In Defense of Capitalism


Pseudo-intellectuals are ever proclaiming that man is evolving rapidly. My view is that amidst the debris of endless civil and tribal wars, the ecological mess, the financial chaos (bordering on total collapse of western civilization) and such, our evolution (though ever upward) is a gentle curve. My motto and the motto of the International Harry Schultz Letter is "Plus ca change, plus c'est la meme chose", or the more things change the more they remain the same. This is based on my view of man's nature being unchanging, or nearly so. Support for such view comes from Alexander Solzhenitsyn, who says: "Human nature changes not much faster than the geological face of the earth".

I fear we are so near to the collapse of individual freedom in the world that we must take radical steps, individually, and perhaps with others. The main reason we are losing liberty is through ignorance. We have let radicals chatter on and take the stage and have not fought back on an ideological level. We took capitalism for granted for so long that we forget its rationale and became almost ashamed of it when socialists claimed it was unjust simply because they were poor and we were not, without realizing they were poor because they were lazy and/or wanted to drag us down instead of elevating themselves through honest effort, or simply did not understand the benefits of capitalism.

Indeed, the battle between capitalism and socialism is not just an economic one: it is also a moral battle. It is not a question of which system is more practical; clearly capitalism can prove itself here. That is all too obvious. But the socialists claim their system is morally right. We should argue on this issue to win the final war for survival. We should renounce as a moral obscenity their demand that the individual sacrifice his own happiness for that of the tribe. Socialism (in all forms) is a primitive tribal conception—that the only value of an individual is what he contributes to the tribe. Socialism says your only moral worth is what you contribute to the tribe, how much of your own interests you sacrifice. All collectivist morality is based on human sacrifice, "a morality for cannibals" in the words of my friend Jack Wheeler, grad student of philosophy at USC. He urges that we stop trying to justify capitalism only by praising profits, or its altruism, and how profits help the state. All communist nations say "work for the good of the state". There are bigger issues.

Socialists say the "pie" (all the assets in a nation) belongs to the group. They did not create it or earn it and they do not know how it got there, but they will confiscate it. They feel the size of the pie is never changing, so if anyone takes a big piece, the rest are cheated. Capitalists say the pie should keep growing, and proceed to make it grow. Wealth is created by individuals. Such activity continually increases the size of the pie.

Resistance to capitalism is mostly pure resentment, jealousy. Anti-capitalists do not desire to improve themselves, but want to draw successful people down. We must not let socialists get away with referring to those they oppose as the "rich" or the "well off" or "upper class", etc., for what they are opposing is "success" itself. A successful man may become rich but our title is "successful," not rich. Socialists avoid that word because it implies hard work, dedication, solitary and voluntary effort. As capitalists we had better find our voice, or we will perish. The socialist cannibals will have us for dinner.


Socialism is theocracy. It calls for sacrifices to a god, e.g. Lenin, Herrenvolk, the state. Socialism is also based on violence. There is no such thing as voluntary socialism. If you do not contribute to the state or agree to have your wealth redistributed, they take you over or put you in jail. Capitalism is based on trade and individual freedom of choice. Capitalism is the only system that allows for a plurality of practices. You will never meet a voluntary system socialist.

So, in such a world, if one faces reality, one is safer to bank on gold than on men's promises. Gold is not barbarous, but the socialists who seek to terminate its use, they are barbarous. They unwittingly seek to destroy your freedom.

Paper money was after all first created only as a warehouse receipt for a valued commodity (gold, silver) which was on deposit. It was to save the bother of carrying heavy coins and to facilitate large sums in small weight. But when we get so far away from the original purpose of money that the paper itself is the money and the valuable backing is discarded, then we live in a desperate society, subject to gross injustice on all fronts, notably to legalized government corruption (political and monetary) and rule by whim.

Thus fiat currencies are now no better than commodities. Floating rates make it possible for cash to move sharply, whereas previously fixed rates limited rises and falls. This is not, however, to criticize floating. That would be like criticizing a thermometer. It is the absence of backing to currencies these days which makes them faithless paper.

The ruin born by this bitter tree is chaos. Democracy and capitalism are both fast losing strength, if not actually dying. Mob rule and/or socialism are increasingly filling the vacuum. I contend that all this evil springs from the destruction of monetary value and stability, for society is built on equity through an ability to bank "stored sweat" (which gold is and money should be—and is when backed by gold and convertible into it).

On the practical level I say we must first act for ourselves alone, taking all steps to seal ourselves off from a deteriorating society. But simultaneously I think we must fight back, even while running. One conjures up the image of a gallant musketeer dueling with one hand against three swordsmen while picking up his treasure with the other and slowly retreating toward his boat. If he cannot beat the socialist swordsmen, he will jump in his boat and be off. But as long as he can, he will fight for what he knows to be right. The survival of capitalism is eminently worth fighting for.

Dr. Harry D. Schultz is one of the world's leading investment counselors. He edits and publishes the International Harry Schultz Letter and the Gold Newsletter. He is the author of numerous books on investment survival.