Note: This is my entry for the “What is Capitalism?” essay contest on Ayn Rand Institute Campus. The essay prompt was: “Why does Ayn Rand argue that the moral justification of capitalism does not lie in the claim that it is the best way to achieve the ‘common good’?” The maximum length for the essay was a mere 800 words, so I had to heavily edit my original draft (already brief at just over 1,000 words.) For the longer version, without the heavy editing, click here.

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Ever since the Enlightenment, there have been many attempts to justify capitalism–or rather, a quasi-capitalist mixed economy—on the basis of its being the best way to achieve “the common good.”

But Ayn Rand justified capitalism on different grounds. She rejected “the common good” as an invalid, collectivist notion, and instead held that capitalism rests upon the principle of individual rights. This principle ultimately rests on the nature of man. Thus, the justification for capitalism as the proper governmental system for man starts with the nature of man as a living organism.

Living organisms must support their own lives by their own actions. Whether plant or animal, microbe or man. It is this self-sustaining, self-generated action of life that gives rise to values: the things that living organisms pursue to keep themselves alive. It is only in reference to the maintenance of an organism’s life, as the ultimate basis, that anything can be evaluated.

Thus, it is only in reference to the maintenance of human life that a human governmental system can ultimately be evaluated. But in order to evaluate the effectiveness of any governmental system in the promotion of human life, we need to know the fundamental means by which man survives.

Man’s mind, unlike other animals, operates conceptually and non-automatically. He has no instincts to guide him throughout his life.

Man cannot survive by simply adapting himself to his environment, but must adapt his environment to himself. He lacks the physical prowess of the other animals, but he can use his mind to make tools, shelter, clothing, to grow food and domesticate animals.
Man’s mind—his process of thinking—is his basic means of survival, and it must be performed independently by individuals.

So the fundamental unit of human life is the individual. If human beings are to live, rather than die—to flourish, rather than stagnate—they need to use their own minds to support their own lives.

In order to do this, they need to be free from the initiation of physical compulsion by others. Among chosen human actions, it is only physical force that can stop, paralyze, or nullify the thought of an individual. A man’s thought (and life) is stopped if he is killed; his thought is stopped if his brain is destroyed by a club; his thought is paralyzed if the government prohibits his ideas from being expressed; his thought is nullified to the extent that he is prevented from acting on his own judgment.

The principle required to objectively implement the non-initiation of force in a societal context is the principle of individual rights. A right is, in Ayn Rand’s words, “a moral principle defining and sanctioning a man’s freedom of action in a social context.” It is the rights to life, liberty and property that enable man to thrive in a society. This is because the enforcement of these rights protects man’s freedom of judgment and action in the pursuit of his own life. The protection of rights ensures that man has the free use of the fundamental tools of survival and happiness: his mind, his body and his property.
Under capitalism, the government only has three basic functions: to provide the police, the military and the courts. The only laws that the government enforces are those that help protect individual rights. The government does not provide welfare, health insurance, or retirement payments. Nor does it regulate business activity, (beyond protecting rights, prosecuting fraud and enforcing contracts.) Nor does it regulate interest rates, enforce an official currency, regulate rents.

Capitalism is a system designed to let those who produce valuable things benefit from their own production. They are as free to benefit from their own productivity as they would be on a large island by themselves. Capitalism is not designed to let some people force others to pay for their lifestyle. Capitalism, just like a deserted island, is not good for people who are determined to leech off of others, when they could be productive.

If the woozy notion of “the common good” is translated into “the good of everyone in the country, irrespective of his goals,” then capitalism does not promote the common good. It enables those whose goal is the maintenance and betterment of their own lives, to actually sustain and improve their own lives. In this process, capitalism enables people who are willing, to donate to charities for those who are genuinely unable to sustain themselves. The abundance of created wealth allows for larger donations, without self-sacrifice on the part of the donors.

Thus, capitalism, by enshrining and protecting individual rights, would provide great potential benefits to mankind. But it is only the portion of mankind that is (or would be) willing to use their minds and produce values that would actually benefit from the system.

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Related Posts:

How to Show That Taxation is Robbery

Wealth is Created by Action Based on Rational Thought

QuickPoint 1: Thinking is Individual

Why Healthcare in the US is So Expensive, and What Can Be Done About It

An Objectivist Refutation of Anarcho-Capitalism (Market Anarchy)