Research Paper: Laissez-Faire Capitalism and Human Rationality (Essay Sample)

Laissez-Faire Capitalism and Human Rationality
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Laissez-faire capitalism claims that human beings act rationally and prudently in their best interests. The foundational basis of Laissez-fare capitalism is that human beings are rational agents and know what is good for them (Rossides, 1998, p. 368). Consequently, they act justly and engage in actions that benefit them. Laissez-faire capitalism holds that prudence and rationality enable human beings to respect private property, and to acquire property through just means, such as trade or seeking employment. Consequently, there is no use of force or coercion in laissez-faire capitalism because people’s actions and relationships are guided by reason and prudence. In this kind of capitalist society, no individual or group may use force or coercion to acquire others’ property.
The second tenet of laissez-faire capitalism is that the role of government is not to interfere with business, but to protect the rights of the people from the use of physical force against them (Holroyd, 2002). The government’s use of force is limited only to retaliation against those using force to violate others rights. In this regard, laissez-faire advocates for pure unregulated and uncontrolled capitalism, with complete separation of economics and the state. It justifies capitalism on the ground that it is the only economic system that resonates with man’s rational nature, and protects his survival in society. In this regard, the central principle of laissez-faire capitalism is justice- each man acts justly and respects private property.
To a large extent, laissez-faire seems to accurately explain the nature of human relationships in a capitalist society. The acquisition of wealth is pursued through just means, such as seeking employment to earn a salary, or taking a loan to invest. In addition, the principle of fair pay for fair work illustrates the labor relations are based on justice, whereby employers pay for the services of employees. In this relationship, both parties benefit mutually and cooperate under a contractual agreement that protects the rights of both (Rossides, 1998). It is for this reason that employers do not round up people and put them into forced laborer- they advertise the job and makes a wage offer, so that whoever is willing to do the job at a given salary can do so voluntarily.
Secondly, laissez-fare is illustrated through man’s respect for private property. Human beings desist from destroying or acquiring by force what belongs to others. It is on the basis of rationality that one does not randomly go out and fence of a neighbor’s patch of land and declare ownership. Consequently, it seems that there is an inherent quality in people that inhibits them from engaging in destructive and unfair actions.
Thirdly, rationality demands that the best efforts are rewarded accordingly, such as job promotion for hard working employees. A manager who increases the salary of a hard-working employee, or recommends his promotion, is acting rationally because it is the expected reward for a high-performing employee. Moreover, reason dictates that promoting hard work will act as an incentive for all employees to work hard.
Nevertheless, there are situations in which human beings might be inclined to be irrational and imprudent in their actions. For instance, greed, corruption, competition and self interests- which characterize a laissez-faire capitalist system- can motivate people to act selfishly (Derber & Magrass, 2015). Capitalism is by nature a competition-based economy in which those with better services and products, or efficient means of production and service delivery, outcompetes those with poor services, products and systems of production and service delivery. Accordingly, individuals will tend to outwit others during business negotiations to get the best deal. This shows that justice is not the riding principle, but a by-product of human-to-human relations that result in mutual benefit- such as in labor relations. In reality, therefore, individuals in a laissez-faire capitalist system do not act rationally because it is moral to do so, but act in self interests. For instance, a person who engages in business relationships to acquire property instead of acquiring it forcefully is not guided by the principle of justice, but restricted by the consequences of such an act- legal prosecution.
At the same time, individuals act...