I was reading a post on the Rio Norte Line. It was written by a friend of mine, so I want to be sure to make it clear that I am not hostile to him. Nor do I disagree with the essence of his post. He is writing in opposition to government oppression, and I am certainly in allegiance with him on this point. However, what struck me is the use of the word “Capitalism.” For some time now, something has not been sitting right with me concerning the way we use the word. It was when I read my friends post that the problem suddenly struck me, and the ramifications of my realization are as sweeping as those of realizing that the Constitution does not contain the principles and ideals of the Declaration. This realization is really rather simple – so simple that we do not see it. Capitalism is not the same thing as the free market.
We should start by asserting an eternal truth: that the natural order of economic activity among men is that of the free market. It is only in and through the free market that the economic activates of humanity can conform to Natural Law. Therefore, whenever a system is found that restricts or constrains the free market, that system is not a free market system and is in conflict with Natural Law.
That said, let’s start by looking at the definition of the free market:
: an economic market or system in which prices are based on competition among private businesses and not controlled by a government
Now, look at the definition of Capitalism:
: a way of organizing an economy so that the things that are used to make and transport products (such as land, oil, factories, ships, etc.) are owned by individual people and companies rather than by the government.
OK, now, let me show you how profound the difference between the free market and Capitalism actually is, and – at the same time – how easy it is to miss this difference. But first, let us start by stating that the free market means freedom of activity for all individuals in the market. Now, with this notion in mind, let me ask you a simple question:
What stops a private person from becoming just as much of a dictator as the head of a government?
Do you understand the point here? I will understand if you do not. I didn’t – not for many years. And even then, I only understood that I knew something was wrong with my use of these words. I sensed the problem with their definitions, but it wasn’t until this morning, when I read my friend’s post, that it suddenly came together. So let me try to help you see what I now see.
Assume we have a man who owns and runs a hedge fund. Assume he becomes so large and powerful that he can crash the financial systems of entire nations, and that he can use this influence to manipulate or even replace national governments. Now ask yourself: can the free market exist with the presence of such a person operating inside of it?
Now, what if there is another man who starts a business that becomes so powerful he can use his money to seize control over and direct a nation’s education system for his own purposes. He then changes that education system to test and indoctrinate children. The ones who show an aptitude for being useful o him are set on one path so they can work for him, while the rest are placed on another path where they will be controlled by a system he helps create. The smart ones will become his employees; the rest will be turned into a controlled market. Can the free market exist with such a man operating inside it?
Think about this for a moment. Both men own their corporations. This means they are private citizens. Both men operate within the letter of their nation’s laws. So they are legal. But both men are so powerful that they can either manipulate the market by destroying the financial system, or by literally altering the society that uses that market. Now, is that the free market?
Now, consider this. Both men are real; both men live in the United States; and both men have actually boasted that they are doing exactly what I just explained. Now, do you still believe that Capitalism is the same thing as the free market?
By the way: those two men are George Soros, who jokes about destroying nations as a hobby, and Bill Gates who openly boasts that his contributions to Common Core are “developing new markets and customers.” Look it up for yourself. That way, you’ll be more likely to believe it for yourself than if I explain it to you.
[NOTE: this is one of those times where our enemy should be consulted, because he can actually be better at describing us than we are ourselves. In this case, I am referring to a Socialist definition of Capitalism. In many respects, the Socialist critique of Capitalism is much more accurate than the Capitalist wants to accept. At the same time, the Capitalist’s critique of the Socialist’s answer to these problems is dead-on accurate. Capitalism ‘can’ operate in a benign manner, whereas Socialism can never do so. This is because Socialism cannot exist without being forced on society where Capitalism can function according to free market principles. It is all connected to the heart of the people running the system. If they are a good and moral people, Capitalism will be more like what it was during the time of our founders. However, if the hearts of the people running it are evil, then… Well, then we will have people gleefully boasting about destroying nations and indoctrinating children.]
3 thoughts on “LESSONS IN LOGIC: Capitalism isn’t Necessarily the same as the Free Market”
I often assume capitalism = “free market”.
Consider: If China’s economic system is described as Capitalist, a system where everything is controlled by the government; then how can capitalism = “free market”?
So now, Joe helps me understand, “words have meaning”, and now it is time to be more accurate and descriptive and use the terms “free market” as opposed to “capitalism”. “Free market” means as a producer, I am able to make decisions and choices to maximize my profits freely, without going being prevented by government laws and regulations.
Our founders envisioned a “free market”, as shown by “patents” being included in our Constitution:
So what path do we take from here? Do we dissolve corporations? How does this collectivist idea of Corporations affect the Supreme court decision of Citizens United? Should Corporations not have a civil right to a voice? Is that rite against Naural Law? How do we ensure that Capitalism operates in a benign manner? Is the profit motive against Natural Law? If so, how is it different from greed as self interest? Once a person earns more than he “needs” to live a comfortable life, is he abusing free market principles? How do we monitor capitalism vs free markets? I call Capitalists who leverage too much control over others crony capitalists because they could not do so if they did not manipulate and pay for special privileges under the law. Crony Capitalists change the playing field of free markets and competition so that they have an advantage. I am more confused than ever.