A Pro-Capitalist Foreign Policy (Part 7 of 10)

by | Aug 12, 2021 | Foreign Policy

In the present-day world, a procapitalist foreign policy is indistinguishable from a pro-American foreign policy.

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 Amazon.com author’s page for additional titles by Dr. Reisman.

In the present-day world, a procapitalist foreign policy is indistinguishable from a pro-American foreign policy. The United States is the world’s leading capitalist country. It is so on the basis of its fundamental laws–its Constitution and Bill of Rights. And, not surprisingly, it is hated for it. It is regarded by much of the rest of the world in the same way that within the United States the minority constituted by businessmen and capitalists–the “rich”–are regarded by much of the rest of the American citizenry. If the United States is to stand up for itself, it must learn to stand up for capitalism.

The most essential point which needs to be recognized is that to the extent that the United States is a capitalist country, its government is morally legitimate, because to that extent its government acts to defend individual rights, and the powers it exercises consist of nothing more than those of the individual’s delegated right of self-defense. By the same token, governments which do not recognize the existence of individual rights, governments whose very existence is based on the premise of the forcible sacrifice of the individual to the collective, have no moral legitimacy. This means, above all, that the surviving Communist regimes, such as those of mainland China, North Korea, and Cuba, and many, if not most of the governments of the so-called third-world countries have no moral legitimacy.

The overthrow of these governments is earnestly to be desired on behalf not only of their own citizens, who are enslaved, but also on behalf of the people of the entire world, who are forcibly deprived of the benefits they could otherwise derive if these countries were free–benefits in the form of the free development of the talents of the citizens of those countries and the free development of their natural resources. A major principle here is that the violation of the rights of the individual anywhere is an attack on the well-being of people everywhere.

A foreign policy based on these principles would deal with such governments as bandits and outlaws, temporarily holding power by means of force and fear. This does not mean that it would be the obligation of the U.S. government to go to war with such countries if it were not itself attacked or directly threatened by them. But it certainly does mean, as a minimum, that the U.S. government should do nothing to promote the existence of such governments. It should certainly not aid them in any way, nor provide them with any kind of forum in which to defend their crimes, nor denounce those who prevent them from expanding their power or who prevent similar regimes from coming to power in the first place.

As examples from the recent past, the U.S. government should certainly not have provided Soviet Russia or Communist Poland with free food or loan guarantees. Instead, it should have allowed them to suffer the famines that socialism causes, while at the same time explaining to the world how socialism was the cause of the famines and thus how millions were forced into starvation because of the power-lust of the Communist rulers and their insistence on the preservation of the socialist system. It should have led world opinion in demanding that the Communist rulers step down and the socialist system they had imposed be abolished, so that the citizens of the Communist countries could become free to produce and live. Had the United States followed this policy, the collapse of communism would have occurred decades earlier.

Today, the United States should withdraw all official recognition from the remaining Communist-bloc countries and from totalitarian third-world countries, such as Iran, Iraq, and Libya, and expel their diplomats and alleged trade missions. It should end all so-called cultural exchanges with such regimes. If necessary, it should withdraw from the United Nations and expel that organization from U.S. territory. The only purpose served by the presence of these individuals and institutions is spying, terrorism, and subversion. If the governments of these countries wish to continue to be recognized, the prime condition must be their formal disavowal of socialism and the adoption of a genuine plan for the protection of individual rights and the establishment of capitalism in their countries.

It should be recalled that the very fact of the United States adopting a policy of laissez faire and respect for private property rights at home would itself go a long way toward undermining the power of today’s leading terrorist governments, namely, those of the Middle East. At the same time, it would cut the ground from under the resurgence of religious fanaticism in the region, which, like the arms build-up by governments in the region, is financed by money derived from an artificially high price of oil. These results would follow because a leading consequence of the adoption of a policy of laissez faire and respect for private property rights by the United States would be a great increase in the supply of domestically produced oil and other sources of energy, which latter, as substitutes for oil, would cause a reduction in the demand for oil. In the face both of a substantial increase in the supply and reduction in the demand for oil, there would be a sharp decline in its price. Thus, the revenues that finance the terrorists and fanatics would sharply decline.

* * *

A major obstacle to the pursuit of a proper foreign policy by the U.S. government is the incredible corruption of thought which exists not only within the United States but, to a much greater degree, in the rest of the world. This corruption was blatantly evident in the fact that throughout the so-called cold war, the state of world opinion was such that the expulsion of Communist diplomats from the United States would have been regarded as an act of aggression on our part. A call for the Communist leaders to step down and end the enslavement of their citizens would have been regarded as a transgression against their allegedly God-given right to enslave–or, as it is customarily put, “an interference in the internal affairs of sovereign nations.”

The ability of the United States to pursue a proper foreign policy and the ability of foreign countries themselves to move toward the achievement of a capitalist society depends on the spread of procapitalist ideas abroad. To say the same thing in different words, both our immediate national security and our long-run goal of the establishment of a fully capitalist society throughout the world, with worldwide free trade, freedom of investment, and freedom of migration, require that we be interested in the spread of proreason philosophy and procapitalist economic theory in foreign countries as well as in the United States.

A major task in the years ahead must be to bring about the translation of all of our main books into all of the world’s major languages. Human Action, Socialism, Atlas Shrugged, and about fifty or more other titles, should be made available in Russian, Polish, and Chinese, as well as in Japanese, Korean, Arabic, and all the other leading languages. Efforts should be made to promote the circulation of these books everywhere. I do not agree for a moment with the notion that only people brought up in the United States or Canada can readily appreciate our literature. Our philosophy recognizes only one reality and one human nature. No matter what intellectual and psychological obstacles a particular culture may create in the thinking of people, there is always some significant number who are open to new ideas. Our commitment to our philosophy and our national and economic self-interest require that we try to reach these people. As an example of the importance of doing so, just imagine the effect on our national self-interest of a totalitarian regime’s someday having to deal with people who have come to realize that each individual possesses reason and has an inalienable right to life, and that their reason and their lives are being sacrificed because of nothing more than the rulers’ willful refusal to abandon an irrational dogma. Imagine the effect of the regime’s being infiltrated by such people.

It should go without saying that all such intellectual efforts must be undertaken privately, not as an activity of the U.S. government.

As a further point in connection with what we should be working toward in the area of foreign policy, I would like to make a suggestion for another special campaign. This would be a campaign urging newspapers, magazines, and television stations which choose to maintain officially accredited reporters in Communist or other totalitarian countries to provide a warning label on all their reports from those countries which are obtained with government sanction. The label would identify the totalitarian nature of the country and state that no reason exists for regarding the report as anything but propaganda serving the interests of the government that originated it or sanctioned it.

Freedom of Immigration

We need to make a beginning toward the establishment of freedom of immigration. A logical place to begin would be in calling for free immigration from our immediate neighbors, Canada and Mexico. There is not the slightest reason for excluding Canadians. They are virtually indistinguishable from Americans, and had one or two battles gone the other way early in our history, would in fact be Americans. By the same token, had the Confederacy won the Civil War, then, with the prevalence of today’s ideas, present-day New Yorkers would probably not be able to migrate to Texas, nor Texans to California. Such restrictions, based on mere accidents of history, simply have no logical foundation.

It should not be necessary to add that the free immigration of Canadians, Mexicans, or any other nationality should not be at the expense of the immigration allowed under existing law to the members of any other nationality. As in the case of tax reduction, no one should be made any worse off than he now is, because of an attempt to improve conditions for anyone else.

The reason we must seek to abolish restrictions on Mexican immigration at the earliest possible moment is because the attempt to restrict it is in danger of making us adopt some of the most obnoxious features of the former South African regime–namely, a virtual pass law, in which people of Latin origin will have to carry identity papers to show on demand to immigration police, who, if they do not find the appropriate “papers,” will have the authority to destroy the lives of said individuals by uprooting them from their jobs and homes and deporting them. Already virtually Gestapo-like conditions exist in Southern California in connection with a notorious immigration checkpoint, where fleeing Mexicans of all ages and both sexes have often run into oncoming automobile traffic rather than be arrested by officers of the Immigration and Naturalization Service. This ignominy, I must note, has now been compounded by the recent passage of Proposition 187 in the state of California, which, if upheld in the courts, will actually impose the requirement of having an official identity card that must be shown on demand to the authorities.

Furthermore, the principle of private property rights implies that the Mexicans, and everyone else, have a perfect right to come here–to work for anyone who is willing to hire them and to live wherever anyone is willing to sell or rent to them. The violation of the rights the Mexicans or any other category of immigrant is a violation of the private property rights of employers and landlords–it is telling them that other people have the right to dictate whom they may or may not employ or to whom they may or may not sell or rent their property. It is a blatant manifestation of collectivism to believe that somehow the people of the United States as a whole have the right to tell the individual, private owners of property how they may use their property–that they must use it not as they, the private owners wish to use it, but as the nation collectively, or at least a majority of those voting, wish it to be used.

As I explained in Chapter 9, in a capitalist society free immigration does not deprive those already present of the opportunity of working and it does not reduce their standard of living. On the contrary, in the long run free immigration into a capitalist society from a semifeudal one, such as Mexico’s, must operate to raise the general standard of living in the capitalist society, because it means that more human beings will now live under freedom and have the opportunity to develop their talents. There are Mexicans and the children of Mexicans who have the potential for making the same kind of economic contribution to the general standard of living as have immigrants from other countries before them.

The only legitimate argument against unrestricted Mexican immigration (or unrestricted immigration of any other ethnic group) is based on the existence of our welfare state. To the extent that Mexicans come here and go on welfare and medicaid, or use public hospitals and public schools, and place an increased burden on government-subsidized public transportation facilities and so forth, then, it is true, there is a genuine loss imposed on the people already here. The solution, however, is not to violate the right of the Mexicans to immigrate, but to start dismantling our welfare state.

Without immediately abolishing the totality of the welfare state, which would be politically impossible, we could simply change its terms and make all noncitizens ineligible for its programs. This, of course, is essentially what a portion of California’s Proposition 187 seeks to do. However, that proposition also seeks to expel the immigrants and to deter further immigration through fear. Totally unlike Proposition 187, the mere exclusion of the immigrants from the welfare state would not impose any actual burden or disability on them. It would not be they who had to carry identity papers and prove why they should not be deported. There would be no question of that. On the contrary, it would only be the American citizens who sought the alleged benefits of the welfare state who would have to show papers and prove their citizenship.

While excluding the immigrants from the welfare state, we should simultaneously remove all government-imposed barriers to their being supplied privately with what they need. This would entail the removal of government licensing requirements in connection with meeting the medical, educational, transportation, and sanitation needs of the immigrants. As far as possible, this should be accompanied by privatization of such things as existing government-owned hospitals, schools, bus lines, and garbage-collection operations. An important result of privatization would be that the presence of the larger numbers of people resulting from immigration would be viewed as a source of more business, not more problems, as it is under the ineptitude of government ownership. In addition, in order to reduce the injustice that would exist in making immigrants pay taxes for the support of the welfare state for the native population, the immigrants should receive as nontaxable wages what would otherwise be their own and their employer’s social security and medicare contributions made in connection with their employment. The ironic effect of all these liberalizing measures would be to give the immigrants more freedom than today’s American citizens, and in that sense to make them truer Americans than today’s American citizens. If, at the same time, the immigrants could be reached with procapitalist ideas, this might well serve as the foundation for their being developed into a major group opposed to the welfare state for anyone.

In the present circumstances, it is especially important to make every effort to exclude immigrants from the public education system. At one time, it is true, public elementary education succeeded in educating pupils of all different nationalities in the three R’s. And even though its own existence represented a contradiction of the principle of individual rights, it instilled in pupils a basic respect and admiration for the United States. Today, public education teaches very little to anyone. It turns out masses of illiterates and students who have not the slightest idea of what the United States stands for. One of the last things we should want is today’s public education system teaching masses of immigrants in their own language. One of the major subjects that would be taught would undoubtedly be revolutionary Marxist nationalism. Under such conditions, as far fetched as it may sound, large-scale Mexican immigration into the Southwest could well result, one or two generations later, in a widespread demand for the return of the Southwest to Mexico. Thus, an important part of any campaign for free immigration for Mexicans should be an attack on public education and its Marxist domination. It is vital that the immigrants be assimilated as English speakers who support capitalism.

It would be enormously valuable if it could be explained to the immigrants that only the philosophy of individualism and respect for private property rights made possible their immigration. It would be legitimate to require of all immigrants an oath swearing to uphold the system of private property rights and to educate their children in the English language.

It would be a very short step from freedom of immigration for Mexicans to freedom of immigration for everyone.

Friendly Relations with Japan and Western Europe

Because of their exceptional economic strength and thus their potential someday to constitute a serious military threat to the United States, a cardinal principal of American foreign policy must be the maintenance of friendly relations with Japan and the countries of Western Europe. To assure this, what is necessary on our part is a policy of free trade, freedom of investment, and freedom of immigration–in short, a policy of full capitalism with respect to these countries. If we were to follow this policy, we would eliminate any possible economic basis of aggression against us on the part of these countries. And for all of the reasons shown in this book, from an economic point of view we could only gain from such a policy–probably very substantially. As I have shown, we would gain even if we alone were to follow a policy of free trade while the others clung to various protectionist measures. In that case our position would be analogous to the situation of a territory in which inbound transportation costs were lower than outbound transportation costs.

If we followed such a policy toward these countries, we could reasonably ask them to undertake a larger share of the defense of the free world, in accordance with the increase in wealth and income they have experienced. We would not have to worry that in doing so, we were encouraging potential enemies to arm, as we should presently be concerned.

Of course, the policy of full capitalism with respect to foreign relations should be applied to all countries. However, for the reasons stated, it is especially important in these two cases.


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 Amazon.com author's page for additional titles by him. Visit his website capitalism.net and his blog atGeorgeReismansBlog.blogspot.com. Watch his YouTube videos and follow @GGReisman on Twitter.

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