21. A True Economy vs. A False Economy

This is my interpretation and discussion regarding how Laissez-faire Capitalism fosters, encourages, and promotes the establishment of a true, realistic economy VERSUS how Statism fosters, encourages, and promotes a false, unrealistic economy. My discussion regarding a True Economy comes first, followed by my discussion regarding a False Economy.


Laissez-faire Capitalism represents a social-political-economic system oriented around and based upon a laissez-faire, unrestricted, and unregulated free-trade, division of labor, realistic supply and demand, wealth production oriented economy, where all commerce, business, banking, and financial production, practices, procedures, activities, and decisions occur and are based upon complete individual and economic freedom of all individuals and businesses, where it is in the best interests of all individuals and businesses to interact and associate together (or not) in a peaceful, rational, voluntary (free of coercion), cooperative manner with each other, while also recognizing and respecting the individual and economic freedom of all individuals and/or businesses, including the individual rights and property rights of each other, and including how businesses, corporations, and organizations independently choose and decide to operate, apply, market, and run their own establishments and businesses, and all related personal and economic practices, procedures, and activities.

All this can only occur under Laissez-faire Capitalism, the social-political-economic system that establishes a proper, constitutionally-limited government whose only purpose and function is the recognition, preservation, defense, and protection of individual and economic freedom, individual rights, property rights, and derivative freedoms of all individuals and businesses.

The entire economy under Capitalism is created, established, and maintained through the unrestricted, unregulated, peaceful, voluntary, cooperative economic intercourse between all individuals and businesses under complete individual and economic freedom. All products and all services of the entire capitalist economy evolve, develop, are produced, and are provided based on a completely unrestricted, unregulated, uncontrolled free economy, oriented towards open free-trade, unrestricted-unregulated division of labor, unrestricted-unregulated supply and demand, and unrestricted, limitless wealth production and profit production. Laissez-faire Capitalism (economic freedom) encourages and promotes the careful, purposeful, and responsible directing of money, financing, and resources towards the true productive demands in the economy – based upon a realistic and “true” supply and demand economy.

For lack of a better phrase, I refer to this type of economy, an economy under Laissez-faire Capitalism, as a True, Realistic EconomyNOT the “false” economy established, manipulated, controlled, and destroyed by Statism (collectivism, socialism, communism, Marxism, environmentalism, etc.).

Capitalism represents a social-political-economic system where the economy (meaning all things associated with commerce, trade, business, financing, and banking) develops and revolves around Economic Power (see Item No. 19), meaning the application of individual and economic freedom. Capitalism represents an economy of long-range thinking and planning, investing and expansion.

To repeat, from Item No. 19: Economic power focuses on offering values, rewards, free choice, prosperity, and happiness – it focuses on the positive in social and economic interactions.

Under Capitalism, all commerce — meaning all economic and business procedures, policies, practices, and activities, including all related to banking and financing — are private, and completely unrestricted and unregulated. Free-markets, meaning free-acting individuals and businesses, are then free and able to respond and act accordingly (independently, privately, and voluntarily), without the threat of government interference or intervention, acting towards changes and activities in the economic system as needed and necessary.

Capitalism and Freedom establish the well-know “win-win” interchange of values between all individuals and businesses, in both personal and economic exchanges, activities, and pursuits. This is also known as the “double thank you” exchange that exists between buyer and producer/seller in a capitalist society, where both producer/seller and buyer of a product or service say “thank you” to each other – meaning that the producer/seller “thanks” the buyer for doing business with him or her, and the buyer “thanks” the producer/seller for providing the product or service. Everyone wins, and no one loses.

The “win-win” interchange can also be viewed as the “value for value” exchange (Ayn Rand), and is also known more popularly as the trader principle.


Statism represents a government restricted, regulated, mandated, taxed, controlled, and manipulated economy, an economy based upon the threat and fear of the initiation of physical force by the government against all individuals and businesses, against all economic (commerce) production, interactions, practices, procedures, and activities, thus creating, establishing, and maintaining a government manipulated, unreliable, regulated, chaotic, impoverished economy. Statism DOES NOT represent an economy based upon true individual and economic freedom, NOT an economy based upon “open, free, unrestricted, unregulated, peaceful, voluntary (free of coercion), cooperative” commerce, trade, business, financing, and banking. Statism represents an economy (if it exists at all) based upon, and strangled by, government interference, manipulation, coercion, and control.

Statism represents a forced-controlled economy where individuals, organizations, and businesses CANNOT make decisions or take actions based on their own best interests. The economy develops and evolves around complying with, avoiding, and/or seeking favors from the government, and those people in political control and in political power.

Statism represents an economy based upon government interference, manipulation, regulation, control, force, coercion, and tyranny against all individuals and businesses, and their actions and activities.

For lack of a better phrase, I refer to this type of economy as a False, Unrealistic Economy – an economy established, manipulated, regulated, limited, controlled, and destroyed by Statism (collectivism, socialism, communism, Marxism, environmentalism, etc.).

Statism represents a social-political system where the economy (meaning all things associated with commerce, trade, business, financing, and banking) develops and revolves around Political Power (see Item No. 19), and political plans (short-ranged), policies, goals, agenda, decisions, and activities based upon:
(1) government regulation, legislation, mandates, taxation, controls, manipulation, and interference of the economy, thus recklessly diverting money, financing, and resources away from the true productive demands in the economy – creating an unrealistic and “false” supply and demand economy (if an economy even exists – as there is essentially non-existent economies in some extreme statist countries, such as in Cuba),
(2) government control and regulation of all banking, savings, financing, and investing,
(3) government favoritism and funding (from taxation) provided to “certain selected and favored” individuals and business,
(4) the use of government force (in the form of taxation, fees, fines, property confiscation, political intimidation and manipulation, threat of governmental force, corruption), or the existence and use of private force sanctioned by the government (see Item No. 3),
(5) government favored, supported, and sponsored unions and other organizations,
(6) government established and/or enforced coercive private business monopolies where no competition is allowed to exist by the same government against such monopoly, or the competition is heavily controlled by the government,
(7) government corporate and business welfare in the form of subsidies (such as farm subsidies) to “certain selected and favored” industries and businesses, including special “tax incentives” to attract and/or support “certain selected and favored” businesses, with “certain” expectations from the government, and politicians, of how business is exercised in return,
(8) the increasing influence of government lobbyists and special interest groups used to gain access to government favoritism, power, control, and force to both influence and manipulate the competition in the market place, and to gain access to government funds (taxes), and
(9) government regulated, controlled, and manipulated stock market system.

To repeat, from Item No. 19: Political power focuses on offering fear, punishments, force, destruction, and misery – it focuses on the negative in social and economic interactions.

Only Statism (in any and all of its forms) and Force can destroy the “win-win” exchange of values between all individuals and businesses, in both personal and economic exchanges, activities, and pursuits. It is only through Statism and Force that the concept of “zero-sum game” (if one gains, another loses) can be used to rationalize politically implementing statist-oriented policies, legislation, mandates, and controls to restrict, manipulate, and control economic activity, particularly trade, pricing, and profit – and do so by using coercive government force. It is only the social-political system of Statism, in any and all of its forms, that destroys both individual and economic freedom, and destroys economic prosperity for all.

Comment: It is a MYTH – a LIE – that Laissez-faire Capitalism, meaning complete individual and economic freedom, is responsible for the current (2008) economic and financial crisis. The TRUTH is that it was caused by statist-oriented, corrupt, coercive government “anti-economic” legislation and interference that was restricting, regulating, manipulating, mandating, dictating, limiting, and controlling of free-market practices and activities, preventing otherwise “sound, rational, objective, open, honest, accountable, productive economic and financial decisions and actions,” thus allowing corrupt actions and practices by corrupt politicians and crony capitalists to engage in “unsound, irrational, non-objective, corrupt, deceptive, unaccountable, destructive decisions and actions” that recklessly diverted money and resources away from the true financial and productive demands in the economy – through such government-established pseudo-business entities as Fanny Mae and Freddie Mac – that messed things up for all private citizens and businesses – worldwide!

— For a full discussion regarding the myth of blaming Laissez-fair Capitalism for our current (2008) economic and financial crisis, see Dr. George Reisman’s recent essay “The Myth that Laissez Faire Is Responsible for Our Financial Crisis,” from his blog site George Reisman’s Blog on Economics, Politics, Society, and Culture.

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