Whether Libertarian or Republican - Capitalism Works

Libertarians are fiercely anti-government. They believe there should be no rules of commercial conduct and that every person should have the right to conduct themselves as he/she wishes. They believe that wrongful acts by anyone will result in actions by others to mitigate against those wrong acts. Just let people do what people do.

Republicans are fiercely anti-big government. They believe that a person’s individual rights supersede the powers of government and they believe that government should be restricted in its spending and its powers.

Both groups agree that defense and affairs with foreign governments are the job of federal governments. Both groups fiercely believe in capitalism.

Where Does Capitalism Come From?
Before the invention of chartered companies in the 17th century, if you owned a business, you were personally liable for everything the company did, for everything the company owed. The businessman risked everything every day because he was liable for all of the debts and all of the actions of the business. It may help to remember that debtor’s prison lurked for those unable to pay their just debts.

The Economist, December 18, 1926 The economic historian of the future may assign to the nameless inventor of the principle of limited liability, as applied to trading corporations, a place of honor with other pioneers of the Industrial Revolution. The genius of these men produced …… the limited liability company – the means by which huge aggregations of capital required to give effect to their discoveries were collected, organized and efficiently administered. This was written in 1926.

A limited liability company conducts business as if it is an individual. It borrows money; it sells goods; it is liable for its actions. Individuals are the directors of the corporation. So long as their actions are within the law, they are saved harmless from personal liability. Officers run the company under the direction of the directors, and so long as their actions are within the law, they are also saved harmless.

The Rule of the Companies
Under this invention of a “limited company” (in years gone by called a “chartered company”), commerce blossomed, employment blossomed, and with the advent of the Industrial Revolution, our modern world came into being. We prospered sufficiently to allow us to worry about more than a supply of shelter and food. The rights and freedoms of the individual come into focus.

Government had to grow and adapt in order to deal with the corporations, which added an element of complexity to the role of government. In our modern age, many people look to the government to be sort of an overseer of the rights of the individual. Therein, the problem exists. As government seeks to moderate the powers of the corporations, it steps on the rights of the individual.

The Power of the Corporations
A good illustration of the need for government to be the balancing act, is the corruption of the corporations that caused the 2008 economic meltdown. Corporations lied to both sides of transactions, and the pyramid of debt grew until it collapsed. Without government enforcing rules of conduct, individuals would have little opportunity or freedom. So government is the balance to corporations, and both corporations and government are necessary as players in our society.

The Rights of the Individual
Now we have the Libertarian belief that all persons should be free. The fiercest proponents of Libertarianism are sole professional practitioners, small business owners, and people who believe that all government spending is wasteful. It is ironic that sole professional practitioners owe their vary existence to government regulation. Lawyer would not exist as a monopoly without government regulation. Dentists would face competition from every quack on every corner offering cheap services without government regulation, and so on. The very rules enforced by government gives needed economic benefit to these sole practitioners.

Small business people, who fiercely resent government paperwork and enforcement, would not have the opportunity to be in business without government leveling the playing field. Large corporations would eliminate all competition.

The Inefficiency of Government
Government is incredibly inefficient, spends outrageous amounts of money, creates multitudes of lifetime government jobs to deal with every issue, hires employees to look after employees, and supervisors to supervise, and on and on. Private corporations are much more efficient, and much more productive and much more sensible. The only problem is, without government, all freedoms would be lost by economic dictatorship of those large corporations.

What Republicans often forget, is that basic human emotions include greed, avarice, selfishness and multitudes of other emotions, only some of which are good and humane. Humans are a complex mix of good and bad emotions, and humans run both corporations and governments.

Republicans are correct that too much money is being printed, that too much debt is being created, that too much new government has been created, but Republicans should remember that it was a Republican administration that started the printing presses, and used the printing presses in every economic downturn, and created what is now known as Economic Stimulus to keep the world from falling into a depression. The Democrats took this spending to new heights, in their attempts to deal with the economic crisis.

We have government that is too big, too many government rules, too much debt, too much influence by big corporations and special interest groups. We have many problems.

Capitalism & Democracy
We also have an amazing invention called Capitalism, and an amazing political system called Democracy. These amazing parallel systems will gradually right the ship, and life for everyone will continue and be better.

The views expressed in this blog are opinions only and are not investment advice. Persons investing should seek the advice of a licensed professional to guide them and should not rely on the opinions expressed herein. This blog is not a solicitation for investment and we do not accept unsolicited investment funds.