Economic Means vs. Political Means

By Harrison Dean

Many progressives in the Democratic party and the Occupy Wall Street movement spend much of their time condemning the rich. They claim that greed is one of the main causes of our country’s problems, and that wealth needs to be redistributed from the rich to the poor in the name of fairness. But there is an important distinction that is often overlooked. It is that there are two ways to become wealthy: the economic means and the political means. These terms were coined by political theorist Franz Oppenheimer,

“These are work and robbery, one’s own labor and the forcible appropriation of the labor of others. Robbery! Forcible appropriation!...  I propose… to call one’s own labor and the equivalent exchange of one’s own labor for the labor of others, the ‘economic means’ for the satisfaction of needs, while the unrequited appropriation of the labor of others will be called the ‘political means.’”

The economic means involves producing a good or service that people will pay you for, and then proceeding to make money on that.  These are voluntary transactions whereby both parties benefit. There is no force or violence involved. In the free market, this includes everything from your local street salesman, to small businesses, to mega corporations. So long as they are not using force or fraud to achieve their profits.

The second way to acquire wealth is the political means. This can take many forms, but it always involves violence or the threat of violence. This almost always involves state violence which can take the form of subsidies, bailouts, state-granted monopolies, and government regulations that stifle competition. But in every instance of gaining wealth via the political means, there is coercion or the threat of coercion.

Individuals who become wealthy through the economic means deserve our praise. Their goods and services have benefited mankind. We know they have benefited mankind because their consumers wouldn’t give them money in exchange for their products if they didn’t have something to gain. They can lose their market share at any point if their customers decide to stop giving them their business.

On the other hand, those who acquire their wealth by the political means should be scorned. Their methods have invaded individual liberty, turned the machinery of government into an instrument of cronyism, and undermined the prosperity of the market.

If you believe in individual freedom and peace, you should embrace the economic means and reject the political means of acquiring wealth.

If people on the free market have a large fortune, that doesn't mean they did anything wrong, and we don’t have to fear them. The institution whose unlimited power we should fear is the state. F.A. Hayek understood this when he wrote about the power of state vs. the “power” of a millionaire:

“Who can seriously doubt that the power which a millionaire, who may be my employer, has over me is very much less than that which the smallest bureaucrat possesses who wields the coercive power of the state and on whose discretion it depends how I am allowed to live and work?”

We need not fear millionaires. We need to fear the power of the state which can take our money at the point of a gun.

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