Ray Harvey

In a recent interview with CNN’s Piers Morgan, socialist documentarian Michael Moore — who, not coincidentally, made a socialist propaganda movie called Capitalism: A Love Story — revealed Monday (September 27th, 2011) what we all already knew: he has no understanding whatsoever of what capitalism really is.

The video clip won’t embed, but you can watch it here (and I suggest you do).

This is what Michael Moore said:

When you say the word capitalism, you have to talk about it in its current sense. You can’t told about the old days or the way maybe, you know, Adam Smith. The sort of old capitalism….

[In the] old days when you worked hard and prospered, everyone else prospered as well. And not only that, as you prospered, the wealth was shared with your employees, with the government. Everybody had a piece of the pie. You, who started the business or invented the light bulb or whatever, you got a bigger piece of the pie. And you know what, nobody cared because you invented the light bulb. That was a pretty cool thing….

None of the major religions, in fact they all, say it’s one of the worst sins you could commit, is to take such a large piece of the pie while others suffer.

Isn’t that heavy?

But the truth is, capitalism is the diametric opposite of what Michael Moore would have you believe.

What is capitalism?

Capitalism is a social system based upon private ownership of the means of production and the preeminence of the individual over the group.

This issue — capitalism-versus-socialism — hinges upon one thing, and this one thing is the only thing you’ll ever need to know about the subject: private ownership (capitalism) versus public or government ownership (socialism).

Do we each own ourselves and (corollarily) our property?

Or do others own us and our property?

Money is property.

Capitalism is an entire political theory — not, as is sometimes supposed, merely economic.

The exclusively economic component of capitalism can be described as the right to life, liberty, and property applied to commerce and industry.

Pure laissez-faire capitalism, which does not exist now and has never existed fully, means that government removes itself from all commerce (and that includes healthcare), in the same way that government removes itself from the bedroom.

In addition to early America, there is at least one other society that has come close to laissez faire capitalism:

“After the War Hong Kong had no minimum wage, low and simple taxes, zero tariffs, zero capital controls, and a stable legal environment. Postwar Hong Kong went as far with economic laissez faire as any other country in history. This resulted in economic development that benefited virtually all the people of Hong Kong. Living standards increased substantially even for the poorest people in Hong Kong” (Stefan Karlsson, “Inflation Leads to Protectionism,” 2004).

Capitalism means that commerce and industry are entirely privatized.

Corporations that receive government subsidies are not capitalistic. They’re the opposite: they’re mercantilistic.
The same is true of small businesses and farms that receive subsidies.

Trade tariffs are not capitalistic but mercantilistic.

Mercantilism is an ancient and more primitive form of socialism. It is socialism before Karl Marx.

Political theory is the theory of government, and government, properly defined, is the body politic that possesses rule over a certain specified geographic region.

Economics is the science of production and exchange, but production does not just mean agriculture, although that is certainly included.

Productive work is any kind of work geared toward the task of survival — survival in the fully human sense of the word, including, therefore, arts, sports, industry, and so on.

Thus the essential questions of government are these:

Do humans exist by right or by permission?

Are we free by nature?

If so, why?

Are we free to produce, exchange, and exist, or do politicians, elected or not, have authority and jurisdiction over the lives of us — to any degree?

Obviously, there’s only one sane answer to all these questions; for to say that humans do not exist by right is the same as saying humans only exist when someone permits us to. But if that were true, we must then ask: who permits? And why? And who gives these people permission?

Fundamentally, political freedom can be achieved only through recognizing each and every single individual’s right to life.

If, then, you believe that we are each individuated and sovereign, and if you believe that our lives are entirely our own and not the government’s and not another’s, if, in short, you believe “we each have a property in our person,” as John Locke said, then you believe in the inalienable right to life, liberty, and property.

You believe, therefore, in laissez-faire capitalism.


More here on the many permutations of socialism.

June 4th marks the twenty-two year anniversary of the Tiananmen Square massacre in Beijing, China. This was when the communist dictatorship of that country quashed a political reform movement, which was begun by Beijing students who sought to bring about more freedom.

The People’s Republic of China (PRC) ended these protests by force, which is the only way governments can ever resolve disputes of this sort, since government by definition is an agency of force.

When it was all over, the People’s Republic of China began arresting its people on a widespread scale.

They also went to great lengths to suppress protesters and other people of China who were supportive of the protesters’ cause.

The People’s Republic of China banned the foreign press and controlled all later coverage of the event.

Members of the Party who had publicly sympathized with the protesters were purged, with several high-ranking members placed under house arrest, such as General Secretary Zhao Ziyang. The violent suppression of the Tiananmen Square protest caused widespread international condemnation of the PRC government (Andrew Nathan, The Tiananmen Papers).

The protesters — among whom were advocates of laissez-faire as well as disillusioned communists and Trotskyites and many other groups besides — were united only in their hatred for that oppressive regime. The Tiananmen Square protest was a protest against authoritarianism.

It actually began some seven weeks before, on April 15th, 1989, after the death of a largely pro-free-market, anti-corruption government official named Hu Yaobang. Many Chinese people wanted to mourn his death because they regarded him as something of a hero. By the eve of Hu’s funeral, a million people had gathered in Tiananmen Square.

In fact, many large-scale protests sprung up all throughout the cities of China, including Shanghai. These others remained peaceful, however.

It is not known exactly how many people died altogether in Tiananmen Square, although at one time the Chinese Red Cross gave a figure of 2,600, which they later denied.

During those seven weeks, many of these protesters were openly discussing a principle that we almost never hear discussed even in this country — though it was this country’s foundational principle — a principle that is so profound and so complex that only a small minority of people today grasp its awesome logic. That principle is the principle of individual rights.

It was, incidentally, this same communistic Chinese government that American pseudo-intellectuals, like Norman Mailer, Howard Zinn, and Noam Chomsky, have described as (quoting Chomsky’s own words) “a relatively livable and just society,” about which “one finds many things that are really quite admirable.” Furthermore says Chomsky:

China is an important example of a new society in which very interesting and positive things happened at the local level, in which a good deal of the collectivization and communization was really based on mass participation and took place after a level of understanding had been reached in the peasantry that led to this next step.

The word Tiananmen literally translates to “Gate of Heavenly Peace.”

Among the people who died in the Tiananmen Square massacre was a young girl, a student, who worked as a pastry chef in a Dim Sum cafe on the Yangtze. She was the daughter of an engineer. In a country that did not (and does not) permit freedom, she came to understand the principle of individual rights and the inseparable link that exists between property and person — which is to say, economics and politics, or body and brain, all of which amount to the same thing — and that, reader, is no small thing.

Jim Cox is one of my favorite living economists. His slim but pregnant book — The Concise Guide To Economics — is a miniature masterpiece. The following comes from Chapter 37:

The Spanish Scholastics of 14th through 17th century Spain had produced a body of thought largely similar to our modern understanding of economics. The work of these scholars was largely lost to the English speaking world we’ve inherited. The French physiocrats carried the discipline forward in the 18th century with prominent economists of the time including A. R. J. Turgot and Richard Cantillon. A strategic error was made by these French advocates of laissez-faire as they attempted to change policy by influencing the King to embrace free markets, only to have the institution of monarchy itself delegitimized. Thus a guilt by association undermined the credibility of the laissez-faire theorists.

In 1776 Scotsman Adam Smith published The Wealth of Nations only to set the discipline back with his cost of production theory of value. (Smith did properly emphasize specialization and the division of labor in his analysis.) The correct subjective theory of value had been understood by both the Spanish Scholastics and the French laissez-faire school. Why Adam Smith chose the faulty cost of production theory over subjectivism is a mighty mystery as it is clear from Smith’s lecture notes that he had endorsed marginal utility analysis prior to the publication of his book. The marginal revolution of the 1870′s–with Carl Menger in Austria, William Stanley Jevons in England, and Leon Walras in Switzerland each writing independently and in differing languages–reestablished the correct marginal approach. As stated by Joseph Schumpeter in The History of Economic Thought:

It is not too much to say that analytic economics took a century to get where it could have got in twenty years after the publication of Turgot’s treatise had its content been properly understood and absorbed by an alert profession. p. 249

Unfortunately, the theory was perverted into a mathematized method with the rush to positivism in the 20th century.

The Austrian tradition of Menger was completed in the theories of Ludwig von Mises with the application of marginal utility analysis applied for the first time to money, which in turn led to the correct business cycle approach during the 1920′s. This approach was gaining headway in the English speaking world with F. A. Hayek’s appearance in England in the early 1930′s. But in the late 30′s the well-named Keynesian Revolution displaced the Austrian theories–not by refutation, but by neglect–taking economic theory to the bizarre point of splitting macro-theory from an underlying micro-emphasis; a point where it still is today.

Jim Cox is an Associate Professor of Economics and Political Science at the Gwinnett Campus of Georgia Perimeter College in Lawrenceville, Georgia and has taught the principles of Economics courses since 1979. Great Ideas for Teaching Economics includes nine of his submissions. As a Fellow of the Institute for Humane Studies his commentaries were published in The Cleveland Plain Dealer, The Wichita Journal, The Orange County Register, The San Diego Business Journal, and The Justice Times as well as other newspapers. His articles have also been published in The Atlanta Journal and Constitution, The Margin Magazine, Creative Loafing, The LP News, The Georgia Libertarian, The Gwinnett Daily News, The Atlanta Business Chronicle, The Gwinnett Post, The Gwinnett Citizen, The Gwinnett Business Journal and APC News. Cox has been a member of the Academic Board of Advisors for the Georgia Public Policy Foundation, and is currently on the Board of Scholars of the Virginia Institute for Public Policy.

(Link)

In December of 1958, an American thinker named Leonard Read wrote a remarkable essay entitled “I, Pencil: My Family Tree as told to Leonard E. Read.”

In this essay, Mr. Read walks us step-by-step through the entire process of how a single pencil is produced; I recapitulate it here because it is the only argument you’ll ever need in support of the absolute economic superiority of laissez-faire capitalism.

In the beginning of the essay, we are shown the many materials needed to make a single pencil, among them: wood, rubber, paint, lacquer, graphite, metal, zinc, and many other things.

We are then shown how these materials are really only the beginning of the process; for a whole industry is in turn required to produce each of those materials.

There is, for example, the lumber industry needed to produce the wood; the mining industry to mine and mill and smelt the zinc and lead and metal; the rubber industry, of course, and the paint and graphite, and so on.

Then, within each of these industries, there are numerous sub-divisions, such as chemical industries, which make up the groundwork for paint and lacquer, and the engineering companies to supply all the tools, and even the lighthouse workers to guide the ships safely into port.

Of course there is also the singular fact that our solitary pencil could neither be manufactured nor produced without all the various other forms of transportation required to get the products from place to place, and of course this transportation requires its own set of industries (not just oil), and on and on, all of which industries, in turn, are no less involved than the manufacturing of the wood or graphite or rubber.

So that when everything is said and done, the making of one pencil requires thousands of people, most of whom have specialized knowledge and specialized jobs, in hundreds of different industries.

Furthermore, these people come from all over the world. No centralized government imaginable, even with an army of super-genius planners, could organize the countless factors that go into the making of that one small pencil.

And yet in this country, as in all developed countries, pencils are so cheap and abundant that nobody thinks twice about them. How is this so?

The answer is deceptively simple: private property and free markets.

The free market, and its corollary, the profit motive, are what bring these thousands of people from these hundreds of different industries the wide-world over, into peaceful and mutually beneficial cooperation with one another.

The free market instantly and smoothly organizes this entire process of complexity, and the free market does so without any bureaucratic coercion or political force.

Indeed, this singular fact is what the word “free” refers to in the term “free markets.” That is the beauty of capitalism at work: the free and voluntary exchange of goods and services, which presupposes the inalienable right to your own life and your own property.

This process, outlined eloquently in Leonard Read’s pencil example, is precisely what our peace-loving greens wish to subvert.

It is also what our peace-loving greens, like all proponents of mercantilism, think that they themselves can achieve – and do so by means of a massive centralized planning bureau.

They cannot.

It is a literal impossibility, as history has demonstrated time and again.

It is also an exercise in governmental compulsion.

It is, finally, anti-freedom and anti-private property, which is exactly what environmentalism as a political philosophy is and always will be.

The green party can indeed try to organize all this industry, as they have tried many times before, but the result will be the same result as always: chaos and poverty. The free market will then be called upon to bail them out, and the free market will bail them out, just as it always has, and then the free market and all its big bad corporations will be maligned, just as the free market and corporations always are.

And so it goes.

But the next time an environmentalist tells you to “bicycle more and save the planet” think of I, Pencil, by Leonard Read.

Because I promise you that all the filthy, hardcore industry that goes into the manufacturing of one simple pencil is multiplied a thousandfold just to make and transport a single bicycle to you there in Boulder, Colorado, or wherever.

Capitalism is a social system based upon private ownership of the means of production and the preeminence of the individual over the group.

The word capitalism was popularized by Karl Marx, in the 1850′s. Marx used it to denounce private ownership of the means of production and the autonomous workings of the free market.

Capitalism is an entire political theory — not, as is sometimes supposed, merely economic. In this regard — and only in this regard — it is akin to communism.

The exclusively economic component of capitalism may be described as the right to life, liberty, and property applied to commerce and industry.

Pure laissez-faire capitalism, which does not exist now and has never existed fully, means that government removes itself from all commerce (and that includes healthcare), in the same way that government removes itself from your bedroom.

In addition to early America, there is at least one other society that has come close to laissez faire:

After the War Hong Kong had no minimum wage, low and simple taxes, zero tariffs, zero capital controls, and a stable legal environment. Postwar Hong Kong went as far with economic laissez faire as any other country in history. This resulted in economic development that benefited virtually all the people of Hong Kong. Living standards increased substantially even for the poorest people in Hong Kong (Stefan Karlsson, Inflation Leads to Protectionism, 2004).

Capitalism means that commerce and industry are entirely privatized.

Corporations that receive government subsidies are not capitalistic. They’re the opposite: they’re mercantilistic.

The same is true of small businesses and farms that receive subsidies.

Trade tariffs are not capitalistic but mercantilistic.

Mercantilism is an ancient and more primitive form of socialism. It is socialism before Karl Marx.

Political theory is the theory of government, and government, properly defined, is the body politic that possesses rule over a certain geographic region.

Economics is the science of production and exchange, but production does not just mean agriculture, although that is certainly included.

Productive work is any kind of work geared toward the task of survival — survival in the fully human sense of the word, including, therefore, arts, sports, industry, and so on.

Thus the essential questions of government are these:

Do humans exist by right or by permission? Are we free by nature? If so, why? Are we free to produce, exchange, and exist, or do politicians, elected or not, have authority and jurisdiction over the lives of us — to any degree?

Obviously, there’s only one sane answer to all these questions; for to say that humans do not exist by right is the same as saying humans only exist when someone permits us to. But if that were true, we must then ask: who permits? And why? And who gives these people permission?

Fundamentally, political freedom can be achieved only through recognizing each and every single individual’s right to life.

If, then, you believe that we are each individuated and sovereign, and if you believe that our lives are entirely our own and not the government’s and not another’s, if, in short, you believe “we each have a property in our person,” as John Locke said, then you believe in the inalienable right to life, liberty, and property.

You believe, therefore, in laissez-faire capitalism.