The evidence that personal freedom and free markets lead to most prosperity and human flourishing is undeniable. Everywhere you look today and in history, the freest countries are and have been the most prosperous, making flourishing for their people possible. Singapore, Switzerland, Ireland, Luxembourg, Estonia (since being liberated from the Soviet oppression), America (especially in the 19th and early 20th centuries), and England after the Industrial Revolution make a striking contrast to the autocratic regimes from North Korea to Cuba to Mao’s China and various African dictatorships where people starve or live in utter poverty.
Despite elements of capitalism in the freest countries, none of them have achieved full, laissez-faire capitalism where all property is privately owned and the government’s only role is to protect individual rights. Why?
Voters generally prefer a mixed economy that combines elements of capitalism and the socialist welfare state because they don’t like the inequality of capitalism. (Autocrats prefer socialism for the state ownership of property and the opportunities for kleptocracy it provides). Indeed, prosperity in capitalism is unequal: the most productive get rewarded the most. But this is not a flaw but a benefit because everybody prospers more in capitalism than in any other system.
The fundamental reason for not having full capitalism is its conflict with the prevailing moral code, altruism, that motivates voters’ preferences. Altruism imposes a duty to place others’ interests first and sacrifice our own, whereas capitalism protects freedom to pursue self-interest and trade voluntarily with others. Since altruism is widely considered the only (acceptable) moral code, many people are adverse to acknowledging self-interest as moral (as manifested, for example, in my discussions with business students over many years of teaching).
But altruism is an anti-life morality that – if followed consistently as a moral code – makes everyone a loser. Those who sacrifice their own life and interests lose, but so do the recipients of sacrifice who claim greater needs and a “have-not” status to receive benefits paid by the more productive, the “haves.” The recipients of sacrifice become dependents without a productive purpose and eventually exhaust the producers who become “have-nots” themselves unless they escape. Witness the flight of producers from the more oppressive welfare states to freer countries, or the equal misery of everybody (save the ruling elites and their proteges) in autocracies.
Capitalism is a social system that makes everyone a winner – capitalists, workers, and consumers alike, because it is based on the recognition of the primary requirement of a successful human life: the use of reason for survival and flourishing.
Capitalism incentivizes using reason and creates the conditions that make it possible. The government under capitalism protects everyone’s freedom to think and act against those who initiate physical force, whether common criminals, terrorists or foreign invaders and retaliates on your behalf. The only means to deal with others capitalism permits is persuasion. If others don’t want to help or trade with you, coercion is not an option. You need to seek out others that do. There are no duties in capitalism except the obligation to respect the equal freedom of others and abstain from using physical force.
Altruism and capitalism are inherently in conflict because altruism curtails freedom and enslaves individuals to serve others and sacrifice their own interests. According to prominent altruist philosophers, such as John Stuart Mill and Peter Singer, we must cut spending on personal enjoyment and dedicate the savings to helping others, until we have only the basic necessities to keep on giving.
Why is altruism the dominant moral code, despite being anti-self-interest? Regardless professions of altruism, most of us don’t engage in self-sacrifice – if we did, we could not survive and flourish – but pursue our interests and happiness daily. We work to have a productive purpose and to support ourselves and our families; we buy food, shelter, clothing, and other goods; we look after our health; we engage in social relationships. We do all this, not to maintain ourselves for the purpose of self-sacrifice but to survive, thrive, and enjoy life.
Yet, many embrace altruism as the unquestioned moral code, because that is what we have been taught, thanks to religion and philosophy that have shaped today’s culture. In this teaching, whether at home, church, or school, altruism is often camouflaged as generosity, kindness, and benevolence that facilitate harmonious co-existence. This is more palatable than the explicit duty to self-sacrifice for the “common good” that altruism actually prescribes. Self-sacrifice is required in socialism and the mixed economy where the needs of the “have-nots” are met through the productive efforts of the “haves.” Taxes and other private property confiscations are not voluntary or optional.
To achieve capitalism, we need a different moral code that aligns with the human requirements of reason and freedom from physical force. That code is rational self-interest, or egoism, whose moral guidance is based on the recognition of these factual requirements. Egoism was developed by Ayn Rand on the Aristotelean foundation, as part of her philosophy of Objectivism that she called “a philosophy for living on earth.” It entails living in harmony with others, dealing with them by voluntary consent only as traders of values for mutual benefit – which no other social system but capitalism sanctions and protects.
We will not achieve capitalism unless or until we accept and embrace the fact-based, pro-human-life morality of egoism. Therein lies the challenge, given the millennia of religious and philosophic teaching and continued cultural dominance of altruism. But the factual requirements of human life and happiness are aligned with egoism and capitalism, which is observable to all who want to see it and think for themselves.