Truth has a ring to it. It rings true because truth is a part of nature. Mankind's job is to identify the facts of reality. Things like gravity and centrifugal force, the tides, winds, and seasons are all very understandable because they are ostensible. You can point to them, and you can easily explain them.

It's not so easy to explain abstractions or theories. And it’s especially not so easy to explain non-truths like rationalizations or outright falsifications. That's hard. They do not have a ring of truth to them. You have to work to obscure the truth and come up with plausible explanations. It’s hard to falsify reality. Yet, such falsifications are accepted as truth all the time.

Take economics as an example. Economics is a science, but a social science filled with abstract theories and connections. But like natural law, you can point to the effects of various theories when put into practice. We have empirical evidence of what works and what doesn’t, therefore what’s true and what isn’t. We have fifty years of communism to point to in Cuba. And even more than that in the now defunct Soviet Union. We have thirty years of an Industrial Policy and protectionism to point to in Japan and the decades of stagnation that has resulted. We also have the decades of stagnation in the socialist countries of Europe. And simply look at the economies of North and South Korea for conclusive evidence of the two opposing economic theories.

The first great experiment with what became known as capitalism came from the writings of Adam Smith who wrote The Wealth Of Nations in 1776 and ushered in the Industrial Revolution in Europe and then America. It raised the standards of living of millions of people above and beyond anything dreamed of in the entire previous history of mankind. Two-hundred years of progress reigned like never before. The technological revolution that resulted from Reagonomics is a similar example of an undreamed-of burst of prosperity.

What amazes me is the refusal of nations around the world and the US itself to look at these two periods of unprecedented prosperity and identify the forces that made these phenomena possible. Why hasn't everyone just copied what was done during that time? Why don’t governments just do what works?

The causes were simple: freedom and the rule of law. It was Adam Smith's “invisible hand” at work. It was the unleashing of natural law. The effect of free people pursuing their self-interest leads to the unintentional consequence of prosperity for the most people possible.

The fact that so many nations would rather indulge in proven failed policies  - as Venezuela is today - is solely due to the demand that people do just the opposite of the pursuit of their self-interest. America is explicitly based on the pursuit of happiness. The result is there for everyone to see.

Instead they are told they must sacrifice for the good of all which invariably leads to just the opposite of a society’s increased well-being, peace, and prosperity. The reasons for this being true can be found in the writings of Milton Friedman, Henry Hazlitt, and so many of the other classical economists of the past. The more than 100 articles on this site contain dozens of examples and stories that back this view up.

Freedom works. Capitalism works. A command economy where the government demands that things be done its way does not. Just look around the world and you can tell which nations are freer or less free by the degree of their prosperity or lack of it.

Even China’s prosperity is due to the releasing of the shackles on individuals and allowing them to pursue their self-interest; to produce and keep the fruits of their labor. Interestingly they still call their system, “Communism”.

When a government like America establishes objective laws that protect individual rights and property rights, then separates itself from the economy, good things happen. Markets are formed, individuals produce, consumers demand, and the best products at the lowest prices are offered in open competition.  Innovation and creativity blossoms and a multitude of varying products come into being. The best producers succeed and the least successful fail and are allowed to. Failure is often the best teacher of how to succeed.

It is Adam Smith's invisible hand at work. Prices are set by free markets, as are wages. The supply of goods is determined by consumer demand as new products are invented, manufactured, and allowed to freely compete without the use of force, coercion, or fraud. This is close to what markets were like in the 18th and 19th centuries. We still had a mixed economy and not a completely free economy, but they were freer than ever before or since. The results speak for themselves.

It is the exact opposite of the government telling individuals what to produce, how to produce, when to produce and how much to charge for their products and how much to pay their workers. The result of that economic system is always varying degrees of failure. Just look around.

But we are continuously being told by our political, religious, and "intellectual" leaders, that the government knows best and should impose a "system" on citizens for their own good or for the good of others. Self-sacrifice is preached over rational self-interest. To paraphrase Ronald Reagan as he ventured forth in his eight years as president: The most dangerous words ever uttered are when the government says, "let me help"!  That’s when the damage begins. The best thing a government can do is to protect and defend...then get out of the way.

Free-market capitalism is the result of the natural law that mixes freedom with rational self-interest. This equals prosperity, while government intervention and mandates result in stagnation and less people becoming prosperous. Until people recognize this fact and allow individuals to be free of compulsion, we are bound to repeat the failures of the past. Count on it. It is a natural law.

Paul Nathan

Paulnathan.biz