for a time. Doing the right thing means thinking about long-term consequences and not holding values hostage to momentary concerns. Doing the right thing may mean splitting the vote until enough people are fed up with two horrible choices to do something truly different. The Founding Fathers chose to suffer in the present for the hope of a better future, are we willing to do the same?
TRADITIONAL ATTACKS ON CAPITALISM
Almost all attacks on capitalism are straw-men—they misconstrue essential meanings, ascribe a characteristic which capitalism does not possess, and then attack the misconception.
Ironically, almost every attack on capitalism made by a statist actually amounts to an attack on statism itself!
Most attacks are usually not made against pure capitalism but its mongrel statist hybrid—the mixed economy. America and every other semi-free nation on earth have mixed economies in varying degrees.
Most of the alleged evils of capitalism are actually the results of statism. Historian Leonard Peikoff examined some of these alleged evils and identified their actual statist causes:
ECONOMIC DEPRESSIONS
A depression is a sustained downturn in economic activity across a large geographic area.
The only way a financial system can become unsound and cause a depression is through overextension of credit and paper currency. The only thing able to cause this would be an agency with nationwide power. The only agency with nationwide power to affect currency is the government—specifically, through the Federal Reserve system. This is done principally by manipulating the money supply. Lending money too easily or cheaply gives incentive to spend irresponsibly. The suspension of cause and effect (dollars follow value; failure follows non-value) makes possible market bubbles and quickly collapsing business sectors. But often a normal market fluctuation will persist even longer because of tax policy, fear of more tax policy, fear of government intervention, and actual government intervention.
Also thrown in is the fact that incentives of character have been removed with the introduction of the “I’m-property-of-the-state” victim mentality.
One common Progressive/statist response is to decry all economic problems as the results of too much freedom, and look to regulations and controls for the solutions. It has been one of the primary methods used by statists to destroy capitalism: establish controls that make businesses unable to solve their problems, and then cry that freedom has failed and stronger controls are required. It is also a deeply entrenched part of human history that we tend to seek more power over others, rather than relinquish it.
Isabel Paterson examined the history of depressions and recessions in America before the 1930’s. She observed that during several heavy depressions in America, the government did practically nothing. “There was rock-bottom poverty, men tramping the country looking for work, and living on handouts or soup-kitchens. But prices of commodities were so low, being allowed to go down as far as they would, that very little money sufficed for subsistence. When the credit collapse had been liquidated, recovery was so rapid that the change seemed fabulous in retrospect.”
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Such rapid recoveries do not exist when government rides to the rescue and tries to keep prices from falling naturally.
Here is a chart showing the annual inflation
rate of the U.S. marked with historical events and banking panics.
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As you can see, for about 150 years, the inflation rates changed dramatically and often quickly, and there were several banking panics spanning the years. However, this self-correction of the market kept consumer prices relatively stable during this time. From the Revolutionary War up until the Federal Reserve System was established in 1913, prices rose sometimes and then fell back to original rates. Many things cost the same 1776 as they did in 1900! However, once the Fed started manipulating interest rates and inflation, and especially when the U.S. partially and then completely dropped the gold standard, they never let the prices correct themselves to lower levels. Each year, things cost more than they did before. We will discuss more about the gold standard and consumer prices later in this chapter.
CHILD LABOR
What is needed to raise the standard of living across a broad range of people? Not laws or redistribution of wealth, but production. Before people can consume anything, it must be produced. For much of history, nothing could be produced beyond a bare subsistence.
Mercantilism helped amass large quantities of capital, and the Enlightenment helped free people somewhat politically and economically. What resulted? The heavy machines of the Industrial Revolution. Such increased production with its divisions of labor made many of the modes of production from the Middle Ages obsolete. This increase in production also helped increase population exponentially, as well as the overall standard of living since more goods were available that were cheaper to produce and thus cheaper to buy.