Capitalism: Ludwig von Mises vs Ayn Rand

A man uses reason to create. He sells his product in the market and it sells like hot potatoes. Within no time, he makes a fortune out of it. As he was about to enjoy his fortune, he was baffled by the progressive taxes on his income. Most of his hard-earned money went to the government in arbitrary taxes, charity, and donations. Even though he lives in a capitalist economy where he is free to do whatever he wants with his money. He felt a scapegoat for others' idleness. This sounds like robbing someone of their money and paying others for their needs. The two great philosophers in the history of capitalism—Ludwig von Mises and Ayn Rand—have antithetical views on Altruism, government, and capitalism.   

Capitalism is known as a dominant socio-economic system that emerged after the breakup of feudalism. In a capitalist system, most means of production are privately owned, and income is distributed through the operation of the market. Most governments function altruistically in a capitalist economy. They collect taxes from the rich and pay the poor through welfare such as free schools, health, subsidies, and jobs. Such a government is an altruist that harms the capitalist economy. Auguste Comte first coined the term altruism. He said the only moral acts were those intended to promote the happiness of others. Ludwig von Mises and Ayn Rand disagree with the notion of altruism in any form. Is giving away hard-earned money in progressive taxes, charity, social welfare, and donations morally correct in capitalism?

Ayn Rand thinks excessive taxation, welfare, and charity mean robbing people of their money. She vehemently rejected altruism. For her, altruism isn’t a trademark of virtue. It is incompatible with individual freedom, capitalism, and individual rights. She believes that altruism entails that the only moral code for man is to live in service to others. For Rand, selfishness and self-interest are the only moral codes that benefit society. Rand explains in The Virtue of Selfishness that altruism declares that any action taken for the benefit of others is good, and any action taken for one’s benefit is evil. Thus, the beneficiary of an action is the only criterion of moral value, and so long as that beneficiary is anybody other than oneself, anything goes. Ayn Rand argues that it isn’t a right of government or any entity to give food, shelter, clothing, medical care, and education. It is against the tenets of the laissez-faire capitalist system. Rand argues that the self-interest of a rational man does not conflict, and pursuing our genuine self-interest requires that we deal with others employing peaceful, voluntary exchange. In a capitalist system, those who wish the services of others must offer value in return. No one may use the state to expropriate what others have produced.

Ludwig von Mises was the leading economist who wrote and lectured extensively on classical liberalism. He is an influential Austrian economist who eloquently advocated for free-market capitalism and opposed any form of socialist and interventionist tendencies in the economy. He holds slightly different views on laissez-faire capitalism than his contemporary Ayn Rand. One of the major interesting differences between these two philosophers is the term altruism and its usage in capitalism.

Mises advocated altruism. He thought that man has no right to exist for his own sake, and that service is his highest moral duty, virtue, and value. Altruism is a touchstone of morality. Those who deviate from altruism are considered deviants, selfish, or greedy. Altruism’s ethical theory is aligned with utilitarianism. It holds that charity and helping others with their needs and welfare are necessary to increase a society’s aggregate utility or satisfaction of human wants. Mises believes that altruism is the essence of capitalism. The market benefits people with greater income if they provide better services to others.

Capitalism is the only social system that upholds individual liberty. Capitalism allows everyone an equal chance to earn an income and become a businessman. The anti-capitalist advocates criticize pure laissez-faire capitalism because it creates inequalities, neglects the poor, and lacks internal mechanisms to address the needs of the poorest of the poor. The proponents of altruism believe that it is a moral obligation of wealthy individuals to help others in need who are either too weak to work or socially disadvantaged. Mises and the Austrian school believe the market benefits some people more than others. It is the choice of rich people to either give their money to welfare or they can spend on the luxuries they want in their lives. Ayn Rand and others reject any sort of altruistic tendencies in capitalist economies. Ayn Rand thinks that individual freedom allows people to become self-interested. Selfish individuals benefit society when they pursue their self-interest. Elan Mask would not have been rich if he had not pursued his self-interest.

To cap it all, both Rand and Mises have vehemently advocated for capitalism. They think that capitalism is a social system that allows humans to gain riches and improve their standard of living. They have different approaches to the problem of a moral tenet of altruism within capitalism. For Mises, altruism is the duty of an individual who earns wealth and income through serving others in a free-market economy. Rand denies the basis of altruism. She believes that altruism promotes collectivism and socialism. It restricts individual freedom.