The free market is a superior electoral system to democracy. Where democracy assigns equal power to all citizens, capitalism rewards the competent. Where democracy breeds incentives to reduce national prosperity, capitalism protects the principles that allow all to succeed. Where democracy forces politicians to make decisions of scope outside their expertise, capitalism cultivates specialized knowledge which applies to its relevant sector. Democracy naturally expands into its logical successor of socialism. It is an illogical system which progressively degrades the productive capabilities of a society. Capitalistic governance is a more rational alternative. The legal or revolutionary requirements to de-democratize are outside of the parameters of this discussion, as they are outside the realm of present possibility. However, the actual process of de-democratization is less complex than it seems. The capitalist system, despite constant distortion from intervening institutions, is already established, and thus no new infrastructure needs to be built.
THE PROBLEMS WITH DEMOCRACY
In a democratic society, every citizen is granted the same share of electoral influence, one vote, and therefore democracy is an egalitarian based system. It grants suffrage to people for merely existing, as opposed to demonstrating competence, expertise, insight, or responsibility. The first question a democratic system must answer is why power should be equitably distributed? Appealing to arbitrary notions of fairness, justice, or human rights is an appeal to the mystical.
Nothing else in nature or society is doled out uniformly. For example, there are significant interpersonal genetic differences. Some of these distinctions are easily discernible, such as height, sex, and skin color. Others are more discreet, yet more significant; studies routinely indicate intelligence is between 50-80 percent inherited (Dreary 2013). Intelligence even differs within families. First born children are more intelligent than second born, and second born more than third (Sowell 2019, 7). Intrafamilial analyzation means social experience and genetics were as comparable as possible, and significant deviations remained. If disparities cannot be flattened within the same family, why should we expect them to not materialize in society? Knowing that there are concrete limitations to the removal of intellectual discrepancies amongst individuals, and therefore an immutable hierarchy of potential from birth, it is unreasonable to assume that all people should immediately receive an equal say in government. In all other institutions, a great deal of effort is devoted to vetting out the less capable. Businesses bid higher wages for competence, they assign more authority, responsibility, and resources to these individuals. Universities, in theory, assign grades and reward degrees to those deemed intellectually fit in a field of study; the incompetent are failed, removed, and prevented from receiving accreditation.
It is true that environmental factors are impactful and shape individuals. However, merely because society can reduce hyper-discrepancies resulting from environmental differences in no way indicates that it will. In actuality, it makes no difference that social factors influence individuals, all that matters is the human product at the time of voting. If an individual reaches the legal age to vote, and is less competent than his/her peers, he/she deserves less influence. If that individual surpasses his/her peers in competence by the next election, he/she should have more comparative power. It is a mistake to conflate culpability of incompetence with whether or not one is fit to receive equal say in government. Democracy provides no such system of flexibility.
In addition to genetics and social factors, individual decisions play a massive role in the outcome of one’s life. Ron Haskins and Isabel Sawhill (2009) famously discovered that by finishing high school, getting a full-time job, and not having children out-of-wedlock or before the age of 21, 98 percent of people avoided poverty. Despite detractor attempts (Matthew 2015) to declare pregnancy and graduation as out of an individual’s control, they are almost entirely within so. If someone makes the personal decision to consensually engage in sexual activity, and becomes pregnant and impoverished, why should a blatant demonstration of incompetence be rewarded with the equal ability to affect others lives? If one is so incompetent as to not graduate high school and continuously stay out of work, why should they be deemed competent enough to determine the future policies of the nation?
The inverse of social detractors are those of extreme benefit. Tim Berners-Lee, Norman Borlaugh, Jeff Bezos, and Bill Gates all revolutionized the modern world. They created services and products that lifted millions out of poverty, expanded business, and fed the starving. The fact that these men receive an equal vote to that of a high school dropout on welfare seems ludicrous. The burden of proof lies on the democrat for explaining why elections and governance are concretely different than every other aspect of society in that each member is equally effectual. Why we pretend that demonstrably unintelligent, incompetent, and irresponsible people intrinsically deserve to dictate the lives of others is an astonishing, and detrimental, claim.
The extension of a system based on unconditional suffrage, and majority rule, is what I deem to be “mob rule.” Mob rule historically referred to groups of people that intimidated legitimate bodies of government, in effect, usurping power. I use the phrase to mean anytime a majority, through threat of violence, decides (votes) to violate the “principles of prosperity,” which will be discussed in a later section of the same name.
Much of the defense of democracy stems from a misapplication of Jeremy Bentham and John Stuart Mill in their advance of utilitarianism—supporting the greatest good for the greatest number of people. The greatest good for society is not determined by a majority vote. A majority may, and historically did, vote for measures that provided them short-term benefits while breaking the mudsill of their society, leading to worse conditions in the future. Absent of this misunderstanding, utilitarianism is still a defunct ideology; it relies on an interpersonal comparison of utility, which is impossible (Hoppe 2007, 235).
An easily comprehensible example of the undesirable prospect of democracy is that of analyzing a singular, global democracy. “If majority decisions are ‘right,’ then the largest of all possible majorities, a world majority and a democratic world government, must be considered ultimately ‘right’” (Hoppe 2007, 106). Given that Asia is home to 4.5 billion people, most recognize how an Asian world order could be problematic. They could exploit other nations, arbitrarily raise taxes on other countries, take land, displace people, disproportionately spend money on their own nation, underdevelop and underprotect western countries, etc. Besides the immediate suffering non-Asiatic countries would endure, Asia would be left with an inefficient system based upon mercantilist ideas, and their innovative sectors would dwindle, leaving the entire world worse off. This is easy to conceptualize with differing nations, however it is no different when applied to smaller units. Regardless of the scope of a constituency, democracy grants populous groups the ability to seize power and confer short-term benefits upon themselves that lead towards long-term negatives for everyone.
As soon as one acknowledges that non-beneficial policies may be voted in democratically, the moral justification for democracy disappears. Is the Holocaust legitimate because the Nazis were democratically elected; is Hamas justified in genocidal ambitions because they won the popular vote? Most would say no. A possible rebuttal is that general legal restrictions exist to curb unfettered popular ambitions. But, who makes these rules besides the electorate? If there are rules that cannot be voted on, then there is no democracy. These rules must have been made by a select few, and if such rules were viewed as positive restraints on the masses, why would such an elite not run the country more responsibly? This is simply an admonition that democracy is a flawed system where the many can dominate the few. The problem is, that the “many” are pacified so long as they receive the benefits.
Ultimately, people attain benefits and power through democracy by socialization. Nobody votes in intellectual isolation, policies are advocated by those of similar interests, and the most populous group, by definition, achieves power. Who is the most populous group? Since wealth generation is hierarchical, for many reasons, there will always be more people with relatively less than those with plenty. Democracy always places the power of theft in the hands of the less productive many to take from the more productive few. One can see the logical progression of democracy to socialism. These irreconilities are noted by thinkers across the political spectrum, including Marxist intellectuals who plainly state that there is a “fundamental incompatibility between capitalism and democracy” (Nimtz 2016). Democracies cater to the desires of the masses; capitalism differs because it caters as well to the wishes of minorities. Even though a poor person may have less purchasing power than wealthier individuals, he/she can still allocate that capital at will and therefore business is inclined to serve their interests (Mises  2011, 109).
Mob rule also destabilizes the legal system. If laws can change at public whim, one can never be certain what their future treatment will be. One may be promised certain rights, only to have them taken away at the sway of public opinion. Of course, new rights may be extended as well, but there is no linearity of less rights to more rights, and much more incentive for the masses to take rights from the wealthy.
Interest in Personal Prosperity vs System of Prosperity
The majority of people act in self-interest, and since the majority of people are of the relatively less wealthy class, in a democracy, the majority of the decisions will benefit the less wealthy class. The working class, those who work for someone that innovated, or created, a capital structure, have an incentive to vote away the resources of the wealthy. Whether it be genetic, social, or personal decisions that lead to a less successful person, their least toilsome recourse is found in politics, not the market.
There are well-known economic axioms such as when you subsidize something, you get more of it than you otherwise would have, and when you penalize (tax) something, you get less of it than you otherwise would have. When the working class can vote themselves resources , we subsidize less productive people and create more of them; when they vote to penalize more productive people, we get less of them. Therefore, even small acceptances of these policies lead to a cyclical welfare program. As you get more unproductive people, and less productive people, the need for redistribution increases to sustain the larger unproductive population. Why does this happen? Firstly, few voters earn large incomes, and many envy those who do (Folsom  2018, 112). Secondly, economic achievement is now denigrated as “privilege,” and voters may genuinely feel they are entitled to a person’s “undeserved” income (Sowell 1999, 136). Lastly, it is in everyone’s personal interest to receive money without working. Without welfare, the poor would starve unless they could confer a social benefit (measured in terms of a salary) proportional to the economic cost of their life. This a system that not only robs the nation of wealth, but also disincentivizes an advantaged member of the lower classes from rising up into the producer class. If they escape welfare, and then have their property taken, the system has proportionally punished their success relative to their former comrades' failures. The underlying incentives which produce wealth weaken in democracy, as “the middle system of property that is hampered, guided, and regulated by government is in itself contradictory and illogical. Any attempt to introduce it in earnest must lead to a crisis” (Mises  2011, 18).
Most importantly, the principles which enable economic expansion wither. The foundation of a functioning market is strong property rights. Without guaranteed ownership of spoils after a capital risk, there is no reward and no reason to expand the economy. When wealth is stolen through voting, the poor are actually voting away the economy which employs them. This is the concrete way in which majority rule reduces the common good, “it hampers man’s productive efforts where, from the consumers’ viewpoint, they are most useful and valuable. It lowers labor productivity and redirects production along lines of political command, rather than consumer satisfaction.” (Sennholz  2011, ix). The poor masses are focused on temporary wealth gains by robbing the rich, and it is in their rational interest to do so, but they erode the requisite principles which produced the wealth in the first place, which is what they hope to have. They are interested in their personal prosperity instead of a system of prosperity. This is demonstrative of the economic principle of incentive compatibility—a system degrades if the incentives for individuals are to behave contrary to what propagates the success of the system.
An obvious point of confusion is that if the poor know their votes will erode a prosperous system, is it not their long-term rational incentive to support the system? The answer is no because individual rationality is different and takes precedence over group rationality, and the poor have low time preferences (Friedman 2018). It is in everyone’s individual interest to vote themselves money, and they are poor because they are genetically, socially, or individually deficient. Therefore, they would not take advantage of the system of prosperity, since they did not, and it causes them no immediate harm to damage the system in aggregate. Additionally, knowing that others are likely to vote themselves wealth, if one abstains and others are successful, he/she may miss out on resources despite the system’s erosion. With low time-preferences, people choose short term satisfaction over long term benefits. For example, one may indulge in drugs which cause immediate euphoria and long term health consequences. The poor are highly susceptible to low time preference and they choose short term economic relief as opposed to long term economic growth.
General Knowledge, Time Horizons, and Unaccountability
There is no such thing as equal distribution in nature and this extends to individual knowledge. Throughout one’s life, individuals acquire more knowledge on certain topics than other topics. Nobody is equally competent in any two fields. Most individuals choose to specialize in a certain industry which they will devote a large portion of their life developing and mastering. The market understands that people are specialized, and industry bids for competence in their respective sector. In a democratic government, despite everyone having specialized knowledge, people vote for representatives which must make decisions about every topic in the nation. Politicians deal with education, taxes, immigration, healthcare, transportation, national security, and thousands of other topics while additionally setting budgets for each program. Nobody has the requisite general knowledge to make highly educated decisions about each of these topics. Why should a plumber have the same say in how to regulate banks as a banker does? Would it not make more sense to give people with the most experience and knowledge proportionally more influence?
After individuals and politicians make uneducated decisions about topics they are unknowledgeable about, politicians usually pay no price. Since governments own the present use, but not the future value, of a nation’s resources, they will take short-term solutions without facing the repercussions of long-term consequences (Hoppe 2007, 46). Politicians may vote for wealth distribution with a warm heart. They will see immediate effects of happy poor people and innocent children better off; they will not see, or ever have to answer to, the progressive system of wealth inhibition, the businesses that never opened, and the lives never bettered by their destruction of expansionary incentives. They pay no individual price for making bad long-term decisions and they subsidize their poor decisions with taxpayers’ futures.
Additionally, with hundreds of members of congress, thousands of state officials, and millions of government workers, who can you singularly point to for accountability? Not only will politicians pay no personal price for their decisions, it is impossible to pinpoint who’s fault it even was. There are billions of market alterations daily, “it would be ‘absurd’ to assume that we could ascertain all the data” to assign culpability years later (Hayek 1974). Frequently, by the time negative effects are realized, the officials who made the decisions are no longer in office. This enables vast mistakes to be made without anyone ever knowing who truly was at fault and to what degree they were responsible.
In capitalism, resources are competed for by companies seeking market share. Resource acquisitions are constantly rearranged as certain companies provide more popular products than others, moving scarce resources towards higher order uses. This concept may seem complex, but is simple in application. Phone companies and window manufacturers compete for glass to build each of their products. If phone company A sells a higher quantity of phones using glass than window company B sells windows utilizing glass, the phone company becomes the more efficient use of glass, and more glass will flow to that company. In this way, the competition for resources is arbitrated through a preset, defined process.
In comparison, democratic institutions acquire capital through taxation, minting currency, or borrowing funds. These funds must then be distributed by a Congressional vote, providing resources to those favored by a few hundred politicians as opposed to those most economically efficient or desired in the marketplace. This creates social distrust in two ways. First, companies devote resources towards favorable treatment from government officials rather than providing the most desirable product, leading consumers to distrust business. Second, businesses begin to distrust each other as they vye for zero-sum government distributions.
The first case has been sufficiently touched upon through the explanation of resource distribution. The second case can be illustrated through the depiction of a case example. Imagine two competing, co-located grocery stores in New York City. Normally, they would compete to provide the largest variety of products and the lowest prices to attract the most customers. However, in certain cases, it actually makes sense for the stores to cooperate. Imagine both stores provided grain cereals, and the cereal provider offered discounts for retailers purchasing in bulk. Both grocers would benefit by cooperating and ordering their inventory together in a positive-sum situation where everybody wins. In the case of government subsidies though, whatever money grocery chain B receives is money that grocery chain A comparatively did not receive. It then becomes in each stores’ long term interest to disparage the other store and attempt to acquire as much of the government pot as possible. Government distributions are zero-sum games that damage inter-business trust and consumer-business trust.
THE FOUNDERS’ OPINIONS
Popular Perception vs. Reality
With such glaring issues involved in one-man-one-vote popular elections, surely the founding fathers attempted to mitigate these negative effects? Such is the conventional sentiment, as school systems routinely state that at the birth of the nation “white men with property were the only Americans routinely permitted to vote” (“The Founders and the Vote”). The basic idea is that by owning property, one proves his competence and investment in a framework that secures natural rights. Many see the founders as bigoted aristocrats, revolting against the British to protect their wealth from foreign government. Once they set up the new federal colonial government, they desired to keep anyone who threatened their status out of power. While this is a popular perception of the founders’ opinions, it is largely unsupported by documented history.
In reality, there was a lively debate about suffrage and to what extent it was beneficial. Benjamin Franklin ardently supported universal male suffrage (Meyers 2016). Conversely, Alexander Hamilton supported widespread restrictions and thought property owners were most fit to vote (Hamilton 1775). James Madison was in the middle, believing that voting restrictions might allow landowners to dominate the poor, and universal suffrage would allow the poor to dominate the landowners. While at the time of the nation’s founding, most freemen owned land , Madison realized this would change in the future and universal suffrage could lead to class conflict (Madison 1787). Thomas Jefferson, like Madison, believed that property owners and the impoverished class should vote, but he openly stated that some men were naturally more fit to participate in government than others. In a letter to John Adams in 1813, Jefferson wrote, “the natural aristocracy I consider as the most precious gift of nature, for the instruction, the trusts, and government of society” and “may we not even say that that form of government is best, which provides most effectually for a pure selection of these natural aristoi into the offices of government?” (Jefferson 1813). Despite these strong claims, Jefferson opposed aristocratic government for fear that the gifted class would produce incapable children, who may not be gifted or deserving of power.
So the founders held varied opinions and no voting system was agreed to at the Constitutional Convention. Each state was allowed to craft its own voting laws, and states quickly moved towards suffrage. In the 1790s, during George Washington and John Adams’ presidencies, Connecticut, Delaware, Kentucky, Maryland, New Jersey, North Carolina, Pennsylvania, Tennessee, South Carolina, Vermont, and Virginia, all expanded white male suffrage (“Who Voted in Early America?”). New Jersey even held elections in which women played important roles. All of this transpired under the founding fathers’ watch, and they did nothing to stop suffrage’s progression. I contend that had the founders sternly opposed the expansion of voting, they would have interfered.
Part of the issue is that the founders themselves betrayed the Constitution when convenient. Jefferson, a strict Constitutionalist, transparently violated the law with the Louisiana purchase from France, despite having no legal authority to purchase land from a foreign government (Jefferson 1803). The founders, above all else, were practical men willing to sacrifice ideological purity for what they thought would benefit the nation. There is little reason to doubt Jefferson, or his more legally-liberal predecessors, would have intervened in suffrage if they felt it was a ruinous development.
By studying the historical record, instead of the rhetoric, the founders reveal themselves as comparatively democratic and accepting of popular rule. When discussing why mob-rule came to the United States, one must hold the founders liable as the architects of our present system. One cannot look to their writings for solutions, one must conceive of a new system, devoid of our cherished myths.
THE ADVANTAGES OF CAPITALISM
Unequal Distribution of Power
The irrationality of everyone receiving equal power to influence every sector is well established. Capitalism differs because those who prove their competence in the marketplace acquire more capital and therefore have more say in the market. As competent people make productive decisions, they earn more money than their less productive peers, and can therefore allocate that capital where they choose, resulting in more influence in the orientation of the system. How this influence is acquired is more ethical7 than democracy’s method. There is no morality in giving the incapable power to intentionally or benignly damage others’ lives. In capitalism, the way to become profitable is to offer society a benefit that individual consumers voluntarily purchase. Absent of government, the only path to prosperity lies in providing a service that others vote for with their dollars. Society votes with capital and elects the most useful citizens. Is this not democracy in different words? No, the capitally enriched have more power, the poor must proportionally work for their wealth (they are not subsidized through transfer payments), and the unproductive progressively lose power as they make bad decisions or are unable to offer beneficial services. Critically, if the productive class “does not produce at [the] lowest costs of capital and labor what consumers believe they need most urgently, he suffers losses. But losses finally lead to a transfer of wealth and thus his power of control over means of production to more capable hands” (Mises 2006, 112). As a result, “the market responds to the demands of consumers, expressed by their willingness to pay for what they want, in a much more sensitive and efficient fashion than the political system responds to the demands of voters” (Friedman 2009, 15).
A democratic system allows individuals to vote standards on others while practicing a different one themselves. Nobody volunteers to pay more taxes, as they recognize it is a hindrance on their prosperity, but people frequently vote to raise taxes on others. Another example is when individuals vote to restrict the growth of a corporation, such as Amazon, yet continue to buy their products. These contradictions are not possible in a capitalist society. One cannot receive Amazon’s services without supporting the company. The key facet of capitalism is its remarkably unegalitarian features which reward those who benefit society with resources and power, and punish those who detract from society through poverty and impotency.
As this productive class rises to power, dies, and passes wealth to their children, is that not a realization of Jefferson’s idea of an artificial aristocracy founded upon “wealth and birth” (Jefferson 1813)? The complication of Jefferson’s analysis is that it assumes once wealth is accumulated, its mediatory power remains static. In actuality, wealth is fluid. If the rich children never spent a dime, they would immediately begin to lose comparative power as the market expanded. More commonly, the market directly tests these individuals as they utilize their capital. Most fail this test as ninety-percent of families lose generational wealth by the third generation (Kleinhandler 2018). Historians have noted that, in contrast with popular opinion, “it is hard for those on top to stay there the generations that follow. An inheritance can be transferred; but entrepreneurship, talent, and vision cannot be” (Folsom  2018, 57).Empirically, the children of our aristocracy not only drastically lose power, but they mobilize downward while most Americans mobilize upward. Over three-quarters of Americans reach the upper twenty-percent of income earners and over half reach the upper decile in their lifetime (Sowell 2011, 93, 111). Evidence shows that the incompetent are punished and stripped of their power, and the competent are rewarded and given more power regardless of inherited income. The market favors those that benefit society, in relation to society’s expressed desires, and ignores those that do not.
Success in the market, measured by wealth, is the best known metric of competence. This is because it accounts for specialized intelligence that is successfully acted upon to benefit society, as determined by society’s purchases. IQ is a relatively poor metric; plenty of intelligent people have held erroneous beliefs and advocated destructive policies. Many intellectuals still support communistic ideas, despite communism’s abysmal record. Intelligence is a measure of intellectual capability; it is not competence. Competence in and of itself is neither desirable. One can exume supreme proficiency in detrimental tasks such as genocide, engineering starvation, and promoting warfare. The market only rewards what is desired by society, while simultaneously protecting property rights. Since business can only secure the entirety of its profits by protecting universal property rights, it defends a system which enables others to produce and acquire wealth. Social pathologies like racism and sexism are reduced in a free market system, as it is in business’ interest to expand the consumer base. Producers that do choose to discriminate, as they should be free to, lower their profits and reward more inclusive competitors.
The tendency towards minority representation is an observable phenomenon. South African business routinely violated government policies limiting the hiring of blacks, since blacks provided cheaper labor (Leighton 1991, 89-92). American railroad companies supported Homer Plessy in his attempt to end state-sponsored racism, as segregation increased the cost of service (Sowell 2019, 48). It is an undeniable truth that widespread discrimination is at least as equally rooted in government as it is in free market operations. Free markets inherently distribute power according to measurable competence and there is no intrinsic predisposition to superficial discrimination.
Knowledge is Specific
One of the foundational principles of free market economic theory is its belief in the dispersion of knowledge. Any economic system must solve the “coordination problem” where millions of different people need to arrange a cooperative and expanding market. There are essentially two approaches to solving this problem, a centrally planned and a decentralized model. Socialists are proponents of central planning, where a group of individuals organizes the modes of production. Everywhere this has been tried, it has failed. It is impossible for a group of people to sensibly adjust millions of interrelated prices, every single day, while consumer preferences constantly change, and productive potential constantly adapts (Sowell 2011, 14). In capitalism, knowledge is dispersed amongst every consumer and producer, so that each portion of coordination is pieced into manageable sizes. Producers can adjust their output and model based on their experience and expertise. In this way, free markets recognize the dispersion of general knowledge while concurrently promoting the efficient allocation of specific knowledge.
One way to conceptualize this process is to think of any common commodity. A pencil is the most common example. To produce a pencil, one first needs wood to build the casing. In order to acquire wood, one needs to hire labor to cut down trees, that labor needs saws to cut down the trees, saws require metal, metal needs to be mined, labor miners need to be hired, the mining equipment needs to be built, etc. The supply chain for each of the individual components of a pencil (rubber, metal, wood, graphite) is massive. And this is one of the simplest and cheapest commodities available. The task to coordinate all of these systems by a governmental committee is too largely for any small group of people. Even if it was possible, it is still more efficient to allow the incentivized individuals most knowledgeable and invested in the sector, the producers, to organize it themselves.
All democratically based government functions are a transmogrification of the centralization of decision making or the application of general knowledge to specific problems; therefore, all democratic governments damage economies and the lives of citizens. Capitalism offers a more efficient way to organize economies, and by extension, the allocation of knowledge, resources, and power.
The Influence of Inequality
Inequality is prevalent in society. Many find it repugnant and wish to equalize outcomes. Understanding why inequality exists is paramount to comparing how the free market deals with it compared to democratic institutions.
On issues such as climate change, democratic liberals insist on “trusting the science,” yet on social issues they are the first to ignore relevant scientific concepts. In order for evolution to occur, genetic differences must exist which enable individuals to become more successful. To pretend that humans are exempt from this process is nonsense. Thus, from birth, humans begin their life unequal, with some possessing healthier genes and/or more potential to succeed in society. This is a note of extreme importance. Even if all social inequities were somehow ridden, the materialization of visible inequality would persist.
There are many other factors that contribute to inequality besides genetics: luck, circumstance, geographic location, effort, and individual choice. However, crucially, there is no way to differentiate how much each factor proportionally contributed to an individual's success or failure. Therefore, democratic institutions resort to analyzing statistics of outcomes and erroneously assume that if differences exist, it is the result of external injustices. The goal becomes to eliminate disparate statistics: equalizing incomes, crime rates, college admissions, etc.
The only way to achieve this goal is to forcibly remove any modicum of free choice in society. If people are genetically unequal, and they have any opportunity to act upon these differences, disparities will result. Of course, it is impossible to inhibit all expressions of individuality, so democratic policies continuously work towards an unattainable, and undesirable, goal by taxing some and legally mandating preferential treatment towards others. The cost is that “of creating an injustice to millions of others, who can become needlessly poorer, or fail to rise to the level of prosperity” than they otherwise would have in a free society (Sowell 1999, 25).
Capitalism, on the other hand, rewards productivity, not merit. Someone may have an inborn talent for engineering, but if a less genetically capable person works harder and can deliver a better product, they get the job. Therefore, where democracy looks to redesign society through retrospective results, capitalism provides the opportunity for individuals to choose their lifestyle. Capitalism embraces inequality and rewards those who can improve the lives of others, incentivizing a more prosperous society in general.
Preservation of Prosperity
A core assumption of free market ideology is that rational individuals purposely act to benefit themselves. The idea that people focus on how to improve their position instead of others’s positions is why competition exists. Opponents of capitalism refer to this as a culture of greed. People are set on making a profit and do not care about the welfare of others. Attempting to diagnose people’s intentions is a philosophical and not an economical matter; it is irrelevant why people act the way they do when analyzing aggregate systems. Just as group rationality differs from individual rationality, aggregate outcomes differ from singular intents. Suppose capitalism is founded upon greed; empirically, it produces more comfort than economic systems founded upon egality. Competitive markets breed social benefits and egalitarian markets impoverish nations, no matter the intent. There is no rational fallacy at work either. Discussions of “greed” are often conflated with ideas of zero-sum circumstances. In capitalism, with rule of law, the only way for someone to act upon greed is to benefit a second party through voluntary exchange. Just because one person acquires wealth does not mean that others are made worse off. Both parties benefit, even if one party has “immoral” intentions belying cooperation.
By understanding these axioms, we can extrapolate how capitalistic governance, where the wealthy exert more electoral power, preserves systems of group advantage. In democratic societies, people can act to benefit themselves by injuring others (transfer payments through taxation). In capitalism, people can only receive benefits by providing a desired equivalent or greater benefit to a second party. With the wealthy in power, they act in their self-interest to protect their wealth, exercising greed. In order to protect their property, they must enforce property rights. These property rights are what enable a free market to expand and produce wealth for the less productive. The wealthy will also seek low taxes and few regulatory hindrances, which incentivizes productive behavior and punishes unproductive behavior, increasing overall production and prosperity. Finally, while it may be said that the wealthy can exploit the less fortunate, in reality their incentive is in the inverse. Since the wealthy are invested in finance and business, their wealth relies on a prosperous consumer base. Thus, while they could infer short-term benefits from exploitation, it would damage the future value of their assets, disincentivizing the behavior. As previously discussed, democracies do not punish those in power for foregoing future value since the legislators do not own the nations’ resources, they only control their present use. In essence, an aristocratic class of productive and wealthy people would still vote in their self-interest, but their self interest is to confer benefits upon society. The principles they preserve, private property, wealth, and free capital structures, are all what allow others to mobilize through economic classes. These factors become less changeable, law and society is more stable, and the productive capacity of a population increases.
Capitalistic Forms of Government
A critique of anarcho-capitalism, an ideology of which I do not subscribe, is that since it seeks to replace public provisioning of services with private provisioning of services, it is not actually anarchistic, but privatist. I am inclined to agree. We tend to have an arbitrary definition of government, and “it’s very hard to think of anything at all that a government does that isn’t done by some non-governmental actors” (Friedman 2013). A capitalist governmental system is therefore a tautology. Capitalism is government. The free market coordinates groups of people to productive ends, punishes the lazy or immoral, and rewards those that benefit others.
There are two possible shifts towards capitalistic electoralism. First, there could be a partial shift, where voting weight is determined by wealth. If man “A” has one million dollars, he is allotted one million votes; if woman “B” is worth two million dollars, she is allotted two million votes. This system would improve the current democratic model as it enhances the “preservation of prosperity” incentives. It also allows for fluid power dynamics where the competent are constantly reassessed and voting power reallocated.
The second type of shift would be an abolishment of public provisioned government. As noted, the structures of capitalism already exist, so there is no need to rebuild a governing network. We could simply abandon the public government in favor of a full private government. This shift does run into problems such as how legal systems would be enforced. Solutions have been proposed, such as the implementation of rights enforcement agencies, however their merit is admittedly questionable. Regardless, any shift towards capitalistic governance is an improvement over democracy. There is no reason to believe that networks arranged by public government could not be done so by private entities, and the country would be better off for it.