On Individualism, Capitalism, and Ayn Rand


Last year I was encouraged by a friend to read Any Rand’s classic and highly influential novel Atlas Shrugged. For those that are unfamiliar with the book, it is largely considered Rand’s most important novel, and was arguably one of the most influential pieces of thinking behind the resurrection of economic liberalism towards the latter end of the 20th Century, following the pervasiveness of Keynesianism in the post-war era. Indeed, one of Rand’s most passionate followers was Alan Greenspan, who chaired the US Federal Reserve from the mid-1980s to the mid-2000s, and was a key figure in the resurgence of market rationalism in the US over that period. Greenspan has on many occasions readily affirmed the strong influence Rand had on his intellectual development, and was in fact a close confidant of hers. But Rand’s influence was certainly more broad than this. For instance, her thinking was highly influential at the various conservative US think tanks that drove much of the liberalisation, privatisation, and deregulation in the West in the latter part of the 20th Century (including the deregulation of finance).

Whilst reviewing books is not really my forte, I felt that this was one book that was worth writing about. To begin with, I will give a brief overview of the book (with minimal spoilers!) and then try and summarise Rand’s philosophy, which she explores through the medium of fiction. I will then discuss what I like about it and what I agree with, and I will then offer a few thoughts on where I think Rand’s philosophy breaks down.

Atlas Shrugged is the story of a strike, set in mid-20th Century America. However, it is not a strike as we have come to imagine them. Rather, this is a strike of the productive elite – the men and women of great intellect who drive the economy and underpin the standard of living of the nation. The title of the book alludes to its key theme – when society begins to demand too much of this elite, expecting them to shoulder the wants of the whole world, the only response that is left to them is to shrug their obligations off, and to abandon the world to a collectivist/socialist dystopia with no productive capacity to feed itself. Frankly, this is about all you need to know of the story to understand her philosophy – Rand uses 1,100 pages of novel (in my version at least…) to explore a philosophy more than to write a particularly nuanced piece of fiction.

Rand coined the term ‘Objectivism’ for her particular philosophy, and defined it with four elements:
1. A metaphysics based on objective reality
2. An epistemology based purely on reason
3. An ethics of self interest
4. A politics of unfettered capitalism

This is the ‘technical’ side of it, but Rand summarised her philosopy neatly as follows:

“My philosophy, in essence, is the concept of 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.”

For Rand, man’s only obligation is to achieve his own desires by bending nature to his will. In her view, pity and compassion are tools employed by the weak against the strong in order to guilt the strong into putting the wants of others above the only rational objective for their lives – their own happiness. For Rand, the pursuit of self interest was not only the right order of things, but indeed the most moral way for man to live his life – to give to others what they don’t deserve was, in her view, immoral. Underpinning Rand’s view of the world was a strong belief in rationalism and reason as the only right forms of thought.

First, I will give credit where credit is due – Rand does makes some important points in her book.

Rand argues that you and I are not entitled to a certain standard of living just because we exist and because we were born into a certain country. I find myself agreeing with this, at least in principle. The jobs that we have exist because courageous and intelligent people were able to identify a need or discover a better way of doing things, and create an enterprise to achieve that. Likewise, what we consume, and the price at which we are able to consume it, are the products of this same entrepreneurialism. Of course, this doesn’t mean we are entitled to nothing just because we haven’t built our own enterprise. To the contrary, we are entitled to the economic value that we contribute to society through our labour (and whatever investments we have) – enterprise cannot operate on ideas and entrepreneurship alone. But Rand is correct in saying that our incomes and our standard of living do not simply appear out of nowhere (or some kind of mechanistic economy, as some academic economists seem to imagine exists) – they are the product of toil. I’m reminded of a great Einstein quote:

“Every day I remind myself that my inner and outer life are based on the labors of other men, both living and dead, and that I must exert myself in order to give in the same measure as I have received and am still receiving.”

All else equal, if I demand a standard of living above and beyond the value I volunteer to create through my effort, then I force someone to bear a load that is simply unfair for them to bear. Moreover, work is a fundamental part of who we are as human beings, and is key to our self-actualisation. If we choose not to push ourselves to our best, we not only opt for a lower standard of living but we also rob ourselves of the pride in a job well done and the knowledge that we have made the most of ourselves.

So much for the broad principle. However, I take exception to Rand’s philosophy, as borne out in Atlas Shrugged, for a few reasons. These are not collectively exhaustive – certainly, much more could be written on this book, and Rand’s philosophy in general, than I would care to write (and I’m sure you would care to read!). To me, these are just the most important shortcomings.

First, in Rand’s world there exists no imbalance of opportunity. Indeed, Rand mocks the idea of equality of opportunity, portraying it merely as another justification given by those who would impose their wants upon the productive and motivated in society. (I discuss inequality of opportunity in more depth here)

Second, Rand gives no consideration whatsover to the instances in which individuals pursuing their own economic interest do not generate efficient outcomes. For instance, anti-competitive behaviours (where firms solve not for their customers’ wants, but for the attainment of monopolistic market power – also known as ‘economic rents’) would simply never cross the mind of one of Rand’s heroes (in the story, such behaviours are reserved solely for those in bed with a highly corrupt government), and yet this is all too often what is observed, and is the reason we have competition watchdogs in all advanced economies. Likewise, principal-agency problems, where the managers of corporations solve for empire-building and their personal interest (as opposed to the company’s interest) are completely ignored in Rand’s world, in which corporations are run by founders or their heirs (in contrast to the vast majority of corporations in the real world).

Third, and perhaps most importantly, Rand seems to suggest that it is only financial gain that can bring happiness to an individual. Rand presents a twisted and frankly quite disturbing view of romantic love, in which attraction is based partly on acceptance of my own individual worth and partly on some kind of natural attraction to any character that embodies Rand’s ideals. Rand seems to flatly reject the possibility of familial love (for those heroes in Atlas Shrugged who do have families, they are portrayed as parasitic and manipulative, rather than a source of joy). For the rest of society, all relationships are based on the ‘trader principle’ – other human beings are not part of a collective identity and shared humanity, but rather are a means to better advancing one’s own financial ends. At best, one might respect the competence of another human being. However, one would certainly never find joy in the happiness of others. Again, strangely, the only exception Rand seems to permit is if a character subscribes to her own philosophy. The general point is that Rand, while celebrating the achievement of man’s happiness as the ultimate end, seems to forbid the possibility that man might achieve happiness through anything other than financial gain and, perhaps more importantly, a dogged adherence to her worldview.

Together, these three examples illustrate a broader issue, which is that the arguments put forward in Atlas Shrugged lack sophistication and nuance, permit no exceptions, and give no ground on the potential failings of markets. If you’ll permit me to get on my hobby horse for a moment, this kind of ‘all or nothing’ view unfortunately seems to be the way many who are economically right-of-center argue. While progressives have largely ‘come to the party’ on market forces, accepting the failings of socialist systems, the right has not gravitated towards the centre for many decades, and indeed in recent years has gravitated back towards free market extremism.

In terms of the literature itself, there is one final comment I would make. The reason, in my view, that Rand is so effectively able to present a simplistic and one-sided view of humanity is that she employs the medium of fiction. The great irony here is that Rand herself argued that only reason and rational argument can form the basis of any belief. Yet she makes her argument appear compelling by embedding it in a story in which all ‘evidence’ leads irrefutably to support for her conclusions, leaving no room for doubt. The issues I have raised above are only some of the examples of ways in which observations of the real world (which are the most important test of an economic argument) undermine much of what Rand proposes. Perhaps the more aggregious sin in Atlas Shrugged is that Rand repeatedly builds a ‘straw man’ argument of all those who disagree with her (that is, a false representation of an opponent’s argument) in order to delegitimise any and all points against the total devolution of the economy to unfettered capitalism and the dogged pursuit of material self interest – progressives are presented as nothing more than “looters” who seek to ride off the productive efforts of others. I am no philosopher, but even I know that such methods of argument are disingenuous and frowned upon.

To summarise, my conclusion on Atlas Shrugged is that Ayn Rand effectively draws attention to a few principles that are broadly right – the inherent virtue of hard work and dedication (and their importance in self-actualisation), and the notion that, all else equal, we should not expect society to bestow a certain standard of living on us simply because we are unwilling to work for our due. However, Rand takes these principles and converts them into a fundamentalist philosophy and politics that not only offers no room for complexity or subtlety, but also portrays anyone who offers arguments to the contrary as manipulative and immoral. The fact that she has had such a strong influence on economic and political thinking today makes Atlas Shrugged an especially dangerous text. For this reason alone, it is well worth the read.

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