Capitalism and Freedom Require Government

by | May 27, 2020 | Economics

The existence of freedom under laissez-faire capitalism requires the existence of government.

An excerpt from Chapter 1 of Capitalism: A Treatise on Economics, Volume I.

Freedom means the absence of the initiation of physical force. Physical force means injuring, damaging, or otherwise physically doing something to or with the person or property of another against his will. The initiation of physical force means starting the process—that is, being the first to use physical force. When one has freedom, what one is free of or free from is the initiation of physical force by other people. An individual is free when, for example, he is free from the threat of being murdered, robbed, assaulted, kidnapped, or defrauded.

(Fraud represents force, because it means taking away property against the will of its owner; it is a species of theft. For example, if a bogus repairman takes away a washing machine to sell it, while saying that he is taking it to repair it, he is guilty of force. In taking it to sell, he takes it against the will of the owner. The owner gives him no more authorization to sell it than he gives to a burglar.)

Freedom and Government

The existence of freedom requires the existence of government. Government is the social institution whose proper function is to protect the individual from the initiation of force. Properly, it acts as the individual’s agent, to which he delegates his right of self-defense. It exists to make possible an organized, effective defense and deterrent against the initiation of force. Also, by placing the use of defensive force under the control of objective laws and rules of procedure, it prevents efforts at self-defense from turning into aggression. If, for example, individuals could decide that their self-defense required that they drive tanks down the street, they would actually be engaged in aggression, because they would put everyone else in a state of terror. Control over all use of force, even in self-defense, is necessary for people to be secure against aggression.18

An effective government, in minimizing the threat of aggression, establishes the existence of the individual’s freedom in relation to all other private individuals. But this is far from sufficient to establish freedom as a general social condition. For one overwhelming threat to freedom remains: namely, aggression by the government itself.

Everything a government does rests on the use of force. No law actually is a law unless it is backed by the threat of force. So long as what the government makes illegal are merely acts representing the initiation of force, it is the friend and guarantor of freedom. But to whatever extent the government makes illegal acts that do not represent the initiation of force, it is the enemy and violator of freedom. In making such acts illegal, it becomes the initiator of force.

Thus, while the existence of freedom requires the existence of government, it requires the existence of a very specific kind of government: namely, a limited government, a government limited exclusively to the functions of defense and retaliation against the initiation of force—that is, to the provision of police, courts, and national defense.19

In a fully capitalist society, government does not go beyond these functions. It does not, for example, dictate prices, wages, or working conditions. It does not prescribe methods of production or the kinds of products that can be produced. It does not engage in any form of “economic regulation.” It neither builds houses nor provides education, medical care, old-age pensions, or any other form of subsidy. All economic needs are met privately, including the need for charitable assistance when it arises. The government’s expenditures are accordingly strictly limited; they do not go beyond the payment of the cost of the defense functions. And thus taxation is strictly limited; it does not go beyond the cost of the defense functions.20

In short, in its logically consistent form, capitalism is characterized by laissez-faire. The government of such a society is, in effect, merely a night watchman, with whom the honest, peaceful citizen has very little contact and from whom he has nothing to fear. The regulations and controls that exist in such a society are not regulations and controls on the activities of the peaceful citizen, but on the activities of common criminals and on the activities of government officials—on the activities of the two classes of men who use physical force. Under capitalism, while the government controls the criminals, it itself is controlled (as it was for most of the history of the United States) by a Constitution, Bill of Rights, and system of checks and balances achieved through a division of powers. And thus the freedom of the individual is secured.21

Given the existence of government and its power to restrain the private use of force, the concept of freedom must be defined in a way that places special stress on the relationship of the citizen to his government. This is because the government’s capacity for violating freedom is incomparably greater than that of any private individual or gang whose aggression it fights. One has only to compare the Gestapo or the KGB with the Mafia, to realize how much greater is the potential danger to freedom that comes from government than from private individuals. The government operates through open lines of communication and has at its disposal entire armies that in modern times are equipped with artillery, tanks, planes, rockets, and atomic weapons. Private gangs number comparative handfuls of individuals, operating clandestinely and equipped at most perhaps with submachine guns. Thus, freedom must be defined not merely as the absence of the initiation of physical force, but, in addition, in order to highlight its most crucial aspect, the absence of the initiation of physical force by, or with the sanction of, the government. The very existence of government can easily secure the freedom of the individual in relation to all other private citizens. The crucial matter is the individual’s freedom in relation to the government.

Freedom as the Foundation of Security

It is important to realize that freedom is the foundation of both personal and economic security.

The existence of freedom directly and immediately establishes personal security in the sense of safety from the initiation of physical force. When one is free, one is safe—secure—from common crime, because what one is free of or free from is precisely the initiation of physical force.

The fact that freedom is the absence of the initiation of physical force also means that peace is a corollary of freedom. Where there is freedom, there is peace, because there is no use of force: insofar as force is not initiated, the use of force in defense or retaliation need not take place. Peace in this sense is one of the most desirable features of freedom. Nothing could be more valuable or honorable.

There is, however, a different sense in which peace of some sort can exist. Here, one person or group threatens another with the initiation of force and the other offers no resistance, but simply obeys. This is the peace of slaves and cowards. It is the kind of peace corrupt intellectuals long urged on the relatively free people of the Western world in relation to the aggression of the Communist world.

Freedom is the precondition of economic security, along with personal safety, because it is an essential requirement for individuals being able to act on their rational judgment. When they possess freedom, individuals can consider their circumstances and then choose the course of action that they judge to be most conducive to their economic well-being and thus to their economic security. In addition, they can benefit from the like choices of those with whom they deal.

Under freedom, everyone can choose to do whatever he judges to be most in his own interest, without fear of being stopped by the physical force of anyone else, so long as he himself does not initiate the use of physical force. This means, for example, that he can take the highest paying job he can find and buy from the most competitive suppliers he can find; at the same time, he can keep all the income he earns and save as much of it as he likes, investing his savings in the most profitable ways he can. The only thing he cannot do is use force himself. With the use of force prohibited, the way an individual increases the money he earns is by using his reason to figure out how to offer other people more or better goods and services for the same money, since this is the means of inducing them voluntarily to spend more of their funds in buying from him rather than from competitors. Thus, freedom is the basis of everyone being as secure as the exercise of his own reason and the reason of his suppliers can make him.

The detailed demonstration of the fact that economic freedom is the foundation of economic security is a major theme of this book. This book will show, for example, that free competition is actually a leading source of economic security, rather than any kind of threat to it, and that such phenomena as inflation, depressions, and mass unemployment—the leading causes of economic insecurity—are results of violations of economic freedom by the government, and not at all, as is usually believed, of economic freedom itself.22

* * *

The harmony between freedom and security that this book upholds is, of course, in direct opposition to the prevailing view that in order to achieve economic security, one must violate economic freedom and establish a welfare state. The existence of the social security system, in the United States and other countries, both represents a leading consequence of this mistaken belief and provides essential evidence about what is wrong with it.

In the name of economic security, the freedom of individuals to dispose of their own incomes has been violated as they have been forced to contribute to the social security system. A major consequence of this has been that an enormous amount of savings has been diverted from private individuals into the hands of the government. Had these savings remained in the possession of the individuals, they would have been invested and would thus have helped to finance the construction and purchase of new housing, new factories, and more and better machinery. In the hands of the government, these savings have been dissipated in current consumption. This has resulted from the fact that the government has an overwhelmingly greater interest in its own immediate financial needs than in the future economic security of any private individuals and thus has spent the funds in financing its current expenditures. This has meant the dissipation of these savings and thus the serious undermining of the wealth and productive ability of the entire economic system.23

These results have proceeded from the essential nature of the case, which is that while private individuals have an interest in their long-run future economic security, and will provide for it if they are left free to do so, the government does not have such an interest. The interest of government officials is to get by in their term of office and leave the problems of the future to their successors. Thus the violation of economic freedom necessarily results in making individuals less economically secure. Indeed, having been deprived of the existence of actual savings to provide for their future economic security, individuals are now in the position of having to depend on the largess of future legislators, who will have to turn to future taxpayers for the necessary funds. This arrangement has much more in common with the gross insecurity of living as a beggar than it has with any actual economic security.24

In opposition to all such delusions, this book shows that to achieve economic security, the essential requirement is precisely economic freedom.

The Indivisibility of Economic and Political Freedom

Although the emphasis of this book is necessarily on the importance of economic freedom, this fact should not be taken in any way to mean a lack of concern for political freedom. Economic freedom and political freedom are indivisible. They are, in fact, merely different aspects of the same thing. The alleged dichotomy between economic freedom and political freedom, between property rights and human rights, is groundless. Virtually every human activity employs wealth—property. To respect the right and freedom to use property is to respect the right and freedom to carry on the activities in which property is used. To deny the right and freedom to carry on such activities is to deny the right and freedom to use the property involved.

For example, the freedom of speech is implied in a farmer’s right to use his pasture as he sees fit. The farmer’s property rights include his right to invite people onto his land to deliver and or hear a speech. Any effort by the government to stop or prevent such a speech is an obvious interference with the farmer’s property rights. Property rights also include the right to build meeting halls and radio and television stations and to use them to propound whatever ideas one likes. Freedom of speech is fully contained in the economic freedom of the owners of property of the kind that facilitates speech to use their property as they see fit. By the same token, the freedom of speech of those who do not own such property is implied in their right and freedom to buy the use of such property from those who do own it and are willing to rent it to them. Government interference with any such speech is simultaneously an interference with the property rights of the owners of meeting halls or radio or television stations to use or rent their facilities as they see fit.

In the same way, freedom of the press is fully contained in the freedom of an individual to set his type to form the words he wants to form, and then to use his presses, paper, and ink to reproduce those words, and to sell the resulting product to buyers of his choice. Freedom of travel is contained in the property right to build railroads and highways, automobiles and airplanes, to drive one’s automobile where one likes, or buy a bus, train, or plane ticket from any willing seller. It is contained in the freedom to use one’s shoes to walk across the frontier.

In prohibiting the freedom of speech, press, or travel, one prohibits property owners from using their property as they wish. By the same token, in respecting property rights, one respects these freedoms. On this basis, one should observe the irony of alleged conservative defenders of property rights advocating such things as antipornography legislation—a violation of the property rights of press owners—and of alleged liberal defenders of civil liberties advocating the violation of property rights.25

The Rational Versus the Anarchic Concept of Freedom

The concept of freedom when employed rationally, presupposes the existence of reality, and with it the laws of nature, the necessity of choice among alternatives, and the fact that if one resorts to force, one must expect to be met by force. Of particular importance is the fact that it presupposes the necessity of having the voluntary cooperation of everyone who is to aid in an activity—including the owners of any property that may be involved. After taking for granted the presence of all this, the rational concept of freedom then focuses on the absence of one particular thing: the initiation of physical force—in particular, by the government.26

In sharpest contrast to the rational concept of freedom is the anarchic concept. The anarchic concept of freedom evades and seeks to obliterate the fundamental and radical distinction that exists between two sorts of obstacles to the achievement of a goal or desire: “obstacles” constituted by the ordinary facts of reality, including other people’s voluntary choices, and obstacles constituted by the government’s threat to use physical force. For example, by the nature of things, it is impossible for me to square circles, walk through walls, or be in two places at the same time. It is also not possible for me, in the actual circumstances of my life, to win the Nobel prize in chemistry or the Academy Award for best actor of the year, or to enter the automobile or steel business. There are all kinds of such things I simply cannot do. And among the things I could do, there are many I choose not to do, because I judge the consequences to myself to be highly undesirable. For example, I cannot arbitrarily decide to walk off my job in the middle of winter to take a vacation in the sun, without the very strong likelihood of being fired. I cannot drive down a city street at ninety miles an hour, nor can I strike or kill another, without running the risk of paying the penalty for violating the law. And then, there are things that are possible for me to do, and that I would very much like to do, but that would require the consent of other people, which consent they are unwilling to give. In this category, are such things as having my views published in The New York Times or having this book assigned in courses at leading “liberal” universities.

Absolutely none of these facts constitutes a violation of freedom, a denial of rights, or anything of the kind. In order for a violation of freedom to exist, it is not sufficient merely that someone be unable to achieve what he desires. What is necessary is that the specific thing stopping him be the initiation of physical force; in particular, the government’s threat to use force against him in response to an action of his that does not represent the use of force.

The stock-in-trade of the anarchic concept of freedom, however, is to construe precisely such facts as a violation of freedom and rights. On the basis of the anarchic concept of freedom, it is claimed that freedom is violated any time there is anything that, for whatever reason, a person cannot do, from flying to the moon, to being able to afford a house or a college education that is beyond his reach, to committing murder.27

Ironically, the anarchic concept of freedom is implicitly accepted by conservatives and fascists, as well as by anarchists and hippies. This is evident in the arguments they advance when they seek to establish the principle that it is necessary and proper to violate freedom. For example, they argue that we do not allow a man the “freedom” to murder his mother-in-law or to speed through red lights and thereby threaten the lives of others. In propounding such arguments, the conservatives and fascists casually neglect the fact that such acts constitute the initiation of force, and are so far from representing freedom that their prohibition is what actually constitutes freedom.

The anarchic concept of freedom, of course, is present in the assertions of Communists and socialists that their freedom of speech is violated because they are threatened with arrest for attempting to disrupt the speech of an invited speaker by shouting him down or by speaking at the same time. This assertion by the Communists and socialists neglects the fact that their action constitutes the use of someone else’s property against his will—namely, the use of the meeting room against the will of the owner or lessee, who wants the invited speaker to speak, not the disrupters. It is thus the action of the Communists and socialists which is a violation of freedom in this instance—a genuine violation of the freedom of speech.

It follows from this discussion of the erroneous claims of the Communists and socialists that a prohibition on arbitrarily shouting “fire” in a crowded theater should not be construed as any kind of limitation on the freedom of speech. Arbitrarily shouting “fire” constitutes a violation of the property rights of the theater owner and of the other ticket holders, whom it prevents from using their property as they wish. When one holds the context of the rational concept of freedom, it becomes clear that it is no more a violation of freedom of speech to prohibit such speech, than it is to prohibit the speech of disruptive hecklers, or the speech of an uninvited guest who might choose to deliver a harangue in one’s living room. Violations of freedom of speech occur only when the speaker has the consent of the property owners involved and then is prohibited from speaking by means of the initiation of physical force—in particular, by the government or by private individuals acting with the sanction of the government.

Because of the confusions that have been introduced into the concept of freedom, it is necessary to set matters right in a number of important concrete instances. Thus, freedom of speech is violated not when an individual does not receive an invitation to speak somewhere, but when he does receive it and is stopped by the government (or by private individuals acting with the sanction of the government) from accepting the invitation or exercising it. It is violated precisely by Communist and socialist disrupters whom the police refuse to remove. Ironically, in the case of a live theatrical performance, it is violated precisely when someone arbitrarily shouts “fire.” Such a person violates the freedom of speech of the actors on stage.

The freedom of the press is violated and censorship exists not when a newspaper refuses to publish a story or a column that, for any reason, it regards as unworthy of publication, but when it is prepared to publish a piece and is stopped from doing so by the government. Thus, if I want to print my views in The New York Times, but can neither afford the advertising rates nor persuade the publisher to give me space, my freedom of the press is not violated; I am not a victim of “censorship.” But suppose I do have the money to pay the advertising rates or could persuade the publisher to print my views, and the government disallows it—that would be a violation of the freedom of the press; that would be censorship. It is a violation of my freedom of the press if the government stops me from mimeographing leaflets, if that is all I can afford to do to spread my ideas. Again, censorship exists not when the sponsor of a television program refuses to pay for the broadcast of ideas he considers false and vicious, but when he does approve of the ideas he is asked to sponsor and yet is stopped from sponsoring them—for example, by an implicit threat of the government not to renew the license of the television station, or arbitrarily to deny him some permission he requires in some important aspect of his business.28

In the same way, if I ask a woman to marry me, and she says no, my freedom is not violated. It is only violated if she says yes, and the government then stops me from marrying her—say, by virtue of a law concerning marriages among people of different races, religions, or blood types. Or, finally, if I want to travel somewhere, but lack the ability to pay the cost of doing so, my freedom of travel is in no way violated. But suppose I do have the ability to pay the cost, and want to pay it, but the government stops me—say, with a wall around my city (as existed until recently in East Berlin), a passport restriction, or a price control on oil and oil products that creates a shortage of gasoline and aviation fuel and thus stops me from driving and the airlines from flying—then my freedom of travel is violated.

What is essential in all these cases is not the fact that there is something I cannot do for one reason or another, but what it is, specifically, that stops me. Only if what stops me is the initiation of physical force—by the government in particular—is my freedom violated.

Subsequent discussions in this book will unmask the influence of the anarchic concept of freedom in the distortions that have taken place in connection with the antitrust laws—in the concepts of freedom of competition and freedom of entry, and in the related notions of private monopoly and private price control. They will also deal with the distortions to be found in the present-day notion of the “right to medical care.”29

Here it must be pointed out that application of the anarchic concept of freedom operates as a cover for the violation of genuine freedom. If, for example, having to work for a capitalist, as a condition of earning wages and being able to live, is a violation of freedom and represents the existence of “wage slavery,” as the Marxists call it, then it appears that when the Communists murder the capitalists, they are merely retaliating against the aggression of capitalists—indeed, of slave owners.30 Similarly, if, as the anarchic concept  of freedom claims, freedom of travel or movement requires the ability to be able to afford to travel or move, then a state’s requirement of a year’s residency, say, as the condition of receiving welfare payments, can be construed as a violation of the freedom of travel or movement. Maintenance of such alleged freedom of travel or movement then requires the continued corresponding enslavement of the taxpayers, who must pay to finance it under threat of being imprisoned if they do not.

What is essential always to keep in mind is that since freedom—real freedom—is the absence of the initiation of physical force, every attempt to justify any form of restriction or limitation on freedom is actually an attempt, knowingly or unknowingly, to unleash the initiation of physical force. As such, it is an attempt to unleash the destruction of human life and property, and for this reason should be regarded as monstrously evil.

What makes the anarchic concept of freedom so destructive is the fact that in divorcing freedom from the context of rationality, it not only seeks to establish a freedom to initiate physical force, as in the cases of “wage slavery” and the anarchic concept of the freedom of travel, but also, on the basis of the consequences of such a perverted concept of freedom, provides seeming justification for the violation of freedom as a matter of rational principle. For example, the anarchic concept of freedom of speech, which claims that hecklers can speak at the same time as a lecturer and thus prevent him from communicating his thoughts, not only serves to legitimize the violation of the lecturer’s freedom of speech but also, if accepted as being a valid concept of freedom of speech, must ultimately doom the freedom of speech as a matter of rational principle. For if freedom of speech actually entailed the impossibility of communicating thought by speech, because hecklers could continually interrupt the speaker, respect for rationality—for the value of communicating thought—would then require the denial of the freedom of speech.

Such a vicious absurdity arises only on the basis of the anarchic concept of freedom. It does not arise on the basis of the rational concept of freedom. Freedom of speech rationally means that the lecturer or invited speaker has the right to speak and that hecklers and disrupters are violating the freedom of speech. The rational concept of freedom establishes freedom of speech precisely as the safeguard of the communication of thought, not its enemy. It is vital to keep this principle in mind today in an environment in which many university campuses have been transformed into virtual zoos, in which cowardly and ignorant administrators regularly tolerate disruptions of speech by gangs of delinquents masquerading as students. Such university administrators thereby abandon their responsibility to maintain their universities as the centers of teaching and learning that in their nature they are supposed to be. In tolerating anarchic violations of freedom of speech in the name of freedom of speech, they pave the way for the outright fascistic destruction of freedom of speech in the name of rationality.

The Decline of Freedom in the United States

In the twentieth century, freedom in the United States has been in decline. A twofold measure of this decline is the fact that, with little if any exaggeration, it is now the case that the average mugger has less to fear from the police and courts than the average successful businessman or professional has to fear from the Internal Revenue Service. In allowing common crime to go increasingly unchecked, the government has increasingly failed in its function of securing the individual’s freedom in relation to other private individuals. At the same time, as the limits on its powers have been removed, it has itself increasingly violated the freedom of the individual. The government’s energies and efforts have more and more been diverted from the protection of the individual’s freedom to the violation of it.

To some extent, the process of the destruction of freedom has taken place under the code words of combatting “white-collar crime” instead of “blue-collar crime.” The latter type of crime is genuine crime, entailing the initiation of physical force. The former type of crime incorporates some elements of genuine crime, such as fraud and embezzlement, but consists mainly of fictitious crimes—that is, perfectly proper activities of businessmen and capitalists which are viewed as crimes from the perverted perspective of Marxism and other varieties of socialism, such as charging prices that are allegedly “too high” or paying wages that are allegedly “too low.”

A profreedom political party would have as the essence of its platform the replacement of the government’s suppression of the activities of businessmen and other peaceful private individuals with the rightful suppression of the activities of common criminals, such as muggers, robbers, and murderers. Its essential goal would be the total redirection of the energies of the government away from interference with the peaceful, productive activities of the citizens to forcibly and effectively combatting the destructive activities of common criminals.

The extent to which this can happen, and thus the future of freedom in the United States, depends first of all on the concept of freedom being properly understood, and then on its being upheld without compromise in every instance in which freedom is violated or threatened, from the police turning their backs on campus disruptions and even open rioting and looting in major cities, to income tax audits and the ever growing array of government regulations.

All of the major problems now being experienced in the United States have as an essential element the inconsistent application or outright abandonment of the country’s own magnificent original principle of a government upholding individual freedom. Every violation of that principle—every act of government intervention into the economic system—represents the use of physical force either to prevent individuals from acting for their self-interest or to compel them to act against their self-interest. It is no wonder that as the violations of freedom multiply, people are less and less able to serve their self-interests and thus suffer more and more. In order for the American people once again to succeed and prosper, it is essential for the United States to return to its founding principle of individual freedom.

The Growth of Corruption as the Result of the Decline of Freedom

Closely and necessarily accompanying the destruction of freedom in the United States has been the growing corruption both of government officials and of businessmen, who are increasingly under the power of the officials. The ability to violate the freedom of businessmen gives to the government officials the power to deprive businessmen of opportunities to earn wealth or to retain wealth they have already earned. The power of the officials is fundamentally discretionary, that is, it may or may not be used, as they decide. This is always the case with legislators contemplating the enactment of new laws. It is often the case with officials charged with the execution of a law—if they have the power to decide whether or not to enact this or that new regulation in the course of its execution, and whether or not to apply the regulation in any given case, or to what extent.

This situation inevitably creates an incentive on the part of businessmen to bribe the officials, in order to avoid the passage of such laws or the enactment or application of such regulations and thus to go on with the earning of wealth or to keep the wealth they have already earned. It is a situation in which businessmen are made to pay the officials for permissions to act when properly they should be able to act by right—by the right to the pursuit of happiness, which includes the right to the pursuit of profit.

At the same time, the government’s ability to violate freedom gives it the power to provide businessmen with subsidies and to damage their competitors. This creates corruption of a much worse character, one in which businessmen are led to offer bribes not to defend what is theirs by right, but as part of an act of depriving others of what belongs to those others by right. Few businessmen are moral philosophers, and those who may have begun their practice of bribing government officials in order simply to avoid harm to themselves cannot be counted upon always to keep in mind the distinction between an act of self-defense and an act of aggression, especially when they must operate increasingly in the conditions of a virtual jungle, in which competitors are prepared to use the government against them and in which large and growing numbers of other businessmen are all too willing to gain subsidies at their expense. The result is a powerful tendency toward the destruction of the whole moral fabric of business.

The obvious solution for this problem of corruption is, of course, the restoration of the businessman’s freedom and his security from the destructive actions of the government officials. When the businessman can once again act for his profit by right rather than permission, when the government has lost the power both to harm him and to harm others for his benefit, the problem of such bribery and corruption will shrivel to insignificance.31

Excerpted from Chapter 1 of Capitalism: A Treatise on Economics, Volume I. Copyright 2020 George Reisman. All rights reserved. The encyclopedic Capitalism: A Treatise on Economics is a required reference for every Capitalist’s library. Reisman’s treatise is now available in two volumes: Volume I (focuses on microeconomic issues) and Volume II (focuses on macroeconomic issues).


18. On these points, cf. Ayn Rand, “The Nature of Government,” in Ayn Rand, Virtue of Selfishness.
19. Cf. ibid.
20. In a fully consistent capitalist society, taxation itself would be of a voluntary nature. On this subject see Ayn Rand, “Government Financing in a Free Society,” in Ayn Rand, Virtue of Selfishness.
21. Again, cf. Ayn Rand, “The Nature of Government,” in Virtue of Selfishness.
22. See below, pp. 343-371, 513-514, 542-594 passim, and 938-942.
23. It should be realized that even if much of the savings individuals presently pay into the social security system were invested in housing, as they likely would be, those savings would indirectly still contribute to investment in factories and machinery. This is because savings would then not have to be withdrawn from financing factories and machinery to financing housing, as is presently the case because of the vast siphoning off of personal savings caused by the social security system.
24. The problem of the economic insecurity of prospective social security recipients (and of everyone else) is compounded by the fact that an inevitable accompaniment of the welfare state is fiat money, which makes all contractual obligations stated in fixed sums of money essentially meaningless. On these points, see below, pp. 925-926 and 930-931.
25. It should go without saying that the context taken for granted in the reference to antipornography legislation is one in which all the parties involved are freely consenting adults.
26. The following discussion is essentially an application of principles set forth by Ayn Rand in criticizing the use of the word censorship in reference to the actions of private individuals. Cf. Ayn Rand, “Man’s Rights,” in Ayn Rand, Virtue of Selfishness, especially pp. 131-134.
27. Cf. ibid., pp. 128-130.
28. Ibid.
29. See below, pp. 375-387 and 238. The contrasting meanings of the right to medical care are discussed on p. 380. Concerning this last subject, see also George Reisman, The Real Right to Medical Care Versus Socialized Medicine, a pamphlet (Laguna Hills, Calif.: The Jefferson School of Philosophy, Economics, and Psychology, 1994).
30. For further discussion of the distortions introduced into the concept of freedom of labor and present in the notion of “wage slavery,” see below, pp. 330-332.
31. I am indebted to von Mises for the substance of this discussion. See Ludwig von Mises, Human Action, 3d ed. rev. (Chicago: Henry Regnery Co., 1966), pp. 734-736.

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George Reisman, Ph.D., is Pepperdine University Professor Emeritus of Economics and the author of Capitalism: A Treatise on Economics. See his author's page for additional titles by him. Visit his website and his blog Watch his YouTube videos and follow @GGReisman on Twitter.


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