Atlas Shrugged, Ayn Rand’s masterpiece celebrating capitalism and the individual, is a rare accomplishment. First published in 1957, it seems to have been written for today. Its villains stare up at us from our daily newspapers; its warnings are now headlines on the nightly news. Not only does Rand make the argument for free markets, sound money, and a minimal state, she lays out in gripping detail the corrupt logic of collectivism and the danger of a society whose motive powers are politics and “pull,” not choice and merit.
Laissez-faire capitalism is not only the most productive organizing principle for a society; it is also the most preservative of human wealth and human dignity. The parallels between Rand’s fiction and today’s facts show us that the results of the policies and attitudes that helped create the recent economic catastrophe were foreseeable and inevitable. But a society that learns and understands the principles of freedom and equality before the law can reclaim what is being lost to the “looters” of the world.
“If old truths are to hold men’s minds, they must be restated in the language and concepts of successive generations. … The underlying ideas may be as valid as ever, but the words, even when they refer to problems that are still with us, no longer convey the same conviction; the arguments do not move in a context familiar to us; and they rarely give us direct answers to the questions we are asking.”F.A. Hayek, The Constitution of LibertyEven assuming the purest of intentions on the part of the planners of all political persuasions, the goals that they espouse, the methods they choose, and the haste in which they seek to remedy all of the material world’s injustices can only lead to a “system of central planning which few now consciously wish to see established.”[1] For every intervention into the natural and voluntary interactions of man leads to unintended consequences that must then be dealt with by more forceful and ad hoc interventions.
And just because a policy is created to achieve such ends as “social welfare” or a “public good” does not mean that the desired ends can be attained by that method; in fact, it begs the question of what is “social welfare,” and who is “the public”?[2] Rand’s great industrialist Hank Rearden makes this point when he wonders “why Orren Boyle is more ‘the public’”[3] than he is. Chasing vague concepts such as these leaves room for creative minds to manipulate society down destructive and unsustainable paths valuable only to the manipulators themselves.
Promises of creating material equality while maintaining equality before the law are a siren’s song, in reality leading only to favoritism and the equality of universal material poverty. The fact is that the two concepts are “in conflict with each other; and we can achieve either the one or the other, but not both at the same time.”[4]
Men are not equal in their physical attributes. Indeed, it is these differences, when recognized, that allow them to cooperate to mutual benefit; a world of identical men who found nothing to gain from trading on each other’s differences would leave as the only profitable interactions violence and exploitation. Equality before the law, and not equality of the man, is not just “the only equality which we can secure without destroying liberty”[5] but also the only kind of equality man truly has the power to deliver.
When you violate the rights of one man, you have violated the rights of all, and a public of rightless creatures is doomed to destruction.
— Hank Rearden, in Atlas Shrugged[6]
The prescience of Rand’s novel is astounding. What must have seemed at the time of its first printing as the bitter imagination of a woman who had seen her family expropriated and dehumanized during the Russian Revolution has become now almost a work of investigative journalism where only the names have been changed. The aristocracy of achievement, with money as its certificate, has been replaced by the “aristocracy of pull,”[7] the new currency of access. This will sound familiar if one knows the story of the subsidies lavished on the Serious Materials company; and of Cathy Zoi, the White House official in charge of weatherization, wife of a Serious Materials executive.[8]
James Taggart, Rand’s fictional president of Taggart Transcontinental Railroad, made it known to his Board of Directors “that his friends in Washington, whom he never named, wished to see a railroad line built in Mexico … [which] would be of great help in matters of international diplomacy,”[9] so a Mexican railroad is what Congress got in return for passing legislation to injure Taggart’s competitors. This is an example of economic decisions being made for political, not economic reasons and is akin to the modern day “stimulus” money being spent in areas where the White House feels it has the most to gain politically.
Dagny Taggart, vice president in charge of operations at Taggart Transcontinental, is forced to mitigate the damage by reducing the quality of the service, both because there is not a viable market for the rail line, and for fear that the Mexican government will nationalize it.[10] This is much like our economy today: people are uncertain of the future actions of the regime, so economic growth slows as they withhold their capital out of fear of expropriation.
When society’s resources are redirected to failing firms and allocated for political reasons, whether a railroad or steel company in Rand’s world or an automaker or bank in ours, wealth is by definition destroyed. When Eugene Lawson, former president of the Community National Bank of Madison, tells Dagny Taggart, “I can proudly say that in all of my life I have never made a profit!”[11] he is explicitly stating that he has been destroying wealth proudly and consistently throughout his career. A profit is the recognition that you have combined materials which, individually, had a lower sum value than the new combination. Only those who are not serving their customers need subsidies, so they are inherently detrimental to the “public welfare.”
When James Taggart asks Orren Boyle rhetorically “whether it is in the public interest to tolerate wasteful duplication of services and the destructive, dog-eat-dog competition of newcomers,”[12] he is making the same argument we hear from government officials about healthcare services. But it is precisely this “dog-eat-dog” competition that forces firms to innovate and to provide new and better services in order to retain their customers.
Capitalism is a system where resources are voluntarily redirected to each whose ideas are better than the last, and whose products serve more needs; competition is the process by which these new products and ideas are discovered. At any one moment in time it might appear that wasteful production of similar goods is taking place, but when consumers choose one good over another they make it possible for the producer of the more valued good to continue production, and signal to others in the industry to step aside. With government-granted monopolies, resources are squandered and incompetence is rewarded.
Like today’s EPA, FCC, SEC, or any other part of the federal alphabet soup of regulatory agencies, Rand’s “Bureau of Economic Planning and National Resources” issues directives with the force of law, but not subject to constitutional constraints: railroads must reduce speed and capacity, and they must all run the same number of cars per zone consisting of five states; steel mills can only produce as much as the average mill; manufacturing establishments are forbidden to relocate without permission.[13] Rand’s bureaucrats have their own motivations and can disregard the rights of their “subjects.” The real world differs little from her vision: today’s federal agencies take land, censor information, stifle competition, regulate prices, and dictate countless terms to businessmen and consumers alike every day.
When the White House pressured the courts to ignore precedent and the law in order to enrich the union workers of a large, bankrupt automaker at the expense of the secured bondholders, it was channeling James Taggart. “What if we did skip a few technicalities? It was for a good purpose.”[14]
One intervention into the market leads to another: In the novel, the moratorium on interest payments to railroad bondholders, which Taggart brags about, becomes necessary to keep the railroads in business after they are forced to cut services and create more work for their own unionized employees. Funds for new investments begin to dry up, pensions depending on dividends from the bonds are broken, leaving retirees to starve; and the railroads still begin to fail despite the “help” of the government. In the real world, the bondholders were granted a small victory in the courts, but pensioners lost millions, and future investors were given a very clear warning.[15]
So you think that money is the root of all evil? Have you ever asked what the root of all money is? Money is a tool of exchange, which can’t exist unless there are goods produced and men able to produce them. Money is the material shape of the principle that men who wish to deal with one another must deal by trade and give value for value.
— Francisco d’Anconia, in Atlas Shrugged[16]
In a free, capitalist society, men are paid not to their ability, but to how well they put their ability to use serving their fellow man. Differences between men and their outcomes become the responsibility of the men themselves, not forces beyond their control. As Hayek points out, discontent may express itself in the form of envy. But to attack these differences under the guise of “social justice” is a dangerous game, and it leads to conflict and loss of liberty.[17]
Politicians use envy to divide the people and turn them against the ones who truly serve their needs. They hold up businessmen who have grown rich and call them criminals, hauling them into court and charging them as monopolists under antitrust laws. All the while, the sugar farmers protected by tariffs and quotas, and the bankers who have hijacked the nation’s money, fill the politicians’ pockets with campaign contributions.
Rand repeatedly points out that true money is gold, and that to hold the state to what she considers its only legitimate functions — the police, courts, and national defense — it is imperative to shackle it with chains of this precious metal. Until then the state will continue to turn men’s efforts against them, buying the means of oppression with their sweat.
Their plan — like all the plans of all the royal looters of the past — is only that the loot shall last their lifetime.
— John Galt, in Atlas Shrugged[18]
Rand’s original working title for Atlas Shrugged was The Strike. She envisioned that the men of minds and ambition would abandon the world to its own devices and find a place where their work and talents would be respected and admired — where they would be free to enjoy the fruits of their labors. In the real world men can, and will, exercise this option. Oppressive taxes, regulations, and denunciation by politicians and the media drive the best and brightest overseas. Many are discouraged from entering business by the red tape and bureaucratic mazes they must navigate in order to start a business and serve their fellow men; businesses are destroyed by frivolous lawsuits and carnivorous taxes.
A society cannot survive if it cannibalizes itself. Politicians promising a free lunch but using the seed corn to provide it will bring only ruin. This is the essence of socialism, a system that rewards the unproductive and enslaves those who produce more than they consume. The morality of capitalism lies in the fact that it rewards producing for your fellow men. The looters think only of the present: the next meal, the next vote, but not the next day.
Capitalism by its very nature is oriented toward the future; it builds upon itself and benefits all who voluntarily trade on their minds and muscles. The lesson of Rand’s work is that freedom and capitalism are worth fighting for, but a series of near defeats and pyrrhic victories will not be enough. Men must be willing to give up everything, or it will all be taken from them.
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Notes
[1] Hayek, F.A. (1978). The Constitution of Liberty. Chicago: University of Chicago Press. p. 256.
[2] Hayek, F.A. (2007). The Road to Serfdom. Chicago: University of Chicago Press .
[3] Rand, A. (2005). Atlas Shrugged. New York: Penguin Group. p. 898.
[4] Hayek, F.A. (1978). The Constitution of Liberty. Chicago: University of Chicago Press. p. 87.
[5] Hayek, F.A. (1978). The Constitution of Liberty. Chicago: University of Chicago Press. p. 84.
[6] Rand, A. (2005). Atlas Shrugged. New York: Penguin Group. p. 445–6.
[7] Rand, A. (2005). Atlas Shrugged. New York: Penguin Group. p. 375.
[8] Carney, T. P. (2010, January 29). Obama’s Pledges Mean Lobbyists Continue Winning. San Fransisco Examiner.
[9] Rand, A. (2005). Atlas Shrugged. New York: Penguin Group. p. 84.
[10] Rand, A. (2005). Atlas Shrugged. New York: Penguin Group. p. 53.
[11] Rand, A. (2005). Atlas Shrugged. New York: Penguin Group. p. 292.
[12] Rand, A. (2005). Atlas Shrugged. New York: Penguin Group. p. 51.
[13] Rand, A. (2005). Atlas Shrugged. New York: Penguin Group. p. 310.
[14] Rand, A. (2005). Atlas Shrugged. New York: Penguin Group. p. 361.
[15] Rowley, C. (2009, June 10). “June 10, 2009: Barack Obama Loots Chrysler Bondholders,” Charles Rowley’s Blog.
[16] Rand, A. (2005). Atlas Shrugged. New York: Penguin Group. p. 380.
[17] Hayek, F.A. (1978). The Constitution of Liberty. Chicago: University of Chicago Press. p.93.
[18] Rand, A. (2005). Atlas Shrugged. New York: Penguin Group. p. 679.
