Freeman

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Perspectives on Capitalism and Freedom

The Proper Role of the State Is Limited

DECEMBER 01, 1996 by EDWARD YOUNKINS

Dr. Younkins is professor of accountancy and business administration at Wheeling Jesuit University, Wheeling, West Virginia.

Capitalism and freedom are inseparable. In our society we believe that human beings, merely by virtue of being human, possess the capacity to exercise freedom and the right to do so. Each person should be free to own property, choose a job and a career, worship, speak, move freely within the society and to other societies, promote and protect one’s self-interest, contract, compete, create, innovate, trade, and associate with others.

Those of us who favor freedom and free markets are a diverse lot. Our worldviews differ, too. To find common ground, let us briefly consider in turn the libertarian, Judeo-Christian, and Objectivist perspectives on the nature of capitalism and its relationship to liberty.

The Libertarian Perspective

Libertarians elevate personal freedom to the highest good—as an end to be achieved. Freedom is viewed as prerequisite to, and integral with, the achievement of any of man’s goals. Libertarians defend each person’s right to be protected against all forms of external aggression initiated by the state or by private individuals. A basic principle of libertarianism is that individuals have the right to live life as they choose, as long as their actions do not constitute an aggression against the freedom of others.

This nonaggression or noninitiation-of-force principle is related to the libertarian idea of self-ownership. Self-ownership means that one’s own decisions about what to do with one’s life, property, body, energies, and speech are the decisions that count. Because individuals are equal, not only does a person own himself, every other person owns himself as well.

The self-ownership principle creates a zone of privacy and freedom of action for each individual. When dealing with others each person should respect them as equals in moral status and human dignity who have the right and responsibility to make their own decisions regarding their own life, property, body, energies, and speech.

Libertarians reject the notion that people need a guardian to protect them from themselves or to tell them what is good and bad. The state should therefore confine itself to the minimum necessary to protect individuals in the way they choose to pursue happiness. The proper state is therefore neutral with respect to its commitment to one or another conception of happiness or the good life. The role of the state should be limited to providing the freedom that allows individuals to pursue happiness or the good that each defines for himself.[1]

The Judeo-Christian Perspective

According to this worldview, God, the ultimate moral authority, created man. Each person is free, self-responsible, and accountable before the Creator. Between a man and God, the appropriate relationship may be viewed as one of agent, steward, or trustee to owner. Each person has a God-given responsibility to answer to Him for his choices including the uses he makes of his individual human potential and his possessions held temporarily as a steward of God.

Only when a man has choice and its inherent responsibility can he be moral. Choice (free will) is the foundation of virtue. Morality involves choice and the use of reason in making that choice. Freedom, a gift from God, does not mean freedom from the law or license to do whatever is not forbidden. Real freedom is not the power to do whatever we like but, rather, to choose to do what we ought to do.

The purpose of freedom is not freedom for its own sake but for the purpose of serving God through self-actualization and the promotion of human flourishing and the common good. Freedom is simply the means toward a higher end and should not be viewed as an end in itself. When one has freedom, the important choices become how to order one’s life, what values to pursue, and which virtues to practice.

Each person should be politically free to choose and pursue his own values and should allow others to choose and pursue their own values. Man is endowed by God with inalienable rights, the exercise of which is strictly a matter between the individual and the Creator, until he trespasses on the rights of another person. To force another to adhere to my value judgments is to deny him his right and responsibility to answer to God directly for the choices he makes.

The underlying idea is that each individual should be able to encounter God without the mediation of any other person, group, or nation. When self-responsibility before God is viewed as prior to, and determining of, political philosophies and systems, it follows that government should be limited to protecting this relationship between man and the Creator. The state is simply a man-made means of securing liberty and justice for all men alike. The legitimate aim of government is to provide the social and political conditions that protect each citizen’s right to individual action.

From the Judeo-Christian perspective, governmental authorities are the civil distributors of God’s higher law. There is a realm of natural law, over and above positive man-made law, involving unwritten and unalterable laws of God. Natural law, the ultimate source of right and wrong, is timeless and well beyond the political realm. The idea of governmental restraints rests on the premise that a natural law higher than that of the state limits and qualifies the power of the state. Capitalism properly emerges from such a political system, is consistent with Judeo-Christian values, and involves the voluntary exchange of goods and services between free and self-responsible persons.[2]

The Objectivist Perspective

Objectivism, the philosophy of Ayn Rand and her followers, contends that the universe has existed eternally and repudiates the idea of its creation by a rational, omnipotent God. For Objectivists, the idea of God is offensive and humiliating to man, because it denies that man is the highest being in the world. The Objectivist position is that without God it is up to man alone to pursue his own happiness and create his own values. Freedom for Objectivists comports with the non-existence of the Creator.

The Randian view is that reality is objective, absolute, and comprehensible, and that man is a rational being who relies upon his reason as his only means to obtain objectively valid knowledge and as his basic tool of survival. The concept of value presupposes an entity capable of acting to attain a goal in the face of an alternative. The most basic alternative in the world is existence versus non-existence. Life makes the concept of value meaningful. An organism’s life is its standard of value. Whatever furthers its life is good, whatever threatens it is evil. The nature of living persons is to determine for themselves what they ought to do.

Man’s life is therefore identified as the proper standard of man’s value, and morality is identified as the principles defining the actions necessary to maintain life as a man. If life as a man is one’s purpose, he has the right to live as a rational being. To live, man must think, act, and create the values his life requires. In other words, since a man’s life is sustained through thought and action, it follows that the individual must have the right to think and act and to keep the product of his thinking and acting (the right to life, liberty, and property). As men are creatures who think and act according to principle, a doctrine of rights is intended to ensure that an individual’s choice to live by those principles is not violated by other human beings. All individuals possess the same rights to freely pursue their own goals. These rights are innate and can be logically derived from man’s nature and needs—the state is not involved in the creation of rights and exists merely to protect an individual’s natural rights. Because force is the means by which one’s rights are violated, it follows that freedom is a fundamental social good. The role of government is to protect man’s natural rights, through the use of force but only in retaliation and only against those who initiate its use.[3]

Metaphysical Agreement Is Not Required

Capitalism may be defined as a system of voluntary relationships within a legal framework that protects individuals’ rights against force, fraud, theft, and contract violations. Advocates of capitalism differ in their arguments for a social system that maximizes individual freedom and in their views with respect to the nature of man and the universe. Underlying these separate views, however, is the need for freedom of the individual to choose how he wants to integrate himself into society. All agree that:

1. Freedom is the natural condition of the individual—each person from birth has the ability to think his own thoughts and control his own energies in his efforts to act according to these thoughts.

2. Individuals are free to initiate their own purposive action when they are free from man-made restraints—coercion by other individuals, groups of people, or the government; freedom is not the ability to get what one desires—other non-man-made obstacles such as lack of ability, intelligence or resources may result in one’s failure to attain his desires.

3. Freedom is a necessary but not a sufficient condition for one’s happiness.

It is not necessary to first reach metaphysical or religious agreement to agree on the desirability of a system in which individuals do not use violence or fraud to injure others or to deprive others of their legitimately held possessions. Various proponents of capitalism therefore agree that the proper role of the state is limited to that of protector of property and punisher of those who rob and cheat others.


1.   Exemplars of the libertarian perspective include Murray N. Rothbard, For a New Liberty: The Libertarian Manifesto (New York: Collier Books, 1978) and Robert Nozick, Anarchy, State, and Utopia (New York: Basic Books, Inc., 1974).

2.   Models for those who work within this worldview include Edmund A. Opitz, Religion and Capitalism: Allies, Not Enemies (Irvington-on-Hudson, N.Y.: The Foundation for Economic Education, 1993 [1970]), Ronald H. Nash, Poverty and Wealth (Richardson, Tex.: Probe Books, 1986), and Michael Novak, The Spirit of Democratic Capitalism (New York: Simon and Schuster, 1982).

3.   See Ayn Rand, Atlas Shrugged (New York: Random House, 1957) and Leonard Peikoff, Objectivism: The Philosophy of Ayn Rand (New York: Dutton, 1991).

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December 1996

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