Tag Archives: economic philosophy

Session #10: June 24th, 2009

Atlas Shrugged
Image by Rodrigo Paoletti via Flickr

In today’s session, we finished reading two extracts from Ayn Rand‘s 1957 novel Atlas Shrugged.

We continued discussion some of the issues Ayn Rand raises in that book: capitalism, free trade, individualism, the axiom of non-aggression, etc.

We read a few extracts from Rand’s 1974 address to the graduating students at West Point, “Philosophy: Who Needs It?” We also read a quote from John Maynard Keynes about the importance of philosophers in general and of economists in particular to influence the thinking of the ordinary citizen.

The next session (July 1st, 2009) will be about irony.

A criticism that is often made of Rand’s political philosophy, is that she championed the businessmen and industrialists, yet they are the ones (it is said) who created the present financial crisis. Some people assume this means Rand’s entire philosophy is therefore completely ridiculous and without merit.

Ayn Rand rarely gave credit to other philosophers or thinkers except Aristotle. However, she did inherit many ideas about libertarianism and free-market economics from other thinkers. Here is one, Gabriel Kolko, who writes about a flaw in Ayn Rand’s thinking:

“the lords of Big Business, far from being martyrs to the cause of free market capitalism and “America’s Most Persecuted Minority,” as Ayn Rand had put it, were actually the most powerful and implacable enemies of laissez-faire. The corporate giants  had not only favored the Progressive era regulations [e.g. the New Deal], but had also originated them in an effort to cartelize the markets. Instead of a “persecuted minority,” the coporate giants were, in large part, a state-privileged elite. Far from championing free markets in principle or in practice, corporate barons had ruthlessly used the blunt instrument of government to erect barriers to market entry and bludgeon their competitors into submission.”

(from  “An Enemy of the State” by Justin Raimondo, Prometheus Books, Amherst NY, 2000 (page  138-9), quoting Gabriel Kolko, “The Triumph of Conservatism” (Glencoe, Ill.: The Free Press, 1963).

So comedian  Stephen Colbert is hardly the first to point out this flaw in Rand’s world view.

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Capitalism and philosophy

Sean Gabb by the Baltic
Image via Wikipedia

In the last session, someone asked “what is capitalism?” and said that there are many different kinds of capitalism, e.g. “Japanese capitalism”.

First, it is important to be clear about the meanings and definitions. The kind of economy in Britain, the United States, and Japan, is not pure capitalism because it includes a great deal of government control and regulation. Such an economy should correctly be called “a mixed economy“. “Japanese capitalism”,  therefore, should more correctly be called “Japanese mixed economy”, i.e. a mixture of capitalism and statism or socialism.

Secondly, is America a truly capitalist country? Here is a quote from a financial newsletter “The Daily Reckoning” June 3 2009 “The Eye of the Economic Storm”.

Americans are not necessarily in favour of socialism… But the country has clearly moved towards more government intervention in the economy. In 1986, 40% of Americans thought government regulated the economy too much. Now, 40% think it doesn’t regulate enough. And get this… The Economist reports the results of a worldwide poll. When asked if “people [were] better off under free markets,” 75% of Indians say ‘yes’ and so did about 72% of Chinese. But put the question to Americans and only about 69% think so. Even Italians are more in favor of free enterprise than Americans. Go figure.

Another comment, this time from a British libertarian, Sean Gabb:

big business capitalism we see around us is not the same as a free market”

Finally, another comment from a free-market financial commentator, Bill Jenkins, writing in the Daily Reckoning of May 28th, 2009: To Hell in a Bond Basket:

In a larger sense, the US is at war with capitalism…and with nature herself. Markets have natural rhythms. They go from boom to bust…from inflation to deflation…from expansion to contraction naturally. Trying to stop the bust is futile. It is a fight against Fate…a losing proposition. And it is diabolically unnatural. You have to take the bad with the good in life.

and

“The idea is ‘to make holding money less attractive’ so people will spend it.”

In other words, this is not free-market capitalism: the Federal reserve holds interest rates artificially low to “force” people to spend instead of to save. But where does capital come from? From savings. If people are discouraged from saving, where will capitalism’s capital come from?

Writes Bill Jenkins,

“What we need is to be left alone. The market has been, and remains, the most efficient system for regulating itself. Is it perfect? Not in a moral or theological sense.  Not even in a fairness sense. The market will make some men rich while impoverishing others. Many people do not consider that ” fair”. But it doesn’t matter. The market does what it does because it is the most efficient way of doing things. .. The ironic thing is, bubbles are created by regulation.”

Here is what Ayn Rand wrote about capitalism:

Capitalism is a social system based on the recognition of individual rights, including property rights, in which all property is privately owned.

When I say “capitalism,” I mean a full, pure, uncontrolled, unregulated laissez-faire capitalism—with a separation of state and economics, in the same way and for the same reasons as the separation of state and church.

We must understand the meanings of the words we use. Then, we must look around at the world around us, and see clearly through our own eyes, not through the eyes of the media, or what we read in the newspapers, or what the politicians tell us.

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