The Philosophy of Freedom

by Caleb Nelson

“That’s highway robbery!”

  If you’ve ever heard or said any of the above sentiments, you’ve experienced a pretty slippery mental mistake that many good people get caught up in.

  To be greedy is usually defined as being “excessively desirous of acquiring or possessing, especially wishing to possess more than what one needs or deserves.”

  [306]

  Are there any problems in that definition? Let’s start with the word “needs.” According to whom? Who gets to decide how much another person needs, deserves, utilizes, or wants? Who gets to dictate what values another chooses to pursue?

  It would be a better definition to say that greed is placing more value on objects than people. Greed is the violation of the principle that People are Assets, and is entirely different from the concept of rational self-interest discussed in the first chapters.

  What about the claim that it is immoral to be affluent? Why? There is no clear answer given. Did money corrupt a moral man, or did an immoral man corrupt his money? Money is a neutral idea and currency is an inert object; they are neither good nor bad. The only effect money has is to magnify and make more obvious the qualities its owner already possess. Money earned honestly is a product of virtue, achieved by trading your best for the best others have to offer. Dollars are the result of value offered to the world. Profits are the result of producing more than you consume. These are all important concepts when examining morality.

  ATTACK #3

  Capitalistic Greed Causes Inflation

  vs.

  The Gold Standard (or any limit on an increase in money supply) Leads to Inadequate Credit and Money

  “Inflation is a symptom of the terminal stage of that social disease which is a mixed economy.”

  [307] - Ayn Rand

  INFLATION

  See Chapter 9. The expansion of fiat money, unmoored to any actual value in the marketplace (not even the reputation of a private bank), is the direct and only cause of inflation. Fiat currency derives its value from mandate rather than from a physical commodity. Inflation has a direct correlation to the degree of statism in a nation.

  It would require an entire book to explain and evaluate the harm done to our monetary system by the Federal Reserve System that was instituted in 1913 by the Wilson Administration under the influence of powerful banking magnates. Use the basics here as a starting point for further research. The chart on the next page shows the inflation history of the U.S. set against a line showing the price of goods. As you can see, while inflation was very volatile before the creation of the Federal Reserve, prices remained fairly stable. Consistent inflation since after the early 20th century has caused prices to skyrocket. Capitalism didn’t cause this.

  If the correlation seems fishy, you are on to something. Then again, annual inflation rate is one thing—that only compares it to the previous year. The cumulative inflation rate from 1913 to 2014 is 2307.5%! That’s right, what only cost your grandparents $100 now costs you $2,407.

  [308] Write a thank you letter to the Treasury Secretary and the Federal Reserve Chair if that thought makes you feel warm and fuzzy.

  A stated goal of the Fed is to keep inflation in place. Purportedly, this is to prop up employment, debtors, and the speed of buying and selling. They fear people will stop buying things and start saving money if it starts gaining in value. For some reason, they consider that a bad thing.

  THE GOLD STANDARD

  It is absurd to claim that to have money backed by an objective standard of value, such as gold or silver, leads to an inadequate supply of money or credit. For a few centuries from the early 1700’s, money often increased in value, and prices often deflated. This was accompanied by the boom of the Industrial Revolution. This is why Benjamin Franklin’s adage that “A penny saved is a penny earned” made sense literally. As people saved their money, they actually saw it increase in value—in purchasing power. Credit didn’t dry up because people could actually do more with less currency. Today, inflation discourages savings because no one wants to sit on a pile of paper that will become worth less the longer it is held.

  [309]

  The return to the gold standard isn’t the only way to fix the problem. While gold has historically held its value, it is mostly only valued for its scarcity. In a famine, a gold bar is worthless compared to a loaf of bread. Gold only really has value because we decide it does because of its unique and objective properties and uses. In the same way, using only paper for currency is perfectly fine so long as it is universally accepted as the medium of trade and it cannot be arbitrarily printed. In other words, with a set limit on how much currency a government or bank can manufacture (ideally, only to replace old bills and coins), artificially-caused inflation would stall dramatically. Even with the severe challenges facing the future of America, merely passing a Balanced Currency Amendment would do an incredible amount of good in stabilizing and strengthening the economy.

  As you can see from the previous chart, prices remained relatively stable until the early 20th century. A penny saved was a penny earned. Today, a penny saved is most of a penny lost. This is part of why your house, your car, your education, your health care, and your groceries all cost so much.

  ATTACK #4

  Capitalism is Militaristic Imperialism

  vs.

  A Draft is Necessary Because No One Would Fight Even a War of Self-defense in a Free Society

  IMPERIALISM

  Is capitalism about imperialistic warmongering—sending innocent soldiers against their will to conquer foreign countries and expand its sphere of exploitation? Or is conscription necessary in a free market because no one will want to go to war even to defend their own country and lives?

  This slight against capitalism, first made popular by Lenin, relies on evasion. Neither “capitalism” nor “imperialism” is ever adequately defined by those who use this attack—that is the point. “Imperialism” sounds bad. Its use is meant to imply all the evils of an expansionist, fascist Hitler or Napoleon and seeks to equate it with “a system of private property and free exchange.” If we can be made to blank-out, to give up the process of conceptualizing, then we can be made to accept that somehow capitalism is bad because imperialism is bad.

  Lenin attempted to explain it this way: The root of capitalism is free competition. This leads to higher and higher stages of production and wealth. (True enough. Then what?) This, he said, eventually leads to the “highest” stage of capitalism—imperialism, or monopoly capitalism. Capitalist powers then seek to annex other territories, “striving for violence and reaction.”

  [310]

  This assertion is the justification for all Communist aggression in the twentieth century: defense. In order to protect territories from capitalist imperialism and “exploitation,” Communists engaged in war after war of “defense” (i.e. invade a territory to “protect” it from capitalist aggression). Observe the following official statements from the Communist Party of America:

  “In the capitalist world today, the revolutionary proletariat supports the war of defense of the proletarian state (the U.S.S.R.) against the imperialist states.”

  “Every war of the Soviet Union is a war of defense, even if it is conducted with offensive means.”

  [311]

  Lenin defined capitalism as competition and monopoly, attempting to explain this contradiction by claiming that competition is an early stage, and that monopoly/imperialism is a later stage of capitalism. However, Lenin doesn’t understand the law of identity—a thing is what it is. If capitalism is free exchange and competition, as he admits, then also defining it as forced exchange and exploitative control is not capitalism. What he describes must, out of necessity of having different essential characteristics, be defined as something else (e.g. fascism, mixed economy, corruption, coercive monopoly, etc.). A ≠ B.

  CONSCRIPTION—THE MILITARY DRAFT

  Of all the violations of rights put forth by a statist government, the draft is one of the worst. It is a bla
tant violation of the right to life, and an explicit declaration of the statist doctrine that man’s life belongs to the state and may be claimed at any time by sending him into battle.

  The draft is unconstitutional and falls under the category “involuntary servitude.” The only proper and moral solution to national defense is an all-volunteer army (which doesn’t necessarily mean “unpaid”). Would a man volunteer to fight if his country was attacked? Yes, if he values his life; and no semi-free country has ever lacked for volunteers to defend against a hostile invader. Many military personnel would also claim that a volunteer army is the most effective, and a drafted one the least effective (read Band of Brothers by Stephen Ambrose).

  What if a country lacked a sufficient number of volunteers? This still would not justify a claim to the lives of those who don’t volunteer. There are a few reasons that men may refuse to fight: (1) they might be demoralized by a corrupt and authoritarian government and refuse to defend it; (2) their country is fighting for some reason other than self-defense and they don’t understand it; (3) they might be disabled or afraid; and (4) they might be traitors, sympathizing with the enemy. Thus, a volunteer army is the best defense against both foreign aggression and the warlike ideologies of the army’s own government. Men will defend their country in just conflicts where their freedom is clearly at risk; not many volunteer for aimless self-sacrificial and undeclared wars such as in Vietnam and Korea.

  ATTACK #5

  Capitalism is Fine for a Genius but What About the Regular Guy?

  (The Business Owner Makes More than the Hired Man).

  vs.

  Capitalism is Fine for the Common Man but What About the Genius?

  (The Sports Star Makes More than the Scientist or Teacher.)

  Remember that Dollars Follow Value. Under a system which protects individual rights, everyone is free to produce as much as they are able, and pursue values to the best of their abilities. This, in turn, lets each man live according to his own judgment and reap the rewards that he is able. A single principle determines his profits: the voluntary consent of those who are willing to trade with him in return (which is the moral meaning of the law of supply and demand).

  Many people like to complain about the messed up world we live in where someone who dribbles a basketball makes millions while the noble martyr, the school teacher or scientist, lives below the poverty level. Before we quickly nod our heads and agree, let’s examine the sentiment.

  If this really is as immoral as they claim then the first question we should ask is, “Is there any force involved?” Are people required to watch basketball? No. People willingly watch the sport in massive numbers because they want to. The professional basketball player makes his money by doing something that people value. Dollars follow value; this means that people will spend money on what they value, and other people will pay to advertise to those people. The number of people who love basketball and the degree they value those players’ skills puts those players in such demand that owners can afford to pay them millions of dollars a year. Good for them! That’s a lot of value being created. Another thing to keep in mind is that there are millions of teachers and only hundreds of NBA players. Workforce wages are subject to supply and demand as well.

  As for teachers, they are paid as much as they are valued. But by whom? Public school teachers’ value isn’t determined by the free market like the salaries of sports stars. Their value is determined in part by votes and politicians and taxation and unions. If there is anything to be upset about, it’s that they don’t work on the same playing field as other professions. They are kept from receiving the wage which the market would determine. Keep in mind that the “market” is the aggregate desire of the people involved in trading. There are many people out there willing to pay a lot of money to someone to provide a quality education to their children. There would be even more people wanting to do that if they weren’t also forced to subsidize a school that their children were not attending. There is a very high demand for private schools and even charter schools. Great mentors are able to receive high remuneration for training and teaching.

  Whether or not you think people are valuing the right things is irrelevant. Everyone is free to love and value what they want, even if it’s not good for them or if there are better options they could choose. We are not responsible for the values of others, nor should we try to force others to value the same things or professions we do.

  ATTACK #6

  Capitalism is Impractical in the Complex Modern World

  vs.

  Capitalism is Impractical in Undeveloped Countries;

  They are not Advanced Enough for Freedom

  One argument is that capitalism and a free economy were all well and good in older times when things weren’t as fast and complex and widespread as they are today. “Freedom was fine when things were simple,” many say, “but today we need a more pragmatic and flexible approach to dealing with economic issues.” We need some centralized planning and regulation to control and guide the “excesses” of freedom for everyone’s own protection. (The same argument is used for the abrogation of freedom because of military threats, e.g. freedom was fine when the enemy lined up in bright red coats.)

  On the contrary, it is impossible for government to foresee or control much of anything, and with the dismal approval numbers of Congress, one would wonder why anyone would entrust them with the country’s prosperity.

  Adam Smith explained the concept of the invisible hand of the market. When the combined forces of self-interest, competition, and supply/demand are left free to interact, the results are as if some “invisible hand” were guiding and directing resources to those who can put them to the best use and to those who need them most. Such perfection in the production and distribution of resources cannot be accomplished by any political leader or committee. The “hand” providing the guidance which brings such order and efficiency is no actual unseen power, but merely a result of combined decisions of people in an economy using their free judgment to pursue their self-interest. No one can run your life better than you.

  In the other argument, we are told that capitalism is only meant for advanced and stable countries—countries who have the infrastructure and expanding economy necessary to support and allow the private property and other economic freedoms essential to laissez-faire policies.

  In countries dealing with impoverishment and crime and more primitive conditions, we are told a more centralized planning is necessary in the early stages to lay a solid foundation that will allow for the future uncertainties of capitalism. The poor populace can’t be allowed to own and keep property because they may not use it in a way which supports the common good. Greedy risk-taking can’t be allowed early in a poor country’s development because a profit might be made.

  This argument is exactly wrong, but we have to discuss it because some people believe it. America’s major export should be the principles of capitalism which have allowed America to rise out of poverty and become the massive source of production that she is today. That would be the most charitable contribution this nation could make to any other. Freedom is the source and wellspring of six major revolutions in earth’s history that resulted in exponential increases in the quality of human life: the Industrial Revolution decreased the labor required to produce; the Machine Revolution made things abundant and cheap; the Transportation Revolution; the Communications Revolution; the Energy Resource Revolution; and the current Computer Revolution.

  [312] These advances were not the cause of the major civilization progress in the last two hundred years, they were the result of the recognition of individual rights.

  In 1848, the Frenchman Alexis de Tocqueville observed of America that, “For sixty years [they] have increased in opulence; and . . . it is found to have been . . . not only the most prosperous, but the most stable of all the nations of the earth,” and that “the principles on which the American constitutions rest, those principles of order, of the balance
of powers, of true liberty, of deep and sincere respect for right are indispensable to all republics.”

  [313]

  Thomas Jefferson wrote to one of his friends, “A just and solid republican government maintained here, will be a standing monument and example for the aim and imitation of the people of other countries; and I join with you in the hope and belief that . . . our revolution and its consequences, will ameliorate the condition of man over a great portion of the globe.”

  [314] It did, and very quickly, too. “The climate of free-market economics,” Skousen wrote,

  “. . . allowed science to thrive in an explosion of inventions and technical discoveries which . . . gave the world the gigantic new power resources of harnessed electricity, the internal combustion engine, jet propulsion, exotic space vehicles . . . .

  “The average length of life was doubled; the quality of life was tremendously enhanced. Homes, food, textiles, communications, transportation, central heating, central cooling, world travel, millions of books, a high literacy rate . . . surgical miracles, medical cures . . . .

  “Of course, all of this did not happen just in America, but it did flow out primarily from the swift current of freedom and prosperity which the American Founders turned loose into the spillways of human progress all over the world.

  “In 200 years, the human race had made a 5,000-year leap.”