Politics, (all politics), is the application of ethics to a social context. Since the Objectivist ethics holds that each man is an end in himself, with his own life and happiness as his highest moral purpose, in politics it necessarily follows that each man possesses an absolute right to his own life. This does not mean that man has a right to survival, merely that he possesses sovereignty over his mind and body, and thus the right to act on his own judgement. All other rights, i.e. liberty, property, pursuit of happiness, etc., are merely applications of the right to life.
Individualism
In a human society -- one that recognizes the independence of each man's mind -- each individual is an end in himself. He owns his life, and no one else's. Other men are not his slaves, and he is not theirs. They have no claim on his life or on the values he creates to maintain his life, and he has no claim on theirs. In a free society, men can gain immense values from each other by voluntarily trading the values they create to mutual gain. However, they can only create values if they are free to use their minds to exercise their creativity. A man is better living off on his own than as a slave to his brothers. Individualism is the recognition that each man is an independent, thinking being. An individualist recognizes no authority higher than his of judgment of the truth, and no higher standard of value than his own life. That which furthers his life is the good, while that which destroys it is evil. Individualism is opposed to collectivism, the idea that man does not have an independent mind, does not own his life, and lives as a slave to his brothers. Collectivism holds the evil idea that man's life has value only so far as it servers the society, State, or race.
Freedom and Force
To pursue the values necessary for his life a society, man requires only one thing from others: freedom of action. Freedom does not mean the freedom to act by permission of a state or a dictator, but the freedom to act however one pleases as long as one does not infringe on the same and equal freedom of others. To live in a society, man requires rights to protect the actions necessary to sustain his own life. All rights derive from a man's right to his own life, including the rights to life, liberty, property, and the pursuit of happiness. Thus, rights are moral principles defining his freedom of action in a social context. Rights are inalienable -- they are not given to man by any government and may not be morally infringed upon. A man may have his rights violated by a criminal or a corrupt regime, but morally he remains in the right, and the dictator and criminal in the wrong. Rights are not guarantees to things or obligation placed on others, but only guarantees to freedom from violence (the right to life), freedom of action (the right to liberty), and the results of those actions (the right to property). The only obligations one's rights impose on other men is to respect the same and equal rights of others -- the freedom to be left alone.
In a political context, freedom means solely the freedom from the initiation of force by other men. Only by the initiation of force can man's rights be violated. Whether it is by a theft, force, fraud, or government censorship, man's rights can be violated only by the initiation of force. Because man's life depends on the use of reason to achieve the values necessary for his life, the initiation of force renders his mind useless as a means of survival. To live, man must achieve the values necessary to sustain his live. To achieve values, man must be free to think and to act on his judgment. To live, man must be free to think. To be free to think, man must be free to act. In the words of Ayn Rand, "Intellectual freedom cannot exist without political freedom; political freedom cannot exist without economic freedom; a free mind and a free market are corollaries."
Because force renders man's mind useless, every man has the right to self-defense -- and the right to use force to retaliate against those who initiate force against him. However, no man -- and no group of men -- has the right to initiate force against any individual. The initiation of force is a great moral evil, but the use of force in self-defense is a moral requisite.
Capitalism
There are exactly two ways for men to deal with other men. The first is by force, and the second is by reason, which in practice means by voluntary trade. For examples of the first, look at the anarchism of the period after the fall of Rome but before Feudalism ruled Europe, Christian rule after that point, fascist rule, communist rule, Muslim rule, tribal rule, etc.
The second is known as capitalism. It is the only social system based on a rational, usable moral code, namely that a man has a right to live. Moreover, his life is not a means to any other or others' ends; it is an end for its own sake.
Capitalism is a social system based on the principle of individual rights.
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