Friday, June 23, 2006

The Ultimate Defense of Laissez-Faire Political Economy

Stuart K. Hayashi

Many great free-market advocates have read and recommended Ayn Rand's anthology, Capitalism: The Unknown Ideal, which contains contributions from Alan Greenspan prior to his becoming Federal Reserve chairman.

However, I should state, for the record, that Capitalism: The Unknown Ideal is not Ayn Rand's definitive statement on politics or economics.

In reality, the ultimate defense of laissez faire is . . .

The Virtue of Selfishness: A New Concept of Egoism, also by Ayn Rand.

I have to admit that the provocative title is a double-edged sword. On the one hand, many close-minded elderly people, such as Whole Foods founder-CEO John Mackey, are instantly turned off by the title and thus close their minds against anything the book has to say.

On the other hand, I know from personal experience that, back when I was in high school and sick of all the social conformity that my teachers and classmates tried to push upon me (calling me "selfish" for refusing to conform to their irrational demands about how I dress and talk), I was immediately captivated by the bold title. I saw it and said, "Virtue of . . . selfishness?!" I admired that somebody had the guts to pen a tome with that title.

Of course, when Ayn Rand upholds "selfishness," she doesn't mean that there is anything right about harming other people for one's own benefit. She explains the ethics of rational self-interest, which means that, as long as you violate no one else's rights, it is ethical and even noble of you to creatively pursue endeavors that benefit yourself, your loved ones, and everyone and everything else you value.

That is what the most productive entrepreneurs do in a free market.

It is The Virtue of Selfishness -- not Capitalism: The Unknown Ideal -- that explains all of the important principles behind a laissez-faire political economy. Capitalism is a merely a sequel and extension of the ideas first elucidated in Virtue.

Virtue of Selfishness explains all of the following important points, which are not addressed as clearly in Capitalism and sure as heck not as well-addressed in any Libertarian-authored book:

* Why you have a right to the private property that you have justly acquired through either homesteading or through consensual transactions.

* Why, if you have very few posessions, you have no right to demand that the government take the property of other people and hand it over to you.

* Why coercive taxation is immoral, and of how government can be financed through consensual transactions instead of through coercive taxation. (The only problem I have here is that Ayn Rand uses the fallacious term of "voluntary taxes"; a tax, by definition is not voluntary, and consensual financing of government should not be given the label of "taxation" at all, but of "user fee.")

* The ultimate defense of the right to private profit, which no American Samoan politician will ever be able to refute.

So, despite the greatness of Capitalism: The Unknown Ideal, it is time to put that book aside, and to pick up the all-time best primer on liberalization and free enterprise: The Virtue of Selfishness.

Another terrific book on this subject, which beats the pants off of anything recommended by the Ludwig von Mises Institute, is Andrew Bernstein's The Capitalist Manifesto, which uses history, economics, and science to demonstrate the ethical necessity of a laissez faire political system.