Laissez-Faire Capitalism

Political Philosophy
1

I’m having a problem reconciling laissez-faire capitalism with the existence of any government at all. If laissez-faire capitalism means no government interference, then the only way laissez-faire capitalism could exist is in an anarchy. Laws are a form of coercion, coercion is a form of force, therefore government laws interfere in the market - they coerce people to act a certain way, therefore laissez-faire capitalism could only exist in a society with no laws - i.e. anarchy.

Has anyone reasoned a way out of this problem?

2

I’m having a problem reconciling laissez-faire capitalism with the existence of any government at all. If laissez-faire capitalism means no government interference, then the only way laissez-faire capitalism could exist is in an anarchy. Laws are a form of coercion, coercion is a form of force, therefore government laws interfere in the market - they coerce people to act a certain way, therefore laissez-faire capitalism could only exist in a society with no laws - i.e. anarchy.

Has anyone reasoned a way out of this problem?

LFC means no government interference in the economy. A government is still necessary to uphold and protect the rights of individuals in order to maintain the freedom necessary to make rational decisions, which is at the foundation of LFC. The only “coercion” that should be imposed by the government is that which will protect people from the coercion of other individuals, and hand out justice when rights violations have occurred.

3

I’m having a problem reconciling laissez-faire capitalism with the existence of any government at all. If laissez-faire capitalism means no government interference, then the only way laissez-faire capitalism could exist is in an anarchy. Laws are a form of coercion, coercion is a form of force, therefore government laws interfere in the market - they coerce people to act a certain way, therefore laissez-faire capitalism could only exist in a society with no laws - i.e. anarchy.

Has anyone reasoned a way out of this problem?

Objectivism makes a distinction between the initiation of force, retaliatory force, and defensive force. The initiation of force is what criminals, invading foreign powers, or improperly acting governments do-- deprive you of your life, liberty or property without your consent, broadly speaking. To combat criminals and invaders who attempt to initiate force, the government is vested with a monopoly on retaliatory force to stop and punish those criminals (as well as foreign invaders). When government help is temporarily out of reach, an individual that finds his rights threatened in an emergency situation may use defensive force in self-defense.

So to specifically answer your post, some (if not most) of what the government does nowadays is an improper use of force. This does not change the fact that the existence of some kind of government to keep peace, enforce property rights and settle legal disputes is necessary in a civilized society. The government ought only use its monopoly on force to protect individual rights, and nothing else.

This is the broad outline-- actually filling in the details of what constitutes force being initiated, retaliatory or defensive is a task left for law.

4

Laws are a form of coercion

Coersion and force are necessary for self-defense. They would exist in anarchy as well, unless you’re suggesting that in anarchy no one would ever use them.

The only difference is that in LFC those who use them would be punished by a stronger force than themselves (Government, ruled by a law that punishes the initiation of force and nothing else).

In anarchy that would not happen: coersion and force would in fact become the law.

5

LFC means no government interference in the economy. A government is still necessary to uphold and protect the rights of individuals in order to maintain the freedom necessary to make rational decisions, which is at the foundation of LFC. The only “coercion” that should be imposed by the government is that which will protect people from the coercion of other individuals, and hand out justice when rights violations have occurred.

Laws would interfere in the economy. For example, if a business’s product kills someone, it’s reasonable to prosecute the company’s executives for murder. The threat of the force (among other things) would cause the company to make a product which doesn’t kill people.

6

Laws would interfere in the economy. For example, if a business’s product kills someone, it’s reasonable to prosecute the company’s executives for murder.

By that logic it would be reasonable to prosecute the CEO of Smith&Wesson with murder. It most certainly isn’t.

Can you think of an example in which a product kills someone, and it would be reasonable to prosecute the CEO of the producer for murder?

If yes, then why would you oppose that reasonable legal action?

7

I’m having a problem reconciling laissez-faire capitalism with the existence of any government at all.

No, it means the government cannot initiate force. Read Nate’s response: “interference” is not the correct concept. Laws are not a form of coercion, they are a means of preventing coercion.

8

Laws would interfere in the economy. For example, if a business’s product kills someone, it’s reasonable to prosecute the company’s executives for murder. The threat of the force (among other things) would cause the company to make a product which doesn’t kill people.

You would have to prove that the executives initiated force that resulted in death. The only example i can think of at the moment is the grenade in a teddy bear. :dough:

9

Thank you all, so much, for replying. I hope you don’t mind if I reply to you all in one post.

Nate T. - How would the existence of laws not be an initiation of force? Suppose a man approaches you on the street and says, “Hand over your money or I’ll kill you.” This is clearly an initiation of force. He’s giving you a false choice. Sure, you could choose to let him kill you, but you’d rather not. Your hand is forced. Now, suppose there’s a law which says, “If you sell a product that doesn’t do what you claim it does, the government will take your money.” This would be protection against fraud (which isn’t allowed in laissez-faire capitalism). Undoubtably, there are people out there who would like to sell products that don’t do what they claim they do. In such cases, the government is initiating force in much the same way the mugger is: the government is providing a false choice. People would rather sell products which don’t do what they claim to do, but because of the law they do not.

Coersion and force are necessary for self-defense. They would exist in anarchy as well, unless you’re suggesting that in anarchy no one would ever use them.

The only difference is that in LFC those who use them would be punished by a stronger force than themselves (Government, ruled by a law that punishes the initiation of force and nothing else).

In anarchy that would not happen: coersion and force would in fact become the law.

I don’t think this is a true Objectivist point of view, is it? It can’t be rational to argue “might makes right.”

By that logic it would be reasonable to prosecute the CEO of Smith&Wesson with murder. It most certainly isn’t.

Can you think of an example in which a product kills someone, and it would be reasonable to prosecute the CEO of the producer for murder?

If yes, then why would you oppose that reasonable legal action?

I should have been more specific. I meant in cases where there is mal-intent or negligence. For example, suppose someone sells arsenic as the cure all for cancer. They know it’s arsenic, they know it will kill people. Would laissez-faire simply let this man walk?

For those I didn’t reply to specifically, I think I covered your questions above. If I didn’t, please let me know.

10

Thank you all, so much, for replying. I hope you don’t mind if I reply to you all in one post.

Nate T. - How would the existence of laws not be an initiation of force? Suppose a man approaches you on the street and says, “Hand over your money or I’ll kill you.” This is clearly an initiation of force. He’s giving you a false choice. Sure, you could choose to let him kill you, but you’d rather not. Your hand is forced. Now, suppose there’s a law which says, “If you sell a product that doesn’t do what you claim it does, the government will take your money.” This would be protection against fraud (which isn’t allowed in laissez-faire capitalism). Undoubtably, there are people out there who would like to sell products that don’t do what they claim they do. In such cases, the government is initiating force in much the same way the mugger is: the government is providing a false choice. People would rather sell products which don’t do what they claim to do, but because of the law they do not.

This is not true because this argument assumes that an individual has a right to fraud other individuals. Which is false because a right is only a right if it can be exercised without infringing anothers rights.

I don’t think this is a true Objectivist point of view, is it? It can’t be rational to argue “might makes right.”

Might makes right is not an objectivist point of view. He is using might makes right as an example of what would exist in an anarchist society.

I should have been more specific. I meant in cases where there is mal-intent or negligence. For example, suppose someone sells arsenic as the cure all for cancer. They know it’s arsenic, they know it will kill people. Would laissez-faire simply let this man walk?

For those I didn’t reply to specifically, I think I covered your questions above. If I didn’t, please let me know.

This argument also assumes that an individual has the right to fraud, and in this case infringe on right to life. Preventing someone to sell posion that knows it is posion is not an improper use of force, as the government would be protecting others rights to life.

11

How would the existence of laws not be an initiation of force?..

Now, suppose there’s a law which says, “If you sell a product that doesn’t do what you claim it does, the government will take your money.”

Never start with fraud: start with simple things like murder and theft. Murder and theft, when actual, are the initiation of force. A law against murder or theft prevents the initiation of force, and states that if you initiate force, the government will use retaliatory force in an objectively prescribed fashion. You should now see that laws are not the initiation of force, they are the threat to retaliate with force against anyone who initiates force.

In such cases, the government is initiating force in much the same way the mugger is: the government is providing a false choice.

It is a real choice: you can chose to respect the rights of other men. If you chose to initiate force, there will be certain consequences. In what way is that a “false choice”?

For example, suppose someone sells arsenic as the cure all for cancer. They know it’s arsenic, they know it will kill people. Would laissez-faire simply let this man walk?

No, that would be the anarchist’s approach, but capitalism does respect the rule of law. The essential thing is that only certain kinds of laws are proper under capitalism.

12

Nate T. - How would the existence of laws not be an initiation of force? Suppose a man approaches you on the street and says, “Hand over your money or I’ll kill you.” This is clearly an initiation of force. He’s giving you a false choice. Sure, you could choose to let him kill you, but you’d rather not. Your hand is forced. Now, suppose there’s a law which says, “If you sell a product that doesn’t do what you claim it does, the government will take your money.” This would be protection against fraud (which isn’t allowed in laissez-faire capitalism). Undoubtably, there are people out there who would like to sell products that don’t do what they claim they do. In such cases, the government is initiating force in much the same way the mugger is: the government is providing a false choice. People would rather sell products which don’t do what they claim to do, but because of the law they do not.

First, I’m confused by your usage of the phrase “false choice.” You’ve given two examples of this type of choice, a mugger asking you to choose between your life and your cash, and the government “forcing” a company to choose between truthfully advertising what it is selling and some kind of legal consequence. How are these two choices “false” as against other kinds of choices? I ask because you seem to be determining when force is initiated based upon these kinds of choices. For example, does a law against murder induce a similar choice: either do not murder anyone or face severe criminal penalties? If not, how is this different from the above examples? If so, does this mean the prohibition of murder is an initiation of force?

In any case, the example you give is that of fraud, which is a species of initiating force-- I’m not sure why you think fraud would not be illegal under a laissez-faire system. If you agree to certain conditions in a contract and fail to deliver, you have by virtue of your possession effectively stolen that which you promised to deliver; that which you have illicitly kept is not yours by right. To see how this justifies retaliatory force on the part of the government using your example: if a company sells a product and fraudulently claims it has certain properties* it does not, the company has stolen your money by violating the agreement it made with you to deliver goods of a certain nature. The government is then justified in using retaliatory force on your behalf to correct the situation.

*You’ll have to find a lawyer, judge, or other person knowledgeable about the workings of the law to determine how much information or omission thereof is necessary to constitute fraud.

13

I’m obviously not being very clear. Please, allow me to try again.

My argument is that, in order to safeguard a laissez-faire capitalist market and economy, laws against the initiation of force must exist. But laws are an initiation of force. If you started with a blank slate, and wanted to create a society with laissez-fair capitalism, you would first have to create laws which protect that capitalism. The individuals in the society would not have initiated force in any way, yet the government’s first action would be to say, in effect, “Follow the rules, or something bad will happen to you.” Which is coercion.

Yes, if someone breaks a law and the government uses force against them in retaliation, that is not an initiation of force. But that’s not when the force began. The force began, was initiated, when the government threatened the citizens with force if they failed to comply with the laws.

At first, I considered this to simply be an issue of consequences. You are free to break the law, but you are not free to escape the consequences of going to jail, or paying a fine. Therefore, a law is not force - it merely tells what the consequences are if action is taken; like when the doctor tells you, “Continue to smoke and you’ll die in a year.” This is not a threat, simply a statement of fact - cause and effect. But that argument falls apart when used in the case of a mugger and his victim. Is the mugger’s demand of, “Give me your money or die” simply a statement of fact - cause and effect? Or is it force?

14

I disagree that the government institutes the law first. In order for there to be a government in the first place a civil society has to develop. It would be that society that would determine the start point of law (probably starting with tradition or common custom). Now if we consider that this society has developed as a L-F Capitalist society there would be no initiation of force in establishing the law only a promise of force should one disobey it.

15

My argument is that, in order to safeguard a laissez-faire capitalist market and economy, laws against the initiation of force must exist. But laws are an initiation of force. If you started with a blank slate, and wanted to create a society with laissez-fair capitalism, you would first have to create laws which protect that capitalism. The individuals in the society would not have initiated force in any way, yet the government’s first action would be to say, in effect, “Follow the rules, or something bad will happen to you.” Which is coercion.

You have answered some of your own questions, you just seem to be caught in some sort of logical loop. You need to make clear to yourself what is an initiation of force and what isn’t. Let’s break it down:

  • The gov’t doesn’t “protect capitalism” or “safeguard a market and economy” it protects the Rights of the individual.

  • When individuals are exercising their Rights, no force is initiated, no coercion is used (As you acknowledge).

  • So the gov’t isn’t coercing anybody, in fact it is telling all those who would use coercion: “don’t do it”. The gov’t is telling everybody: “don’t use force”, which is something they shouldn’t be doing (using force) in the first place (As you agree).

I am not initiating force against you when I inform you of the rules of scrabble before we play. Rather, I am preventing any misunderstandings from arising later on. It is in fact the only civilized way to play scrabble.

In a civilized society the rules are:

  • Exercise your rights

  • Do not infringe the rights of others

There are penalties for not following the rules. Reality enforces the first rule, the gov’t enforces the second.

Capitalism is the social system based on individual rights.

People would rather sell products which don’t do what they claim to do […]

Not if they want to make a profit.

16

I’m obviously not being very clear. Please, allow me to try again.

My argument is that, in order to safeguard a laissez-faire capitalist market and economy, laws against the initiation of force must exist. But laws are an initiation of force. If you started with a blank slate, and wanted to create a society with laissez-fair capitalism, you would first have to create laws which protect that capitalism. The individuals in the society would not have initiated force in any way, yet the government’s first action would be to say, in effect, “Follow the rules, or something bad will happen to you.” Which is coercion.

Yes, if someone breaks a law and the government uses force against them in retaliation, that is not an initiation of force. But that’s not when the force began. The force began, was initiated, when the government threatened the citizens with force if they failed to comply with the laws.

At first, I considered this to simply be an issue of consequences. You are free to break the law, but you are not free to escape the consequences of going to jail, or paying a fine. Therefore, a law is not force - it merely tells what the consequences are if action is taken; like when the doctor tells you, “Continue to smoke and you’ll die in a year.” This is not a threat, simply a statement of fact - cause and effect. But that argument falls apart when used in the case of a mugger and his victim. Is the mugger’s demand of, “Give me your money or die” simply a statement of fact - cause and effect? Or is it force?

Well, if all of the laws on the books do nothing but forbid various kinds of force initiation, then there would be no reason to object to them, by the first sentence in your second paragraph. Any other laws shouldn’t be there in the first place. Are you asking how to distinguish good law from bad law? Or how to tell when the use of force is justified in the first place?

In a sense, law is an expression of causality every bit as much as gravity-- which is the recognition that in a social setting men need to live without the threat of initiation of force by others in order to pursue their own ends with their rational faculty and trade peaceably. To meet this need, the initiation of of force ought to be barred in its various guises, but in a predictable, objective way so that everyone involved can plan their lives accordingly: i.e., proper laws. This is why (among other reasons) a mugger’s ultimatum of “your money or your life” is not a law, but a government prohibition against murder is: they serve very different ends.

I should mention that improper laws, laws that confiscate property from people to redistribute from others, say, are an initiation of force. This is true because, even though these bad laws may be enacted by the same formal process as good laws, they serve the wrong purpose-- the purpose that laws were meant to stop. So good laws are those that prevent the initiation of force, bad laws are an initiation of force.

One last thing-- the example of the mugger. In this case, the mugger would be using force. To say that the dilemma the mugger puts people in is just a matter of cause and effect ignores the fact that the mugger has a choice in the matter: he has chosen to violate the rights of others. That’s what makes him morally (and legally) culpable.

17

My argument is that, in order to safeguard a laissez-faire capitalist market and economy, laws against the initiation of force must exist. But laws are an initiation of force.

No, proper Objectivist Laws would define what constitutes an initiation of force that will be met with a response of force.

A law against murder, for example, does not force you not to murder. It cautions you that murder is an initiation of force against another individual, and that if you violate another individual’s right to live by murdering them, and are discovered, you shall be dealt with by means of force in response. You can still initiate the murder. You might even get away with it.

The law should be society’s way of saying, “If you hit me, I will hit you back”. You would have to hit me for me to hit you. You would have to initiate the force, for me to respond with force.

18

But laws are an initiation of force. If you started with a blank slate, and wanted to create a society with laissez-fair capitalism, you would first have to create laws which protect that capitalism. The individuals in the society would not have initiated force in any way, yet the government’s first action would be to say, in effect, “Follow the rules, or something bad will happen to you.”

And yet it still is not initiation of force. A law says that if you initiate force, that act will be met with force. That is retaliation, not initiation. Do you understand the distinction?

Yes, if someone breaks a law and the government uses force against them in retaliation , that is not an initiation of force.

Do you not see the internal inconsistency of your position?

But that’s not when the force began. The force began, was initiated, when the government threatened the citizens with force if they failed to comply with the laws.

The government “threatened” retaliatory force because others threatened to initiate force. Savage use of force predates civilization and the rule of law by millenia.

19

I don’t think this is a true Objectivist point of view, is it? It can’t be rational to argue “might makes right.”

“Might makes right” is not what I want. That’s precisely why I’m against anarchy: In such a system might would be right.

In a system of laws right is might, provided that you have the right laws.(which LFC does)

I should have been more specific. I meant in cases where there is mal-intent or negligence. For example, suppose someone sells arsenic as the cure all for cancer. They know it’s arsenic, they know it will kill people. Would laissez-faire simply let this man walk?

No, LFC wouldn’t. Anarchy would.

The reason why that wouldn’t be allowed in Capitalism is because it constitutes fraud.

It is not an act of voluntary trade, it is an act of deception.

As a result, it doesn’t qualify as part of the economy (which is the system of voluntary trade among individuals). A government which provides laws to prevent theft and fraud would not have to be involved in any way in the economy: the deals and contracts people make voluntarily. That is what is meant by the separation of state and the economy.

20

I’m obviously not being very clear. Please, allow me to try again.

My argument is that, in order to safeguard a laissez-faire capitalist market and economy, laws against the initiation of force must exist. But laws are an initiation of force. If you started with a blank slate, and wanted to create a society with laissez-fair capitalism, you would first have to create laws which protect that capitalism. The individuals in the society would not have initiated force in any way, yet the government’s first action would be to say, in effect, “Follow the rules, or something bad will happen to you.” Which is coercion.

Yes, if someone breaks a law and the government uses force against them in retaliation, that is not an initiation of force. But that’s not when the force began. The force began, was initiated, when the government threatened the citizens with force if they failed to comply with the laws.

At first, I considered this to simply be an issue of consequences. You are free to break the law, but you are not free to escape the consequences of going to jail, or paying a fine. Therefore, a law is not force - it merely tells what the consequences are if action is taken; like when the doctor tells you, “Continue to smoke and you’ll die in a year.” This is not a threat, simply a statement of fact - cause and effect. But that argument falls apart when used in the case of a mugger and his victim. Is the mugger’s demand of, “Give me your money or die” simply a statement of fact - cause and effect? Or is it force?

You misunderstand the difference between initiation and retaliation. LFC laws are not an initiation, they are retalatory in nature. An individual still is free to do as he pleases, but face consequences of his choices. Every choice has a consequence, and not having laws qould not change that fact.

Saying that a laws existence is an initiation of force is the same as saying the idea of right to life and self defense are an initiation of force. If a mugger thinks about mugging me, he is aware that a consequence of his actions may be me shooting him because I have the pre-existing idea that I have a right to defend my life. However, the fact that I have pre-existing concepts of self defense does not constitute an initiation of force against a mugger.