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I’ve just completed reading an excellent book about Capitalism, the economic system of laissez faire, individual rights, and freedom. The full title is: “Capitalism Unbound: The incontestable moral case for individual rights” and for such a short read I must say it does fulfill that promise. While I did find some errors with the historical aspects covered in the book, the overall argument made is fully accurate, and the message contained is of utmost importance to anyone who cherishes liberty and happiness.

Capitalism is a lost idea in the modern world thanks to statists who demonize it at every turn and self-proclaimed “conservatives” who refuse to defend it because of things like “focus groups” who deem the term unpopular. I fully believe that if we are to save ourselves and save our country we must turn all of our attention to the study of Capitalism as well as the failed systems of Socialism and Fascism. In Capitalism Unbound, Andrew Bernstein sets out to initiate such a study.

The book’s stated purpose is to lightly cover the main ideas and the moral issues surrounding Capitalism, giving the reader enough knowledge to understand the subject and enough references to do deeper dive research on topics that they find are important to them. To that end, it is arranged in three parts:

1. The Historic Superiority of Capitalism
2. The Moral Superiority of Capitalism
3. The Economic Superiority of Capitalism

Personally I think this was a very effective method for presenting the author’s thesis as it broke the subject into three easily discernible areas. I will proceed to review each subject as it was covered:

The Historic Superiority of Capitalism
Bernstein’s first task in his discussion of Capitalism is to set out the historic record of economic systems and to compare them to the historic record of Capitalism. In a unique exercise, he lays out the economic conditions and systems of the pre-industrial world, from about 500 to 1500 A.D., and contrasts this with the rapid advancement and increase in the human condition seen during the industrial revolution. It’s a fascinating dive into the economics of the dark ages, something that I have not seen before.

Unfortunately, in describing the economy of 19th century America, Bernstein takes the “official” objectivist stance on the issue: that while not perfect, America’s government supported the free market and it was the lack of a philosophic base and the advent of the progressive movement that caused the government to shift toward fascism and thus create the disastrous mixed-economy that now burdens us. This is something that I’ve read several times in Ayn Rand’s works, that is universally accepted by the organizations devoted to the study of objectivism, and that has recently gotten me kicked off of a list of bloggers covering objectivist topics. It is as if Bernstein and Objectivists reject every statist myth about the American economy post 1870, but accept every statist myth about America pre 1870. It saddens me that this author and such a distinguished group of intelligent people have taken the wrong position and maybe some day soon I’ll do a post on this issue alone.

The reality of the situation is that the American government instituted by the Constitution is a Mercantilistic system modeled after that of Great Britain, where the government hands out favors and regulates free enterprise to accomplish the whims of politicians. This is clearly seen with the “Whiskey Rebellion” that occurred under our very first administration after the federal government decided to place a tax on alcohol – a move that was unjust, amoral, and totally the opposite of capitalism. The United States of America was never setup to protect individual rights and the degree of economic freedom and therefore prosperity that we have enjoyed is simply inversely proportional to the size and scope of the government.

America was founded by rugged individualists who fully believed in their rights to their own lives and their own freedoms. These are the men who carved out prosperous towns and cities from the uninhabited wilderness, the men who fought in the Revolution, and the men who were enslaved by the second handers in Philadelphia at the constitutional convention; only they did’t know it. The only reason we had so much economic success as a country is that our people were forced by nature to live as rational egoists and our government was simply slow to catch up.

That being said, Bernstein argues correctly that it was capitalism in rudimentary forms in Britain and in America that dragged the entire world out of drudgery and backbreaking daily labor. This is the only section of the book that I don’t think is fully accurate, but it is still very informative.

The Moral Superiority of Capitalism
The second section of Capitalism Unbound is devoted to laying out the moral justification for the system of freedom in practice, something that is not often accomplished by modern writers on the subjects of politics or economics. This justification is central to the entire debate though, for all arguments against Capitalism are made on moral grounds. Even the most staunch enemy of freedom will say that Capitalism does “work” (by increasing the standard of living for everyone) but that it is “flawed” in that it doesn’t care for “those in need.” They use this line of thinking to justify every single rule, regulation, or otherwise fascist imposition on the freedom of individuals. “Unrestricted Capitalism,” they say, “can only lead to an oligarchy of the wealthy and the destruction of the common good.” What is the common good? Whatever “they” say it is.

Bernstein absolutely shatters this flawed morality by setting forth the explanation of Rational Egoism and the side effects of defending the individual against the initiation of the use of force. He explains that only through self esteem and individual rights can we actually achieve goodwill towards others and honest, fulfilling charity. For example, is it “good will” that impels you to pay your taxes, which are then used for the “common good,” or is it the barrel of a gun? I know I wouldn’t pay them if I wasn’t forced to. Is an act of charity actually charitable if it’s not done voluntarily? Of course not. This chapter is very thorough and is extremely important if one is to understand just why the morality of the world is so backwards and why it is driving our economy in the same direction.

The Economic Superiority of Capitalism
In the third and final section of Capitalism Unbound, Bernstein performs a qualitative comparison of varying forms of economy, from socialism (or communism) to fascism to the modern calamity known as the mixed economy, where elements of freedom are arbitrarily mixed with elements of socialism and fascism.

He starts by studying socialism and its obvious and massive failures throughout history. He sheds light onto the inner workings of the Soviet economy and its slaughter of millions of innocents in the name of the “common good.” Again I learned something I’d never heard before in this section, when Bernstein outlined all of the massive amounts of aid, assistance, and intellectual property the USSR received from the western world, and mainly from America. I never learned about
this at school of course, but the fact of the matter is that Communism would have collapsed much earlier if FDR and other Americans hadn’t worked so hard to prop it up. If you already had bad feelings toward the American Progressives of the early 1900s, take a few deep breaths before you read this part of the book, but do yourself a service and make sure you read it.

Next Bernstein moves into the failure of the mixed-economy, the current system of American government that has led to the never ending boom-bust cycle that creates wealth for second handers and destroys the businesses and the life savings of honest Americans. In a relatively small amount of space he manages to pull together a wealth of information from Austrian economists that explains the economic chaos we have all seen in recent history. If you’ve read books like “Meltdown” this section will be nothing new for you, but it is refreshing to see an Objectivist at least honor the works of such esteemed libertarians.

Finally, in the last section of Capitalism Unbound, Andrew Bernstein offers us a “modest proposal” on how to right this ship and save our economy and our freedom:

1. Let the United States move to full laissez-faire capitalism, assiduously protecting individual rights in all arenas of human life, including personal morality, as well as economics.
2. Let every other nation, without exception, if they so choose, move to partial socialism, to whatever degree each country’s populace wishes.
3. Open the borders of all countries, so that every honest person – but not criminals or terrorists – can emigrate to the land he prefers.
4. Over a period of decades, even centuries, conduct a “Great Laboratory,” honestly studying the progress of each nation, emigration patterns between nations, and levels of fulfillment/happiness among individual citizens of each nation.

To be honest, I was a little bit disappointed in this conclusion to an otherwise excellent book. The reason: it’s just not rooted in reality. Step 2, for instance, has already happened and will continue to happen no matter what we do here in America. What we need to do is STOP sending foreign aid to countries who decide to do such things. Step 3 would be fine, but we can’t control the border policies of other nations, so it’s moot. Step 4 has already been done. All we need to do is look at history, as in the first part of the book, to learn what freedom will do for the prosperity of individuals.

Most importantly, Step 1 is simply out of the realm of possibilities for America. We are too far gone down the road to serfdom. Hell, we’re already there. The government will never relinquish its power, no matter who we elect or what resolutions we pass.

The proposal that I would have hoped for is simple: peaceful secession of every state from the Union. Have the different states run their own governments as they please, and see which ones are the most prosperous and the most happy. Fight like hell to have your state be one of the few that establishes a truly Capitalist system, having the government perform only one strict role: to protect individuals from the initiation of the use of force, either foreign or domestic.

In summary, Capitalism Unbound is an excellent book and I recommend everyone read it. It’s only about 130 pages and takes a couple of hours to read, and it is extremely informative and insightful. I learned a lot from reading this book and I think you will too.