Sparring With the Cult of Ayn Rand

I recently posted an interview I did with the ghost of Ayn Rand and, as expected, a few Randian ideologues came out of the woodwork to challenge the points I sought to get across in my post.

I do these faux-interviews because I believe that my strong suit as a writer and financial commentator is satire, in the grand tradition of Jonathan Swift and The Simpsons.  The point I was making was that markets, even free ones, do require a modicum of regulation, and that the events of 2008 categorically proved that the emperors, in fact, have no clothes.

Here is my rather interesting exchange in the comments section with a gentleman who goes by the name of C. Jeffrey Small.  He clearly knows his stuff and I thought he made several good points, but I stick to my guns as far as my overall premise.

My retorts are in bold:

“For starters, one of the most enduring aspects of your philosophy was that the smartest, most capable citizens should be absolutely free from any government or regulatory interference in order for the society as a whole to move forward. Well, that experiment has been carried out in the US over the last decade or so and it almost led to the end of the world. Any thoughts on where you may have been wrong?”

Is it possible that you actually believe that an experiment in individual and economic freedom was conducted over the last decade, or is this just some form of ironic word play at the reader’s expense? If the former, and you truly think that the Bush years were a model of Capitalism and an administration that truly promoted individual rights as outlined in the US Constitution, then there isn’t anything that I or anyone else could say that could get through to you.

TRB: To my knowledge, no president has ever truly offered “model of Capitalism and an administration that truly promoted individual rights as outlined in the US Constitution” in its purest sense, but I gotta tell you sir, the last 10 to 12 years were as close to a free-for-all as you’re going to get in terms of lax restriction and the elites were given just enough rope to hang themselves. Everything they were in charge of fell apart. Don’t believe me? Ask 2 out of the 10 people you know who are unemployed.

TRB:

I have no reason to doubt that you sincerely believe that the Bush years were a “free-for-all” and represent a period of significant regulatory reduction. This is certainly the picture that the politicians and the press have gone to great lengths to convey. However, nothing could be further from the truth. While some specific regulations were rescinded under Bush, there were many, many more new regulations created to replace them. Overall, businesses were far more constrained by the end of the Bush administration than at the beginning. Bush significantly increased the national debt, and expanded the intrusion of government into an ever increasing number of areas. He supported all of the disastrous actions taken with regards to the FED, FDIC, Fannie Mae, Freddie Mac, etc. which were responsible for the housing bubble and the start of the economic collapse. He supported the trillion dollar FED bailout. And here were many shady public/private business dealings of a quasi-fascist nature. None of this qualifies as anything remotely approaching capitalism.

And now with Obama doing all of these things, only on an unimaginably larger scale, what is there to be proud of? For the life of me, I cannot understand how people get it in their mind that Bush represented capitalism and demonstrated its failure. Just like his father and Clinton, and Carter, before him, Bush was a weenie, inconsistent socialist who didn’t have the guts to go all the way with his policies. But the distance that he and his predecessors did travel has been a continual series of disasters. Now Obama, a proud socialist, stands defiantly in the open and works to fully implement everything that Bush only approached half-heartedly, and if left unchecked, is poised to plunge this country into a true disaster from which, ultimately, we might not be able to recover.

You are correct in saying that no president in the 20th century has promoted true capitalism and our constitutional rights. It is about time that we get one that actually understood these concepts and reigned in government, freeing people to once again rebuild our tattered economy and restore liberty to all.

You seem to be familiar with some of Rand’s works. If you understood anything that you read, then you must know that if she had lived to see it, Rand would have vilified Greenspan as a traitor for taking the job at the FED and would have classified his actions as some of the worst examples of government abuse. Greenspan was the Dr. Stadler in our current sorry cast of characters. Also, how do you account for the fact that the events in Atlas Shrugged, written over 50 years ago, are playing out almost verbatim, today? There must be some fundamental principles in operation that makes that kind of forecasting of the future possible!

As for me, I won’t be taking an opinion poll of my friends, whether employed or unemployed, to determine my conclusions on what is transpiring in the world today. I prefer to look at the facts and integrate them into a picture that can be comprehended and understood in terms of basic principles. And I find time and again that the trouble we find ourselves facing today is easily explained by government meddling in the economy – and not by some non-existent pipe-dream that we tried capitalism and that it was proven a failure.

Regards,

C. Jeffery Small

TRB: I respect your views and certainly your understanding of Rand’s ideology trumps mine, however, I disagree with your assertion that there was more regulation as opposed to less. I’d like to point out two key pieces of legislation and one non-enforcement of the Fed’s mandate that were proximate causes of the condition we currently find ourselves in. Ironically, all three of these items were high lobbied-for and sought after by he very banks that used them to commit fiscal suicide:

1. The Commodity Futures Modernization Act, pushed for by Enron, which exempted the trillions in CDS contracts that led to our $173 billion ransom payment to AIG and its counterparties

2. The repeal of Glass-Steagal, which led to the Too Big To Fail culture that ended up in the most expensive rescue effort in the history of business

3. The Fed’s apathy in terms of monitoring the banking system as well as the exemption for the Big 5 i-banks (Lehman, Bear, Merrill, Morgan & Goldman) which led to a game of leverage chicken, culminating with 40-to-1 debt to equity ratios and a speculative orgy.

All three of these rule changes (eases) would have been cheered on by the objectivists as being concrete steps toward the ultimate goal of the absolute freedom for markets.

I thought I held my own, although I am admittedly something of a dilettante in matters of philosophy.

Thanks for the debate, Jeffrey, you’re welcome back to add your own two cents below.

Read Also:

Interview With The Ghost Of Ayn Rand  (TRB)

What's been said:

Discussions found on the web
  1. MichaelM commented on Oct 08

    Joshua,

    Holding your own? I’ll contest that.

    In the radical capitalist politics of Ayn Rand, less regulation is merely a direction. It requires, in principle, that there be no regulations at all that would interfere with voluntary exchanges. And until that occurs, the dire consequences of intervention will remain endemic.

    Furthermore, that radical requirement rests on a more fundamental ethical principle: that volitional (and fallible) human beings whose basic means of life is action guided by reason require protection from the fallible choices of others by guaranteeing them autonomy in the application of their own reason to their own actions in the service of their own life.

    So while you are out there trying to guess the short term consequences of more or less regulation in the tangled web of violations of that principle in which we victims dwell, the Objectivists are way ahead of you, knowing that in the long run all interference in that autonomy by physical force or the threat thereof is immoral and therefore impractical from the get-go.

    Occasionally the likes of C. Jeffrey Small will be glad to explain how your package-deal definition of free market capitalism erroneously equates it with mixed economies and show you how an exclusive preference for freedom over force will produce the very consequences you desire but that unwittingly prevent whenever you opt for force (regulation by incompetent bureaucrats) over freedom (entrepreneurs unleashed ).

    After all, Objectivists wholly reject the theory vs. practice dichotomy, and debunking it is a favorite contact sport. The underlying argument, however, will always be that capitalism is not right because it is practical, but rather that it is practical because it is right.

    Prior to Rand, capitalism was recognized only as an economic system, and that continues today among those who, like you, only know of Rand from skimming through her novels or gorging on the hearsay of her critics. What Rand has provided, however, is a systematic and comprehensive ethical foundation for a capitalist political system that necessitates the capitalist economic system. You cannot attack Rand’s ethics-based radical capitalism by reference to the half-baked, partially free market economics of what you used to think capitalism was when no one knew better. Like a pre-Gallilean’s understanding of the sun and the earth, you are operating on a pre-Randian understanding of capitalism.

    Capitalism, the political system, defends individual rights by prohibiting the use of force by any individual or the government itself to interfere in any voluntary socio-economic interrelationship — a mandate I summarize to be:

    No person may initiate the use of physical force or the threat thereof to gain, withhold, or destroy any tangible or intangible value of another who either created it or acquired it in a voluntary exchange.

    Under a capitalist government there would be no regulatory agencies at all. There would be only private companies who would compete to be the most reliable certifiers of trustworthiness and transparency. There would be no government ransoms. There would be no such thing as “Too Big to Fail” and no bailouts if they did. There would be no Fed to artificially inflate or deflate any ratio of any kind. There would be no escape from caveat emptor — no escape from freedom.

    What relevance could your three examples from the quagmire of interwoven tyrannies possibly have to the structural integrity of Rand’s politics? If you had whined to her of such things, she would have simply replied, “you asked for it, brother!”

    The ghost of your satire was a Fata Morgana that emanated from your own false assumptions about her philosophy. Not unlike the cheap shot in your title. If you want to keep the Objectivist ideologues at bay, don’t wave the little flag that says, “I’m an idiot, come and get me.” Intellectual independence is a primary virtue of the Objectivist ethics. To the degree any overenthusiastic fan engages in actual cultish behavior, they self-disqualify ipso facto. So sticking the cult-word on Rand is the first clue that one is clueless.

    A good satirist has to do his homework first just like the rest of us.

    TRB: The system you argue for, which I suppose surpasses the one that Mr Small advocated in terms of its radicality (yes, i just invented that word, deal with it), is every bit as alien to the human psyche as that of communism. You haven’t “come and gotten me” in the least, although you’ve done a very job at fleshing out the objectivist POV.

    What you’ll never agree to is that human beings have always and will always subjugate each other, in life and especially in business. This has always been the case and always will be. The trick is in finding the balance.

    And don’t pretend that in the modern world that economic harm isn’t every bit of the threat that physical harm used to be.

    thx for sharing and joining the debate

  2. MichaelM commented on Oct 08

    Joshua,

    Holding your own? I’ll contest that.

    In the radical capitalist politics of Ayn Rand, less regulation is merely a direction. It requires, in principle, that there be no regulations at all that would interfere with voluntary exchanges. And until that occurs, the dire consequences of intervention will remain endemic.

    Furthermore, that radical requirement rests on a more fundamental ethical principle: that volitional (and fallible) human beings whose basic means of life is action guided by reason require protection from the fallible choices of others by guaranteeing them autonomy in the application of their own reason to their own actions in the service of their own life.

    So while you are out there trying to guess the short term consequences of more or less regulation in the tangled web of violations of that principle in which we victims dwell, the Objectivists are way ahead of you, knowing that in the long run all interference in that autonomy by physical force or the threat thereof is immoral and therefore impractical from the get-go.

    Occasionally the likes of C. Jeffrey Small will be glad to explain how your package-deal definition of free market capitalism erroneously equates it with mixed economies and show you how an exclusive preference for freedom over force will produce the very consequences you desire but that unwittingly prevent whenever you opt for force (regulation by incompetent bureaucrats) over freedom (entrepreneurs unleashed ).

    After all, Objectivists wholly reject the theory vs. practice dichotomy, and debunking it is a favorite contact sport. The underlying argument, however, will always be that capitalism is not right because it is practical, but rather that it is practical because it is right.

    Prior to Rand, capitalism was recognized only as an economic system, and that continues today among those who, like you, only know of Rand from skimming through her novels or gorging on the hearsay of her critics. What Rand has provided, however, is a systematic and comprehensive ethical foundation for a capitalist political system that necessitates the capitalist economic system. You cannot attack Rand’s ethics-based radical capitalism by reference to the half-baked, partially free market economics of what you used to think capitalism was when no one knew better. Like a pre-Gallilean’s understanding of the sun and the earth, you are operating on a pre-Randian understanding of capitalism.

    Capitalism, the political system, defends individual rights by prohibiting the use of force by any individual or the government itself to interfere in any voluntary socio-economic interrelationship — a mandate I summarize to be:

    No person may initiate the use of physical force or the threat thereof to gain, withhold, or destroy any tangible or intangible value of another who either created it or acquired it in a voluntary exchange.

    Under a capitalist government there would be no regulatory agencies at all. There would be only private companies who would compete to be the most reliable certifiers of trustworthiness and transparency. There would be no government ransoms. There would be no such thing as “Too Big to Fail” and no bailouts if they did. There would be no Fed to artificially inflate or deflate any ratio of any kind. There would be no escape from caveat emptor — no escape from freedom.

    What relevance could your three examples from the quagmire of interwoven tyrannies possibly have to the structural integrity of Rand’s politics? If you had whined to her of such things, she would have simply replied, “you asked for it, brother!”

    The ghost of your satire was a Fata Morgana that emanated from your own false assumptions about her philosophy. Not unlike the cheap shot in your title. If you want to keep the Objectivist ideologues at bay, don’t wave the little flag that says, “I’m an idiot, come and get me.” Intellectual independence is a primary virtue of the Objectivist ethics. To the degree any overenthusiastic fan engages in actual cultish behavior, they self-disqualify ipso facto. So sticking the cult-word on Rand is the first clue that one is clueless.

    A good satirist has to do his homework first just like the rest of us.

    TRB: The system you argue for, which I suppose surpasses the one that Mr Small advocated in terms of its radicality (yes, i just invented that word, deal with it), is every bit as alien to the human psyche as that of communism. You haven’t “come and gotten me” in the least, although you’ve done a very job at fleshing out the objectivist POV.

    What you’ll never agree to is that human beings have always and will always subjugate each other, in life and especially in business. This has always been the case and always will be. The trick is in finding the balance.

    And don’t pretend that in the modern world that economic harm isn’t every bit of the threat that physical harm used to be.

    thx for sharing and joining the debate

  3. Burke commented on Oct 09

    Capitalism is a system in which people are free to produce and trade without govt interference. The purpose of govt in Ayn Rand’s view is to outlaw the use of force as a way of people dealing with one another. It exists as a retaliatory force and acts only to protect individual rights. It protects us against domestic criminals and foreign threats.

    “Regulation,” *as the term is most commonly used today* is the use of force not in this manner. It is the govt INITIATING the use of force against those who are violating no one’s rights for supposed social purposes.

    Every alternative to capitalism is just some exploiting others with force.

    Socialism, for example, is a system in which the able and productive are forced to spend their lives in service to those who are not able and productive.

    As such, socialism is just another kind of slave society.

    Virtually all the supposed “horrors” commonly attributed to capitalism are really caused by departing from capitalism–the present financial and economic collapse being a perfect example, its primary cause not being “Wall Street greed,” but govt intervention in the economy by Freddy Mac, Fannie Mae, and the (govt created) Federal Reserve.

  4. Burke commented on Oct 09

    Capitalism is a system in which people are free to produce and trade without govt interference. The purpose of govt in Ayn Rand’s view is to outlaw the use of force as a way of people dealing with one another. It exists as a retaliatory force and acts only to protect individual rights. It protects us against domestic criminals and foreign threats.

    “Regulation,” *as the term is most commonly used today* is the use of force not in this manner. It is the govt INITIATING the use of force against those who are violating no one’s rights for supposed social purposes.

    Every alternative to capitalism is just some exploiting others with force.

    Socialism, for example, is a system in which the able and productive are forced to spend their lives in service to those who are not able and productive.

    As such, socialism is just another kind of slave society.

    Virtually all the supposed “horrors” commonly attributed to capitalism are really caused by departing from capitalism–the present financial and economic collapse being a perfect example, its primary cause not being “Wall Street greed,” but govt intervention in the economy by Freddy Mac, Fannie Mae, and the (govt created) Federal Reserve.

  5. MichaelM commented on Oct 09

    TRB

    When formulating a philosophy that is meant to define our nature, the nature of the rest of existence, and the relationship of the former to the latter, radical validity is the only goal worth pursuing. Hence, anything less than “radicality” is a cop out.

    If the nature of the human psyche is having the capacity of reason as the primary tool of survival, I fail to see how guaranteeing the freedom to use it could be alien to it.

    Contrary to your claim, I fully agree that human beings have always subjugated each other, and it is a pretty safe bet they will continue to in the future if allowed to. The trick is not in finding the balance. Sickness is equally inevitable, but who would instruct their oncologist to strike a balance between their cancerous tumor and a healthy life?

    The solution to the propensity to subjugate is to throw the entire weight of government against it — to cease to enable it or allow it. Radical capitalism is the first politics defined in the history of man that would have that as its sole purpose and task. One cannot object to it without implicitly advocating the coercion of their fellow human beings for their own purposes.

    The only harm of concern in the context of politics is harm to individual autonomy. No human being has any claim on any more than they can produce by applying their own reason to their own actions and gain from trading it with others. The efficiencies of specialized effort and trade in a society can produce enormous swings of benefit and harm, but to the extent they are due to the actions of others, they are gratuitous and irrelevant to the status of an individual’s autonomy.

    You cannot harm autonomy except by physical force. And physical force cannot be used without harming autonomy. And if you take sides with a gang of others (like a majority in any given populace) and advocate harming individual autonomy for any purpose whatsoever, you implicitly deny any right to your own. That’s a very bad trade, broker!

  6. MichaelM commented on Oct 09

    TRB

    When formulating a philosophy that is meant to define our nature, the nature of the rest of existence, and the relationship of the former to the latter, radical validity is the only goal worth pursuing. Hence, anything less than “radicality” is a cop out.

    If the nature of the human psyche is having the capacity of reason as the primary tool of survival, I fail to see how guaranteeing the freedom to use it could be alien to it.

    Contrary to your claim, I fully agree that human beings have always subjugated each other, and it is a pretty safe bet they will continue to in the future if allowed to. The trick is not in finding the balance. Sickness is equally inevitable, but who would instruct their oncologist to strike a balance between their cancerous tumor and a healthy life?

    The solution to the propensity to subjugate is to throw the entire weight of government against it — to cease to enable it or allow it. Radical capitalism is the first politics defined in the history of man that would have that as its sole purpose and task. One cannot object to it without implicitly advocating the coercion of their fellow human beings for their own purposes.

    The only harm of concern in the context of politics is harm to individual autonomy. No human being has any claim on any more than they can produce by applying their own reason to their own actions and gain from trading it with others. The efficiencies of specialized effort and trade in a society can produce enormous swings of benefit and harm, but to the extent they are due to the actions of others, they are gratuitous and irrelevant to the status of an individual’s autonomy.

    You cannot harm autonomy except by physical force. And physical force cannot be used without harming autonomy. And if you take sides with a gang of others (like a majority in any given populace) and advocate harming individual autonomy for any purpose whatsoever, you implicitly deny any right to your own. That’s a very bad trade, broker!

  7. Clint commented on Oct 09

    You are correct about the regulations that we taken off during the Bush years. They in themselves because damning to our economy because we had other mechanisms to “back up” the risk takers and the “elites” as you like to call them.

    The corporate welfare promoted for decades, the injection of tax payer money to prop up these “elites”, and the government use of law and the threat of force to take money from those who did no wrong (poor investments) and give it to those who drove us into the dirt are what she would rail against.

    I really think you are missing the point by only looking at the regulations that “prohibit” certain actions on the part of the “elite”. Rand would offer that the other side of the coin is when you have government policies that encourage risky behavior and lack or responsibility when you screw up!

    It is my assumption she would have said to get rid of the regulations, but no one gets a government handout and risky investments mean you lose your shirt and possibly go to jail (if fraudulent). Think about that in relation to the “elites”. Do you really think the “elites” would have risked it so much if the institution of government wasn’t there to fix them up with taxpayer money? I’m guessing they would have had a lot longer look at what type of loans (NINJA, Interest Only, and other Liar) they were giving out and to whom. What type of collateral was backing up CDOs and other “shady” investments (Government Freddy and Fanny is who)?

    So, yes, Bush sucked. He rolled back certain regulations that were protective for the government sponsored programs pushing more money to unfit borrowers. If you do have programs pushing money out to everyone, you’d better have regulation. If you take that regulation away, while you still have the government pushing more money into the system, of course you’re going to get smart/”elite” people who figure it out and jump all over it (there is not much risk to them since the .gov is backing it). When it fails, then the government is the one who insured the spending, so they pay the claim. But having a government pushing cheap money isn’t capitalism any more than regulation is!

  8. Clint commented on Oct 09

    You are correct about the regulations that we taken off during the Bush years. They in themselves because damning to our economy because we had other mechanisms to “back up” the risk takers and the “elites” as you like to call them.

    The corporate welfare promoted for decades, the injection of tax payer money to prop up these “elites”, and the government use of law and the threat of force to take money from those who did no wrong (poor investments) and give it to those who drove us into the dirt are what she would rail against.

    I really think you are missing the point by only looking at the regulations that “prohibit” certain actions on the part of the “elite”. Rand would offer that the other side of the coin is when you have government policies that encourage risky behavior and lack or responsibility when you screw up!

    It is my assumption she would have said to get rid of the regulations, but no one gets a government handout and risky investments mean you lose your shirt and possibly go to jail (if fraudulent). Think about that in relation to the “elites”. Do you really think the “elites” would have risked it so much if the institution of government wasn’t there to fix them up with taxpayer money? I’m guessing they would have had a lot longer look at what type of loans (NINJA, Interest Only, and other Liar) they were giving out and to whom. What type of collateral was backing up CDOs and other “shady” investments (Government Freddy and Fanny is who)?

    So, yes, Bush sucked. He rolled back certain regulations that were protective for the government sponsored programs pushing more money to unfit borrowers. If you do have programs pushing money out to everyone, you’d better have regulation. If you take that regulation away, while you still have the government pushing more money into the system, of course you’re going to get smart/”elite” people who figure it out and jump all over it (there is not much risk to them since the .gov is backing it). When it fails, then the government is the one who insured the spending, so they pay the claim. But having a government pushing cheap money isn’t capitalism any more than regulation is!

  9. Robert commented on Oct 11

    The Fed is a quasi-governmental institution. Fannie and Freddie are quasi-governmental institutions. When the government refuses to regulate itself that is a failure of the government not a failure of capitalism. The CRA was a government regulation of the banking industry; it in no way represented a “liberation” of the banking industry; it required that banks make more loans according to lower standards to people with bad credit ratings; it dictated those standards to the banks; that is regulation, not capitalism. Government backed loans offered to people who cannot afford to pay them back is a failure of government not capitalism; it is the government that could not back them yet sold a lie that the loans were secure. Government backed worthless securities sold as investments by Fannie and Freddie to an already over-regulated financial industry is a failure of government not capitalism; it was government that made people think the securities were good investments when they were worthless. The entire sub-prime crisis is a result of the idea of government re-distribution from the rich to the poor…it was a government-caused crisis. Re-distribution is the Marxist premise of to each according to his needs (the poor need homes) from each according to his abilities (investors in banks must pay). This is not a capitalist premise. The people who backed this entire fiasco from Frank, to Dodd, to Fannie and Freddie (whose Directors were Democrat operatives), to Obama and the Democrats in Congress who protected the scheme of sub-prime lending were not capitalists. They are the very people who are responsible for the crisis that now claim it is a failure of capitalism. They are all socialists. The sub-prime crisis is a failure of socialism, not a failure of capitalism.

  10. Robert commented on Oct 11

    The Fed is a quasi-governmental institution. Fannie and Freddie are quasi-governmental institutions. When the government refuses to regulate itself that is a failure of the government not a failure of capitalism. The CRA was a government regulation of the banking industry; it in no way represented a “liberation” of the banking industry; it required that banks make more loans according to lower standards to people with bad credit ratings; it dictated those standards to the banks; that is regulation, not capitalism. Government backed loans offered to people who cannot afford to pay them back is a failure of government not capitalism; it is the government that could not back them yet sold a lie that the loans were secure. Government backed worthless securities sold as investments by Fannie and Freddie to an already over-regulated financial industry is a failure of government not capitalism; it was government that made people think the securities were good investments when they were worthless. The entire sub-prime crisis is a result of the idea of government re-distribution from the rich to the poor…it was a government-caused crisis. Re-distribution is the Marxist premise of to each according to his needs (the poor need homes) from each according to his abilities (investors in banks must pay). This is not a capitalist premise. The people who backed this entire fiasco from Frank, to Dodd, to Fannie and Freddie (whose Directors were Democrat operatives), to Obama and the Democrats in Congress who protected the scheme of sub-prime lending were not capitalists. They are the very people who are responsible for the crisis that now claim it is a failure of capitalism. They are all socialists. The sub-prime crisis is a failure of socialism, not a failure of capitalism.

  11. MichaelM commented on Oct 11

    Thanks Robert. I have read hundreds of comments this year explaining the fallacies and lies relied on in blaming the crisis on capitalism, but none so comprehensive and efficient as yours.

  12. MichaelM commented on Oct 11

    Thanks Robert. I have read hundreds of comments this year explaining the fallacies and lies relied on in blaming the crisis on capitalism, but none so comprehensive and efficient as yours.