Marxists wrongly assert that capitalism is all about “private ownership of the means of production”. All these machines and factories are nothing but capital—and the fundamental aspect of capitalism, which goes deeper than property in machinery, is private ownership and superintendence of capital itself. This is something individuals produce for themselves, through production, exchange, saving and investing. It is private ownership and superintendence of these individual savings that lies at the root of capitalism. This is what capital is all about. And the word “capital” is a word that indicates something of supreme importance—as in “capital city” or “capital punishment”.

Now, it becomes immediately obvious that a socialized, centralized and state-owned and -directed fiat money and banking system is nothing but communism in thin disguise. All our savings are made available to the political needs of the state. All our private capital is denominated in fiat money, as are all our commercial dealings. In every exchange that transpires on the market, one part of that exchange is state money. And this is money of extremely poor quality, deteriorating in value with every passing day. Inflationism means “capital consumption”—the destruction of savings. This means that what is actually happening under this communistic ownership and superintendence of our capital is that capital is being consumed, being eroded, being malinvested and being wasted. In other words, we are hastening down the road towards “decivilization”.

Indeed, the progress of civilization always involves not capital consumption, but capital accumulation. With progress, we save more, providing for our future, our old age, and even for our children and grandchildren. These vital savings, when invested by prudent private bankers, become capital—the life-blood of capitalism. Bankers direct these funds towards those businesses that are best at satisfying consumer needs—and more and more capital is accumulated. All this capital, when invested in machinery, becomes available for capital-less poor workers, who then use these machines to improve their productivity—the only way by which we can permanently increase workers’ wages and also achieve lasting growth. And let us not forget the all-important civilization that we will foster, not destroy.

The only way, then, by which we can achieve all these extremely worthy goals, worthy not only in our individual interests, but also in the interests of the commonwealth, is by denationalizing money. Capitalism must mean private money, private capital and private control over this capital.

Private money is but whatever the common people are willing to accept in their day-to-day transactions. It is safe to predict that if fiat paper were abolished, the common people would revert to gold and silver. All these hoards of gold and silver will then be private hoards, private capital, private money. If collective action is required to manufacture standardized coins, these official mints will be converting private stocks of gold and silver into coins. Even in the performance of this task, the state should be offered nothing but its modest seignorage, with no role in establishing a fixed rate of exchange between gold and silver. All prices, including those of gold and silver, must be freely determined. That is capitalism.

We must also look at the huge political gains our society will achieve through the denationalization of money. In one fell swoop, we will inform all public functionaries that “the party is over”. Their budgets will be strictly limited to their tax revenues, and they will be unable to fund purely political programmes —from subsidies to income transfers to welfare spending all the way to Air India, wars and the secret services of the state. The most direct benefit of this will be a severe curtailment of “state politics” itself, a pernicious activity directly linked to the proliferation of “tax parasites”. Such a phenomenon is a blatant contradiction of traditional conceptions of “representative democracy”, which always meant representation of the taxpayer. As many classical liberals pointed out through the 20th century, as the Western welfare-warfare state expands and continues expanding, it is the system of fiat paper money that is ultimately responsible for turning all democratic institutions into representatives of those who receive money from state budgets. Thus, there is lot at stake in the denationalization of money. There is civilization, capitalism, and even democracy.

As an Indian economist, I hold that practising this pure form of capitalism is the only way of improving the lot of our poor—whom the constantly depreciating fiat paper money system sucks dry of all their capital while central planners feign concern for them. Their only hopes lie in exactly the same set of liberties that billionaires will thrive under. They need freedom, free markets and free trade. They need to earn, to save, and to invest their savings—under their own direction. In capitalism, all such actions are speculative. I advocate letting our poor people speculate with their own money rather than hand all their savings to state authority. It is indeed this idea that has failed— most spectacularly in the US, once considered a bastion of capitalism.

I was recently asked: “How do we get from here to there?” My contribution to these deliberations must be limited to pointing out where “there” ought to lie. I trust I have succeeded in my objective.