The 2008 financial crisis gave rise to sustained criticism of capitalism as an economic system, with many of its advocates conceding that while an immoral system, it is also a ‘necessary evil’. Reflecting on the writings of Ayn Rand, Yaron Brook and Don Watkins reject this view, and instead argue that capitalism is a necessary good. They maintain that capitalism is the only social system that takes into account people’s rationality, enabling them to survive and prosper through self-interest

Brook, Yaron

Watkins, Don

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blogs.lse.ac.uk http://blogs.lse.ac.uk/usappblog/2013/10/28/ayn-rand-rewrote-the-story-of-capitalism/Atlas statue at Rockefeller Center, New York Credit: Timothy Ellis (Creative Commons BY NC SA)Ayn Rand rewrote the story of capitalism to show that it is anecessary goodThe 2008 financial crisis gave rise to sustained criticism of capitalism as an economic system,with many of its advocates conceding that while an immoral system, it is also a ‘necessary evil’.Reflecting on the writings of Ayn Rand, Yaron Brook and Don Watkins reject this view, andinstead argue that capitalism is a necessary good. They maintain that capitalism is the only socialsystem that takes into account people’s rationality, enabling them to survive and prosper throughself-interest.Ayn Rand has been one of the greatest salesmen of capitalism in history, with total sales of herbooks approaching 30 million copies. What makes her so powerful? To put it simply: she knowshow to tell the story of capitalism. Since capitalism arose during the nineteenth century, its criticshave weaved a compelling story shaping the way we think about free enterprise. Capitalism,according to this story, is inherently immoral because the needy many receive no help fromsociety, while the greedy few are allowed to exploit society. Well, if so then the solution is obvious:to limit and ideally eliminate capitalism.You can see that story at work today. The financial crisis, we’re told, was the product of greedy bankers profiting atthe expense of society. The solution? Regulate the greedy profit-seekers and redistribute their ill-gotten gains tothose in need.How have capitalism’s allegedchampions responded to thisstory? By and large, they haveconceded that capitalism is an inherently immoral system. Their story consists of the claim that it is a necessaryevil. “You’re right,” they’ve told the critics, “capitalism does exploit the needy and reward the greedy. Butunfortunately it works and socialism doesn’t, so while we need to limit capitalism, we mustn’t go too far.”But if you concede that your position is a necessary evil, then in any specific battle, who is going to have theadvantage? The person who is defending the necessary evil or the person who says, in this case the evil isunnecessary? Who will be seen as the noble idealists and who will be seen as cynical and self-serving? Ifcapitalism is a necessary evil, then the critics are right: our goal should be to minimize it and ultimately putsomething superior in its place.Ayn Rand argues that capitalism is a necessary good: It is the only social system in which human beings cansurvive, prosper, and enjoy their lives. The key to Rand’s approach is that she doesn’t jump right away to thequestion of what political policies we should adopt. As a philosopher, she starts by looking at what kinds of actionsindividual human beings have to take in order to flourish. Whether we’re irrigating a barren landscape in order togrow food, or designing iPhones, or starting a new biotech company, or launching satellites into space, ourwelfare, thinks Rand, comes down to three essentials:1. We have to think2. We have to produce3. We have to deal with others on mutually beneficial termsThis perspective has profound implications for social questions. As Rand explains:Since knowledge, thinking, and rational action are properties of the individual, since the choice toexercise his rational faculty or not depends on the individual, man’s survival requires that those whothink be free of the interference of those who don’t. Since men are neither omniscient nor infallible,they must be free to agree or disagree, to cooperate or to pursue their own independent course,each according to his own rational judgment. Freedom is the fundamental requirement of man’smind.That’s exactly what capitalism—complete, unregulated, uncontrolled laissez-faire capitalism—does. It is thesystem in which our rights to think, produce, and trade voluntarily are sacrosanct, and where the initiation ofphysical force is therefore barred.Rand sees the moral superiority of capitalism as borne out in history and around the world. Whether you compareSoviet Russia to the United States, East Germany to West Germany, China to Hong Kong—government controlover the individual crushes his ability to live and freedom for the individual is what opens up unlimited roads.That is the real story of capitalism. It is not a system in which the helpless “needy” are exploited by the immoral“greedy.” It is the story Rand tells in Atlas Shrugged. Capitalism is a system in which each individual is free toflourish and prosper and deal harmoniously with others.So why can’t the so-called defenders of capitalism tell that story? Because they hold many of the same basic ideasas capitalism’s critics.Both sides see individuals as fundamentally helpless, and believe that to succeed, a person needs to submit to ahigher authority. The left generally says that higher authority is the state or society, the right generally says it’sGod or tradition, but both agree: by himself, the individual is incapable of running his own life and therefore cannotbe fully free to live his own life.Both sides also believe that the interests of individuals necessarily conflict, and that what benefits one personoften harms another. Human life, they conclude, requires sacrifice. The government’s job is to decide whatsacrifices are necessary in order to achieve “the public good.” The left and the right quibble over which those are,but both are united in agreeing that the freedom to pursue one’s interests has to lead to disaster.These two ideas—that we are fundamentally dependent on society and that our interests clash—lead to a thirdidea that historically has been the chief cause of the view that capitalism is immoral: the idea that our primarymoral duty is to be selfless. To focus on making the most of our own life is seen as morally wrong since, both sideshold, it means that we are benefiting at the expense of others and refusing to “give something back” by allowingthem to benefit at our expense.Every traditional “defense” of capitalism, Rand held, conceded this framework. Every argument that appealed to“the public good,” or which said capitalism’s chief aim was to help the “helpless poor,” or which shirked fromacknowledging that the essence of capitalism was the individual’s pursuit of his own well-being proceeded from aphilosophy that said: the individual couldn’t and shouldn’t be fully free to pursue his own happiness and thatcapitalism, therefore, was at best a necessary evil.Rand’s great insight was that every element of this anti-capitalist framework came from the same error: ignoringand denying the mind. As rational creatures we are able to create the values our lives require by thinking andproducing. Our basic interests then are in harmony with other people: to deal with one another through mutuallybeneficial cooperation and voluntary trade. Selflessness on this view is senseless. There is no reason on earthwhy each individual should not seek to make the most of his own life, without victimizing others or becoming avictim himself.Rand put it this way:The moral code which is implicit in capitalism had never been formulated explicitly. The basicpremise of that code is that man—every man—is an end in himself, not the means to the end ofothers, that man must exist for his own sake, neither sacrificing himself to others nor sacrificingothers to himself, and that men must deal with one another as traders, by voluntary choice tomutual benefit. This, in essence, is the moral premise on which the United States of America wasbased: the principle of man’s right to his own life, to his own liberty, to the pursuit of his ownhappiness.Yaron Brook will be speaking at the LSE public event, ‘Capitalism Without Guilt: the moral case for freedom’ onMonday, 28 October. Click here for more details.Please read our comments policy before commenting.     Note:  This article gives the views of the authors, and not the position of USApp– American Politics and Policy, norof the London School of Economics.Shortened URL for this post:  http://bit.ly/16EdLuK_________________________________About the authorsYaron Brook – Ayn Rand InstituteYaron Brook is the executive director of the Ayn Rand Institute . He is a columnistat Forbes.com, and his articles have been featured in the Wall Street Journal, USAToday, Investor’s Business Daily, and many other publications. He is a frequent guest on nationalradio and television programmes and is a co-author of Neoconservatism: An Obituary for anIdea and a contributing author to Winning the Unwinnable War: America’s Self-Crippled Responseto Islamic Totalitarianism. Dr. Brook is co-author with ARI fellow Don Watkins of the national best-seller Free Market Revolution: How Ayn Rand’s Ideas Can End Big Government . A former financeprofessor, he speaks internationally on such topics as the causes of the financial crisis, the morality of capitalism,ending the growth of the state, and U.S. foreign policy Don Watkins – Ayn Rand Institute.Mr. Watkins is a fellow at the Ayn Rand Institute and co-author, along with Yaron Brook, of thenational bestseller Free Market Revolution: How Ayn Rand’s Ideas Can End Big Government . Heis a columnist at Forbes.com and his op-eds have appeared in such venues as TheGuardian, USA Today , and Forbes magazine.CC BY-NC-ND 3.0 2014 LSE USAPP

Ayn Rand rewrote the story of capitalism to show that it is a necessary good

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