Atlas Shrugged, Closing Thoughts
We’re almost to the end of our epic journey through Atlas Shrugged. I’ve reviewed the whole book and all three movies, pointing out the logical holes and untenable assumptions as they were spotlighted in each scene. In this post and a few more to follow, I want to step back and look at Rand’s philosophy as a whole. We’ll see some broader themes that deserve more attention.
One of the cornerstones of Objectivism is that laissez-faire capitalism is the only polity that gives people an incentive to be honest or moral. Ayn Rand insists that being selfish and valuing money makes you an honest and moral person, and the more you love money, the more honest and moral you’ll be. To justify this, she argues that in capitalism, the only way to prosper is mutually beneficial trade, whereas socialism and communism reward people who forcibly seize others’ wealth.
But Rand failed to grapple with – indeed, she carefully avoided – the ways that free markets fail. There are problems that money can’t solve, and ways in which profit motives encourage people to act immorally and destructively.
One of these is the tragedy of the commons, also called the prisoner’s dilemma. It’s any situation where the individual rewards of the selfish choice are greater than the rewards for working together; yet, if each person makes the selfish choice, it ensures a worse outcome for everyone than if they had all agreed to work together.
Pollution is a classic commons problem. It’s an example of an externality, a cost of doing business that the owner can push onto society at large instead of paying for it out of their own profits. The usual libertarian answer is privatization: chop the commons up into pieces and sell them off, so that each owner will be properly motivated to care for his or her own private plot. But this doesn’t always work, especially when it comes to natural phenomena that don’t respect our artificial property boundaries.
You can’t privatize the air, but pollution emitted from a smokestack blankets cities in choking smog for miles around. In fast-growing countries like China and India, millions of people die each year from heart and lung damage caused by inhaling particulates.
Lead pollution from gasoline and paint poisoned generations of children, leading to lowered IQs, increased crime and diminished impulse control. Sewage or fertilizer discharged into a river creates toxic algae blooms and dead zones hundreds of miles away. Farmers who feed antibiotics to their animals to make them grow faster also increase the risk of deadly pandemics that are resistant to the drugs formerly used to treat them.
But the ultimate commons problem is global climate change. All carbon molecules are identical, no matter where they come from. Every coal plant or cement factory in the world contributes equally to rising seas, coast-smashing hurricanes, and deadly droughts and heat waves, even on the other side of the planet.
Rand deals with this problem by evading it. She writes her capitalist utopia to be a cornucopian paradise where natural resources are inexhaustible. No matter how many trees you chop down or fish you catch in Galt’s Gulch, there are – apparently – always more for the taking. The land remains perpetually pristine despite the protagonists who work in mining, smelting, oil drilling and other heavy industry. We’re left to assume that the waste products of their work just conveniently vanish.
The ultimate expression of this is John Galt’s magic motor, which produces infinite energy with zero pollution. It’s a perfect illustration of how, in Rand’s tunnel vision, all new technology is an unalloyed benefit with no downsides or side effects we need to be concerned about. (Similarly, modern-day Objectivists deal with climate change mostly by retreating into denialism and rejecting the overwhelming consensus of scientists. This is an ironic example of what Objectivism calls “evasion”, the willful refusal to acknowledge hard truths.)
It’s not that Rand had no notion of what a commons problem was. She knew perfectly well that they’re the reason communism doesn’t work. But in her selective blindness, she failed to see how those same problems plagued her preferred model of society.
You can clearly see Rand’s inability to solve this problem in her view of the state. She conceded that even an ideal society would need a government to enforce laws and contracts. But when asked how that would be funded, all she could offer was vague handwaving about people “voluntarily” paying for it. This is an arrangement that would suffer from the same collective-action paradox she denounced so fiercely.
Another kind of market failure occurs when greedy owners cut corners on safety, increasing their profits at the cost of workers’ health and lives. We’ve seen this at the root of countless disasters and tragedies, from the Triangle Shirtwaist factory fire to the Rana Plaza collapse, from farmworkers doused with toxic pesticide to coal miners killed in explosions and cave-ins.
Again, Rand’s answer to this is to ignore all of it. She insists, with a perverse historical inversion, that regulation makes work more dangerous. She asserts that everything will be fine as long as business owners are allowed to do whatever they want, even if what they want is to run a train at high speed through densely populated towns on rails made of an untested new metal.
Last but not least, there’s the problem of dishonesty in the market. Rand seems unable to conceive of people who get rich through fraud or deception. In her view, government coercion is the only evil there is. And yet again, this stance requires her to keep her eyes firmly shut to obvious facts.
The history of lies and deceit in capitalism would fill a stack of encyclopedias. It ranges from shiny-suited snake-oil pitchmen like Kevin Trudeau, to sophisticated con artists like Bernie Madoff, who spent years cultivating an impeccable reputation while running history’s largest Ponzi scheme.
And fraud is always at its height when markets are booming and profits are surging – the very conditions, according to Ayn Rand, that ought to be best for honesty and ethics. In reality, ethics are usually the first thing cast aside in the scramble to get rich. Again, we see this best in rapidly developing countries like China, which has been horrified by one adulterated-food scandal after another: milk tainted with toxic melamine; cadmium rice; glow-in-the-dark pork; even exploding watermelons.
This is nothing new, of course. Before regulation and inspection, the food industry in the U.S. was just as much a house of horrors. Upton Sinclair wrote about it in The Jungle:
There was never the least attention paid to what was cut up for sausage; there would come all the way back from Europe old sausage that had been rejected, and that was moldy and white โ it would be dosed with borax and glycerine, and dumped into the hoppers, and made over again for home consumption. There would be meat that had tumbled out on the floor, in the dirt and sawdust, where the workers had tramped and spit uncounted billions of consumption germs. There would be meat stored in great piles in rooms; and the water from leaky roofs would drip over it, and thousands of rats would race about on it. It was too dark in these storage places to see well, but a man could run his hand over these piles of meat and sweep off handfuls of the dried dung of rats. These rats were nuisances, and the packers would put poisoned bread out for them; they would die, and then rats, bread, and meat would go into the hoppers together. This is no fairy story and no joke; the meat would be shoveled into carts, and the man who did the shoveling would not trouble to lift out a rat even when he saw one โ there were things that went into the sausage in comparison with which a poisoned rat was a tidbit.
This book was written in 1906, so Rand couldn’t have been unaware of it. Again, none of these problems are idle speculation. They’re all things that have been observed to happen when an economy is left to itself, free of inspection or regulation.
As Sinclair’s example shows, unethical behavior is rarely just a problem of a few isolated con artists. When profits are at stake, it can become normalized and pervasive in a large company, or even an entire industry. Some colossal fraud schemes have grown this way: I mentioned the Libor-fixing scandal, where banks colluded to rig benchmark borrowing rates for their own advantage. Another huge corporate fraud that’s since unfolded is the Volkswagen “defeat device” story, where the German carmaker admitted it had specially designed its cars to cheat emissions tests. Under testing in the lab, they performed as promised; on the roads, they spewed more pollution than the law allowed. Eleven million cars sold worldwide over a period of six years were rigged in this way.
But the best example of all, ironically, comes from Ayn Rand’s most famous disciple: Alan Greenspan. He was a personal friend of Rand’s and a member of her inner circle, and he wrote that her philosophy influenced his life. That’s putting it mildly, since in 1963 he wrote an essay for her newsletter, a diatribe against regulation – all regulation, even building codes and food-safety laws – which said, “it is precisely the ‘greed’ of the businessman or, more appropriately, his profit-seeking, which is the unexcelled protector of the consumer.”
When he became chairman of the Federal Reserve, Greenspan put this view into practice, fighting attempts to regulate derivatives – essentially, complex bets about whether other financial instruments would rise or fall. Of course, we know how this turned out: in 2008, we had a once-in-a-generation financial crisis and market crash, caused by banks who handed out risky mortgages to unqualified borrowers with wild abandon. And those derivatives, in the form of credit default swaps and collateralized debt obligations, were a major ingredient in spreading contagion and panic when the bubble burst.
Greenspan’s ideology left him totally stunned and unable to account for this, as he admitted in congressional testimony:
“Those of us who have looked to the self-interest of lending institutions to protect shareholders’ equity, myself included, are in a state of shocked disbelief,” he told the House Committee on Oversight and Government Reform.
Greenspan’s contrition is the last and most dramatic illustration of how Ayn Rand’s philosophy foundered when confronting the realities of human behavior. People aren’t the perfectly rational, perfectly ethical automatons that Objectivism envisions, no matter what political system they’re living under. There will always be some who work hard and tell the truth; there will always be others who lie, cheat, cut corners, and let others pay the price; and most people will embody both characteristics at different times. A mature political theory would acknowledge this and work to build safeguards against the dark side of human nature, rather than insisting on a simplistic vision and stubbornly blinding itself to contrary evidence.
Other posts in this series: