Amongst her friends and enemies, capitalism is compartmentalized as an economic system. Yet, an economic system does not exist in a vacuum. It rests on a chain of moral, political, and legal principles. To understand capitalism, one must grasp the moral, political, and legal principles which make its economic and social features possible. Let us start at the beginning, by examining the nature of existence and our means of understanding it.

Reality is that which exists. It is the standard for judging what is true, false, or arbitrary. Things are what they are, independent of our or anyone else’s feelings, ideas, wishes, desires, and emotions. A is A.

Reason is one’s only means of understanding reality by conceptually identifying and integrating the facts of reality as perceived by one’s senses. To act rationally is to base one’s ideas, principles, and conclusions solely on the facts in a logical (non-contradictory) manner.

There is no such entity as the social/collective mind. The act of thinking is an individual process. An individual can learn from and communicate with others, but to do so, one must still grasp the facts of reality with one’s mind to make it knowledge. Others may physically act for someone, but no one can intellectually grasp facts for them. The individual mind is sovereign.

Survival for human beings is not automatic. Unlike other organisms — bacteria, elephants or apes — humans must alter their environment to survive. One must use reason to rearrange their environment to create the values — shelter, food, energy, medicine — one requires to survive. Whether one is alone on a deserted island or living in modern society, one must think rationally, and act productively, if life is one’s goal.

Thanks to specialization through division of labor, one can gain immense values by living with others in a proper society: namely, knowledge and trade (in material and spiritual values). Such a society operates under the moral doctrine of individualism, where each individual is regarded as an end in oneself and not as a slave for the ends of others.

There are only two ways individuals may deal with each other: by reason (i.e., persuasion) or by physical force (i.e., physical coercion, fraud). Only by the use of force can one be prevented from speaking, robbed, or murdered; that is, stopped from acting by one’s mind. Physical coercion renders one’s mind useless as a means of survival.

The use of force, in and of itself, is not evil; but, to initiate (start) force is. As force renders one’s mind useless as a means of survival, one has the right to use force to defend and retaliate against those who first start its use.

Given that reason is one’s only means of knowing reality, that reason is the attribute of the individual, and that one must use reason to produce the values one needs to survive, in a proper society the individual needs to be left free to think and free to act on that thinking. The individual needs freedom — from the initiation of physical force.

“A right is a moral principle defining an individual’s freedom of action in a social context.”—AYN RAND

Freedom of action does not mean freedom to act by permission, which may be revoked at a dictator’s, or a democratic mob’s, whim, but the freedom to act as an absolute — by right.

The fundamental right is the right to life, from which all other rights (liberty, property, the pursuit of happiness, etc.) are but applications. The right to life means that your life belongs to you alone, leaving you free to do what you wish with your life, so long as you do not violate the rights of others.

There is no such thing as the right to enslave (“the right to violate rights”). No one has the right to force others to give them food, health care, insurance, education, a house, or to force them to give up their property (wealth, money) to obtain these values. One may produce them or acquire them by reason (trade/persuasion), but never by threatening force (coercion.)

Rights are inalienable — they may not be morally infringed, i.e., a thief may rob you, but morally he is in the wrong, and morally you are in the right. The only obligation one’s rights impose on others is the policy of “laissez-faire:” they must leave you alone and free to act within your rights.

The state of nature, where all are allowed the use of force, according to the “laws of the jungle,” is anarchy — perpetual civil war and gang warfare. To place the retaliatory use of force under objective legal control, the individuals that makeup society delegate their right to defend and retaliate against those who initiate force to government.

As no individual in their private capacity as a citizen, may morally start force against others, neither may one in their public capacity as a state official initiate force. As no person has “the right to violate rights” (a contradiction in terms), neither does the state through its representatives.

In a just society, the law has one purpose: to protect individual rights. Each individual lives free under law by inalienable right, so long as they respect the equal rights of others.

To ensure that no despot or tyrannical majority may usurp the power of government to use force for turning its political machinery upon any of its citizens, every aspect of government action is governed by a body of integrated, codified, and non-contradictory laws. Such laws hold the individual innocent until proven guilty in a court of law before an impartial judge (“rule of law”), as opposed to guilty until “proven” innocent according to the whims of a dictating bureaucrat (“rule of men”).

The actions of government officials are regulated in minute detail with no room for arbitrary discretion, as the government carries the legal power to use force. It is the government official that operates by permission, and it is the private individual that lives by right. By doing so, the principle of individual rights subordinates society to moral law, i.e., might to right.

A constitution — the supreme law of a society — is a citizen’s protection against government officials. Such a document delimits, separates, and balances the powers of government amongst its legislative, executive, and judicial branches, so that political power — the power to legally use physical force — cannot be concentrated in any branch, with each branch being a check on the power of the other.

In order to protect rights, a government consists fundamentally of three things: an armed forces — to protect against foreign invaders, a police force — to protect against domestic criminals, and a court system — to settle disputes that arise, enforce contracts, and to punish criminals, according to objectively predefined laws based on the principle of individual rights.

Economically, when freedom under the rule of law is applied to the sphere of production and trade, it results in a free-market in goods, services, personal relationships, and ideas. A free market is protected by government from fraud and coercion by and operates under a rule of objective law.

A free market is based on the freedom to produce and freedom to voluntary exchange physical and spiritual values between individuals for mutual gain and mutual benefit (harmony of interests). Competition, under capitalism, is a form of cooperation as producers for the same product compete to satisfy the needs of (cooperate with) consumers.

The free-market applies not only to the economic sphere, but to the individual’s spiritual side as well. Under capitalism, one is free to express the ideas one believes (religious, philosophical, political, esthetic, scientific, etc.), and free to choose the associations one forms (from friendship and marriage to disassociation), so long as one respects the right of others to do the same. As Ayn Rand observed: “A free-market is a corollary of a free mind.” 

Can you imagine a society where the initiation of physical force is banned from all relationships? It would not make every person moral, nor would it prevent every injustice, but imagine what it could do.

Such a society would be one of goodwill and benevolence, where each person sees his neighbor not as a thug to rob him in a “dog-eat-dog” world, but as a potential trader, from whom one can gain material and spiritual values, for mutual benefit, in a world where a “harmony of interests” prevails. A society where anyone can rise as high as their will and ability may take them.

In such a society, each individual is judged not by their group affiliation (race, gender, religion, age, etc.), but by the content of their character, that is, as an individual. In such society, each person can live, speak, and act according to their own beliefs (philosophical, scientific, religious, and otherwise) so long as those beliefs do not entail violating the rights of others. In such a society, education is not state-schooled brainwashing but a thought-provoking experience.

A society of free-thinking and free-acting individuals, and not one “collective mind” ruled by a democratic despot with the title of the “voice of the people,” leaving the greatest minority that exists — the individual — disenfranchised. A society of individuals living in harmony with reality, guided by the process of reason. A society founded on the principle of individual rights where the initiation of physical force is banned. What is the name of such a system?

Capitalism (from the Latin capta, meaning “head”) is the social system based on individual rights that unleashes the power of the human mind. It is the social system of the Enlightenment, founded on a philosophy of reason, egoism, and freedom. Capitalism is the objective ideal — as it is  true in moral theory and in economic practice. Capitalism is the ethical ideal as it leaves one free to be moral — to live by the use of one’s mind. Capitalism is the progressive ideal as it leaves one free to pursue — and achieve — happiness on earth.