This is the third in a series of diaries regarding the weaknesses of Objectivism and the Tea Party's goals for the country. The Tea Party supposedly approves Ayn Rand's philosophy of objectivism. In the previous two diaries I analyzed Rand's views on Individual Rights and on Government. This diary will present some of what she wrote about Capitalism. The quotes are from aynrandlexicon.com.
I agreed with much of what Ayn Rand wrote about individualism and government. That was not the case when it came to Capitalism, however.
Let's start with Rand's definition.
Capitalism is a social system based on the recognition of individual rights, including property rights, in which all property is privately owned.
I am not sure why she calls it a "social" system as opposed to an economic system.
Ayn Rand believed the economy and government should be separated.
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.
Webster defined laissez-faire as "the policy of letting the owners of industry and business fix the rules of competition, the conditions of labor, etc.as they please, without government regulation or control."
Rand relates Capitalism to individual rights as well as to "rationality".
Capitalism demands the best of every man—his rationality—and rewards him accordingly. It leaves every man free to choose the work he likes, to specialize in it, to trade his product for the products of others, and to go as far on the road of achievement as his ability and ambition will carry him. His success depends on the objective value of his work and on the rationality of those who recognize that value. When men are free to trade, with reason and reality as their only arbiter, when no man may use physical force to extort the consent of another, it is the best product and the best judgment that win in every field of human endeavor, and raise the standard of living—and of thought—ever higher for all those who take part in mankind’s productive activity.
Of the origin of capitalism, Rand wrote
The nineteenth century was the ultimate product and expression of the intellectual trend of the Renaissance and the Age of Reason, which means: of a predominantly Aristotelian philosophy. And, for the first time in history, it created a new economic system, the necessary corollary of political freedom, a system of free trade on a free market: capitalism.
No, it was not a full, perfect, unregulated, totally laissez-faire capitalism—as it should have been. Various degrees of government interference and control still remained, even in America—and this is what led to the eventual destruction of capitalism.
So, on one hand, Rand touts laizze-faire capitalism as the best possible economic system even though she seems to be saying that it never existed in a full and perfect way. But how can something that never existed experience "eventual destruction"?
Rand also wrote
If a detailed, factual study were made of all those instances in the history of American industry which have been used by the statists as an indictment of free enterprise and as an argument in favor of a government-controlled economy, it would be found that the actions blamed on businessmen were caused, necessitated, and made possible only by government intervention in business. The evils, popularly ascribed to big industrialists, were not the result of an unregulated industry, but of government power over industry. The villain in the picture was not the businessman, but the legislator, not free enterprise, but government controls.
Theoretically, under a capitalistic system devoid of government "interference", everyone would produce what they needed to survive physically and everyone would live happy and fulfilling lives without threatening each other's individual human rights. Ayn Rand might admit that such a society would have to consist of individuals who are rational thinkers.
What is "rational" thinking? The following quote explains what it is not:
Thinking is man’s only basic virtue, from which all the others proceed. And his basic vice, the source of all his evils, is that nameless act which all of you practice, but struggle never to admit: the act of blanking out, the willful suspension of one’s consciousness, the refusal to think—not blindness, but the refusal to see; not ignorance, but the refusal to know. It is the act of unfocusing your mind and inducing an inner fog to escape the responsibility of judgment—on the unstated premise that a thing will not exist if only you refuse to identify it, that A will not be A so long as you do not pronounce the verdict “It is".
This quote describes perfectly, in my opinion, the Tea party's seeming denial of the growing economic inequality in this country; their denial that less fortunate Americans do not have the ability to realize their right to life, liberty and the pursuit of happiness; and their faith in a laissez-faire economic system.
From the above quote it seems logical to conclude that a pure laissez-faire system cannot exist until people become truly rational thinkers. Since the Tea Party wants to create a laissez-faire economic system in this country, I think it is fair to ask how they are going to teach Americans to be rational thinkers. I suspect there is no plan.
Rand says of the effects of the fledgling capitalism of the nineteenth century,
Never mind the low wages and the harsh living conditions of the early years of capitalism. They were all that the national economies of the time could afford. Capitalism did not create poverty—it inherited it.
The captains of industry "of the time" lived like wealthy European aristocracy. An economy that produces that much profit, can, in fact, afford to pay its workers higher wages and create better working conditions.
Rand claims that
Capitalism has created the highest standard of living ever known on earth. The evidence is incontrovertible. The contrast between West and East Berlin is the latest demonstration, like a laboratory experiment for all to see. Yet those who are loudest in proclaiming their desire to eliminate poverty are loudest in denouncing capitalism. Man’s well-being is not their goal.
The "highest standard of living" for whom? For the 1.5 million American households existing on an income of less than $2.00 per day before government benefits? Or is Rand speaking of the 1,556,000 American earners with an income exceeding $394,000? Or is it the top .5% of earners with an annual income of $611,000 and up. Then again, the top .1% have an even higher standard of living at a minimum $1,900,000 annually. But the .01% have the highest standard of all at $10,200,000 and up.
Many people were poor before capitalism. Yes, the income of a portion of the impoverished masses were improved because of the industrial revolution. Extreme poverty was the reality for a number of families before the beginning of the industrial period just as it is today. In Rand's view, the greed of the robber barons should have been allowed to persist without government interference. How that would have resulted in eradicating poverty, I can't imagine.
Rand wrote
Capitalism has been called a system of greed—yet it is the system that raised the standard of living of its poorest citizens to heights no collectivist system has ever begun to equal, and no tribal gang can conceive of. Capitalism has been called nationalistic—yet it is the only system that banished ethnicity, and made it possible, in the United States, for men of various, formerly antagonistic nationalities to live together in peace.
Could it be she never heard of the KKK or Jim Crow laws? And how about how badly each new wave of immigrants were treated by those already "Americanized"?
Maybe she was thinking about "rags to riches" stories when she wrote about the poorest citizens' standard of living being raised to the heights. But there were such stories before the capitalist era as well as such instances in collectivist systems. Capitalism can not take credit for all instances of rags to riches.
More people dream about attaining great riches than those who actually experience it. Unless one wins a mega-lottery drawing, chances are a poor person will not become dazzlingly rich in this society, unless there are certain factors in play. Some of these factors may include a personality that won't impede one's success; a well-developed skill or talent; a number of competent, trustworthy, influential people willing to support one; a great hunger/desire/ambition leading to persistence; and a good networking system that results in meeting the right people at the right times. In some cases, an unscrupulous willingness to do whatever is necessary to advance oneself might also be helpful. Even with all that going for one, there is no guarantee of riches.
Today we have a growing gulf in this country between the haves and the have-nots. The super-rich have the power to create jobs and to eliminate jobs. There are a lot of people in need of jobs and there is plenty of money to pay them to work. The super-rich and the large corporations have more than enough wealth to create jobs. Why don't they? Because they don't like the black President for whom they did not vote? Because they are protesting government regulations designed to preserve the Common Good? Or is it just because of old-fashioned human greed? Human nature hasn't changed. The people with the most money were greedy in the nineteenth century and they are greedy today - greedy for wealth and power.
Rand believes in contractual relationships.
If the good, the virtuous, the morally ideal is suffering and self-sacrifice—then, by that standard, capitalism had to be damned as evil. Capitalism does not tell men to suffer, but to pursue enjoyment and achievement, here, on earth—capitalism does not tell men to serve and sacrifice, but to produce and profit—capitalism does not preach passivity, humility, resignation, but independence, self-confidence, self-reliance—and, above all, capitalism does not permit anyone to expect or demand, to give or to take the unearned. In all human relationships—private or public, spiritual or material, social or political or economic or moral—capitalism requires that men be guided by a principle which is the antithesis of altruism: the principle of justice.
Is a fair contract more likely to be made with a just person or a greedy person? Rand asserts that the worker is free to work for an employer or not, free to quit his job or not. That may work well for skilled and professional workers. But what about millions of unskilled workers? Their only choice may be to work for the greedy boss or be unemployed. This situation raises two questions. (1)How can one call that justice? (2) Is that an endorsement for laisse-faire capitalism? Rand and the Tea Party would say each and every unskilled worker has the power to better themselves. I seriously doubt that there are enough skilled and professional positions available to employ millions of unskilled workers if they all decided to better themselves at the same time. Whenever there is a surplus of available labor, the unfairly treated worker is still free to quit. In a market with surplus labor, skilled or unskilled, a worker may have to choose between unsatisfactory working conditions and joblessness. And who would do the work the formerly unskilled millions were doing before bettering themselves? Would we import millions of foreign people like they do in Saudi Arabia, people who don't mind working for next to nothing? Then again, we already do that. Migrant farm workers.
Laisse-faire capitalism would not have been a system that would be fair to everyone in the nineteenth century and it would even be more unfair to more people today.
Should people be allowed to be greedy? Absolutely. I don't believe a society should attempt to legislate religious morality.
Ayn Rand thinks of work as producing that which others value.
It is right to work for his values and to keep the product of his work.
But she says no one has a right to a job.
There is no such thing as “a right to a job”—there is only the right of free trade, that is: a man’s right to take a job if another man chooses to hire him.
I believe she is correct in principle. The government should not force owners of business and industry to hire any one person nor number of people. Also, people have the right to establish their own business within lawful parameters. I believe that if the business start-up process were cheaper and less complicated, more people would do it. Bureaucracy needs to be "streamlined" and made more affordable.
Many people fail at establishing a profitable business for various reasons. I just heard on the radio that only 30% of new business start-ups survive for the first ten years. Some people know they would not succeed even before trying. If one is unemployed and is one of the aforementioned, and there are no jobs to be had, should society simply ignore the person? If there are no jobs in the private sector to be had, whose fault is that? Some would say the fault is the government's because of government regulations that protect individual human rights, or because corporate taxes are too high, etc. I am not willing to sacrifice my human rights in order for everyone to be employed. Many corporations don't pay their fair share in taxes as it is.
Rand wrote
What greater virtue can one ascribe to a social system than the fact that it leaves no possibility for any man to serve his own interests by enslaving other men? What nobler system could be desired by anyone whose goal is man’s well-being?
A fair question. How about an alternative system that respects and protects everyone's individual rights; provides everyone accessibility to a quality Common Good (see B. Government); takes care of those who are disabled from working; and provides a job to every able adult who needs one, decent jobs that pay at least a healthful living wage (see A. Individual Rights)? This is not a description of a laissez-faire system nor the system we presently have. How would this alternative system be structured?
If private business is unwilling or unable to hire to the extent that every adult citizen willing and able to work has a job that pays at least a healthful living wage, I think it would be proper and right for the government to create jobs for the unemployed that enhance and maintain the Common Good. These jobs should pay at least a healthful living wage to start. These jobs should be tailored to the abilities of the individuals employed. There should be total freedom for those hired by the government to switch employment to the private sector whenever the desire and opportunity to do so presents itself.
As things are now the government supports the unemployed with so-called entitlement programs. These programs do not contribute to the human spirit nor do they maintain or enhance the Common Good. So why not use the money in a way that would do both? Anyone who can not find a decent private sector job that pays at least a healthful living wage should be eligible for the government funded work program. Just as society willingly supports those who cannot, through no fault of their own, support themselves, society should also be willing to support a government funded work program.
Under this system, the mandatory minimum wage could be eliminated. Having the same minimum wage for everyone, regardless of the varying cost of living in different parts of the country, is advantageous to those with a low cost of living but not as advantageous to those whose cost of living is higher.
What is the purpose of a job? If you are a boss or business owner the purpose for hiring help is for you to compel your workers to do what is necessary for you to make as much money as possible. From another point of view, a job is a means of giving a worker a purpose, of enabling him/her to survive, and of earning at least enough to live a healthful lifestyle. This, in turn, allows the worker the opportunity to experience life, liberty, and the pursuit of happiness.
All people who work should be able to afford a healthful lifestyle. With a government funded work program, private businesses would be motivated to pay their employees at least a healthful living wage, since, if they did not, workers earning less would have the option of earning more by going to work for the Common Good.
This alternative system has potential drawbacks. My next diary will discuss those.