They call it free market system. Others use the terms laizzes-faire capitalism, free market enterprise, limited government and simply capitalism. But what do these terms really mean?
Laissez-faire system, from the French words Laissez-nous faire (let us be or let us do), is a social, political and economic concept and system. It calls for the separation of state and economy, in the same way and for the same reasons as the separation of state and church.
This concept of separation does not mean anarchy or state-less system; it merely recognizes the fact that government has its objective, specific roles and that it does not have any authority or business to interfere with the private economic affairs of individuals. Under this system of freedom and liberty, the only proper role of government is to protect individual rights against force or fraud.
This wall of separation between state and economy protects individual liberty and rights and prevents undue government intervention, which is historically the major cause of economic ills and problems usually attributed by the statists to capitalism, namely, monopoly, cronyism, unemployment, recession. pollution, industrial disasters, among others.
Free market intellectuals argue that although man is not infallible, he is nevertheless capable of rational thought, as he possesses the faculty, which is reason, to know right from wrong and to guarantee his survival. They also understood that in any economic or social setting, man has to use his mind to survive. He has to learn new things or improve his skills; he has to work and trade with others; he has to develop and apply new ideas to produce and offer things that people want; he has to cooperate and work with others who share his passion or ideas in order to get things done faster and more efficiently. All these spontaneous activities form a web or network of human interaction that embodies a dynamic social system or a marketplace of ideas.
Adam Smith used the term “the invisible hand” to describe the self-regulating, self-correcting behavior of the marketplace. This view stresses the following imperatives– a) that the individual is a sovereign being who has inviolable, inalienable rights; b) that it is in the self-interest of individuals to interact, to trade, to cooperate and to deal with one another; c) that no privileged individuals or groups of individuals can have the power and omnipotence to plan an economy or society.
While the founding fathers of the free market system disagree on a few issues, they all agree on the fundamentals of capitalism, namely, individual rights, limited or non-intrusive government, and free society and economy. The whole system is founded on the principle of individualism.
The following are the founding fathers or intellectuals of laissez-faire capitalism.
He was the first intellectual… the first father of individual liberty.
“A state is an association of similar persons whose aim is the best life possible. What is best is happiness, and to be happy is an active exercise of virtue and a complete employment of it.”
“A man should live as he likes. This, they say, is the privilege of a freeman, since, on the other hand, not to live as a man likes is the mark of a slave. This is the second characteristic of democracy, whence has arisen the claim of men to be ruled by none, if possible, or, if this is impossible, to rule and be ruled in turns; and so it contributes to the freedom based upon equality.” [Politics Book 6 Part 2]
“History shows that almost all tyrants have been demagogues who gained the favor of the people by their accusation of the notables. At any rate this was the manner in which the tyrannies arose in the days when cities had increased in power.” [Politics Book 5 Part 10]
“These are, (1) the humiliation of his subjects; he knows that a mean-spirited man will not conspire against anybody; (2) the creation of mistrust among them; for a tyrant is not overthrown until men begin to have confidence in one another; … (3) the tyrant desires that his subjects shall be incapable of action, for no one attempts what is impossible, and they will not attempt to overthrow a tyranny, if they are powerless.” [Politics Book 5 Part 11]
“Another practice of tyrants is to multiply taxes, after the manner of Dionysius at Syracuse, who contrived that within five years his subjects should bring into the treasury their whole property.” [PoliticsBook 5 Part 11]
“The tyrant is also fond of making war in order that his subjects may have something to do and be always in want of a leader.” [PoliticsBook 5 Part 11]
2. JOHN LOCKE
He was one of the towering thinkers of the Age of Reason.
“All mankind… being all equal and independent, no one ought to harm another in his life, health, liberty or possessions.”
“Government has no other end, but the preservation of property.”
“To understand political power aright, and derive from it its original, we must consider what estate all men are naturally in, and that is, a state of perfect freedom to order their actions, and dispose of their possessions and persons as they think fit, within the bounds of the law of Nature, without asking leave or depending upon the will of any other man.” Second Treatise of Government, Ch. II, sec. 4
“Freedom of Men under Government is, to have a standing Rule to live by, common to every one of that Society, and made by the Legislative Power erected in it; a Liberty to follow my own Will in all things, where the Rule prescribes not; and not to be subject to the inconstant, uncertain, unknown, Arbitrary Will of another Man: as Freedom of Nature is, to be under no other restraint but the Law of Nature.” Second Treatise of Civil Government, Ch. IV, sec. 22
“The end of law is not to abolish or restrain, but to preserve and enlarge freedom. For in all the states of created beings, capable of laws, where there is no law there is no freedom.” Second Treatise of Government, Ch. VI, sec. 57
“Whensoever therefore the legislative shall transgress this fundamental rule of society; and either by ambition, fear, folly or corruption, endeavour to grasp themselves, or put into the hands of any other, an absolute power over the lives, liberties, and estates of the people; by this breach of trust they forfeit the power the people had put into their hands for quite contrary ends, and it devolves to the people, who have a right to resume their original liberty, and, by the establishment of a new legislative, (such as they shall think fit) provide for their own safety and security, which is the end for which they are in society.” Second Treatise of Civil Government, Ch. XIX, sec. 222
3. CLAUDE FREDERIC BASTIAT
He was a French political theorist, the certified legal thinker of the free market system.
“Socialism, like the ancient ideas from which it springs, confuses the distinction between government and society. As a result of this, every time we object to a thing being done by government, the socialists conclude that we object to its being done at all. We disapprove of state education. Then the socialists say that we are opposed to any education. We object to a state religion. Then the socialists say that we want no religion at all. We object to a state-enforced equality. Then they say that we are against equality. And so on, and so on. It is as if the socialists were to accuse us of not wanting persons to eat because we do not want the state to raise grain.”
“What, then, is law? It is the collective organization of the individual right to lawful defense.
“Each of us has a natural right — from God — to defend his person, his liberty, and his property. These are the three basic requirements of life, and the preservation of any one of them is completely dependent upon the preservation of the other two. For what are our faculties but the extension of our individuality? And what is property but an extension of our faculties? If every person has the right to defend even by force — his person, his liberty, and his property, then it follows that a group of men have the right to organize and support a common force to protect these rights constantly. Thus the principle of collective right — its reason for existing, its lawfulness — is based on individual right. And the common force that protects this collective right cannot logically have any other purpose or any other mission than that for which it acts as a substitute. Thus, since an individual cannot lawfully use force against the person, liberty, or property of another individual, then the common force — for the same reason — cannot lawfully be used to destroy the person, liberty, or property of individuals or groups.”
4. THOMAS JEFFERSON
He was the author of the Declaration of Independence and one of the founding fathers of the United States of America.
1776 July 4. (Declaration of Independence) “We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty, and the pursuit of Happiness.”
1787 Nov. 13. (to W. S. Smith) “The tree of liberty must be refreshed from time to time with the blood of patriots and tyrants. It is it’s natural manure.”
1789 Mar. 24. (to Joseph Willard) “We have spent the prime of our lives in procuring [young men] the precious blessing of liberty. Let them spend theirs in shewing that it is the great parent of science and of virtue; and that a nation will be great in both always in proportion as it is free.”
1820 Dec. 26. (to Marquis de Lafayette) “The disease of liberty is catching; those armies will take it in the south, carry it thence to their own country, spread there the infection of revolution and representative government, and raise its people from the prone condition of brutes to the erect altitude of man.”
5. ADAM SMITH
The author of The Wealth of Nations.
“Civil government, so far as it is instituted for the security of property, is in reality instituted for the defense of the rich against the poor, or of those who have some property against those who have none at all.”
“It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own self-interest. We address ourselves not to their humanity but to their self-love, and never talk to them of our own necessities, but of their advantages”
“Are you in earnest resolved never to barter your liberty for the lordly servitude of a court, but to live free, fearless, and independent? There seems to be one way to continue in that virtuous resolution; and perhaps but one. Never enter the place from whence so few have been able to return; never come within the circle of ambition; nor ever bring yourself into comparison with those masters of the earth who have already engrossed the attention of half mankind before you.”
“The statesman who should attempt to direct private people in what manner they ought to employ their capitals would not only load himself with most unnecessary attention but assume an authority which could safely be trusted to no council and senate whatever, and which would nowhere be so dangerous as in the hands of man who have folly and presumption enough to fancy himself fit to exercise it. ”
6. AYN RAND
She defended Capitalism on moral and intellectual grounds.
“Capitalism is a social system based on the recognition of individual rights, including property rights, in which all property is privately owned.
“The recognition of individual rights entails the banishment of physical force from human relationships: basically, rights can be violated only by means of force. In a capitalist society, no man or group may initiate the use of physical force against others. The only function of the government, in such a society, is the task of protecting man’s rights, i.e., the task of protecting him from physical force; the government acts as the agent of man’s right of self-defense, and may use force only in retaliation and only against those who initiate its use; thus the government is the means of placing the retaliatory use of force under objective control.” Capitalism: The Unknown Ideal
“It is often asked: Why was capitalism destroyed in spite of its incomparably beneficent record? The answer lies in the fact that the lifeline feeding any social system is a culture’s dominant philosophy and that capitalism never had a philosophical base. It was the last and (theoretically) incomplete product of an Aristotelian influence. As a resurgent tide of mysticism engulfed philosophy in the nineteenth century, capitalism was left in an intellectual vacuum, its lifeline cut. Neither its moral nature nor even its political principles had ever been fully understood or defined. Its alleged defenders regarded it as compatible with government controls (i.e., government interference into the economy), ignoring the meaning and implications of the concept of laissez-faire. Thus, what existed in practice, in the nineteenth century, was not pure capitalism, but variously mixed economies. Since controls necessitate and breed further controls, it was the statist element of the mixtures that wrecked them; it was the free, capitalist element that took the blame.” Capitalism: The Unknown Ideal
“A “right” is a moral principle defining and sanctioning a man’s freedom of action in a social context. There is only one fundamental right (all the others are its consequences or corollaries): a man’s right to his own life. Life is a process of self-sustaining and self-generated action; the right to life means the right to engage in self-sustaining and self-generated action—which means: the freedom to take all the actions required by the nature of a rational being for the support, the furtherance, the fulfillment and the enjoyment of his own life. (Such is the meaning of the right to life, liberty and the pursuit of happiness.)” The Virtue of Selfishness
7. LUDWIG VON MISES
He’s one of the greatest, if not the greatest, economic thinkers of the 20th century.
“The characteristic mark of economic history under capitalism is unceasing economic progress, a steady increase in the quantity of capital goods available, and a continuous trend toward an improvement in the general standard of living.“
“The characteristic feature of capitalism that distinguishes it from pre-capitalist methods of production was its new principle of marketing. Capitalism is not simply mass production, but mass production to satisfy the needs of the masses.”
“Capitalism is essentially a system of mass production for the satisfaction of the needs of the masses. It pours a horn of plenty upon the common man. It has raised the average standard of living to a height never dreamed of in earlier ages. It has made accessible to millions of people enjoyments which a few generations ago were only within the reach of a small elite.”
“Many pioneers of these industrial changes, it is true, became rich. But they acquired their wealth by supplying the public with motor cars, airplanes, radio sets, refrigerators, moving and talking pictures, and variety of less spectacular but no less useful innovations. These new products were certainly not an achievement of offices and bureaucrats.”
“The capitalistic social order, therefore, is an economic democracy in the strictest sense of the word. In the last analysis, all decisions are dependent on the will of the people as consumers. Thus, whenever there is a conflict between the consumers views and those of the business managers, market pressures assure that the views of the consumers win out eventually.”
8. HENRY HAZLITT
His book Economic in One Lesson refutes the common fallacies and lies used by the statists against Capitalism.
“A man with a scant vocabulary will almost certainly be a weak thinker. The richer and more copious one’s vocabulary and the greater one’s awareness of fine distinctions and subtle nuances of meaning, the more fertile and precise is likely to be one’s thinking. Knowledge of things and knowledge of the words for them grow together. If you do not know the words, you can hardly know the thing.”
“The ‘private sector’ of the economy is, in fact, the voluntary sector; and the ‘public sector’ is, in fact, the coercive sector.”
“When the government makes loans or subsidies to business, what it does is to tax successful private business in order to support unsuccessful private business.”
“Practically all government attempts to redistribute wealth and income tend to smother productive incentives and lead toward general impoverishment. It is the proper sphere of government to create and enforce a framework of law that prohibits force and fraud. But it must refrain from specific economic interventions. Government’s main economic function is to encourage and preserve a free market. When Alexander the Great visited the philosopher Diogenes and asked whether he could do anything for him, Diogenes is said to have replied: “Yes, stand a little less between me and the sun.” It is what every citizen is entitled to ask of his government.”