Before I read Rand, I would have said Capitalism is an economic only system, independent of politics.
After Rand, Capitalism is a new concept for me (as new as morality became for me), and is not so much economics as an economy defined by politics… and I cannot but utter the implied preface “Laissez-faire”… even though ironically insistence on that is as redundant as saying “independent” before “thought”.
Ownership, refers primarily only to the rights in one’s property. But can we say that (capital C) Capitalism is a system agnostic to freedom of speech? What about freedom of association or movement of the press, the rule of law, equality under the law, and the right to one’s life itself? As everything to a hammer is a nail so too I would suggest a current day Economist of the academy would see Capitalism, technically defined, as purely an economic system (see how “purely” serves as the great compartmentalizer) and hence as independent of such things since they are in the political realm. If we have enough economic activity technically conforming to our concepts of capital etc. it matters not that people do not have free speech or equality under the law.
After years of saturating myself in Rand’s ideas, I have come to see that there are a few ways to look at economic “systems” which depend implicitly on what one thinks they are. First, in a manner analogous to a biologist, and second in the manner of a Hermann Goering. The first is concerned with the study and description of nature, because that is what is meant by a “system” in the context something which arises naturally, while the second is concerned with a “prescription” for the organization of people for reaching the aims of the state or its ruler, because that is what is meant by “system” in the second context, i.e. what is to be imposed and put into place. A biologist observing a natural system would never conclude there is no system, she would point to what is happening and identify it, whereas a Goering who has specific goals for his master, unless there are specific edicts put into place for specific goals he would (quite consistently with his definition of a “system”) be correct to say there would be no system… and to him “Laissez faire” at most is a system of “no system”, so to speak. In the first sense, the economy is what people do and in the second sense, it is what we (or the state) make or allow people to do.
Why the point about the two ways of looking at economic systems? First, almost everyone I meet, no matter how much of a proponent of freedom and rights, when speaking of economics, especially in the comparison between Socialism and Capitalism, tends to inadvertently slide toward usage of terms similar to that which would be used by a State central planner. Of course, the conclusions are different for what “we” should do about, this or that “social ill”, which implicitly is the “responsibility” of “us” (or the state) to “manage”, but the philosophical perspective where the “the ends” are firmly pulling the leash, and the “means”, almost forgotten and apologetically being tugged hither and thither by an some untrained pooch, is all too salient. What is an economic system, how does one validate and assess its success? Outcomes or method, ends or means?
Anecdotally, but not unrelated, some years ago, a pre-law acquaintance of mine essentially told me that Rand had tried to justify Capitalism on the economic outcome, but that such outcomes do not result as of a necessity, and hence she was wrong, other interventions are “required”, and hence Capitalism is not the “best” system. I of course retorted that was not the case. Rand had not argued, Capitalism is “right” because it always makes everyone wealthier. It is right because it is the result of the activity of free individuals whose rights are protected by a proper government, i.e. a proper political system. [That said any “system” (which can be described) as arising within such a context would be a proper Laissez-faire economic system… I do not discount the possibility that some such economic system might not be best labeled or associated with “Capital”. Presumably Rand, (as I do) tended to believe it just so happens that Capitalism happens to be the natural way free peoples voluntarily act and trade with each other… and one day maybe a Laissez-Faire Economy (LFE), as such, including several aspects, will be the correct term to use]
It comes full circle for me that those thinking to prescribe and solve so-called “problems” will never understand the true meaning of what Rand identified as LF-Capitalism, economically it is descriptive not prescriptive, but it goes hand in hand with a certain, a proper political system. Hence the circle, Rand is certainly prescriptive about what the proper society is politically, i.e. what a proper government is and does, and what individual rights are. So Rand’s economic system is not prescriptive in the second sense of an “economic system” but it requires a prescription for a political system which makes it possible. Given that the proper politics here literally defines and brings about the economic system arising therefrom… even in the first sense of “economic system” it becomes difficult to simply identify Capitalism as “purely” economic. In other words IMHO, LF-Capitalism is a description of an economic system naturally arising from a certain prescribed and proper political system…
I’ll try to focus this meandering, about description and prescription, ends and means, economic and political… so as to conclude my ramblings on the when and where:
I tend to see Capitalism as arising naturally and spontaneously from a correct political system whose sole role is to protect individual rights.
It’s existence requires nothing less, and imposes nothing more.