Toward the Establishment of Laissez-Faire Capitalism (Part 1 of 10)

by | Jul 1, 2021

If such a laissez-faire capitalist society is to be achieved, a political movement pursuing a long-range program will be necessary.

This article is excerpted from chapter 20 “Toward The Establishment of Laissez-Faire Capitalism” from George Reisman’s Capitalism: A Treatise On Economics (1996). See the author’s page for additional titles by Dr. Reisman.

The principles and theories presented my book Capitalism: A Treatise on Economics (1996) call for a society of laissez-faire capitalism. (For the sake of brevity, I often refer simply to a capitalist society. In such cases, it should be understood that laissez-faire capitalism is the only logically consistent form of a capitalist society.) If such a society is to be achieved, a political movement pursuing a long-range program will be necessary. My purpose in this concluding, epilogue chapter is to describe the nature of such a movement and to offer a basic outline of the long-range political program it would have to follow, including a description of how the most difficult steps in the program might actually be accomplished. As far as I know, my effort here is the first of its kind; as such, it will undoubtedly benefit greatly from the numerous additions and refinements that I hope others will be led to make.

The Importance of Capitalism as a Conscious Goal

The first thing that those in favor of capitalism must do is to make the conscious, explicit decision that they seriously want to achieve a fully capitalist society and are prepared to work for its achievement. We need to view ourselves as active agents of change, working toward a definite goal: laissez-faire capitalism.

The advocacy of laissez-faire capitalism, indeed, of capitalism in any explicit form, has not been present in the political spectrum. In the United States, the political controversies of the last several generations have been carried on between the “liberals,” who stand for socialism, and the “conservatives,” who stand for nothing except what other groups, including the liberals, have managed to establish as the country’s tradition.

The success of the liberals/socialists in enacting their program shows that what we need is a group of educated and articulate individuals who adopt the achievement of capitalism as their goal. Such individuals, dedicated to maintaining constant progress toward capitalism, would constitute a de facto capitalist political party, even if the name of such a party never appeared on a ballot. By virtue of constantly offering their own definite program for political change, they would seize the political initiative. Instead of merely attacking the socialistic proposals of the “liberals” and then yielding to them and abandoning the fight once the proposals happened to be enacted, as is the almost invariable practice of the conservatives, they would always strive to move in the direction of capitalism. As an essential part of the process of doing so, they would never tire of assaulting intellectual targets as far behind enemy lines as possible–such as social security, antitrust legislation, and public education. Never would they accept the existing state of society as immutably given and deserving of preservation merely because it exists. Always they would seek to change the existing state of society until it represented laissez-faire capitalism.

Laissez-faire capitalism would represent their fixed star so to speak. To the extent that present conditions departed from it, they would be radical in seeking to change present conditions. To the extent that conditions in the past had approximated laissez-faire capitalism, they would be reactionary in seeking to reestablish such conditions. To the extent that present conditions were consistent with laissez-faire capitalism, they would be conservative in seeking to preserve those conditions.

The program such a party would have to follow is both political and educational in nature. It is political in that it centers on the offering of specific political proposals, which, if adopted, would move the country toward capitalism. It is educational in that it views the basic problem that we face as one of explaining to the people of the United States and other countries the value of a capitalist society and the value of the specific steps required to achieve it. What people do is determined by what they think. If we want to change the political practice, there is no other way but to change people’s political philosophy and economic theories. Accordingly, every political proposal that I suggest is itself intended to serve as a vehicle for educating the public and for attracting talented individuals to our cause who in turn will become capable of educating still others to the value of our program.

Needless to say, the substance of such education is the spread of the ideas of Ludwig von Mises and Ayn Rand, reinforced by the ideas of other procapitalist economists and philosophers whom I mentioned in the Introduction and elsewhere in this book. It is principally owing to the great popular success of the writings of Ayn Rand and the growing influence of the works of Ludwig von Mises that there already exists a significant and growing number of potential recruits for the procapitalist political movement that I envision. The further spread of the ideas of these two historic figures is the only possible basis for the further growth and ultimate success of the procapitalist cause.

Along these lines, I wish to acknowledge once more how important are all philosophic ideas that determine people’s conception of the position of the human individual in relation to the world in which he lives. For example, so long as man is viewed as fundamentally helpless, with his destiny controlled by forces beyond his power to change, it will be next to impossible to eliminate the welfare state. People will cling to it out of a sense of helplessness. Elimination of the welfare state and the establishment of a capitalist society presupposes a view of man as a self-responsible causal agent, capable of securing his well-being by means of intelligent action. Indeed, the entire program of reform outlined in this chapter must proceed alongside a renewal of all of the philosophical foundations of a division-of-labor, capitalist society that I described in the first chapter of this book. It is this above all which makes the dissemination of the ideas of Ayn Rand so important. As the leading advocate of reason in modern times, her writings alone hold out the possibility of the necessary fundamental philosophic changes taking place in our culture, without which efforts at the level of economic theory and political philosophy are doomed to failure.

* * *

In the pages that follow, I write of political campaigns over various issues. Please understand that I am not writing merely or even primarily of campaigns carried out in connection with elections. Rather, I am writing of campaigns carried on year in and year out, as part of a process of continuous education of the public. Each of these campaigns would necessarily have to be preceded and accompanied by the writing and dissemination of appropriate literature, ranging from books and monographs on down to handbills–literature dealing with the specific issues at hand, but always in relation to wider, abstract principles. Indeed, the dissemination of such literature and its articulation in speeches and debates would constitute the substance of what I call political campaigns.

Further, I think that to achieve capitalism it will ultimately be necessary for a formally organized capitalist party to come into existence, whose primary function will actually be to serve as an educational institution: it would have one or more book-publishing houses, theoretical journals, magazines devoted to current issues, and schools turning out intellectual leaders thoroughly versed in economic theory and political philosophy. All of these vehicles would be devoted at least as much to questions of political philosophy and economic theory as to political activity.

The political proposals I make are short- and intermediate-range, as well as long-range in nature. I believe that it will take several generations to achieve a fully capitalist society, mainly because of the time required for the educational process. It will not be enough just to present our long-range goals. It will be necessary to advocate a whole intervening series of short- and intermediate-range goals whose enactment will represent progress toward our long-range goals. The major political task in the years ahead will be continuously to formulate such short and intermediate-range goals, and to keep the country moving in the direction of full capitalism by means of their successive achievement. The short- and intermediate-range goals I offer are intended to illustrate principles of strategy and tactics and thus to serve as a pattern.

In the light of the preceding, it should scarcely be necessary to say that at no time should the advocacy of sound principles be sacrificed to notions of political expediency, advanced under misguided ideas about what is “practical.” The only practical course is to name and defend true principles and then seek to win over public opinion to the support of such principles. It is never to accept the untrue principles that guide public opinion at the moment and design and advocate programs that pander to the errors of the public. Such a procedure is to abandon the fight for any fundamental or significant change–namely, a change in people’s ideas–and to reinforce the errors we want to combat.

It is definitely not impractical to explain to people that if they want to live and prosper, they must adopt capitalism. It would not be impractical to do so even if for a very long time most people simply refused to listen and went on supporting policies that are against their interests. In such a case, it would not be the advocates of capitalism who were impractical, for they would be pursuing the only course that is capable of working, namely, explaining to people what they must do if they are in fact to succeed. Rather it would be the mass of people–perhaps, indeed, the entire rest of the society–that would be impractical, pursuing as it did goals which are self-destructive and refusing to hear of constructive alternatives. If, to use an analogy from the world of engineering and business, someone knows how to build an airplane or a tractor that people could afford and greatly benefit from, but is not listened to, such a person is not at all impractical because others refuse to listen to his ideas that would greatly benefit them. Rather it is those others, whatever their number, who are impractical. In the political-economic realm, it is the current state of public opinion that is impractical: it expects that men can live in a modern economic system while destroying the foundations of that system–that, for example, they can have rising prosperity while destroying the incentives and the means of the businessmen and capitalists who are to provide the prosperity. The advocates of capitalism, who tell people that the opposite is true and that the opposite policy is necessary, are not impractical. They are eminently the advocates of practicality–of what is achievable in, and by the nature of, reality.

It is the grossest compounding of confusions to suggest that those who know truths that masses of impractical people refuse to hear, accept error as an unalterable given for the sake of which they must abandon or “bend” their knowledge of the truth. Nothing could be more impractical, elevating as it does, error above truth and making knowledge subordinate to ignorance. The essence of true political practicality consists of clearly naming and explaining the long-range political program that promotes human life and well being–i.e., capitalism–and then step by step moving toward the fullest and most consistent achievement of that goal. That the initial effect of naming the right goal and course may be to shock masses of unenlightened people and invoke their displeasure should be welcomed. That will be the first step in awakening them from their ignorance.

It should not be surprising that those who fear the effects of the open advocacy of capitalism are themselves highly deficient in their knowledge of capitalism. They fear to evoke the displeasure of the ignorant because they do not know enough about capitalism to know what to say in the face of such displeasure. Their ignorance on this score, I believe, is the result of an unwillingness to acquire a sufficient combination of knowledge of political philosophy and economic theory, above all, of economic theory. Remnants of the mind-body dichotomy in their thinking prevent them from fully grasping the intellectual–indeed, the profoundly philosophical–value of a subject as “materialistic” as economics. To be successful, the advocates of capitalism must immerse themselves in the study of economic theory.

The Capitalist Society and a Political Program for Achieving It

The capitalist society we want to achieve is a society in which individual rights are consistently and scrupulously respected–in which, as Ayn Rand put it, the initiation of physical force is barred from human relationships. We want a society in which the role of government is limited to the protection of individual rights, and in which, therefore, the government uses force only in defense and retaliation against the initiation of force. We want a society in which property rights are recognized as among the foremost human rights–a society in which no one is made to suffer for his success by being sacrificed to the envy of others, a society in which all land, natural resources, and other means of production are privately owned. In such a society, the size of government would be less than a tenth of what it now is in terms of government spending. Most of the government as it now exists would be swept away: virtually all of the alphabet agencies and all of the cabinet departments with the exceptions of defense, state, justice, and treasury. All that would remain is a radically reduced executive branch, and legislative and judicial branches with radically reduced powers. To the law-abiding citizen of such a society, the government would appear essentially as a “night watchman,” dutifully and quietly going about its appointed rounds so that the citizenry could rest secure in the knowledge that their persons and property were free from aggression. Only in the lives of common criminals and foreign aggressor states would the presence of the government bulk large.

If these brief remarks can serve as a description of the capitalist society we want to achieve, let us now turn to a series of political proposals for its actual achievement. I group the proposals under seven headings: Privatization of Property, Freedom of Production and Trade, Abolition of the Welfare State, Abolition of the Income and Inheritance Taxes, Establishment of Gold as Money, Procapitalist Foreign Policy, and Separation of State from Education, Science, and Religion. Under each of these heads, I develop specific issues and programs each of which deserves to be fought for and which, in being fought for, would serve to promote the spread of our entire political-economic philosophy.

Copyright 1996 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).

Articles in this Series

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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