- private ownership of all property;
- a complete separation of the state from economics just as there is a separation of state from religion;
- free trade in a free marketplace; and
- the absence of force from human relations – with government confined to keeping things that way.
Oddly, although it is capitalism that has been the engine of prosperity around the world for decades, there is no period in history in which pure capitalism has been practiced; it has always been capitalism shackled. Capitalism won the cold war, but it has been shackled since by 'Third Way' advocates who recognise the ability of capitalism to produce wealth, but who want that wealth for their ends -- as former NZ Finance Minister Roger Douglas once described it, of 'socialist ends through capitalist means.' (We presently live, not under Capitalism, but in what economist Ludwig von Mises called a 'hampered market,' with all the inequities that entails.)
The closest examples history affords us of Capitalism 'in the wild' is arguably the US towards the end of the nineteenth century and the early part of this century as the country exploded into prosperity. Or Hong Kong in its own explosive, free-wheeling prosperity. In the US over that period there was no income tax, no military draft (with the tragic exception of the Civil War), no prohibition of drugs or alcohol, little regulation of personal, artistic or business activity, and a great deal of voluntary charity. Average incomes multiplied by six times in this period – a time of sustained peace and unbridled optimism.
Hong Kong was a rock in the South China Sea that had little to offer but free trade, the rule of law and the protection of contracts ... and simply as a result of Capitalist acts by consenting adults, it became one of the wealthiest places on earth.
The United Police States today, however, are seemingly hell-bent on erasing all vestiges of this libertarian heritage and becoming a full-fledged, statist tyranny, as are we here in New Zealand. And Hong Kong's future is still less than assured, with China's own market reforms still in the balance.
Ironically, unbridled Capitalism seemingly stands a better chance in the former Communist nations of Eastern Europe -- if they can shake off the gangsterism that has plagued Russia -- and the nominally Communist but increasingly free market People's Republic of China. But history has yet to make a call on either, and the continued dominance of collectivist ideas (see Collectivism) in these nations (and the lack of any restraint on totalitarian rule in China) will be a significant impediment. In short, the future of Capitalism is still by no means assured, and the cultural change needed for Capitalism to flourish is still needed.
Until such time as that cultural change is achieved, Capitalism will remain the 'unknown ideal' described in the title of one of Ayn Rand's non-fiction best-sellers.
This is part of a continuing series explaining the concepts and terms used by libertarians, originally published in The Free Radical in 1993. The 'Introduction' to the series is here. Tomorrow, 'Censorship.'