Damn Communists!... Damn Capitalists!

I pass this Shell station every day on my way home from work so I notice when gas prices go up or down. Whenever they go up, I think to myself, "Damn Communists!" because Big Government policies lead to higher gas prices (primarily increased money supply and environmental regulations). But every time the price goes down, I think to myself, "Damn Capitalists!" because somewhere, someone, somehow figured out a way to extract energy from the earth in a more efficient manner, thereby increasing the supply and lowering the price. I damn them (only in jest) because their hard work and ingenuity allow the "Communists" to survive another day.

Seeing the world as a battle between the Capitalists and the Communists (or Socialists, or Democrats, or Compassionate Conservatives—they're all basically the same) is one of the central ideas in Atlas Shrugged. And even though I've read that book four times now, the idea didn't really sink in until I learned more about economics.

I wasn't motivated to learn about economics until I lost over $100,000 on my house and Obama was elected for a second term in 2012. The loss on my house (so far just "on paper" according to zillow.com, but it will be very real whenever we decide to move) was caused by the real estate crash of 2008, the root causes of which I wanted to understand. The reelection of Obama in 2012 concerned me because the conservative press had been highlighting the poor economic policies of Obama and were predicting doom for America if he was reelected.

I wanted to better understand the prediction that America was doomed and so I read After America by Mark Steyn. The book is funny and has lots of good information on the decline of America, but it is light on specifics as to how America will collapse. It talks about the unsustainability of our entitlement programs, our declining school standards, the falling value of the dollar, our increasing national debt and our cowardly foreign policy as things that weaken our country. But it does not point to a fundamental reason why America is doomed by these things or the process by which the impending collapse will occur.  In this regard, it was a disappointment, but I kept up my search for answers.

The wealth of facts that Steyn used in his book made me realize that my history of America was not very strong so I looked for a book to give me more background information. I chose Lies the Government Told You by Judge Andrew Napolitano. As a history of the corruption and deceit of politicians throughout America's history, it was very good. The facts in the book make a very good argument against Big Government.  In terms of economics, the most useful chapter was on the Federal Reserve.  As Ron Paul says in the introduction, "While there is substantial literature explaining the myriad ways the Federal Reserve damages our economy, there is not nearly as much writing that explains how the Federal Reserve System violates the Constitution and ties the Federal Reserve to the general assault on liberty waged by Big Government. This book helps fill that gap."

While Napolitano's book was good at telling us what not to do (i.e. let the government interfere in the economy), it was not strong on what we should do (i.e. turn to laissez-faire Capitalism). So next I turned to John Allison's The Financial Crisis and the Free Market Cure: Why Pure Capitalism is the World Economy's Only Hope. Not only did this book make a strong case for pure capitalism, it also explained in detail why the housing market crashed in 2008. As the CEO of BB&T Bank (the #12 largest bank in the U.S. by assets), Allison saw the housing market collapse first-hand from the inside. His book is a "tell-all" of sorts on the manipulation of government into the inner workings of the banks and the economy in general. He amply demonstrates that the recent financial crisis was caused by government interference in the economy and makes a strong case for a return to laissez-faire capitalism, which America had for its first hundred years or so. I highly recommend this book.

The final book on my journey to realizing the on-going battle between capitalism and communism was George Reisman's Capitalism. I wanted, finally, to learn basic economics in order to avoid another $100,000-plus mistake (like my house) and almost took the advice of Allison from his book above when he said, "A deep understanding of the Austrian economic school is a tremendous competitive advantage in making long-term economic decisions. (You should read Human Action by Ludwig von Mises.)" I downloaded the sample of Human Action to my Kindle and started reading. Right off the bat, I was put off. The first section of the introduction is entitled "Economics and Praxeology." What, I wondered, is praxeology. By simply tapping the word on my Kindle, the definition came up: the study of human conduct.  OK, Mises likes to use fancy words; I'll keep reading.  But it got worse.  Later in the introduction, he wrote, "In the Methodensteit between the Austrian economists and the Prussian Historical School, the self-styled 'intellectual bodyguard of the House of Hohenzollern,'[...]" and then on the next page, "It is seemly for him to remember Spinoza's dictum: Sane sicut lux se ipsam et tenebras manifestat, sic Veritas norma sui et falsi est." I thought to myself, isn't there another economics text that speaks plain English?

I remembered see at an Objectivist friend's house the book Capitalism by George Reisman so I downloaded the sample onto my Kindle. As difficult as Mises' style is to read, Reisman's style is incredibly easy to read while at the same time being incredibly thorough in his explanations of economics. Reading the preface (which I believe is available for free in the Kindle sample) is a beautiful example of independent thinking and describes Reisman's career goal: "I undertook the study of economics for the explicit purpose of finding economic arguments in defense of individual rights, i.e., property rights." His book Capitalism is the result of that quest. To get there, he studied under two great minds, Ludwig von Mises and Ayn Rand. By integrating the knowledge from both Mises and Rand, Reisman's Capitalism is the only thorough explanation and defense of capitalism on both practical and moral grounds. I was stunned when I realized that a complete defense had not existed before Capitalism's publication in 1996. (Ayn Rand's Capitalism: The Unknown Ideal from 1967 was the first presentation of a moral defense.)

Just as Ayn Rand built a complete philosophical system from fundamental truths (e.g. existence exists), Reisman defends capitalism from the ground up:

Part 1, The Foundations of Economics, explains the nature of economics and capitalism, including the role of a philosophy of reason in economic activity. It then shows that, based on his nature as a rational being, man possesses a limitless need for wealth.  This, in turn, is shown to give rise to the central problem of economic life, which is how steadily to raise the productivity of human labor, that is, the quantity and quality of the goods that can be produced per unit of labor. Next, it is shown why the continuing rise in the productivity of labor is not prevented by any lack of natural resources, indeed, how man is capable of progressively enlarging the supply of useable, accessible natural resources as part of the very same process by which he increases the production of products.

It was not until I understood capitalism that I realized its incredible power (the essay I, Pencil is an excellent, condensed summary of the power of capitalism). So while there are thousands of Philosophy professors, journalists, cable news anchors and movie makers spouting bad philosophy, there are millions of Americans working every day to invent new goods or to improve the efficiency in the production of existing goods that we use to survive and thrive in our daily lives.  Certainly, the battle between the Capitalists and the Communists is an unstable one and cannot go on forever. And if we hadn't had the free market reforms of the eighties, we might not have survived. But whenever the American people see the true consequences of the Communist ideas (as they are starting to with Obamacare), they swing back toward free markets and capitalism. I believe a big part of "what went right" in the last thirty years was the election of Ronald Reagan and Margaret Thatcher and their subsequent unleashing of the forces of capitalism.