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."
