The importance of knowing the meanings of words

In the previous blog entry, I wrote,

it is important to be clear about the meanings and definitions (of words).

Do you know the meaning of “capitalism“? I thought I did… until I read Ayn Rand. Then I realized I did not really know what capitalism was. I had not thought deeply about it in detail.

In the previous blog entry, I quoted a free-market journalist (Bill Bonner) and a British libertarian (Sean Gabb).

The reason I quoted them was because reading what they wrote can help us think about and understand more deeply, and more accurately, the meanings of some important concepts, such as “the free market”, “capitalism”, “big business”. Sean Gabb points out that “big business” does not mean capitalism.

We think we live in a “free” society, a “capitalist” economy; but do you remember being taught these things in school? In college? Anywhere?

So, here are some more quotations I found today. My purpose is not to persuade you to believe in capitalism or libertarianism. I merely hope that you will find these quotations interesting and “food for thought”.

Here is part of an interview between Milton Friedman and Phil Donahue, conducted onFebruary 11th, 1979. (Who was Milton Friedman? Click here to find out in English and here to read in Japanese. Who is Phil Donahue? Click here to find out. From Donahue’s questions, we can guess that his philosophy is “left-wing” or socialist rather than capitalist. Donahue also interviewed Ayn Rand shortly before she died. You can see part 1 of the interview on by clicking the YouTube image above). (I found the quote below in an article by Marc Faber, who is a well-known investor who is in favour of free-market capitalism – read about him in Japanese here). Marc Faber’s article is on the Lew Rockwell website, a libertarian website.)

Phil Donohue: When you see around the globe the maldistribution of wealth, the desperate plight of millions of people in underdeveloped countries. When you see so few haves and so many have-nots. When you see the greed and the concentration of power. Did you ever have a moment of doubt about capitalism? And whether greed is a good idea to run on?

Milton Friedman: Well first of all tell me, is there some society you know that doesn’t run on greed? You think Russia doesn’t run on greed? You think China doesn’t run on greed? What is greed? Of course none of us are greedy. It’s only the other fella that’s greedy. The world runs on individuals pursuing their separate interests. The greatest achievements of civilization have not come from government bureaus. Einstein didn’t construct his theory under order from a bureaucrat. Henry Ford didn’t revolutionize the automobile industry that way. In the only cases in which the masses have escaped from the kind of grinding poverty that you are talking about, the only cases in recorded history are where they have had capitalism and largely free trade. If you want to know where the masses are worst off, it’s exactly in the kind of societies that depart from that.

So that the record of history is absolutely crystal clear, there is no alternative way, so far discovered, of improving the lot of the ordinary people that can hold a candle to the productive activities that are unleashed by a free enterprise system.

Phil Donohue: Seems to reward not virtue as much as the ability to manipulate the system.

Milton Friedman: And what does reward virtue? You think the Communist commissar rewards virtue? You think a Hitler rewards virtue? Do you think… American presidents reward virtue? Do they choose their appointees on the basis of the virtue of the people appointed or on the basis of political clout? Is it really true that political self-interest is nobler somehow than economic self-interest? You know I think you are taking a lot of things for granted. And just tell me where in the world you find these angels that are going to organize society for us? Well, I don’t even trust you to do that.

Reblog this post [with Zemanta]

Capitalism and philosophy

Sean Gabb by the Baltic
Image via Wikipedia

In the last session, someone asked “what is capitalism?” and said that there are many different kinds of capitalism, e.g. “Japanese capitalism”.

First, it is important to be clear about the meanings and definitions. The kind of economy in Britain, the United States, and Japan, is not pure capitalism because it includes a great deal of government control and regulation. Such an economy should correctly be called “a mixed economy“. “Japanese capitalism”,  therefore, should more correctly be called “Japanese mixed economy”, i.e. a mixture of capitalism and statism or socialism.

Secondly, is America a truly capitalist country? Here is a quote from a financial newsletter “The Daily Reckoning” June 3 2009 “The Eye of the Economic Storm”.

Americans are not necessarily in favour of socialism… But the country has clearly moved towards more government intervention in the economy. In 1986, 40% of Americans thought government regulated the economy too much. Now, 40% think it doesn’t regulate enough. And get this… The Economist reports the results of a worldwide poll. When asked if “people [were] better off under free markets,” 75% of Indians say ‘yes’ and so did about 72% of Chinese. But put the question to Americans and only about 69% think so. Even Italians are more in favor of free enterprise than Americans. Go figure.

Another comment, this time from a British libertarian, Sean Gabb:

big business capitalism we see around us is not the same as a free market”

Finally, another comment from a free-market financial commentator, Bill Jenkins, writing in the Daily Reckoning of May 28th, 2009: To Hell in a Bond Basket:

In a larger sense, the US is at war with capitalism…and with nature herself. Markets have natural rhythms. They go from boom to bust…from inflation to deflation…from expansion to contraction naturally. Trying to stop the bust is futile. It is a fight against Fate…a losing proposition. And it is diabolically unnatural. You have to take the bad with the good in life.


“The idea is ‘to make holding money less attractive’ so people will spend it.”

In other words, this is not free-market capitalism: the Federal reserve holds interest rates artificially low to “force” people to spend instead of to save. But where does capital come from? From savings. If people are discouraged from saving, where will capitalism’s capital come from?

Writes Bill Jenkins,

“What we need is to be left alone. The market has been, and remains, the most efficient system for regulating itself. Is it perfect? Not in a moral or theological sense.  Not even in a fairness sense. The market will make some men rich while impoverishing others. Many people do not consider that ” fair”. But it doesn’t matter. The market does what it does because it is the most efficient way of doing things. .. The ironic thing is, bubbles are created by regulation.”

Here is what Ayn Rand wrote about capitalism:

Capitalism is a social system based on the recognition of individual rights, including property rights, in which all property is privately owned.

When I say “capitalism,” I mean a full, pure, uncontrolled, unregulated laissez-faire capitalism—with a separation of state and economics, in the same way and for the same reasons as the separation of state and church.

We must understand the meanings of the words we use. Then, we must look around at the world around us, and see clearly through our own eyes, not through the eyes of the media, or what we read in the newspapers, or what the politicians tell us.

Reblog this post [with Zemanta]

Why are Ayn Rand’s novels selling so well?

Quote from novelist Ayn Rand.
Image via Wikipedia

A few weeks ago, I blogged about how well Ayn Rand’s books are selling, and some possible reasons.

I found several articles on the Internet on this topic. Here is one which quoted a Wall Street Journal article, which gave 3 reasons for the growing popularity of Atlas Shrugged,

  1. Atlas Shrugged depicted a future in which America descends into economic chaos due to ever-increasing government regulations. … The result is a downward spiral that nearly destroys America. Many Americans are finding Rand’s predictions uncomfortably close to real-life events.
  2. Another reason for Rand’s appeal is her emphasis on the moral dimension. One of her themes was that no country can survive when its government constantly punishes good men for their virtues and rewards bad men for their vices. Americans correctly recognize that it is unjust for the government to take money from those who have lived frugally to bail out those who have lived beyond their means. Honest men should not be forced to pay for the irresponsibility of others.
  3. Finally, Atlas Shrugged resonates with many Americans because they recognize that our current crisis is not just about bailouts and budget deficits. It’s also about a more fundamental issue — the proper scope of government.

Today, I found another article about Atlas Shrugged and how it is relevant to what is happening in the US today: Rand’s Atlas is Shrugging with a Growing Load.

“Atlas Shrugged” is becoming a political “Harry Potter” because Rand shone a spotlight on a problem that still exists: Not pre-1989 Soviet communism, but 2009-style state capitalism. Rand depicted government and companies colluding in the name of economic rescue at the expense of the entrepreneur. That entrepreneur is like the titan Atlas who carries the rest of the world on his shoulders — until he doesn’t.

Reblog this post [with Zemanta]

Session #9, June 3rd, 2009: The novel of ideas

Atlas Shrugged
Image by Rodrigo Paoletti via Flickr

Today, we read another excerpt from Ayn Rand‘s novel Atlas Shrugged. We read the scene where Hank Rearden‘s mother comes to his office to persuade him to give his younger brother, Philip, a job.

The participant who borrowed my Japanese translation of Atlas Shrugged last week, brought it back today: she had finished reading it. All 1,200 pages! She gave us some useful background information about the story. Another participant promptly borrowed the book.

We had a wide-ranging discussion which included the following:

  1. Why is Atlas Shrugged so popular today in the US?
  2. What is capitalism (and free-market economics)?
  3. What is socialism?
  4. What was the New Deal?
  5. What is the meaning of Karl Marx‘ dictum  “From each according to his ability, to each according to his need“?

Ayn Rand was a supporter of capitalism, of individualism, of free-market economics, of libertarianism (自由主義思想 ).

She believed that capitalism was losing popularity because many people did not fully understand the true meaning of capitalism and of socialism, nor did they understand the philosophical, economic, and moral basis for capitalism. She wrote her novels partly to educate people about these matters and partly to illustrate her philosophy “in action”.

We discussed the philosophies or principles underlying what Hank Rearden says and what his mother says.

One principle which we did not discuss directly, but which is closely connected to our discussion today, is the principle (sometimes called the “axiom”) of non-aggression: that anything is permitted except the use of force or aggression against other people. People can use force or violence to defend themselves or their property, but may not initiate violence or aggression against other people to make them do things they do not want to do.

Ayn Rand believed in the power of philosophy. Philosophy – who needs it? is a good essay to read to understand why she thought philosophy was so important. Click  here for a Japanese translation).

For more information in Japanese about Ayn Rand, visit 藤森かよこの日本アイン・ランド研究会

Although she wrote about capitalism, Ayn Rand was not an economist. If you want to learn more about free-market economics, I recommend an easy-to-read book  Economics in One Lesson by Henry Hazlitt (I cannot find a Japanese translation of this; if you know of one, or – even better – a good Japanese book on free-market economics, please tell me).

Reblog this post [with Zemanta]