What is Capitialism?

By Ayn Rand

WHAT IS CAPITALISM? | AYN RAND

(Notes taken while listening to her lecture. Please note that the following is a paraphrased synopsis of this lecture)

In one's evaluation and approach to political economy, one must begin by identifying man's nature. That is, those essential characteristics that distinguish him from all other living beings. Man's essential characteristic is his rational faculty. Man's mind is his basic means for survival and gaining knowledge. 

In order to preserve itself, every living being must follow a certain course of action required by its nature. The action it takes to preserve human life is primarily intellectual. Everything man needs must be discovered by his mind, and produced by his effort. Production is the application of reason to the process of survival. Men prosper or fail, survive or perish in proportion to the degree of their rationality.

Since the choice to exercise his rational faculty or not depends on the individual, man's survival requires that those who think be free of the interference of those do not.

What social system is appropriate to men? A social system is a set of moral, political, economic principles which determine the relationship, in terms of association, of men living in a given geographic area. In man's history, capitalism is the only system that gives man the freedom to be his own sovereign and have rights to his own property. Capitalism is a social system based on the recognition of individual rights, including property rights in which all property is privately owned.

The only function of government in such a society is the task of protecting man's rights; that is the task of protecting him from physical force.  Capitalism recognizes and protects the metaphysical link between man's survival and his use of reason. All human relationships are voluntary. They can choose to deal with one another or not, by a voluntary choice to mutual agreement. More importantly in capitalism recognizes and protects the right to disagree with ideas. This is the cardinal difference between capitalism and any form of collectivism.  

The moral justification of capitalism lies in the fact that it is the only system consonant with  man's rational nature. That it protects man's survival and that its ruling principle is justice.

When the common good of society is regarded as the common good, or superior to the individual good, of its members, it means that the good of some men takes precedence over the good of others.

In all of man's history, capitalism is the only social system based on an objective theory of values. The good and freedom is not independent of the man's mind and cannot be achieved by force.

Reason is the only means of communication among men and an objectively pursuable reality is there only common frame of reference.

The free market represents the social obligation of an objective theory of values. Since values can only be discovered by man's mind, man must be free to discover them.  To translate their knowledge into physical form, to offer their products for trade, to judge them, and to choose. Be it a material goods or an idea.

Since values are established contextually, every man must judge for himself, in the context of his goals and interest. Since values are determined by the nature of reality,  it is reality that serves as the man's ultimate arbiter. 

The free market value of goods or services represent their socially objective value ; that is the sum of the individual judgments of all the men involved in trade at the given time.  A free market is a continuous  process that cannot be held still. An upward process that demands the best and the most rationale of every man and rewards him accordingly. Those who are unwilling remain unrewarded.

Depression and mass unemployment are not caused by free trade, but are created by government interference in economy.

Capitalism ejects the moral doctrines of tribalism and altruism. Capitalism   recognizes the fact that man is not the property or servant of the tribe. That the man works in order to support his own life.  He cannot expect to receive values without trading commensurate values in return.