Atlas Shrugged – 50 Years Later

Atlas Shrugged – 50 years later – At a time of rampant collectivism, Ayn Rand renewed the promise of liberty. But her ethics are dangerous. When Ayn Rand finished writing “Atlas Shrugged” 50 years ago this month, she set off an intellectual shock wave that is still felt today. It’s credited for helping to halt the communist tide and ushering in the currents of capitalism. Many readers say it transformed their lives. A 1991 poll rated it the second-most influential book (after the Bible) for Americans. Read article below.

Atlas Shrugged – 50 Years Later
by Mark Skousen
Christian Science Monitor
March 6, 2007

When Ayn Rand finished writing “Atlas Shrugged” 50 years ago this month, she set off an intellectual shock wave that is still felt today. It’s credited for helping to halt the communist tide and ushering in the currents of capitalism. Many readers say it transformed their lives. A 1991 poll rated it the second-most influential book (after the Bible) for Americans.

At one level, “Atlas Shrugged” is a steamy soap opera fused into a page- turning political thriller. At nearly 1,200 pages, it has to be. But the epic account of capitalist heroes versus collectivist villains is merely the vehicle for Ms. Rand’s philosophical ideal: “man as a heroic being, with his own happiness as the moral purpose of his life, with productive achievement as his noblest activity, and reason as his only absolute.”

In addition to founding her own philosophical system, objectivism, Rand is honored as the modern fountainhead of laissez-faire capitalism, and as an impassioned, uncompromising, and unapologetic proponent of reason, liberty, individualism, and rational self-interest.

There is much to commend, and much to condemn, in “Atlas Shrugged.” Its object – to restore man to his rightful place in a free society – is wholesome. But its ethical basis – an inversion of the Christian values that predicate authentic capitalism – poisons its teachings.

Mixed lessons from Rand’s heroes

Rand articulates like no other writer the evils of totalitarianism, interventionism, corporate welfarism, and the socialist mindset. “Atlas Shrugged” describes in wretched detail how collective “we” thinking and middle-of-the-road interventionism leads a nation down a road to serfdom. No one has written more persuasively about property rights, honest money (a gold-backed dollar), and the right of an individual to safeguard his wealth and property from the agents of coercion (“taxation is theft”). And long before Gordon Gekko, icon of the movie “Wall Street,” she made greed seem good.

I applaud her effort to counter the negative image of big business as robber barons. Her entrepreneurs are high-minded, principled achievers who relish the competitive edge and have the creative genius to invent exciting new products, manage businesses efficiently, and produce great symphonies without cutting corners. Such actions are often highly risky and financially dangerous and are often met with derision at first. Rand rightly points out that these enterprising leaders are a major cause of economic progress. History is full of examples of “men who took first steps down new roads armed with nothing but their own vision.” In the novel, protagonist Hank Reardon defends his philosophy before a court: “I refuse to apologize for my ability – I refuse to apologize for my success – I refuse to apologize for my money.”

But there’s a dark side to Rand’s teachings. Her defense of greed and selfishness, her diatribes against religion and charitable sacrificing for others who are less fortunate, and her criticism of the Judeo- Christian virtues under the guise of rational Objectivism have tarnished her advocacy of unfettered capitalism. Still, Rand’s extreme canard is a brilliant invention that serves as an essential counterpoint in the battle of ideas.

The Atlas characters are exceptionally memorable. They are the unabashed “immovable movers” of the world who think of nothing but their own business and making money. “… I want to be prepared to claim the greatest virtue of them all – that I was a man who made money,” says copper titan Francisco d’Anconia. But these men are regarded as ruthless, greedy, single-minded individualists. They are men (except for Dagny Taggart, who could be confused for a man) who always talk shop and give scant attention to their family. In fact, no children appear in Rand’s magnum opus.

Her chief protagonist, John Galt, is an uncompromising superman. He is the proverbial Atlas who holds the world on his shoulders. He has invented a fantastic motor, yet is so frustrated with state authority that he withdraws his talents – hence the title, “Atlas Shrugged” – and spends the next dozen years working as a manual laborer for Taggart International.

Mr. Galt somehow succeeds in getting the world’s top capitalists to go on strike and, in many cases, strike back at an increasingly oppressive collectivist government. Rand’s plot violates a key tenet of business existence, which is to constantly work within the system to find ways to make money. Real-world entrepreneurs are compromisers and dealmakers, not true believers. They wouldn’t give a hoot for Galt.

Rand, of course, knows this. And that’s OK, because “Atlas Shrugged” is about philosophy, not business. In her world, there are two kinds of people: those who serve and satisfy themselves only and those who believe that they should strive to serve and satisfy others. She calls the latter “altruists.”

Rand is truly revolutionary because she makes the first serious attempt to protest against altruism. She rejects the heart over the mind and faith beyond reason. Indeed, she denies the existence of any god or higher being, or any other authority over one’s own mind. For her, the highest form of happiness is fulfilling one’s own dreams, not someone else’s – or the public’s.

Galt crystallizes the Randian motto: “I swear by my life and my love of it that I will never live for the sake of another man nor ask another man to live for mine.” No sacrifice, no altruism, no feelings, just pure egotistical selfishness, which Rand declares to be supreme logic and reason.

This philosophy transcends politics and economics into romance. The novel’s sex scenes are narcissistic, mechanical, and violent. Are the lessons of her book any way to run a marriage, a family, a business, a charity, or a community?

To be sure, Rand makes a key point about altruism. A philosophy of sacrificing for others can lead to a political system that mandates sacrificing for others. That, Rand shows with frightening clarity, leads to a dysfunctional society of deadbeats and bleeding-heart do-gooders (Rand calls them “looters”) who are corrupted by benefits and unearned income, and constantly tax the productive citizens to pay for their pet philanthropic missions. According to Rand, they are “anti-life.”

But is the only alternative to embrace the opposite, Rand’s philosophy of extreme self-centeredness? Must we accept her materialist metaphysics in which, as Whittaker Chambers wrote in 1957, “Randian Man, like Marxian Man, is made the center of a godless world”?

No, there is another choice. If society is to survive and prosper, citizens must find a balance between the two extremes of self-interest and public interest.

Adam Smith, the founder of modern economics, may have found that Aristotelian mean in his “system of natural liberty.” Mr. Smith and Rand agree on the universal benefits of a free, capitalistic society. But Smith rejects Rand’s vision of selfish independence. He asserts two driving forces behind man’s actions.

In “The Theory of Moral Sentiments,” he identifies the first as “sympathy” or “benevolence” toward others in society. In his later work, “The Wealth of Nations,” he focuses on the second – self-interest – which he defines as the right to pursue one’s own business. Both, he argues, are essential to achieve “universal opulence.”

Smith’s self-interest never reaches the Randian selfishness that ignores the interest of others. In Smith’s mind, an individual’s goals cannot be fully achieved in business unless he appeals to the needs of others. This insight was beautifully stated two centuries later by free-market champion Ludwig von Mises. In his book, “The Anti-Capitalist Mentality,” he writes: “Wealth can be acquired only by serving the consumers.”

Golden rule anchors true capitalism

Smith’s theme echoes his Christian heritage, particularly the Golden rule, “Therefore all things whatsoever ye would that men should do to you, do ye even so to them” (Matt. 7:12). Perhaps a true capitalist spirit can best be summed up in the commandment, “Love thy neighbour as thyself” (Lev. 19:18; Matt. 22:39). Smith and Mr. von Mises would undoubtedly agree with this creed, but the heroes of “Atlas Shrugged” – and their creator – would agree with only half.

Today’s most successful libertarian CEOs, such as John Mackey of Whole Foods Markets and Charles Koch of Koch Industries, have adopted the authentic spirit of capitalism that is more in keeping with Smith than Rand.

Theirs is a “stakeholder” philosophy that works within the system to fulfill the needs of customers, employees, shareholders, the community, and themselves. Their balanced business model of self- interest and public interest shows how the marketplace can grow globally in harmony with the interests of workers, capitalists, and the community – and can even displace bad government.

The golden rule is the correct solution in business and life. But would we have recognized this Aristotelian mean without sampling Rand’s anthem, or for that matter, the other extreme of Marxism-Leninism? As Benjamin Franklin said, “By the collision of different sentiments, sparks of truth are struck out, and political light is obtained.”

John Galt – it’s time to come home and go to work.

Mark Skousen has taught economics at Columbia University and is the author of the new book, “The Big Three in Economics.”

The Troubled Economics of Ayn Rand

Published in January, 2001, issue of Liberty Magazine:

THE TROUBLED ECONOMICS OF AYN RAND
by Mark Skousen

“No creator was prompted by a desire to serve his brothers…”

–Howard Roark, The Fountainhead (1994:710)

Ayn Rand, author of the celebrated Capitalism: The Unknown Idea, is honored almost universally as the fountainhead of market capitalism, an impassioned proponent of reason, individualism, and rational self-interest.

There is much to praise in Ayn Rand’s novels and writings, especially her uncompromising defense of freedom and her unrelenting denunciations of collectivism. No one has written more persuasively about property rights, the right of an individual to safeguard his wealth and property from the agents of coercion. Her novels The Fountainhead and Atlas Shrugged have probably done more than any other works of fiction to vindicate and honor the glories of “making money.”

Yet in reading her novels and writings, I was surprised to learn that her work often portrays a strange, distorted view of the money-making process. In a perverse way, her model of business may even give aid to the cause of the enemies of liberty–by giving capitalism a bad name.

Consumer Sovereign in The Fountainhead

Take, for example, Howard Roark’s philosophy toward his architectural work in The Fountainhead. In the beginning, Roark indicates that he chose architecture as a profession because he loves his work. He seeks to set the highest standards of excellence. He tries to be creative. All of these traits are to be admired.

But then Roark denies a basic tenet of sound economics–the principle of consumer sovereignty. When the dean of the architectural school tells Roark, “Your only purpose is to serve him [the client],” Roark objects. “I don’t intend to build in order to serve or help anyone. I don’t intend to build in order to have clients. I intend to have clients in order to build.” (1994:14) This bizarre, almost anti-social, attitude sounds like a perverse rending of Say’s Law, “supply creates its own demand,” or the statement made in the film Field of Dreams, “If you build it, they will come.” But supply only creates demand if the supply can be sold to customers; and people come to a new baseball field only if they want to play or watch. Supply must satisfy demand, or it becomes a wasted resource.

Now I have no problem with an architect who tries to set new standards of design, just as I would applaud entrepreneurs who seek to invent a new product or design a new process. Such actions are often highly risky and financially dangerous, and are often met with derision at first. Ayn Rand rightly points out that they are a major cause of economic progress. History is full of examples of “men who took first steps down new roads armed with nothing but their own vision.” (Rand 1994:710)

But the goal of all rational entrepreneurship must be to satisfy the needs of consumers, not to ignore them! Discovering and fulfilling the needs of customers is the essence of market capitalism. Imagine how far a TV manufacturer would get if he decides to build TVs that only tune into his five favorite channels, the consumer be damned. It wouldn’t be long before he would be on the road to bankruptcy.

Rand Denies the Essence of Business Enterprise

In short, Howard Roark’s conviction is irrational and contradicts a basic premise of Rand’s Objectivist philosophy. For Roark, A is not A. He wants A to be B–his B, not his customer’s A. Thus, Ayn Rand’s ideal man misconceives the very nature and logic of capitalism–to fulfill the needs of customers and thereby advance the general welfare. As Ludwig von Mises writes in his book, The Anti-Capitalist Mentality, “The profit system makes those men prosper who have succeeded in filling the wants of the people in the best possible and cheapest way. Wealth can be acquired only by serving the consumers.” (1972:2) Apparently Howard Roark doesn’t believe in consumer sovereignty. As he states in his final court defense, “An architect needs clients, but he dos not subordinate his work to their wishes.” (1994:714) Really?

Talk to any architects about The Fountainhead. Yes, they will tell you that there are a few self-centered, highly-egotistical, elitist Howard-Roark types in architecture who can get away with making monuments to their egos at their client’s expense. Frank Lloyd Wright, an architect Rand deeply admired, may be one of them. But the book’s thesis is entirely unrealistic in the everyday world of commercial building. Occasionally a client values more the notoriety of living in a home built by a signature designer than getting what he really wants, but not many. Almost all of Rand’s scenarios are extreme and idealistic, a strategy that works to sell novels, but does violence to all sense of reality. Normally architects work closely with the client and make numerous changes in order to fit the client’s needs.

Compromise is a necessary element to a successful completion of a project. And this consumer-oriented approach is true in all areas of capitalistic production. An architect or producer of any product who acts like Roark in The Fountainhead is likely to be out of work. Roark’s fate is even worse–he is guilty of his crime, blowing up a much-needed housing project rather than permit the slightest alteration in his designs. The jury may have exonerated him, but the market punishes his kind of behavior.

Ironically, Ayn Rand herself compromised in the making of the movie “The Fountainhead.” She insisted that only Frank Lloyd Wright would design the models for the film, but her demand was later rejected due to Wright’s outrageous fee. In the end, the models were done by a studio set designer. Rand called them “horrible” and “embarrassingly bad.” But the film was made and released. (Branden 1986:209) Oh, the agonies of dealing with other people!

The fact that Howard Roark represents the ideal man in Ayn Rand’s novel and the fact that she denigrates other characters in The Fountainhead who “compromise” with client’s demands suggest that Ayn Rand is philosophically in denial when it comes to comprehending the nature of business. She denies the very raison d’etre of capitalism–consumer sovereignty.

Assault on the Common Man

In this sense, Ayn Rand is not much different from other artists and intellectuals. Artists often bash the capitalist system. They hate the idea of subjecting their talents to crass commercialism and the crude tastes of the common man. Yet Ludwig von Mises chastised this snobbish attitude in The Anti-Capitalist Mentality: “The judgment about the merits of a work of art is entirely subjective. Some people praise what others disdain. There is no yardstick to measure the aesthetic worth of a poem or of a building.” (1972:75) Mises adds that only through economic progress — the creation of surplus wealth — has the level of taste and art been raised to meet the criteria of the more sophisticated artist. “When modern industry began to provide the masses with the paraphernalia of a better life, their main concern was to produce as cheaply as possible without any regard to aesthetic values. Later, when the progress of capitalism had raised the masses’ standard of living, they turned step by step to the fabrication of things which do not lack refinement and beauty.” (1972:80)

The Flaw in Atlas Shrugged

This brings us to the fatal flaw in Atlas Shrugged. Rand’s basic plot violates the whole rationale of business’s existence–constantly working within the system to find ways to make money. There will never be a Galt’s Gulch, where the world’s greatest entrepreneurs isolated themselves from the rest of the world. There will never be enough principled business leaders to fight the system. The business world does not typically attract ideologues and true believers; it attracts people primarily interested in money making by whatever means. They wouldn’t give John Galt the time of day. As Mises states, “There is little social intercourse between the successful businessmen and the nation’s eminent authors, artists and scientists…Most of the ‘socialites’ are not interested in books and ideas.” (Mises 1972:19) Ayn Rand admired Mises, but apparently she didn’t learn much from his writings. Pity.

Altruism Vs. Selfishness

Howard Roark’s diatribe against consumer sovereignty is undoubtedly a way to introduce Rand’s philosophy of selfishness. There are two extremes here: The philosophy of those who serve and satisfy themselves only, and the philosophy of those who believe that they should strive at all times to serve and sacrifice for others. Rand labels the latter “altruism.” In The Virtue of Selfishness, she opines, “Altruism declares that any action taken for the benefit of others is good, and any action taken for one’s own benefit is evil.” (Rand 1999:80) Obviously, Rand protests against altruism and espouses the opposite extreme. As Francisco d’Anconias tells Dagny Taggart in Atlas Shrugged: “Don’t consider our interests or our desires. You have no duty to anyone but yourself.” (Rand 1992:802) No sacrifice, no altruism, just pure egotistical selfishness.

The Adam Smith Solution

The founder of modern economics, Adam Smith, takes a different approach by trying to incorporate both concepts in his “system of natural liberty.” Smith and Rand are in agreement about the universal benefits of a free capitalistic society. But Smith rejects Rand’s vision of selfish independence. He teaches that there are two driving forces behind man’s actions–in his Theory of Moral Sentiments, he identifies the first as “sympathy” or “benevolence” toward others in society, while in his Wealth of Nations, he focuses on the second, “self interest,” the right to pursue one’s own business. Smith believes that as the market economy develops and individuals move away from their community, “self interest” becomes a more dominant force than “sympathy.” But both are essential to achieve “universal opulence.” (Smith 1965:11)

Adam Smith is famous for making a statement that sounds Randian in tone: “It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest.” (Smith 1965:14) But this statement is often taken out of context. Smith’s self-interest never reaches the Randian selfishness that ignores the interest of others. On the contrary, in Smith’s mind, an individual’s goals cannot be fully achieved in business unless he appeals to the self-interest of others. Smith says so in the very next sentence: “We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages.” (Ibid.) Moreover, he writes earlier on the same page, “He will be more likely to prevail if he can interest their self-love in his favour….Give me that which I want, and you shall have this which you want, is the mean of every such offer.” (Ibid.) Smith’s theme echoes his Christian heritage, particularly the golden rule, “do unto others as you would have them do unto you.” (See Matthew 7:12)

Perhaps a true capitalist spirit can best be summed up in the Christian commandment, “Love thy neighbor as thyself.” (Matthew 22:39) Adam Smith and Ludwig von Mises would undoubtedly agree with this creed, but apparently Howard Roark and John Galt — and their creator — would agree with only half. And that’s a great tragedy for the greatest novelist of the 20th century.

References

* Branden, Barbara. 1986. The Passion of Ayn Rand. Doubleday.
* Mises, Ludwig von. 1972 [1956]. The Anti-Capitalist Mentality. Libertarian Press.
* Rand, Ayn. 1992 [1957]. Atlas Shrugged. Dutton Books.
* Rand, Ayn. 1994 [1943]. The Fountainhead. Penguin Books.
* Rand, Ayn. 1999. The Ayn Rand Reader, ed. by Gary Hull and Leonard Peikoff. Penguin Books.
* Smith, Adam. 1965 [1776]. The Wealth of Nations. Modern Library.

Greed Is Good — NOT!

Personal Snapshots

Forecasts & Strategies, February 2000

Greed is Good — NOT!

“Unbridled avarice is not in the least the equivalent of capitalism, still less its ‘spirit.'” — Max Weber

Recently I heard free-market economist Walter Williams speak at a local college about capitalism. He quoted approvingly from Gordon Gekko, the fictional character of the film Wall Street, “Greed is good.”

I normally agree with most everything Walter Williams says, but not this statement. Too often, defenders of capitalism go overboard in defending pejorative phrases, such as “greed is good” or, in the case of Ayn Rand, her book title The Virtue of Selfishness. But selfishness is not a virtue, nor is greed, whether in business or finance. Selfishness leads to unethical behavior — deceptive advertising, fraud, and even theft. It often means taking advantage of another person. Greed and selfishness could land you in jail.

Adam Smith’s Model of Enlightened Self-Interest

Adam Smith, the father of free-market capitalism, did not write approvingly of selfishness or greed. He favored enlightened self-interest and industriousness. He believed that his “system of natural liberty,” his phrase for capitalism, would actually reduce greed, selfishness and fraud. Commercial society, he said, encourages people to be educated and industrious. It “cultivates patience, industry, fortitude and application of thought.” The fear of losing customers “restrains his frauds and corrects his negligence,” Adam Smith wrote in The Wealth of Nations. In contrast to political societies, which depend on flattery, favoritism and deceit, capitalist societies foster self-control, cooperation, punctuality, benevolence and deferred gratification.

Financial Advice: Don’t Get Greedy!

In the financial field, we know that the two greatest enemies to profits are fear and greed. Contrarians take advantage of inexperienced investors who panic when prices are dropping and often sell out in desperation at the bottom. Unseasoned investors also tend to buy heavily at the top, only to see their investments disappear. In short, greed is a disaster for investors. This is a vital lesson given the high-wire act Wall Street is following these days, especially with regard to Internet stocks.

The Real Significance of the Millennium

A friend of mine wrote me saying that the year 2000 was no big deal, and this new millennium was nothing unusual in terms of other calendars: For Moslems, it was 1420, for Jews it was 5760, for Buddhists it was 5119, etc. Well, he’s wrong. There is no universal celebration of the Moslem, Jewish or Buddhist calendar, yet on New Year’s Eve, what did we witness on television? Magnificent celebrations across the globe even in China, Israel, Africa and other places that are not Christian. Why? Western capitalism, which uses the Christian calendar, has captured the world — in business, in dress, in culture.