I came across an article on a blog recently that exemplifies how far removed from reality the socialists’ ideology is. This person declares that “Capitalism is Bankrupt”.

The blog-owner begins: “Their system creates recession, hunger and climate chaos, but they want you to pay.”

Evidence for this please?

Let’s compare the freer countries in this world to the less-free. Let’s compare America of the 19^th century to Soviet Russia of the 20^th. Let’s compare quality of living for even the poorest member of society in pre-industrial society to the poorest person now. Let’s compare the freedom, happiness, healthcare, and wealth, of countries with fewer government restrictions to those with more. Further examples are irrelevant; anyone with even a passing knowledge of world history can tell you the difference; between what happens when men are free to create and trade and invent, and when they are stifled, regulated, and restricted.

The facts of history in every region where it has been systematically practised show that socialism fails.

“Until A few weeks ago, supporters of free market capitalism were confident enough to proclaim that their system was the only way that the world could be organised. Now their certainties have vanished.”

So a few weeks of economic crisis are enough to make the supporters of capitalism uncertain and unsure of their ideology? Who are these supporters and where? Are they are the mixed-economy type (a contradiction in terms), or are they the capitalists who believe morality is still self-sacrifice and dutiful service to those who have earned nothing?

True capitalists are not so easily daunted; if fact, we cannot be daunted, because we know that capitalism is the only MORAL political system, and nothing can violate this principle, ever.

In fact, this attack is capitalism is very foolish for one very important reason: capitalism has NEVER fully been given a chance! Whereas every variety of socialism has tried and failed, capitalism has never been fully practised. 19^th century America came the closest anyone has to it, and witness what happened: the freest, happiest, wealthiest, most powerful nation in human history.

“The economic crisis that started in banking and finance has spread quickly to the wider economy. Now it threatens to engulf whole countries, bringing untold misery to millions.”

But did the economic crisis merely start in banking in finance? Let’s quickly look at inflation. In Ayn Rand’s words:

“The expansion of a country’s currency (which, incidentally, cannot be perpetrated by private citizens, only by the government) consists in palming off, as values, a stream of paper backed by nothing but promises (or hot air) and getting actual values, the citizens’ goods or services, in return—until the country’s wealth is drained. A similar activity, in private performance, is the passing of checks on a non-existent bank account. But, in private performance, this is regarded as a crime—and most people understand why such an activity cannot last for long.

Today, people are beginning to understand that the government’s account is overdrawn, that a piece of paper is not the equivalent of a gold coin, or an automobile, or a loaf of bread—and that if you attempt to falsify monetary values, you do not achieve abundance, you merely debase the currency and go bankrupt.” – Moral Inflation.

The source of wealth is production. And money represents produced goods non-yet-consumed. The government is never a source of production and therefore never a source of wealth. The source of production is private individuals (and companies) who transform the world into objects of value and trade these values with people for other values. A free trader trades value for value – he cannot trade value for fresh air, because his counterpart will not accept fresh air as payment, nor will the trader except it from his counterpart. The only agent in the world that can trade fresh air for value, that can convolute “money” out of thin air to trade, is the government. This is the cause of inflation. Whilst actual produced goods are linked to the free market (what people are freely capable of producing and what anyone is freely capable to buy), money by contrast is printed in bulk by the government. This devalues it.

In a free market, the price of any product is the lowest a seller can make a profit on it and simultaneously the highest a buyer is prepared. There is no way to contradict this law of supply and demand except by force, and the only institution with the power to exert this force is: government.

Did banks and building societies force anyone to accept their loans? Did free citizens force banks to trade with them? No, and no. Now consider that the government has persistently put pressure on banks to offer people loans that they cannot afford, and consistently bailed out banks and private citizens that continue to be reckless with their money – at the expense of the taxpayer. Where does this money come from? How is this money linked to the market, to supply and demand? It isn’t. When two people lose out on a trade, the only people that lose out are them. Now, when other people are forced to pay to cover their loss, a transaction they have had NO involvement with, the repercussions are felt by everyone, and the additional money required to cover this loss is not generated by wealth or production, is it taken by sabotaging wealth and limiting production. To illustrate this, imagine if, all other things being equal, you had to pay £1000 a month from your wages to cover another person’s foolishness or bad luck in business. But, how are you going to live? How will you make up this loss? You cannot pull money out of thin air. So you cut down on your spending (which means sellers now lose business and end up in the same boat as you), or maybe you demand to be paid more by your employer, who himself cannot make money out of thin air. So he rejects your demand, or makes other people unemployed, or pays you more money at a loss to himself. And of course if he does this for everyone, he makes even more loss. Bear in mind that he himself is already losing out because fewer people are buying his products because they are cutting their spending because their cost of living has gone up.

Because capitalism is the free voluntary trade of people with value for value, NO ONE ELSE benefits from this trade. Similarly, NO ONE ELSE is punished either. However, anyone can freely choose to ‘get in on the act’ and do business with other successful people, but no one is forced to, and no one is forced to pay the price for failure. Conversely, the only system where people can be forced to pay for others is under socialism.

“Belarus, Hungary, Iceland, Pakistan and Ukraine all stand on the brink of bankruptcy. Beyond them are even bigger countries – including Poland, Russia, Argentina and Turkey – whose economies are in danger of collapse.”

And why are they in danger of collapse? Is it due to producers over-charging? Is it due to buyers defrauding sellers? Or is it due to paper money spending for non-existent resources? And if so, whose fault is this?

“As their currencies slide and exports falter, all of these countries have been forced to borrow heavily just to ensure that they can pay their bills.

Some have so little in their foreign exchange reserves that they will only last a matter of weeks without an injection of cash. They have been forced to beg the International Monetary Fund (IMF) for emergency loans.

But the IMF – an organisation dominated by the rich countries of the West – will only extend its help at a price.”

Well, yes. What does the socialist suggest? That rich countries sustain other countries and business for no benefit and even loss? Actually, yes. That is the irrational anti-human ideology of the socialist: sacrifice.

“During past crises, it has demanded swingeing cuts in government budgets, privatisation of industries and the liberalisation of markets. Struggling nations are now preparing themselves for the worst.

In Pakistan, where already millions cannot afford food or the fuel to cook it with, the government has announced the ending of fuel subsidies and the removal of a cap on gas and electricity prices. This is to be accompanied by big cuts in government spending.

In Hungary, the government has suggested a massive assault on its state pension and the slashing of pay as part of the bailout of the economy.”

Well, if the government’s solution to economic crisis in these countries was to remove its controls and liberate the market, then what was the problem in the first place that made the situation so bad and forced the government to address its interventionist policies??

Why did the government decide to take action (by reducing its involvement) unless there was already a problem? And since the solution was a move towards a freer market, the free market couldn’t have been the problem in the first place!

“If the past is anything to go by, the IMF will endorse these measures but demand much more for its money.”

Perhaps the IMF should stop bailing other countries out then?

“The economic shockwave that is spreading across the world is not confining itself to poorer economies. Already the Bank of England estimates the cost of the financial crash at $2.8 trillion – a sum so big that it defies comprehention.

And despite the billions spent on bank bailouts, scores of British firms announced major redundancies this week.”

Obviously! Pouring water into a bucket with holes only tops it up for a short time. Money represents produced goods. Tipping trillions of dollars into a hole does not produce goods, create wealth, or solve the problem. It actually exacerbates the problem by spending already limited government money (read: money expropriated from taxpayers) on a cause it should have no involvement with, to solve a problem it created. It also punishes the innocent traders for the bad lending and bad borrowing of other people. Remember this the next time a socialist says that capitalists “want you to pay!”

“We are told that these shutdowns are inevitable and that it is pointless to resist. There is simply a lack of a demand for the goods that are produced, it is said.

But while goods pile up unsold and workers are laid off, millions of people go without the things they need because they can’t afford to buy them.”

The socialist wonders why. Alan Greenspan explains:

“The law of supply and demand is not to be conned. As the supply of money (of claims) increases relative to the supply of tangible assets in the economy, prices must eventually rise. Thus the earnings saved by the productive members of the society lose value in terms of goods. When the economy’s books are finally balanced, one finds that this loss in value represents the goods purchased by the government for welfare or other purposes with the money proceeds of the government bonds financed by bank credit expansion.

In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold.” – “Gold and Economic Freedom”, Capitalism – The Unknown Ideal.

The socialist continues:

“And the skills and machinery in each closing factory could offer solutions to some of the greatest problems facing humanity. For example, engineers who once made cars could be employed to make generators for alternative sources of energy.”

And who would employ them? And who would use their product?

There is only ONE problem facing man: the problem of survival. The only solution is for man to create the values he needs in order to live. Just as a man cannot think for another, he cannot live for another. Each person must transform the world into something to sustain his life, and where possible and necessary, trade his values for those others have. The fact that a tiny minority are unable to do so does not create a mortgage on the lives of others. Without a free mind and body, man cannot create and produce. Without the use of his produce, he cannot realise his Right to Life. A Right to Life without a Right to Property is a contradiction in terms; one flows from the other.

I make the above point to clarify the false implication in the socialists’ last paragraph: that there are problems for “humanity” which are NOT problems for individuals. There are ONLY individuals. Humanity is a collection of individuals, and the problem for each of us is the same: survival. And the ONLY ethical solution is: think, act, produce, consume, trade. This is the ONLY recourse left to free rational beings. The ONLY alternative is expropriation. When one man does this to another, he is a criminal and we arrest him. When a large group of men do this by force (or by vote, which amounts to the same thing), in order to “serve” those who can’t/won’t produce, we call it a welfare state. When one man takes money from another in order to fill the hole created by his failure or misfortunate, we lock him up and demand he repay what he has stolen. When a bureaucrat does this, we call it a “government bailout”.

And if a man needs to cut down a tree to survive, he must. If a man needs to build a car, or drill for oil, or kill animals for food, he must. If a man needs to compete in another market by inventing new fuel and energy sources, in order to survive, he must. And his fellow traders, the people who will want his product in exchange for their own, will decide if he is to be successful. What a man cannot morally (and therefore politically) do is FORCE his values or product on others. Nor can he force their value or product on himself. The only institution that can legally do this is: government. So is government the protector of our Rights, or the violator?

The socialist sees the need for alternative energy sources like the needs of those who have less: as a mortgage on those who CAN already produce energy and those who DO already have. But this is to be expected: socialism is the sacrifice of the CANs and DOs for the CAN’Ts and DON’Ts; of the HAVEs for the HAVE NOTs. Capitalism on the other hand means no sacrifice of anybody for anybody.

In fact, the glaringly obvious and appalling mistake all socialists make, like this one quoted here, is to forget that the only reason the Western countries became so rich and affluent whilst the rest of the world sits in a mire of poverty, superstitious, ignorance, and crime, is because WE allowed man to freely create wealth in the first place. Once again, witness the explosion of wealth and prosperity in 19^th century America to the fully-state-controlled socialist’s (and worker’s) paradise of Soviet Russia, where millions were systematically starved to death by the government because there was nothing to feed them with.

“We have the resources to build a better world. So far, the stranglehold of capitalism has been a barrier. Now it is up to us all to ensure that its hold is broken.”

The socialist wants the “stranglehold” of capitalism, that is: a political system where every human being is recognised as a sovereign individual with his own life as an end in itself, where he is free to trade or not to trade whatever he wants for whatever he can, at no harm to anyone – the socialist wants that replaced, with another stranglehold – a government that can legally violate your Rights by physical force to whatever end a mass of people or politicians deems “necessary” for whatever “greater good” they settle upon; where the sources and means of production are stifled, restricted, and regulated, and where the creative and productive and intelligent and efficient are a resource to be tapped for the uncreative, unproductive, unintelligent, and lazy.

The altruist sees each man as a means to another end: other people; society. The rational person sees each man as an end in himself; as a being in his own right. The altruist therefore wants a political system geared to sacrifice and cannibalism: socialism and communism. The rational man chooses life, he chooses capitalism.