The closest approximation to this system was what was established with the early American form; a Constitution enumerating federal powers, and Bill of Rights safeguarding the individual. Here is where I am in agreement with you: it came with an intricate system of checks and balances to inhibit growth of power. This is absolutely critical.

So this being the case, the ability to exert force on others is severely curtailed. No one can physically violate another, and economic deprivation of property is restricted. Policing is left to government, so no amount of wealth can buy the ability to exert force upon others. Government is immune from coercive lobbying by wealth because it is restricted to a limited set of functionality. You cannot buy power in this kind of system because government does not have it in the first place; it is limited Constitutionally to defined authority.

I’ve heard the example of supreme monopoly posed as a counter to a free system, but I simply don’t buy it. To think that one person will acquire all property and refuse to sell output to anyone else is kind of out there. In a free system people enter agreements of mutual exchange, meaning value must be exchanged to acquire anything. To acquire land implies something else of value was furnished; this process should sufficiently limit extreme polarization of wealth. Producers will always need workers, who if not physically coersed through threat of force (which is not possible in a free system) must be compensated with a fraction of output.

A free system is best suited to ensure that those who don’t abide by reality will be out-competed by those who do. If someone refuses to sell to some group there will always be another who will. Global freedom of capital movements ensures that capital goes to those with ideas and capability, i.e. the ability to turn a profit. This motivation is blind to ideological persuasion, race, sex, creed, etc. It is the most egalitarian system imaginable.

I am very much opposed to the idea of property confiscation upon death. This is a philosophical perversion asserting that property belongs to the collective. It also ignores the notion that highly productive individuals might be better capable of deploying accumulated capital upon death than bureaucrats. This can either be in the form of charitable donations, philanthropic endeavors, and even just passing along to children who then decide how to use the capital. To think that any of us have a claim to such property merely because we happen to reside in the same political jurisdiction is wishful thinking.

The term “free market” has acquired a bad taste for some reason, I think mainly because of association with wealth imbalance and ability to buy power. In that case then I entirely agree with your position that free markets are transitory. But strip the ability to acquire power through purchase and free markets are virtuous. How can a free society not be virtuous?

People will always make mistakes. The scary thing about free society, for many, is that they will suffer the consequences of those mistakes. Consequences are inevitable, a part of life, the only difference in socialism versus free society is that the consequences of bad decisions are collectivized, and spread amongst everyone (or a politically persecuted class…has often been Jews throughout European history, and is currently the wealthy in America).

The problem with socializing risk and bad decision-making is that realistic constraints are obscured; individuals who do not bear the consequences of poor decisions do not learn from their mistakes. The housing bust, credit crisis, and global economic meltdown are perfect examples. Large societies can bear a large amount of poor decision-making, but it always catches up. On the contrary, free societies relegate consequences down to the individual level, which avoids systemic issues. People learn from mistakes and ultimately act like adults. That is not a bad thing.

The big shame of history is that pure Capitalism has never been achieved, yet has itself achieved such a bad reputation! People picture robber barons coercing fickle politicians, 18th century English mercantilism-fed imperialism, and other aristocracy-biased political systems as having something to do with Captitalismo. This is such a shame because Capitalism can only exist in a purely egalitarian politican system. And by that I mean a system in which everyone is equal under the eyes of the law.

As you said it is impossible to have equality of material means. It’s far too ambiguous a notion, and entirely unrealistic. First, do we define equality of wealth at a certain fixed point in time and attempt to enforce rigidity in that metric? This would mean that everyone must earn the same income, spend the same, save the same, and earn the same rates of return on invested capital. Since that is so far from the realm of the possible, and even further from any sort of ideal.

Next, a dynamic metric that is measured over time would still require a system necessary to ensure that the most capable/ productive/ambitious earn the same as the laziest/least capable. This would also entail an enforcement body to ensure everyone consumes the same resources and compulsorily saves the same amount. This is truly tyrranical government!

Even the consideration of such systems of forced social engineering begs the question of why some feel it is acceptable to use force to coerce some to conform to their wishes? There is no set blueprint for how we must live, so why try to force an artificial one? I find human life to be far too precious to waste in social experimentation.

Rather than turning to a coercive entity to force the world to be more pleasant, I think our efforts are better served through peaceful means, i.e. charities, personal donations, time committments to help others, and even business ventures that create jobs and wealth. Good can be achieved through peaceful means.

This may just be the alcohol talking, but you have some really good points. The GDP-prosperity measure is a good one to ponder. I hadn’t considered that before, but you’re right, as income distributions gain kurtosis the measure becomes less meaningful. A society with a few super rich and multitudes of extremely poor is not a good one.

A state of blended socialism is almost always transitory, at least in democracies; entrenched beneficiary groups do not ever vote themselves less benefits, and the process is stacked such that the road to political power comes through promising increasing the beneficiary pool. This is at least the case in America. We do not adequately constrain the legal scope of authority for our federal government. It will ultimately collapse under the weight of combined socialism and imperialism.

The only potential case for coexistence of relative freedom and mild socialism is a carefully crafted, rigid legal structure that delineates the maximum authority of government. As long as it is impossible to cross a certain threshold, then it is reasonable to think that there can exist a minimal safety net. The key is to prevent people from being able to vote themselves benefits, so unconstrained democracies do not fair well here. I have never seen such a government, but concede that one could exist.

The issues of capital gains taxes and social spending are separate. One does not have anything to do with the other, except that levying a tax on capital gains is one method of many that can be used to fund social spending.

Capital gains taxes are a drag on the economy, since they increase the cost of capital. And I would be careful to say that historical data supports the concept that socialistic redistributive policies increase economic prosperity. There’s quite a bit of evidence to the contrary, including a long list of failed states.