So what's an Objectivist? This is from The Fall of a Free Market Prophet by Larry Beinhart [*]:
An Objectivist is a follower of Ayn Rand. [Ayn Rand's real name was Alissa Rosenbaum.] She was a writer. Her most famous book is a novel, Atlas Shrugged. In it, the capitalist entrepreneurs go on strike against the collectivist shlubs -- government, the unions, and the working class in general -- all of whom leach off of the great men, and the world collapses.So Alan Greenspan at one time believed in full, pure, uncontrolled, unregulated laissez-faire capitalism.
The capitalist leaders go off to the wilderness to form their own little utopia, where they build railroads that run on time and airlines that never crash, and have hot, gorgeous, young, college educated heiresses desperate to bed them. They are also very fit and hunky -- the entrepreneurs, that is, -- who are all male.
It's sort of a post-Nietzsche vision of supermensches. In it the only route to virtue is "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."
She established a group. She was the leader, was surrounded by acolytes and devotees. Alan was among them.
His mind was full of Objectivist ideas. A belief that humans were rational. That self-interest would guide unregulated capitalists to do only sane and sensible things. Not every capitalist all the time, but enough of them often enough, that a capitalist system would be inherently beneficent and operate for the good of all.Alan had faith. Capitalists were rational people who would only do sane and sensible things. I mean, that's what Objectivists believe, and he was in Ayn Rand's inner core group. He read drafts of "Atlas Shrugged before it was published.
Free market capitalism -- as a faith -- really is an inverse of Marxism. It is a theology that believes their system will bring paradise on earth and moral perfection. When their system is in power in the real world, their true believers claim that any problem only happened because their ideology has not been applied with sufficient purity.
In 1987, Ronald Reagan appointed him as Chairman of the Federal Reserve.Objectivism. Lassaize Faire free market philosophy. Libertarianism. All prescribe the same thing. Keep the government out of the private markets because the believers of each of those sets of ideas believe that the problems with the private markets is government interference.
He stayed on through Bush I and Bill Clinton.
Then along came George W. Bush.
He was one of those gentiles. The kind who would take a Jewish idea, whether it was Christianity or free market economics, and ride its ideology as far as circumstances would allow, unaware that he'd left its humanistic heart behind.
With nobody to restrain him, Greenspan put his full faith in the markets. He kept interest rates low. Which pumped money into the credit markets. He resisted regulations. When he was warned that real estate was blowing a big, big bubble, he refused to act.
Why?
Because he believed in the inherent virtue of markets.
So there he was, being quizzed by one of the heroes of the House of Representatives, Henry Waxman.
First, Greenspan said, in a prepared statement, "Those of us who have looked to the self-interest of lending institutions to protect shareholder's equity (myself especially) are in a state of shocked disbelief."
Well, yes. One of the fundamentals of conservative, free market, laissez-faire, Objectivist economics is that business people will act sanely and sensibly, thereby protecting people who trust in them. That's a theological belief. Now, watching the bubble burst, Greenspan was doing a remarkable thing, and he does deserve some credit for it. He was acknowledging reality!
Then he said, "I made a mistake in presuming they were best capable of protecting their own shareholders." Which means they need to be regulated. By someone else. By government.
"In other words, you found that your view of the world, your ideology, was not right, it was not working," Waxman said. Meaning this notion that individual greed would, as if "guided by an invisible hand," lead to the greatest social good.
"Absolutely, precisely," Greenspan replied.
The acolyte of Alissa Rosenbaum, the apostle of Adam Smith, the enabler of George W. Bush, had acknowledged that their god -- the free market -- had failed.
Greenspan now appears to understand. Pure, unregulated Objectivism or Lassaize Faire free market philosophy or Libertarianism DO NOT WORK! They are quite as bad as an totally state-controlled economy that is entirely centrally controlled by the government, as the USSR and China have proven! One collapses every so often and takes years to recover. The other simply does not grow or innovate. Both outcomes are unacceptable for a modern industrial economy. Both require that government refuse to measure what the economy is doing or to prevent such measurements from being released to the public.
A mixed economy with minimal careful regulation based on good financial reporting and government inquiries that identify unfair market practices and externalities that destroy the environment or poison society is superior to both faith-based forms of economics.
Besides Alan Greenspan, current politicians who suffer from the Libertarian failed philosophy are Ron Paul, Grover Norquist, ex-Senator Phil Gramm, and Ex-house Majority Leader Dick Armey.
[*] Author of "Wag the Dog."
5 comments:
Greenspan toyed with Objectivism at a time when few others existed who would give his then monetary ideas refuge and support. There is no evidence that he ever adopted or lived by the rest of the philosophy. By the time he took on the Fed position he had obviously concocted some re-arrangement of Rand's principles that would accommodate that blatant contradiction. Nothing he did there is in any way consistent with capitalism.
Laissez-faire capitalism does not allow the naive and opportunistic like Greenspan and Dodd and Frank anywhere near the economy. Linking Bush to Objectivism is the crowning testament to this writer's self-nurtured ignorance of that philosophy and its politics.
Rand's capitalism does not sustain a coercive monopoly over legal tender. Divorced from economics, her capitalist government cannot be lobbied, because it has no favors to give out to anyone. It cannot subsidize bad banking procedures and then bail them out when they fail.
You cannot blame a philosophy for the failure of its opponents. You cannot blame capitalism when the corruption of it you favor fails to deliver. Ultimately, reality rules and will reliably condemn all such contradictions.
Rand went to great lengths to condemn mixing government with economics and predicted repeatedly the very downfall now becoming reality. The frenzy among "progressives" and the socialist to use Greenspan's personal debacle against laissez-faire is nothing more than panic induced by witnessing Objectivism's relentless progress among the new intellectuals and their fear of a consequent rise in its influence.
Rand's strange idea that there is some class of men who are entrepreneurial wizards who are somehow prevented from performing their magic by the normal human functions of social interaction is simply not connected to reality. That alone is sufficient to totally discredit the Hollywood writer's "Objectivism."
The reality-based concept of Bounded Rationality shows why both Objectivism and pure laissez-faire capitalism are unworkable. Economic decisions are made by individuals who have limited thinking power and who gather new information slowly and at great cost. Individual entrepreneurs are rarely better than most other individuals, and generally not reliably so. An individual who can successfully lead others to deal with one social problem will frequently fail when faced with a different problem because every individual comes with a limited skill set.
There are no supermen in the Randian mold. To think that there are is to believe in magic. But magical thinking is a consistent feature of all the various Libertarian ideologies.
Then, when the ideology fails, the ideologues blame the failure on the individual rather than the ideology. That is a consistent pattern among Libertarians, Objectivists, Communists, and movement conservatives. It is also consistently wrong, since all those ideologies are failures.
I will agree that Greenspan was a dilettante. That is why he never completed his Ph.D. in economics. (He was later awarded an unearned Ph.D.) His belief that markets could be allowed to function without oversight and appropriate regulation is pure Randianism, and his admission that his ideology was not based in reality is another nail appropriately driven into the coffin of the various unworkable Libertarian ideologies.
As for Greenspan being a monetarist, you seem quite unaware that he was and currently remains a Gold bug who believes the economy should return to the Gold standard. As he is recently quoted as saying, he and Ron Paul are probably the two remaining Gold Bugs in Washington.
Richard
"Rand's strange idea that there is some class of men who are entrepreneurial wizards who are somehow prevented from performing their magic by the normal human functions of social interaction is simply not connected to reality"
Exactly the reverse is true. Rand's politics is premised on the human rational capacity which is his means to guide one's life's choices toward the number one goal: to survive and flourish as a human being. It is also premised on the human capacity of volition, a corollary of which is being fallible. It is the fact that no human is a wizard at anything that demands the political principle that no fallible person should be given control over any other person's choices so long as the other person reciprocates. The one single moral and just mandate is that each and every human being shall have autonomy over his choices of the actions of his own mind and body, and sole discretion over the disposition of the product of same.
Thus there are in principle only two political alternatives to managing the choices of men: freedom and force. Rand's choice is unequivocal and the resulting politics can be defined by one principle:
No person may initiate the use of physical force to gain, withhold, or destroy any value created by or acquired in a voluntary exchange by another person.
Since the freedom to be a fallible wizard is the freedom to be a fallible failure, your characterization of her belief in the infallibility of her heroes is merely a concoction to suit your own purposes and there is no way you could ever make that accusation stick with citations. Raising one who can achieve and does achieve to the status of hero does not imply infallibility, nor does it preclude the possibility of failure.
And since it is she who champions freedom, to oppose her, you are left with no choice but to advocate coercion, as you do dressed in the euphemism, "normal human functions of social interaction" which means in real life, the majority gang rules at the point of the government's gun. And your worst contradiction is that you have alloted "social interaction" the same infallibility you falsely accused Rand of dishing out to the entrepreneurs.
As for the practicality of freedom over force, you need to grasp that post-Rand, it is more widely than ever understood that politics is a branch of philosophy. Political principles are derived from and rest on the principles of the more fundamental branch, ethics. No one who understands that will take whatever politics you advocate seriously unless you can ground it in a viable ethics. And if you can ground a politics in a valid ethic, no one may accuse it of being impractical. A moral politics is inherently practical. All others are impractical from the get-go, because they are by definition, immoral.
So if you want to dislodge the Objectivists and their radical brand of capitalism from their growing presence in the culture, you better bone up on the Ojectivist ethics and undermine it first, because the moral idea that all men have a right to their autonomy and laissez-faire capitalism are joined at the hip.
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Re: Bounded rationality, on a quick scan of the Wicki article, it appears to be an application of the principle Rand supports that all knowledge is contextual - that the conclusions that qualify as knowledge are restricted to that which is directly or indirectly perceivable i.e., knowable.
I don't live in the fantasy world that Rand dreamed up. Her discussion of "value" simply has no connection to reality, as anyone who bought a home in Florida, California or Nevada in the last decade can tell you. "Value?" Do you have any clue what "value" is? It is a creation of markets, but what happens when either the buyer or seller has some form of power over the other? And how is it measured? What happens when the currency is not stable? Do you have any clue how many ways just those few point permit the manipulation of so-called value? I doubt it.
One thing is for sure, though. Value is more of a social concept than an individual one.
Nor do I live in a world in which the individual impulse always trumps the needs of society. I also live in a world in which the rights, privileges and responsibilities of property ownership are created by society rather than some third-rate Hollywood screenwriter. History, tradition, and yes, politics, are a great deal more important in determining what anyone "owns" and what that uses that "ownership" both permits and restricts the "owner" of a given defined piece of property.
I live in a real world and a social world that both impact me, and they are not based on some fantasy principles. Instead, with careful observation I can sometimes draw conclusions about effective principles which give me some limited guidance as to how to live with reality and society.
I live in reality, not some fantasy dreamed up by a Hollywood screen writer.
The effort required to explain to a Randian true-believer why his "philosophy" is not even useful as myth is not worth my time. If you want to understand a useful set of social principles that generally but don't always work, I suggest that you go study the English and American Common Law to see what principles have been extracts from a millennium of study of social conflict and how those principles can be applied to create a stable government and society in which it is possible to work and raise a family.
If you really want to live in an Objectivist-Libertarian society, I suggest that you move to Somalia. No government. You can put your principles to work immediately - and right now the only jobs available are as members of a militia or as pirates because there is no government that enforces its laws. And if you think that any government can exist without occasionally initiating force, then you are wacked out beyond belief. The problem with government is to restrict the occasions and forms of force it is allowed to use and to keep it under tight control.
In civilized nations we give government a monopoly on the use of force, and then limit the force it can use. Without that process there is no government, and without government there is no civilization (see Somalia.)
Greenspan was appointed Fed Chairman to replace Paul Volker because Greenspan was a Objectivist believer in non-regulation of the financial sector. The current economic crisis is a direct result of the failure of deregulation to provide a stable economy and financial sector. That will always happen when banks are deregulated.
Objectivism - Libertarianism is a crock.
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