This is a speech I have prepared for the Libertarian International convention organized by the Bulgarian Society for Individual Liberty in Sofia on 2005-04-02 and 2005-04-03. Since I had only thirty minutes to deliver it, I cut it down as follows: I skipped the sections The Enforcement of Property Rights, Capitalism as a Phenomenon, We Are All Capitalists, Convincing People, and I stripped down the introduction, the conclusion, and the section Errors in the Way of Liberty.

1 Introduction
2 Ethics: a Paradigm of Individual Choice
3 Responsibility: The Dynamic Feedback of Ethics
4 Capitalism: the Institution of Ethics
5 Law and Facts
6 The Enforcement of Property Rights
7 Capitalism as a Phenomenon
8 We Are All Capitalists
9 Obstacles to Capitalism
10 Errors in the Way of Liberty
11 Convincing People
12 Conclusion

I am François-René Rideau, a one-man think tank from France, and the author of several libertarian websites ^[1]. I am very honored to be speaking before this audience today, especially so in a session dedicated to the memory of Ayn Rand. Ayn Rand, as you may know, was the premier defender of Capitalism from the point of view of Ethics. She was born one hundred years ago, in 1905, and she well deserves the homage being paid to her today.

The title of this session is The Ethics of Capitalism. There are many ways in which this title can be interpreted.

One way to interpret ``The Ethics of Capitalism´´ is to consider Capitalism as a socio-economical phenomenon. This socio-economical phenomenon, the accumulation of Capital in private hands, would then be viewed under the light of some external morality, and the ``Ethics of Capitalism´´, if it exists, would consist in this phenomenon being found to be globally good rather than bad.

Another way to interpret ``the Ethics of Capitalism´´ is to consider Capitalism as a socio-economical framework. This socio-economical framework would then be viewed as an ethically neutral given context in which to exert morality, and the ``Ethics of Capitalism´´, if it exists, would consist in a set of rules of Business Ethics to follow so as to behave in a good way rather than a bad way.

I will argue that both interpretations, while they contain a grain of truth, miss something essential, without which they cannot be justified, and with which they become so secondary as to not deserving anything more than a statement of their obviousness. The interpretation I propose is more radical.

I will argue that the right way to interpret ``the Ethics of Capitalism´´ is to consider Capitalism as a juridical framework; that this juridical framework can be viewed as the very acknowledgement of what Ethics is. In a strong sense, Capitalism is Ethics: a paradigm of individual choice. Behaving according to the rules of Capitalism is being an ethical agent respectful of the ethical nature of oneself and other persons. Violating the rules of Capitalism is denying the ethical nature of oneself and other persons.

Let's start by examining the nature of Ethics.

Ethics is the process of distinguishing between good and bad. Like any process, it is relevant only in as much as it affects human behaviour. And it affects human behaviour, because an individual, when confronted with many opportunities, and in as much as he's able to identify the difference, will naturally be inclined to choose the opportunity that's best. Best according to him, that is. No, not best according to the criteria that he is ready to publicly admit he applies; best according to what he really thinks matters; this means best for himself first, though that self includes the persons and causes he identifies with.

I therefore insist that Ethics is about Choice. Without a choice, good and bad have no relevant meaning. And within a choice, it's actually the comparison ``better´´ and ``worse´´ between opportunities that matters, it isn't an absolute ``good´´ outside of context.

I insist on Individual Choice: every decision is necessarily made by an individual person. Any so-called ``collective´´ phenomenon is the emerging result of individual actions; there are no social forces that act outside and above of individuals; every decision or action that may or may not participate of a collective phenomenon is actually made by a single individual ^[2].

I also insist on the subjective nature of ethical judgments: moral judgements are necessarily based upon individual criteria, due to personal knowledge and subjective preferences ^[3]. Enjoyment is individual, and so is suffering individual. All preferences are individual: good is good for someone, or more precisely according to someone. And good or bad only directly matters if it's good or bad for the extended self of the individual making the decision.

There is no good without someone to benefit: there is no possible ``collective good´´ that benefits a murky ``collective´´ unless it's a good that benefits all the members of said collective. A ``collective´´ judgment may objectively compare preferences and results over each individuals; in some cases, it may then conclude that everyone is better off in some situation than in some other. Hence the concept of Pareto optimality, but more importantly, hence the principle that mutually voluntary exchanges benefit all involved parties. On the other hand, there is no objective way to reconcile conflicts when someone loses and someone else wins; there is no objective common scale on which to project individual preferences and deduce a collective aggregate value ^[4].

Up to now, we have seen that Ethics is a paradigm of individual choice. According to what rules will individuals make decisions? How may we acquire correct rules of behaviour that benefit us, rather than incorrect rules of behaviour that actually harm us? How shall we improve the rules we follow, reject inadequate or obsolete rules we previously accepted, or refine them into better rules?

In cybernetical terms, we speak of the structural coupling between two structures. The two structures concerned are the real world and each of our mental models of it. What ensures the relevance of our models and its ethical rules with respect to the real world and the laws of nature, so that our decisions actually benefit us? As always, the answer, in cybernetical terms, is feedback.

You may have heard of experiments where a man is cut from his sensorial feedback, eyes and ears shut, plunged into a bath at body temperature, with artificial breathing and feeding. After a long enough time in such a situation, the man goes crazy. His mind has been disconnected from reality. Cut a man from his sensorial feedback, and after some time, he'll go raving mad, without sensorial direction. Well, the same is true for man as moral being: cut him from his moral feedback, and after some time, he'll behave in a morally crazy way, without moral compass.

In the realm of morality, the feedback is named responsibility. Responsibility is when someone suffers the consequences of some decisions. And this means both the positive consequences and the negative consequences. When responsibility coincides with liberty, when the person who takes some decision suffers the full consequences of these decisions, then there is a feedback loop; then people benefit from their good choices and lose from their bad choices; and so they may learn from experience. As you may know, experience is the best teacher; but it is an expensive teacher, that always gives the lesson after it gives the examination. However, intelligent people learn from other people's experience, not just their own — so they may learn the lesson and succeed at future examinations without having to fail at first.

When it matches liberty of choice, responsibility before the consequences of one's own choice is the one principle of progress in human history. It is the feedback from reality that makes us stick to reality and improve ourselves within it. Responsibility is what keeps human action relevant to human fate. Without responsibility, we lose track of how to behave; worse, with misplaced responsibility, where those who decide are not those who suffer the consequences of decisions, then we get on the wrong track, and we run into disasters.

To avoid confusion, note the distinction between (1) responsibility in fact, that falls upon whoever actually suffers the consequences of action, (2) the feeling of responsibility, that some people may or may not have, whether or not they actually suffer the direct consequences of given actions. It is through the feeling of responsibility that some people may adjust their actions; but it is actual responsibility that creates a dynamics whereby people learn to feel the right kind of responsibility rather than a wrong one. We may also distinguish (3) responsibility in law, which is about the praise or blame that people get, but I'll get to that later.

Some people may try to equate Responsibility in Fact with some kind of immanent justice. However, it must be understood that conscious human action is part of the feedback that constitutes Responsibility. If humans don't consciously create feedback, then responsibility may fail to exist. In other words, in this matter as in others, We can't ``let nature decide´´ — we are part of nature; we can't ``let god enforce his will´´ — we are among god's agents; we can't ``let authority tell us´´ — we are the makers of the authority that determines things; it isn't above us, it is us. And we'll see that this is what Law is about.

To summarize what Ethics is, Ethics is a paradigm of individual choice between opportunities, which choices are kept relevant to the meaning of human life through the feedback of responsibility. That is why Capitalism is precisely the Institution of Ethics: Capitalism is the formal recognition of Human Action as a Paradigm of Individual Choice between Opportunities.

Indeed, what is Capitalism?

Capitalism is a Theory of Law. It is a Theory of Law that consists in the definition of individual property rights.

A Theory of Law gives means to resolve and prevent conflicts. Conflicts arise when individuals make incompatible decisions about some resources that may be used in only one of the proposed ways at most.

Capitalism is a Theory of Law based upon the recognition that human action is made of individual decisions, that are kept relevant through responsibility.

Because a resource may be spent but by individual decision, whoever ultimately gets to decide the use or fate of a resource in fact possesses that resource. The only way to prevent future conflicts about resources is thus to determine whose decision is to prevail about said resources, who may legitimately possess it. Capitalism is thus based upon acknowledging to each potentially disputed resource a proprietor, an owner. The owner may decide how this resource is preserved or spent.

But under Capitalism, the way that ownership of resources is distributed is not arbitrary.

Capitalism recognizes that possession in fact ^[5], without any previous conflicting claim from anyone else, makes for valid property rights ^[6]. Hence, the personal liberties by which each individual owns his own body, mind, and activity. Hence also the homesteading rule by which individuals appropriate natural resources by being the first to put them to actual use.

Capitalism also recognizes the necessity of responsibility. Thus, it seeks to match the liberty of making a decision with the responsibility for the consequences of making said decision. Hence, creators get to own whatever they create, whether it's good or bad. Hence, destroyers get to be responsible for what they destroy, whether it's good or bad. If during a transformation, one both creates and destroys things, one gets both the praise and the blame accordingly. And blame means that the culprit must compensate the victim for encroachment to the victim's property.

Capitalism recognizes the goodness of mutually volontary exchanges. Hence, not only is a property individual: all decisions concerning it are ultimately borne by a one person, the owner. A property is also transferable: the owner may give or exchange his property with any other willing individual, at mutually agreed conditions. Finally, a property is divisible: either through physical division, time sharing or any agreed upon arrangement, the owner may split his property so as to exchange part of it with another individual, through contract.

These are the principles of Capitalism.

But what relationship does Capitalism have to reality? Indeed, what does any Theory of Law have to do with reality? What binds Fact to Law?

The choice between actions, good and bad, legitimate or illegitimate, still resides upon individual choice. Just because some action has been identified as legitimate or illegitimate doesn't magically drive individuals towards or away from that action.

Once again, there is one distinction that may drive an individual's behaviour, when said individual is able to make this distinction: it is the distinction between what is good for said person and what is bad for said person. But unless you can somehow tie legitimacy to individual good, then it remains an irrelevant distinction as far as human action goes.

That's where the domain of Law comes into play. Widely held opinions about what is legitimate, bind individual interest, through the implementation and expectation of enforcement. Because people expect punishment for their deeds that are generally found to be bad, they will refrain from indulging such deeds — or suffer the wrath of society, and eventually be removed from society, should they persist.

Ideas have consequences. Ideas about legitimacy have consequences in terms of what rules of behaviour people adopt. Law is part of what makes fact. A wide feeling of legitimacy breeds force. Right makes Might.

Certainly, force gives means to do massive propaganda so as to cultivate a feeling of legitimacy. Might gives the means to make Right. And it has to, if it is to survive without yielding to a revolt.

That is why, for instance, you mustn't imagine slaves as being on the constant brink of revolt. Those who could revolt did so before they were conquered, and died; thereafter the few who revolt are destroyed before the majority rises. And so the vast majority of living slaves find that their fate, if not deserved, is by all means normal, a necessary burden in the natural order of society. And I mean not only slaves, but all oppressed people, by all kinds of oppression, including whichever you can observe around you.

But this is also why you shouldn't confuse Law, as the mighty ones want it to be, Law, as their lawyers write it, Law, as their uniform-wearing thugs enforce it, and Law, as established by the population at large, whether through official or unofficial means.

If Law in general gets its power from enforcement, how are property rights to be enforced within Capitalism?

Under a system of Capitalism, the owner of some resource may defend his property against trespassers, intruders, robbers; and the owner of destroyed or altered property may require tort reparation from intentional or unintentional borrowers, thieves, vandals, destroyers.

Defense and reparation of property may require the use of force; the enforcement of property rights thus implies a sphere for the legitimate use of force.

Now, force itself requires the use of resources; thus, the paradigm of property rights implies that the owners of said resources be responsible for deciding whether and how to use resources for property enforcement. Under a regime of property rights, property owners will spend the resources they desire to defend the properties they consider deserve a defense; they may start with defending their own property, and that of those they care for; but they may also help prevent and prosecute any property encroachment that is repugnant to them, whoever the victim may be. And they may organize in the most efficient ways they find, on a free market.

A monopoly on the use of force, taking some resources by force from people to organize defense, and forbidding them to use other resources to defend themselves, is thus in itself a violation of property rights. A monopolist Government, a State, is thus a negation of Capitalism, and actually the biggest negation there is of Capitalism.

Now, you'll tell me, such unrestricted Capitalism doesn't exist — at least not yet. Its opponents call it ``wild´´ capitalism, the law of the jungle. But it doesn't exist because it's actually much more civilized than our societies currently are. Whatever the case may be, in absence of such complete Capitalism, universally recognized as valid Law, what is the relevance of Capitalism in society?

That's where I would like to say a few things about Capitalism as a phenomenon.

Capitalism is a word coined by Marx. I don't mean the great philosopher, Groucho Marx, I mean the bad humorist, Karl Marx. Marx defined ``Capitalism´´ as the private ownership of means of production, as opposed to government ownership of those means of production in the name of the ``collective´´. He actually made up the term from the word ``capitalist´´, which designates someone who earns his living out of the proceeds of his capital investments.

What is capital? Capital is any resource that has to be reserved in advance, so that production may take place that will only bear fruits later. It includes any tools and machinery, but also the resources needed to sustain the lives of the workers until production is successful — assuming it is successful, eventually.

If we are to understand capital as productive material machinery, then the first capitalist man was the first tool owner, the first person to foresee the future utility of a tool and keep that solid stick or hard stone for a future use. The first capitalist was the first human, the first homo abilis. What distinguishes man from animal is precisely this ability to use, keep and develop tools. And capitalism is humanity. Everyone is a capitalist in as much as one owns anything that is for use at a latter date. But those who distinguish themselves as being more capitalist than others, are those who see further than other people, and keeps things for future use that other people fail to prepare or neglect to keep.

If capital is to be understood in a broader sense, as any material thing that one may possess, that will enable future production, then first capitalist was the first animal to keep food for next year, or even for next day. And if these possessions are to include absorbed chemicals as well as chemicals stored outside one's body, then the first capitalist was the first living cell, that kept chemicals inside a membrane. Capitalism, as a phenomenon, is life itself.

Those who fight Capitalism, the phenomenon, are actually seeking to destroy mankind, they are seeking to destroy life itself. They want to put an end to civilization and return to brutish animality. They want to put an end to animality and return to vegetation. They want to put an end to vegetation, to change, to life itself, and return to the purity and stability of death.

What is the relationship between Capitalism, the system of Law, and Capitalism, the phenomenon of Capital accumulation? And how does that make either concept of Capitalism relevant to our life?

We saw that Capitalism as a phenomenon is consubstantial to life itself. And Capitalism as a System of Law is the implicit system by which everyone lives. Any person who faces moral questions, any human being who makes any individual choice, acts under the implicit assumptions that Capitalism makes explicit. Any two persons who voluntarily cooperate with each other act under the implicit assumptions that Capitalism makes explicit.

Human action is projection into the future. A capitalist is someone who looks into the future. A capitalist makes profit only in as much as he sees further than other people in the direction he's looking.

Every consumer who buys goods ahead of consumption time, is a capitalist. Every worker who has a savings plan, an insurance, a retirement plan, is a capitalist. Every student who studies now for his future career, every lover who courts a mate now for his future family, every parent who raises children for the future of his kin, is a capitalist.

But capital accumulation benefits not just those who partake in it; it also benefits all those who fail to individually accumulate capital. Workers benefit from capital accumulation by employers and stockholders, who may provide them with salaries while production is taking place. Consumers benefit from capital accumulation by producers, whereas better means of production entail more and better goods available for everyone.

Competition between capitalists in a free market, one that respects the rules of Capitalism, drives salaries up and prices down, to the benefit of workers and consumers. And that's why the worst thing that could happen to those deprived of capital, is a monopoly on capital — that is, a communist state.

People may accumulate more or different capital, depending on many factors. Luck matters a lot, everyone will tell you for sure. But luck is when opportunity meets preparedness. The main factor that drives people to accumulate capital is their time preference — their propensity to project themselves in the future, and not just live in the sole present. Time preference may depend on personal inclination, either genetic or acquired; it also depends on personal expectations about the future; these expectations depend on understanding of the future — science, as far as nature is concerned; but also Law, as far as the behaviour of other people is concerned.

If we are all implicitly capitalists in our human behaviour, why do people oppose capitalism as a theory? What drives people to reject Capitalism as a Law? Why are they rejecting the rational rules of individual and social life? Why do they subscribe to anti-rational rules of Law, that drive them to conflict and misery?

First, I want to insist that almost by definition, most every man acts in good faith, according to his beliefs of good. As said Alexander Solzhenitsyn, who has seen the heart of evil, ``To do evil a human being must first of all believe that what he's doing is good.´´ Certainly, there are very few psychopaths, who do what they know to be evil. And unhappily, we often find these psychopaths attracted to positions of political power. But that is a different problem. Most people subscribe to evil rules of behaviour, while believing they are doing good. And the psychopathic rulers would have no power, save for the compliance and support of a mass of well-meaning citizens.

Capitalism as a Law is rejected by most people, out of error, out of misunderstanding. This misunderstanding is sustained by the action of evil people, but also by the mere reproduction of errors by other well-meaning people. It is a self-reproducing belief, a meme, that has not been replaced yet by the meme of Capitalism. And we must study it from the point of view of memetics.

What keeps people in Error?

Most people are not able to conduct an abstract logical inquiry into the systemic consequences of the rules of actions they adhere to. And able or not able, such abstract logical inquiry is indeed a complex endeavour that is better left to the few people who are best at it; this follows from a proper division of labour according to skill. And thus, most people, most of the time, including those capable of abstract logical inquiry, act upon rules that they can't possibly inspect in all their consequences. People mostly act according to rules that have no dynamic context: in such situation, do this instead of that.

Where this gets bad is when people wrongly abstract this daily behaviour into a universal principle. And then, they imprison themselves into a static view of the world: one where there are no choices, only obedience to one set of rules or another; one where consequences do not matter, only dogmatic rules; one where there is no dynamic creation or destruction of values, only static distribution of a fixed pie of wealth.

I have treated at length in previous essays the mindset of static thinkers, their ``magic thinking´´ ^[7], their accounting fallacies ^[8].

These people treat ethics as a static set of normative statements of which there is an objective knowledge, and that may be imposed upon non-consenting people. They do not understand that ethical rules have to be discovered, and that forceful imposition of some rules by some people over other people is a process that is both evil in itself, and prevents the discovery of good rules of behaviour ^[9].

In other words, they are ignorant of the Law of Eristic Escalation. The Law of Eristic Escalation says that Imposition of order equates escalation of chaos. That is, by trying to impose an artificial order by force, you only delay the return of the disturbed natural order as far as the parameters you control go, and you increase chaos by all the direct and indirect consequences of your use of force, as far as go the parameters you don't control ^[10].

And thus, static thinkers proffer anerisms, that is pronouncements that are ignorant of the Law of Eristic Escalation: they believe that when some artificial order is decreed with authority, the utterance of this order is turned into the actual realization of the order being commanded, as by a magical formula. People familiar with general semantics will immediately recognize insanity at work: that is, the confusion between the representation of something (the command) and the thing that is meant to be represented (the social order). What static thinkers ignore is the nature and the cost of what may give or fail to give power to the decree: brute force.

An anerism, in the end, is the belief that you can impose goodness by force. It is the belief that supreme force makes a god out of whoever holds it, capable of molding humanity to his bidding. Actually, if it makes anything of whoever holds it, supreme force makes him into a devil. At best, force can eliminate evil. But it can't convince people that what they're doing is bad, and it can only prevent them from doing bad by introducing something that is worse than the bad to be prevented (only, not on the same person). That is, force cannot decrease the evil in the world, at best it can only move evil around to restore the feedback loop between liberty and responsibility; at worst, it can greatly increase the evil in the world all the while destroying that precious feedback loop.

The prototype belief behind the call to impose will by force, is the belief that through force, man may be saved despite himself, either individually or collectively. Saved from what? Saved from evil. But not just from evil — saved from the choice that may lead to either good or evil. Statists want to save man from the burden of morality itself. Statists want to save man by making him no more a human being. Instead of saving people, they turn people into animals, they destroy morality and unleash evil.

Statists believe they can decrease their responsibility by pushing it back to other people. But responsibility never decreases; it only spreads and multiplies. And so statists renounce their responsibility, they renounce their morality, they renounce their humanity.

We libertarians may know that Capitalism is the rational way of living as individuals in society. But other people don't. And thus they are ready to enforce upon each other and upon us rules that violate natural property rights, rules that constitute oppression, and lead to suffering, misery, poverty, and death. If we want to be free, we have to convince all these people. How do we get there?

Let's first agree how not to get there. An eristic debate, where you set yourself as the opponent of your debater's view, almost never convinces. It only makes the other person into an arguer who will seek any and all argument against you. Unless said person is supremely rational, his losing the debate can't possibly change his mind; on the contrary, it will just have him erect psychological barriers against your views.

If you want to convince someone, you must first pose as his friend, not as his enemy. You must conduct a positive debate. It's really like Sale: you have to convince your partner that you have something that is good for him. You must start from things that your partner agrees to, and work your way from there to your point. Which means you may first have to learn what your partner values, and only then find a path from their values to your system of Ethics.

People love liberty for themselves, but fear liberty for others. So you must insist first on liberty for themselves. They know better than the tyrants who decide for them; but they also think they know better than the other people who disagree with them. You must stand with them against tyrants; and then you may invoke the universality of rights to stand with other people against your partner's own tyranny. Universality of rights guarantees to other people the liberty your partner wishes for himselves. And it is liberty, not slavery, that must be universal; because slavery cannot be universal — there will always be a master; and because liberty is life itself, and lack of liberty is death. Not being able to choose is not being able to live. Choosing for other people is not living either — it's a burden without enjoyment or suffering, and that, lacking this compass, soon enough turns into tyranny that makes a monster out of the tyrant. Finally, as your partner becomes desperate and sees no hope in mankind, you may raise the principle that keeps mankind on the right track: responsibility. Your partner longs for security; you can show him how liberty and responsibility build security, whereas oppression and renouncement of responsibility create chaos.

I will now conclude.

Ethics is the paradigm of Human Action: individual choices, kept relevant by responsibility. When you compose the many choices of many people, you get Economics. Economics is the Plural of Morality.

The spinal structure of any economic system is the Theory of Law that people hold and defend. Law is a matter of opinion. And the history of liberty is the history of the evolution of opinion.

That is why, if we are to play a role in furthering liberty, we must learn how to teach liberty.

Thank you a lot for your attention.

Notes

Faré Rideau

Liberty, as it is

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