Property: The Junction of Political and Economic Liberty

libertyI find it striking how little attention is given to the fundamentals upon which America and its namesake of democracy were founded. Amidst the political and economic turmoil that characterizes our time, we seem to neglect what is simultaneously important to each and all of us, liberty. We should never forget that the fundamental precept of democratic politics is and has always been the individual and his or her liberty, i.e. freedom from oppression from either foreign or domestic persons. Yet, it seems that government rhetoric has obscured the true meaning of what it means to be free by seeking to substitute what they call the “public welfare” for that of the individual. Perhaps the most militant weapon used in both the past and present is fear, but fear of what? Economic turmoil via crises, massive unemployment, giant restructuring of the markets and so on has left most of the American public confused and groping in the dark for solutions to these problems, because they intimately affect each individual’s daily life. We turn to the government for answers, yet our system continues to unravel at each successive piece of legislation carefully crafted to safeguard the holiest of bureaucratic utterances – the public welfare. To this I ask, but what of the individual? To find such answers as they have been pronounced for nearly two-and-a-half centuries, one needs to revisit the traditional notions of democratic government and free-market capitalism. Together they illustrate an intersection, that once laid bare, shines a brilliant light not just on past scholarly or even political achievement, but on the fundamental relationship between the economic and political.

This naturally begs the question as to how economic doctrine, namely how it fits within the larger framework of classical liberal theory and which economic system is most conducive to individualism, liberty, equality, and property. Given these criteria, capitalism is the most legitimate form of economic organization because its legitimacy parallels that of democracy. Just as democracy attains its legitimacy from participation, capitalism attains legitimacy by virtue of its requirement of participation. The difference is that participation is not mandatory in a representative democracy because stable government can exist (for some time) without direct influence from the masses. Shockingly, Dye and Zeigler note, “It is the irony of democracy that democratic ideals survive because the masses are generally apathetic and ignorant…The survival of democracy does not depend on mass support for democratic ideals…[A]ll that is necessary is that they fail to commit themselves actively to antidemocratic movements.”[1] More fundamental, is that the American democratic system possesses written law, namely the Constitution, which provides the framework that fosters individualism, while protecting liberty and one’s right to property.

Although capitalism has no such document, the market demands daily participation for no other reason than one’s basic subsistence—indeed, the market is literally manifested via the daily activities of rational consumers. And because any market necessitates property, mandatory action is the very basis of property itself. This provides both the need for the justification of property and is the linchpin that unites democratic theory with the traditional conservative notion of capitalist doctrine originally promoted by Adam Smith.

As mentioned above, the preeminent tenet of liberal theory is individualism, which liberty necessitates—the freedom to maintain one’s existence in accordance with their own self-interest so long as their actions do not infringe upon the equal liberty of others. However, so engrained in liberal theory that it seems almost common sense is that no individual is able to maintain his or her own life without the right to property, the justification of which is most clearly pronounced by Locke. His proviso asserts a key requirement for what constitutes an individual’s right to property—that being acquired or produced by his own labor. “…every Man has a Property in his own Person. This no Body has any Right to but himself. The Labour of his Body, and the Work of his Hands, we may say, are properly his.” The crucial conception to property rights in Locke is therefore the act of production, which necessitates a mixing of the worker’s labor with the object in question. The individual, by mixing his labor with the object, bestows upon that item the virtue of property: “he hath mixed his Labour with, and joined to it something that is his own, and thereby makes it his Property.”[2] But how does this translate into liberal democratic theory, particularly how does one’s right to property ensure his or her right to liberty? It is not until we answer this question that a substantive relationship between democracy and capitalism can be established.

Ayn Rand provides what many view as a highly idealist philosophy, commonly known as objectivist epistemology. Her philosophy attempts to reconcile classical liberal tenets with the material world. By doing so, she provides mankind with a moral justification for its material existence, thereby reinforcing both liberal democratic theory and its necessity of capitalism as the arbiter of social justice. She asserts uncompromisingly:

The right to life is the source of all rights—the right to property is their only implementation. Without property rights, no other rights are possible. Since man has to sustain his life by his own effort, the man who has no right to the product of his effort has no means to sustain his life. The man who produces while others dispose of his product, is a slave.[3]

For Rand, then, property rights are the very basis of life and liberty. Moreover, since life is deemed by liberal theory as a natural right, Rand also provides mankind with a moral justification for their natural right to exist and to hold property.

This has broader effects than some acknowledge today because the moral imperative of democracy, i.e. individualism, manifests itself via private property and the market. Thus, while the legitimacy of democracy comes via participation, the legitimacy of capitalism is manifested via man’s right to his own life. The traditional justification for property then becomes a crucial precept of liberty itself and the only viable means by which man is able to sustain his own life. That said, if man’s fundamental right is his ability to bestow his labor upon that which is to become property, and the value of property lies in the labor that man bestows upon it,[4] then man’s fundamental rights are his right to property (his political right) and the right to dispense of his labor as he sees fit (his economic right). More precisely, democracy provides proprietary legitimacy to acquire property via the law, and capitalism furnishes man the moral right to acquire property by virtue of its necessity for his survival.[5] That said, man’s fundamental right to his liberty presents itself via the duality of the political and economic right to sustain his own life. Therefore, these two dimensions form a coherent conception of man’s fundamental right to liberty, for they represent to him his own power to create and contribute to the betterment of his own position (or at least to sustain his current position) through the acquisition of property. Furthermore, the theoretical connection between democracy and capitalism is that while capitalism provides the moral legitimacy to acquire property, democracy protects that moral right via a commonly acknowledged and accepted canon of legal statutes.

Given such a justification for property within the canon of traditional liberal theory, one may reason as follows:

P1 Liberty necessitates individualism.
P2 Individualism is grounded in property rights.
C1 Liberty necessitates property rights.

In other words, liberty is based in the necessity to exist, whence the basis of property rights. Therefore, the traditional justification of property is grounded in the individual, not the state. If, then, liberty necessitates the right to acquire property free from state intervention, then the point at which the state becomes directly involved in the distribution of property becomes the point at which capitalism is circumvented and liberty, as pronounced by democratic theory, threatened.

[1] Thomas R. Dye, Harmon Zeigler, and Louis Schubert. The Irony of Democracy: An Uncommon Introduction to American Politics, 14th ed. (Boston: Wadsworth Cengage Learning, 2009), 114.

[2] John Locke, Two Treatises of Government: Cambridge Texts in the History of Political Thought, ed. Peter Laslett(Cambridge: Cambridge University Press, 1988), 287-288.

[3] Ayn Rand, “Man’s Rights,” in The Virtue of Selfishness (New York: New American Library, 1964), 110.

[4] Locke, Two Treatises of Government, 287-288.

[5] Rand, “Man’s Rights,” 110.

Laissez Faire Links: Government Shutdown, Delaying the Obamacare Mandate, the Morality of Abortion, and Myths Against Capitalism

What would a proper government shutdown look like?  Why will President Obama need to delay his mandate provision?  Can a woman be charged with homicide for aborting her baby?  Did capitalism cause the 2008 financial crisis?

  • Ari Armstrong over at The Objective Standard talks about a government shutdown that would be welcomed.  His brief piece Toward a Shutdown to Celebrate makes the point that most government functions are superfluous, and there are many.  Beneath the umbrella of laissez-faire capitalism, the proper function of government is strictly limited to protector of individual rights.  He states, “In order to protect rights, the government needs to run an effective military, police force, court system, and the aspects of government necessary to support them. Those, and nothing else, are the essential functions of government.”
  • Forbes contributor Scott Gottlieb discusses problems the new government healthcare exchanges are having out of the gate.  Why President Obama Will Have To Delay His Health Insurance Mandate makes the case that technical problems with the virtual exchange rollout will necessitate a delay in the requirement for those uninsured to purchase coverage.  His prognosis is not optimistic: “The Administration started building these systems late, and rushed them online, without perfecting these networks. Working them out now, in real time, is going to take months, and maybe a year.”  With that large of a delay, the Obama Administration will have to backpedal on its threat to penalize the uninsured.
  • Just a little more from our friends at The Objective Standard tells us about a possible Colorado ballot measure that would effectively criminalize any and all abortions, even in cases of rape and incest.  The measure would go further though.  In addition to calling for “homicide prosecutions for killing the unborn,” the “Brady Amendment” violates a women’s moral right to choose how she lives and what is best for her and her body.
  • Did Capitalism Cause the Financial Crisis?  This is a short, but invaluable video regarding the common myth that capitalism failed, resulting in the 2008 financial meltdown. Yaron Brook, Director of the Ayn Rand Institute, states that this is erroneous because a true system of laissez-faire capitalism did not exist prior to 2008.  What did exist was a degree of government intervention that distorted the market, leading to bubbles in asset prices that never would have existed under natural market forces.  It is no coincidence that the three most highly regulated industries – housing, banking, and mortgages – were those that failed.  Pay particular attention to his comments on the Federal Reserve system.  For more information, see my discussions of the Federal Reserve.

Economic Cannibalism: A Lesson from the Soviets

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Simon Black’s June 14th article entitled “What are the Social Implications of Economic Collapse?” makes a clear-cut diagnosis of America’s imminent fall from its economic pedestal.  The point of no return is passed according to Black.  Foreign buyers of Treasury securities are undoubtedly nervous over the credibility of U.S. debt, and as we lose their business the only option for Washington is to turn up the printing press at the Federal Reserve.  Deficit spending has evolved into an all-out race to the bottom of the dollar.  The diagnosis is in.  Massive inflation and an attempt to continue government austerity via higher taxation will erode much of America’s purchasing power along with her savings.  The final result will be what Black and many others have termed economic cannibalism.  On this, Black makes a poignant reference that bears the full light of Ayn Rand’s vision as laid out in Atlas Shrugged.

In the best traditions of Atlas Shrugged, the government will continue its persecution of the productive class– professionals, investors, entrepreneurs, and skilled workers. Existing taxes will rise, new taxes will be created, trade barriers will be enacted, and a maze of cost prohibitive regulations will be passed.

In the private sector, the results will be stifled incentive, which translate into a serious lack of innovation and growth.  The public however will see still worse effects:

When inflation eats away at a family’s already meager standard of living, when austerity eliminates the benefits to which recipients have grown accustomed, when default vanquishes a retiree’s savings, when high taxes make workers feel like they’re just government serfs– this is when the real turmoil will begin.

Why do we continue down a path to ruin when it is so clearly lit by the beacon of bankruptcy?  One may be so bold as to draw a useful comparison between the fiscal inadequacies of the U.S. over the past two decades with that of the Soviets.  In 1982, President Reagan in a June 8th address to the English House of Commons, said with a wagging finger, “the Soviet system pours its best resources into the making of instruments of destruction.  The constant shrinkage of economic growth combined with the growth of military production is putting a heavy strain on the Soviet people.  What we see here is a political structure that no longer corresponds to its economic base, a society where productive forces are hampered by political ones” (my emphasis).  One may argue then, that the U.S. system of government no longer “corresponds” to the economic realities that dictate pragmatic policy.  Our political structure instead ignores  the logical implications of its policies in favor of safeguarding political interests, thus rendering such policies and the political structure itself highly illogical and contrary to our best interests.

So as we continue to look to government for solutions, perhaps we should ask ourselves if government is itself the source of the problem.  America has gone through many changes in its lifetime, but never has the social and ideological fabric been altered so drastically as since the Great Depression and the beginning of the American welfare state.  Since then, deficit spending (printing money in the name of economic recovery and future stability), government austerity, and continually growing defense spending has left America desperately insolvent, while declining investments in education and a shrinking middle class has left many clinging to the bosom of government like newborn pups.  This is not democracy.  This is not liberty.  It is the natural evolution of the welfare state.

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