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Geekery Today: posts tagged Ayn Rand

The ALLied invasion of Cato (posted 10 November 2008)

(Via Austro Athenian Empire 2008-11-10 and a bunch of other places.)

Congratulations to Roderick for heading up a round-table discussion in the latest Cato Unbound on corporate power, with a fine introductiory essay on left-libertarianism, and left-libertarian takes on corporatism, the alliance of big government and big business, class, and vulgar libertarian conflation of freed markets with actually-existing capitalism. Our efforts to cover the world with lying, thieving mutualism proceed apace.

Defenders of the free market are often accused of being apologists for big business and shills for the corporate elite. Is this a fair charge?

No and yes. Emphatically no—because corporate power and the free market are actually antithetical; genuine competition is big business’s worst nightmare. But also, in all too many cases, yes —because although liberty and plutocracy cannot coexist, simultaneous advocacy of both is all too possible.

First, the no. Corporations tend to fear competition, because competition exerts downward pressure on prices and upward pressure on salaries; moreover, success on the market comes with no guarantee of permanency, depending as it does on outdoing other firms at correctly figuring out how best to satisfy forever-changing consumer preferences, and that kind of vulnerability to loss is no picnic. It is no surprise, then, that throughout U.S. history corporations have been overwhelmingly hostile to the free market. Indeed, most of the existing regulatory apparatus—including those regulations widely misperceived as restraints on corporate power—were vigorously supported, lobbied for, and in some cases even drafted by the corporate elite.[1]

Corporate power depends crucially on government intervention in the marketplace.[2] This is obvious enough in the case of the more overt forms of government favoritism such as subsidies, bailouts,[3] and other forms of corporate welfare; protectionist tariffs; explicit grants of monopoly privilege; and the seizing of private property for corporate use via eminent domain (as in Kelo v. New London). But these direct forms of pro-business intervention are supplemented by a swarm of indirect forms whose impact is arguably greater still.

[…] So where does this idea come from that advocates of free-market libertarianism must be carrying water for big business interests? Whence the pervasive conflation of corporatist plutocracy with libertarian laissez-faire? Who is responsible for promoting this confusion?

There are three different groups that must shoulder their share of the blame. (Note: in speaking of “blame” I am not necessarily saying that the “culprits” have deliberately promulgated what they knew to be a confusion; in most cases the failing is rather one of negligence, of inadequate attention to inconsistencies in their worldview. And as we’ll see, these three groups have systematically reinforced one another’s confusions.)

Culprit #1: the left. Across the spectrum from the squishiest mainstream liberal to the bomb-throwingest radical leftist, there is widespread (though not, it should be noted, universal)[10] agreement that laissez-faire and corporate plutocracy are virtually synonymous. David Korten, for example, describes advocates of unrestricted markets, private property, and individual rights as corporate libertarians who champion a globalized free market that leaves resource allocation decisions in the hands of giant corporations[11]—as though these giant corporations were creatures of the free market rather than of the state—while Noam Chomsky, though savvy enough to recognize that the corporate elite are terrified of genuine free markets, yet in the same breath will turn around and say that we must at all costs avoid free markets lest we unduly empower the corporate elite.[12]

Culprit #2: the right. If libertarians’ left-wing opponents have conflated free markets with pro-business intervention, libertarians’ right-wing opponents have done all they can to foster precisely this confusion; for there is a widespread (though again not universal) tendency for conservatives to cloak corporatist policies in free-market rhetoric. This is how conservative politicians in their presumptuous Adam Smith neckties have managed to get themselves perceived—perhaps have even managed to perceive themselves—as proponents of tax cuts, spending cuts, and unhampered competition despite endlessly raising taxes, raising spending, and promoting government-business partnerships.

Consider the conservative virtue-term privatization, which has two distinct, indeed opposed, meanings. On the one hand, it can mean returning some service or industry from the monopolistic government sector to the competitive private sector—getting government out of it; this would be the libertarian meaning. On the other hand, it can mean contracting out, i.e., granting to some private firm a monopoly privilege in the provision some service previously provided by government directly. There is nothing free-market about privatization in this latter sense, since the monopoly power is merely transferred from one set of hands to another; this is corporatism, or pro-business intervention, not laissez-faire. (To be sure, there may be competition in the bidding for such monopoly contracts, but competition to establish a legal monopoly is no more genuine market competition than voting—one last time—to establish a dictator is genuine democracy.)

Of these two meanings, the corporatist meaning may actually be older, dating back to fascist economic policies in Nazi Germany;[13] but it was the libertarian meaning that was primarily intended when the term (coined independently, as the reverse of “nationalization”) first achieved widespread usage in recent decades. Yet conservatives have largely co-opted the term, turning it once again toward the corporatist sense.

[…]

Culprit #3: libertarians themselves. Alas, libertarians are not innocent here—which is why the answer to my opening question (as to whether it’s fair to charge libertarians with being apologists for big business) was no and yes rather than a simple no. If libertarians are accused of carrying water for corporate interests, that may be at least in part because, well, they so often sound like that’s just what they’re doing (though here, as above, there are plenty of honorable exceptions to this tendency). Consider libertarian icon Ayn Rand’s description of big business as a persecuted minority,[14] or the way libertarians defend our free-market health-care system against the alternative of socialized medicine, as though the health care system that prevails in the United States were the product of free competition rather than of systematic government intervention on behalf of insurance companies and the medical establishment at the expense of ordinary people.[15] Or again, note the alacrity with which so many libertarians rush to defend Wal-Mart and the like as heroic exemplars of the free market. Among such libertarians, criticisms of corporate power are routinely dismissed as anti-market ideology. (Of course such dismissiveness gets reinforced by the fact that many critics of corporate power are in the grip of anti-market ideology.) Thus when left-wing analysts complain about corporate libertarians they are not merely confused; they’re responding to a genuine tendency even if they’ve to some extent misunderstood it.

—Roderick Long, Cato Unbound (2008-11-10): Corporations versus the Market; or, Whip Conflation Now

Read the whole thing. It’s great.

The post has already provoked a lot of discussion. Some of it — for example, from Wirkman 2008-11-10, Peter Klein 2008-11-10, and Will Wilkinson 2008-11-10 — is insightful and raises important issues. I’ll also be interested to see the upcoming promised replies from Steven Horwitz, Dean Baker, and the Danny Bonaduce of the Blogosphere. The commentary is a bit much to cover fully here, and is getting hashed out in comments threads, anyway; but I will say that I’m a bit puzzled about this from Will Wilkinson:

But this hints at a thicket of trickier issues. We want a system in which profit-seeking behavior creates the greatest net positive externalities (like continuously increasing the consumer’s share of the cooperative surplus from mundane purchases). But positive spillover maximization within the constraints of a sub-optimal overall system is really desirable, despite the less-than-best incentive structure.

Dude, I just want Sam Walton to get his cold, dead hands out of my pockets. The rest is all details, as far as I’m concerned.

In any case, it seems to me that whether or not Wal-Mart and its business practices ought to be regarded with admiration, contempt, or indifference is really an importantly separate question from the question of whether or not Wal-Mart would have a sustainable business model under freed markets. If Wal-Mart as we know it could not exist but for State privileges, that’s reason enough for libertarians to be wary of reflexively defending Wal-Mart’s bidniz practices as examples of the free market at work, even if it’s not yet clear whether or not libertarians ought to find Wal-Mart objectionable (as a matter of thickness from consequences, and it seems to me that Roderick’s point has to do more or less entirely with the simpler point about sustainability, not the more complicated point about how to feel about the State-dependent business in question.

Meanwhile, Jesse Walker also kindly posted a notice over at Hit and Run, which provoked a discussion in which Hit and Run commenters were fully able to live up to their reputation for fair, insightful, and thought-provoking discussion of issues in libertarianism. For example, here’s the top comment in its entirety:

joshua corning | November 10, 2008, 2:14pm | #

If libertarians are accused of carrying water for corporate interests, that may be at least in part because, well, they so often sound like that’s just what they’re doing

Fuck you Roderick Long.

I mention the Hit and Run thread, though, mainly because it contains the nicest illustration you could possibly hope for of vulgar libertarian reasoning. Roderick wrote:

In a free market, firms would be smaller and less hierarchical, more local and more numerous

To which R. C. Dean replies:

I don’t see why. Just to take one example of a market that is pretty free of overt government intervention of the kind listed above: Bookstores. Most smaller, less hierarchical local bookstores are now history, replaced by Big Box Bookstores and on-line booksellers that have huge inventories and lower prices.

So, you see:

  1. Big box bookstores are more successful than smaller, more localized bookstore in the (unfree, government-regulated, privilege-infused, development machine-driven) actually existing market.

  2. …

  3. Therefore, big box bookstores will be more successful than smaller, more localized bookstores in the free market.

Far be it from me to bag on Borders and Barnes and Noble — I like them each a lot. But this notion that we can just look at their current market success, under the constrained and distorted conditions of the actually-existing unfree capitalist market, in which their business model is fundamentally dependent on the use of government highways to ship huge piles of books, on the use of the government development machine to seize huge tracts of land and lucrative subsidies to artificially encourage big box retail outlets, and, lest we forget, on government copyright laws that forcibly restrict booksellers to a limited number of centralized, monopoly-priced suppliers; without them, any jackass with a printer or a Kinko’s card could start her own local bookstore for little more than the cost of ink and paper — the notion, I say that we can just look at their current success on the unfree market and immediately infer it to be the result of processes that would continue with no noticeable reduction in a freed market, is desperately in need of a substantive argument that has not been given. Economies of scale only seem to matter here because, as usual, the costs of scale (like, the freed-market cost of consensually acquiring big blocks of contiguous land; like, the freed-market cost of competing with hyperlocal, extremely low-cost competitors that current laws force out of business) are being ignored, and while the rest of the (artificially centralized, subsidized, monopoly-protected) corporate market is assumed to remain fixed just as it is, even though the whole supply chain would in fact be radically altered by freed markets.

See also:

What’s in a name? or: Over My Shoulder #23: from Chris Matthew Sciabarra, Ayn Rand: The Russian Radical (1995) (posted 14 May 2006)

This doubles as this week’s Over My Shoulder. Sort of, because I’m tossing out one of the rules for this week. Normally, here’s how it goes:

  1. Pick a quote of one or more paragraphs from something you’ve read, in print, over the course of the past week. (It should be something you’ve actually read, and not something that you’ve read a page of just in order to be able to post your favorite quote.)

  2. Avoid commentary above and beyond a couple sentences, more as context-setting or a sort of caption for the text than as a discussion.

  3. Quoting a passage doesn’t entail endorsement of what’s said in it. You may agree or you may not. Whether you do isn’t really the point of the exercise anyway.

This week, I’m ignoring rule 2, because I happen to be working on a paper and it’ll be useful to sketch some notes down for it while I’m here. In any case, here’s the quote. This is from Chapter 10, A Libertarian Politics, in Chris Sciabarra’s 1995 study, Ayn Rand: The Russian Radical. I read this in the student center at Wayne State in Detroit, right after (of all things) touring a great little exhibit on the centenniel of the Industrial Workers of the World, hosted at the Reuther Labor Library. Here, Sciabarra is discussing Ayn Rand’s defense of the free market, and her deliberate use of the name capitalism to describe what she was defending:

Rand’s defense of capitalism is similar in form to her defense of selfishness. In fact, Rand titled her collection of essays in social theory, Capitalism: The Unknown Ideal, for much the same reasons that she titled her collection of essays on morality, The Virtue of Selfishness: A New Concept of Egoism. Both capitalism and selfishness have had such a negative conceptual history that Rand needed to reclaim these concepts and to recast them in a new and nondualistic framework. Branden remarks that he had told Rand of his preference for the word libertarianism as an alternative to capitalism, since the latter term had been coined by anticapitalists. For Branden, libertarianism signified a broader, philosophical characterization and addressed the issues of social, political and economic freedom (Branden 1978, 60). But Rand refused to renounce the concept of capitalism, just as she rejected any attempt to couch her ethos of rational selfishness in more neutral terms.

In addition to such nominal problems, Rand was faced with the fact that her defense of capitalism differed considerably from other theoretical justifications. Rand’s approach is not Weberian; she did not view capitalism as an expression of the Protestant work ethic. Nor did she view capitalism as compatible with Roman Catholicism, or any other form of religion. Though she accepted the empirical and theoretical arguments of Austrian-school economists who see the market as the most efficient and productive mechanism in history, she refused to defend capitalism on purely utilitarian grounds. And while Rand celebrates the record of economic growth under Western capitalism, she believes that the historical reality diverged radically from a pure, unadulterated laissez-faire system. While the nineteenth-century United States best approximated this system, its progress was severely undermined by massive government intervention in the areas of finance and banking, and in the bolstering of monopolies through land grants and industrial privileges. Marx himself had viewed this nineteenth-century system as only an approximation of full capitalism, since it was adulterated and amalgamated with survivals of former economic conditions (Capital 3:175). For Rand, as for most Marxists, this mixed system reached its twentieth-century climax in the neofascist and corporativist policies of the U.S. welfare-warfare state.

Rand argued that the underlying reason for this failure to achieve systemic purity was moral and cultural. Capitalism as a social system was an implicit by-product of an Aristotelian philosophical base, one that celebrated the rational, the secular, and the egoistic. And yet capitalism was historically distorted because the cultures within which it evolved had not fully emerged from the influence of mysticism, altruism, and collectivism. Rand saw capitalism and altruism as philosophical opposites that could not co-exist in the same man or in the same society. The modern age was fractured by an inner contradiction because it tried to combine the concept of eudaemonic man with the notion that human beings were sacrificial animals. It was for this reason that Rand was extremely apprehensive about the introduction of capitalist markets into primitive cultures. She argued that capitalism required a predominantly rational and secular orientation, and that industrialization could not be grafted onto superstitious irrationality without massive distortion in the evolving structure of production. Though the United States achieved the greatest progress because it was the most secular Western country, it too had preserved significant elements of altruism and collectivism in its cultural base. And it was paying the price.

Curiously, Rand spoke in terms of a cultural and philosophical base. This view differs considerably from the Marxist formulation, which sees culture and philosophy as components of a social superstructure, a by-product of a material base. These opposed characterizations have disparate consequences for both the theory of history and the nature of social revolution; however, what must be explored at this stage is Rand’s understanding of capitalism as an unknown ideal. In Rand’s view, the nature of capitalism is so inherently radical that its historical, philosophical, and cultural implications have yet to be fully comprehended. Rand unabashedly proclaims that Objectivists are radicals for capitalism … fighting for that philosophical base which capitalism did not have and without which it was doomed to perish. Once again, Rand’s project is geared toward articulation. She aimed to articulate those premises which underlie the daily practices and institutions of a historically emergent but not yet fully realized social system.

Following her literary methods, Rand seems to have extracted and emphasized those principles which, she believed, distinguish capitalist society from all previous social formations. She began with the real concrete circumstances of the historically mixed system, breaking down its complexity into mental units. She constituted her vision of capitalism on the basis of such abstraction, having isolated and identified those precepts which are essential to its systemic nature. In this way, she eliminated the accidental and the contingent in order to focus instead on the philosophical ideals of the capitalist revolution. Such a revolution was incomplete because its principles had never been fully articulated and implemented. Rand viewed her own project as the first successful attempt to articulate the moral nature of the capitalist system, ideally understood, thus making possible its historical fulfillment.

—Chris Matthew Sciabarra, Ayn Rand: The Russian Radical (1995), pp. 283–285.

A lot of left-libertarians have rightly stressed that terms such as capitalism and socialism, as they are commonly used, are systematically ambiguous; often they are used to name two different systems that are mutually exclusive of each other ([state socialism and anarchistic socialism][], on the one hand, or the free market and political patronage for big business, on the other). Roderick Long recently made a persuasive argument that both capitalism and socialism, as the terms are commonly used, are best regarded as anti-concepts, and more specifically as package deals of concepts that do not actually go together, which have been used by statists on both the Left and the Right to systematically blur the distinction between neo-mercantilism and the free market. Left statists say they oppose the chimera, and right-statists say they support it, but what libertarians need to recognize, first and foremost, is that the system they are allegedly fighting over is chimerical, and that the words they are using embody false presuppositions about the meaning and the nature of free markets.

I think that’s quite right, and that it’s very important. Nevertheless, we mustn’t be misled into thinking that just because socialism and capitalism as commonly used are anti-conceptual package-deals, that we ought to abstain from both terms on an equal footing, or to take a pox on both your houses attitude towards the institutions, symbols, traditions, and other socio-cultural trappings associated with either identification. In some dialectical contexts the best thing to do with an anti-concept is just to expose it as nothing more than so much Newspeak, to abandon using it, and to exhort others to follow your example. But sometimes the thing to do is just to urge your conversation partners to use language more precisely, and to teach them by example, by choosing one of the senses of capitalism or socialism to use clearly and consistently. And I think that Ayn Rand’s deliberately provocative use of capitalism is instructive here on the principle, even though I think she’s wrong on the application, and that the reasons for the misapplication have to do with deeper problems in her own economic thought. Those problems don’t have to do with defending a free market in the means of production and distribution — I’m all for that, but given the historical example of self-described socialist free marketeers such as Benjamin Tucker, that doesn’t settle the issue between describing yourself as a socialist, describing yourself as a capitalist, or describing yourself as something else again.

Rand deliberately worked to reclaim the word capitalism for the unknown ideal of the completely free market, rather than the known reality of the predatory, neomercantilist mixed economy, in which all actually existing free markets are embedded, confined, limited, and distorted. Sciabarra explains her decision in terms of an intellectual process of isolating the essential features that distinguished societies called capitalist from earlier and later forms of social organization. It’s an apt description as far as it goes, but the connection between the intellectual process and Rand’s aesthetic and affectional imagination needs to be fleshed out in order to fully explain her decision. Rand knew perfectly well that the historical data underdetermined the question of whether predation or voluntary cooperation was essential to the capitalistic form of society: the rise of the societies we call capitalist involved the liberation of many people and of the markets in many commodities; it also involved the escalation of many forms of predatory state patronage and the invention of new ones (it meant, for example, considerably more freedom in agriculture or textiles; it also meant considerably more government intervention in banking, land use, and transportation infrastructure). You could describe the picture by identifying the growth in freedom as the capitalist stuff, with the new levels of predation as anti-capitalist deviations from capitalism marring its productive development. But you could just as easily describe it by identifying the growth in predation as the capitalist stuff, with the growth in freedom as a countervailing, non-capitalist or anti-capitalist development, which the capitalist stuff had an antagonistic, or often parasitic, relationship to. So which description should you choose? I think the best explanation why Rand chose the first picture instead of the second one has to do with what she would have identified with her sense of life — the degree to which her aesthetic and affectional imagination were engaged on behalf of actually existing capitalists, as she understood them, in the known reality of the mixed economy: that is, her view of the grand bourgeoisie — big industrialists, business-owners, money-men, the top tier of entrepreneurial inventors, and ultimately the wealthy broadly — as the heroic prime movers in business, and thus as the world’s motor, driving the production of the material means of survival and human flourishing. (See, for example, Atlas Shrugged or America’s Persecuted Minority: Big Business.) Though she’d no doubt fume at the description, one way of putting it is that she made her choices about what language to reclaim and what language to abandon on the basis of class solidarity. I have no quarrel with Rand’s procedure; but rather only with the particular class she chooses to stand in solidarity with. If Rand is right that the capitalist is the chief victim of the predatory state, and if the picture she draws of the archetypical capitalist is well-drawn, it makes perfect sense for her to reclaim the word capitalism for the free market as against political patronage. If, on the other hand, the bosses are the chief beneficiaries of the predatory state, and if the picture she draws of the archetypical capitalist is ill-drawn — if the archetypical boss is a busybodying mediocrity, a cunning predator, or a petulant grafter, and if their role in the workplace is a drag on the productive labor on the shop floor rather than the animating force behind it as Rand claims — then it makes perfect sense to locate the essence of capitalism elsewhere from where Rand locates it, and to treat capitalism as a term of criticism for political patronage as against the free market.

This may help serve as some explanation for why Rand is willing to identify with the term capitalism and even to invest the symbol of a government fiat currency with near-religious significance, while fully recognizing the predatory nature of the state-business nexus; it may also help to explain how, in spite of really detesting the stupidity and the atrocities perpetrated in the name of socialism, I can be so fond of old union songs, and how I can fly a red flag over my soap box while I preach the free market.

Further reading:

Please stand by… (posted 24 December 2002)

For those of you who know me only through my online presence, you should be aware that I did not, in fact, commit suicide out of despondancy over the results of the November 5 elections. Nor have I become a reclusive monk (as much as my tastes may run in that direction). Instead, my weblog has simply been on a prolonged hiatus because of a couple months of nearly non-stop academic work and a blissful bit of reclusive relaxation for the week afterwards.

I just wanted to wish everyone a peaceful and happy holiday season, and to let you know that I shall return to posting more regularly in the very near future (whether this means before the New Year or not will depend on how long it takes me to revise certain essays of mine). In any case—talk to you again soon.

In the meantime, consider this bit of correspondance from Paul Feyerabend to his frequent partner in debates over philosophy of science and methodology:

Dear Imre,

You have powerful allies in this country: Ayn Rand (know her?) is after me. She wrote a long article against a short (three and a half pages) article of mine, and sent copies to 4,000 philosophers in order to prevent American philosophy from deteriorating further. Sample: the author (i.e. me) heralds the retrogression of philosophy to the primordial pre-philosophical rationalism of the jungle […] But what is innocent and inexplicable in an infant or a savage becomes senile corruption when the snake oil, totem poles, and magic potions are replaced by a computer …

You must admit, she writes much better invective than you.

(from Lakatos, Imre and Paul Feyerabend, For and Against Method: Including Lakatos’s Lectures on Scientific Method and the Lakatos-Feyerabend Correspondance. Quoted in Gregory R. Johnson and Chris Matthew Sciabarra, "Ayn Rand in the Scholarly Literature," The Journal of Ayn Rand Studies 3.1)