The American System Is Not Capitalism

This article was written by Bob Livingston and originally published at Personal Liberty Digest

One of the great myths of our time is that America is a capitalistic country. It is not, and has not been close to capitalistic for more than 150 years.

Capitalism is a social system in which an individual’s rights, including his rights to own property, are recognized and all property is privately owned. In a capitalistic society, governments acknowledge that individuals and companies can and should compete for their own economic gain, and the prices of goods and services are determined by the free market. The role of government in capitalistic societies is to ensure that markets function without interference and to protect individuals from fraud and/or the use of physical force by others.

Capitalism is not about greed. Capitalism is about human freedom, or as we term it, personal liberty. As Adam Smith posited in Wealth of Nations, when individuals are permitted to pursue their self-interest through markets, they are amazingly good at finding ways of bettering not only themselves but society as well.

In Capitalism: The Unknown Ideal, Ayn Rand writes:

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... In a capitalist society, all human relationships are voluntary. Men are free to cooperate or not, to deal with one another or not, as their own individual judgments, convictions, and interests dictate. They can deal with one another only in terms of and by means of reason, i.e., by means of discussion, persuasion, and contractual agreement, by voluntary choice to mutual benefit. The right to agree with others is not a problem in any society; it is the right to disagree that is crucial. It is the institution of private property that protects and implements the right to disagree — and thus keeps the road open to man’s most valuable attribute (valuable personally, socially, and objectively): the creative mind.

Americans no longer have property rights. Think you do? Try going a year or two without paying tribute to the king (via property taxes) and you’ll see who owns your property. The local sheriff will evict you; the state or local government will seize your property and sell it to the highest bidder or its favorite crony.

Try building a structure on your property... or even remodeling your home. If you don’t obtain the proper permissions (approval for your design, building permits and inspections), you will be fined and forced to tear your structure down. Failure to do so will result in armed agents of the government invading your property, assaulting and incarcerating you until you comply with the government’s demands.

Try damming a creek, tampering with the watershed or capturing water for a pond on your property. You will get a visit from federal agents representing the Environmental Protection Agency and the result will be fines, expensive court costs and possible visits by armed federal agents who will forcibly escort you off your property and into a prison cell.

Try growing livestock or certain plants on your property. Unless you live in an area zoned for agriculture, you will likely get a visit from a local or federal "inspector" who will order you to dispose of your animals and/or uproot your plants in favor of others approved by the local authorities.

Try selling a product you grew or made. You will be forced to comply with regulations regarding harvesting, production, packaging and distribution. You will be forced to act as agent of government and collect government tribute (taxes) which you must then pass along to government — regardless of the time and effort required to comply. Failure to do so will result in fines and/or imprisonment.

Want to inform people about and sell a protocol that experience and use has shown to be beneficial to good health? You must first obtain permission from local and federal agencies, provide proof that your protocol has been tested, tested and retested, regardless of the expense or inconvenience to you. You must then comply with any and all regulations regarding marketing, production, packaging and distribution. Failure to do so will result in seizure of assets, fines and/or imprisonment.

Want to not sell your product for a reason — or no reason at all — not approved by the establishment? That is not allowed and you will find your business shuttered and you will be subject to fines and revocation of your previously-acquired permission to conduct business.

The establishment will tell you that once enter into business you have surrendered your individual rights to the collective, and all your activities must be geared toward the collective good. This is the very definition of force — government force, which is anathema to voluntary exchange and individual liberty.

The federal government works overtime to ensure we are not a capitalist system by passing legislation and enabling federal alphabet soup regulatory agencies to create rules favorable to certain businesses and unfavorable to others. Congressweasels pass tax laws to encourage and discourage behaviors.

The federal government subsidizes certain products, driving up prices and encouraging unsound business practices that skew the market. There are still price controls on food products that were put in place during the Great Depression.

The Federal Reserve, which is not a federal agency but a privately-owned bank, prints money to infinity, which encourages mal-investment and skews the market. It is depreciating your currency.

Here is what has happened to the American people: The money creators, the Federal Reserve and the U.S. Treasury as symbiotic partners, are creating non-substance (fiat money) and "buying" (stealing) substance with it.

Has anyone wondered why "federal money" never gives out? As admitted in congressional testimony and in Federal Reserve publications, the federal money creators can create any amount of "money." Of course this money is non-substance fiat. It is imaginary numbers that appear either on green pieces of paper called dollars or as computer symbols.

The key word to describe fiat non-substance is infinity. This imaginary money system can be created to infinity and indeed is on its way. The American people (and the world) believe that this non-substance is real money. This is an exercise in an unbelievable and unimaginable delusion that is accepted by the mind as real.

This is socialism at its most perfect creation and it is doing exactly socialism’s work of transferring the wealth and savings of the American people to the state without payment.

Every writer, commentator politician in America refers to the U.S. as a democracy of free enterprise capitalism with individual privacy and property rights. We live in a fiction of freedom perpetuated with semantic corruption that has evolved us into economic fascism. Language and words that support a free society have been turned inside out.

The American economic system, and in fact the world’s economic system is failing, and that failure is being attributed by many on the left (and some on the right) as a failure of capitalism. This is a big laugh to any sober person.

All governments are fronts for monopoly capitalism, and monopoly capitalism has many names: fascism, socialism, communism and democracy. Big business has and will promote every ideology and philosophy known to man to disguise its madness for profits. But one equals the other. They are all immoral systems that use the power of government to exist and to suppress human freedom.

Capitalism is the only moral system. It was American free market capitalism that fueled the growth of the U.S. economic engine beginning in the 1800s and raised the standard of living around the globe, before monopoly capitalism began to exert greater and greater control over the U.S. economic system beginning in the mid-1800s and accelerated after the creation of the Federal Reserve in 1913.

The extraordinary level of material prosperity achieved by the capitalist system over the course of the last 200 years is a matter of historical record. But very few people are willing to defend capitalism as morally uplifting.

Sadly, it’s not just the progressive left and ignorant millennials that oppose free market capitalism. In any discussion forum where true or laissez-faire capitalism is discussed, "conservatives" are quick to make the disclaimer that "we must have some regulation" or, "we can’t have unfettered capitalism." In truth, most so-called conservatives are really closet socialists. This is a testament to the powerful propaganda we are subjected to.

Throughout history there have been two basic forms of social organization: collectivism and individualism. In the 20th century, collectivism has taken many forms: socialism, fascism, Nazism, welfare-statism and communism are its more notable variations. The only social system commensurate with individualism is laissez-faire capitalism.

The return of capitalism will not happen until there is a moral revolution in this country. We must rediscover and then teach our young the virtues associated with being free and independent citizens. Then and only then, will there be social justice in America.



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Strategy Needed
written by Mark Smith , January 19, 2018

Your article is a bit of a straw man. While you give the conventional capitalism definition you then say there are regulations and restrictions limiting property rights therefore we do not have capitalism.

For example there are property taxes so if you don't pay the taxes you will be punished therefore we don't have capitalism.

Capitalism like socialism exists in gradations. It's not an either or condition it is a matter of degree. See The Road to Serfdom by F. A. Hayek where he presents the case that the path to socialism is a mistake. But notice it is a path, not a door he is talking about.

There are many important truths in your article. A call to arms so to speak. But what strategy should we apply to right the wrongs you have pointed out especially the corrupt Federal Reserve.

To have the "moral revolution in this country" you are talking about is going to require some thing a little more substantial then saying we want real capitalism not the crony capitalism we have now,

Perhaps you can write a book that outlines your strategy.

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Brandon Smith
written by Brandon Smith , January 19, 2018


You don't seem to understand what a "strawman argument" is. A stawman is when you conjure an argument out of thin air that your opponent never made, then attribute it to him, and then proceed to dismantle it. Bob never did that in this article.

Also, capitalism does not exist in "graduations". This is nonsense that you did in fact conjure out of thin air. If you have government interference in numerous sectors of the economy then you have socialism, not free markets. Period.

Also, it is not for Bob to solve the world's problems just because he is pointing out the problems. Solving problems STARTS with identifying them. Perhaps YOU should offer up some solutions, and give Bob a rest, eh?

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Capitalism Does Exist in Gradations
written by Mark Smith , January 23, 2018

Hello Brandon. Perhaps my earlier reply to your post was too long so that is why you did not post it. Here is a shorter version.

You say "capitalism does not exist in "graduations"." I disagree.

Capitalism can exist in "graduations" and economies can become more socialist meaning less capitalist. See Maduro's Venezuela for example. If you don't agree that Venezuela became more socialist under President Nicolas Maduro then we certainly can't agree that capitalism can exist in gradations.

The below definitions of capitalism and socialism are the commonly accepted ones. You will notice that the main principle that defines capitalism is private ownership. The main principle that defines socialism is government ownership.

Using Venezuela as an example, President Nicolas Maduro increased the expropriation of businesses in the name of socialism. So Venezuela became less capitalist and more socialist under Maduro. .

Definition of capitalism:
An economic system characterized by private or corporate ownership of capital goods, by investments that are determined by private decision, and by prices, production, and the distribution of goods that are determined mainly by competition in a free market

Definition of socialism
1 : any of various economic and political theories advocating collective or governmental ownership and administration of the means of production and distribution of goods
2 a : a system of society or group living in which there is no private property
b : a system or condition of society in which the means of production are owned and controlled by the state

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Brandon Smith
written by Brandon Smith , January 23, 2018


Not sure what comment you are referring to, but if the short version is any indication, then I'm glad I did not have to waste time reading the long one.

You have not made an argument. You have posted the webster dictionary definition of socialism and capitalism, and then argued that socialism has graduations, that is all. There are indeed varying levels of government interference in markets, therefore varying levels of socialism. HOWEVER, free markets are either free, or they are not truly free markets.

Just because socialism exists in graduations does not mean free markets do. Your conflation is illogical.

The Webster dictionary definition of capitalism, for example, is rather idiotic. First, it ignores the ORIGIN of the word "capitalism" (communist created) which was designed to slander the concept of free markets developed by Adam Smith. It then mentions "corporations", which are a creation of government charter and receive special protections through government legislation and limited liability. Corporations are NOT a part of true free markets as defined by Adam Smith. This makes the textbook definition entirely inadequate.

If we are to understand FREE MARKETS, then we have to go to root sources like Adam Smith, who railed against ANY and all interference by government in trade and production. Either you have free markets, or you have some degree of socialism and corporatism. Graduations of free markets do not exist.

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"some degree of socialism"
written by Mark Smith , February 03, 2018

So Brandon if an economy has "some degree of socialism" for example 10% what do you call the the 90% part of the economy which is not socialism ?
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The 90% part of the economy which is not socialism ?
written by Mark Smith , February 13, 2018

The answer to the question, what do you call the 90% part of the economy which is not socialism, is that is the part of the economy which is made up of free markets.

Bob's problem and your problem is that you take some thing which is complex and over simply it to fit your own shallow understanding of how an economy works. Economies are not either or. The US economy is made up of many different types of markets. Some more regulated than others, some not regulated at all and some completely regulated out of existence, in other words there are gradations of free markets just like there are gradations of freedom.

You refer to Adam Smith and define free markets as free of
“ANY and all interference by government in trade and production.”. And if there is any government interference then you have "some degree of socialism and corporatism".

There are no reputable economists who define socialism like that. As I said in my previous post the main principle that defines socialism is government ownership.

Even Ayn Rand quoted by Bob agrees with me saying "The essential characteristic of socialism is the denial of individual property rights".

Karl Marx says about communism which is socialism, "In this sense, the theory of the Communists may be summed up in the single sentence: Abolition of private property."

And Ludwig von Mises says in his epoch work, Socialism An Economic and Sociological Analysis which I highly recommend to you and Bob, p 239, "The essence of Socialism is this: All the means of production are in the exclusive control of the organized community. This and this alone is Socialism. All other definitions are misleading"

My original criticism of Bob's article what that his main thesis, "The American System Is Not Capitalism" was wrong because his definition was wrong. A point you completely missed. And that is why when Bob says "The return of capitalism will not happen until there is a moral revolution in this country." is complete nonsense. If you can't define a problem how can you hope to solve it. The problem is the increasing government ownership and control of the economy which results in less economic freedoms and a less efficient economy. Once you understand that you can talk about ways to take back control from the government which can only happen gradually, not by some "moral revolution in this country".

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