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Fascinating Forbes.com commentary on market economics, the tenets of Ayn Rand, and how the real-value contributors — entrepreneurs, innovators, inventors — don’t receive their just compensation.
Should we leave the free-market system alone to auto-correct what author Sramana Mitra believes to be its flaws? Are they flaws?
Let us know what you think in comments.
Your blog keeps getting better and better! Your older articles are not as good as newer ones you have a lot more creativity and originality now keep it up!
Mark Martin’s response shows why he is one of the more interesting and thought-provoking members of the General Assembly. Who else in our state legislature blogs about the philosophies of Ayn Rand and Ludwig von Mises? Martin is a true classical libertarian – not the big-L party type, but a real one. It’s remarkable that he can be elected, and a credit to the voters in his district.
Great question, and one I am surprised is even being broached here.
Briefly, it is my belief that Sramana Mitra fundamentally mis-characterizes and mis-defines capitalism. Mr. Goldberg above further perpetuates the myth. This misrepresentation may stem from an intentional attempt deceive or just a lack of understand of the philosophy of liberty: http://www.youtube.com/watch?v=3Uqha0Mq-ck
I started to address each one of Sramana Mitra’s supposed “flaws” of Capitalism in a long response that I am certain no one would bear to the end, but I realized that they may ALL be reduced to simple failure to understand that true free market “Classical Liberal” concepts of capitalism forbid the use of force or fraud. The supposed “failure” that is leveled at capitalism is not a failure of capitalism at all, but rather a failure of government to prevent the commission of force and fraud or worse for government to be an active participant in the force or fraud being perpetrated.
The limits and responsibility of government are very clearly defined and to prescribe those abuses that Sramana Mitra states are a flaw in laissez-faire economics (aka capitalism) evidences a failure to even know what the word or the philosophy really means.
Even though I do not agree with all of Ayn Rand’s concepts, I think that the criticism leveled above by Mr. Goldberg also shows a foundational misunderstanding of the Objectivist (which I am not) view of society. He tries to present the Randian view as one of rugged individualism which never moves from that state of pure self-sufficiency, otherwise it slides into collectivism. In the writings of John Locke, you can see the Lockean view of a social contract. Albeit, less developed but equally valid and thoughtworthy are the Randian view of a society that may collectively cooperate within the free exchange of goods and services for the mutual benefit of all involved. This is certainly NOT the beginnings of communalism, nor communism. Again, the same difference as stated above applies. Mr. Goldberg does not seem to recognize that capitalism, and by association Objectivism, does not allow for the use of force or fraud.
Straw men are easy to knock down when you ascribe premises to the position to which the proponents of that system do not hold. Again, I wish your attention to the philosophy of liberty ( http://www.youtube.com/watch?v=3Uqha0Mq-ck ) and ask those considering the arguments to do so within the context of the true view of what it means to be capitalist.
I would like to point out that the author contradicts herself when she writes in two consecutive sentences “I am beginning to see flaws that are unlikely to correct themselves. To be fair, most flaws will self-correct.” Which is it? Next she proceeds to point out that government involvement (not capitalism, nor Randianism) is what has prevented the system from self correcting. Which is it? A flaw in capitalism or a flaw in government interventionism?
Later she says, “[What is] Rand’s flaw? She assumed integrity is implicit in the characters of the “leaders.” It isn’t.” At first I would say that I agree. As a Protestant Reformed type of person, I would initially tend to agree, people are fundamentally depraved. But that is not what Ayn Rand is really promoting. Rand clearly makes the point that those are values and characteristics that are worthy of praise, and who could disagree? But Rand never makes the claim that those are fundamental characteristics of mankind. Rather the contrary, exactly because that is our “nature”, she promotes a system that is based upon mutually beneficial free exchange.
As for Sramana Mitra’s claim of a “another less obvious bug in capitalism”… well, obviously Ms. Mitra has never read “The Fountain Head.” Otherwise she would never have made such an absurd statement. Ms. Mitra’s objections instead prove Ayn Rand’s point rather than discredit it. Howard Roark’s speech to the jurists in “The Fountainhead” obliterates that thesis, here I will let Rand speak for herself: http://www.goodreads.com/videos/show/1844-the-fountainhead-howard-roark-speech-ayn-rand
The poster of this thread asked, “Should we leave the free-market system alone to auto-correct what author Sramana Mitra believes to be its flaws?” My answer would be yes, we need to allow for the natural auto-correction of the free market. “Are they flaws?” Again, my answer is yes, the fallen and selfish nature of mankind… but that is exactly what makes the system of capitalism the best of all options. It isolates those flaws to the individual rather than empowering them in the leviathan of the collective, and uses that very same flaw in every other individual to protect their own self interest as counter and self correcting balance.
It is this very thing that makes capitalism the “Economics of Harmony” (as Frédéric Bastiat described it) And it is the only system of economics that can bring unity and peace between myself… a devote Christian, and Ayn Rand… an atheist.
Mr. Goldberg wishes to paint “Classical Liberalism” as an extreme position, when in reality it is the only balanced position between socialism on the one side and anarchism on the other. To ask me to “compromise” between the middle position of capitalism and the socialism on the left, only leaves a slippery slope that leads to totalitarian socialism (communism). No thanks. I only want a government that prevents force and fraud of one party from being inflicted upon another.
Sincerely,
Mark Martin
State Representative
Arkansas District 87
I first read Ayn Rand in my teens. Anthem, her lesser known but more accessible novel, was a turning point for me. But there are things that Rand never contemplated.
In the leadership development world, there is a concept that any asset over used becomes a liability. Free markets have always had challenges but as the author points out have traditionally been able to right themselves. However, technology and scale have made the everity and length of the standard deviations much more insidious.
Sad to say we are now seeing a reactionary swing to over regulation because the regulation is not based on the rational new needs of a market fueled by technology and 24/7 availability. The regulation is fueled by reactions to the abuse of those whose ability to avoid what should be free market checks.
And the market has not caught up to changes either. Banks are still willing to pay people large bonuses for a specialized skill set. But the question no one is asking is whether we should be returning to the old model that values those skills. In short, we are still willing to pay people really really well to make today’s version of the buggy whip.
Lastly, even after her rant against the evils of a future under communism, Rand writes an ending that is very telling. Her protagonist finds his way to the woods, his mate joins him, and they immediately begin to plan a life of rugged individualism. But it takes only one more paragraph to start adding like minded revolutionaries to their vision- forming a community that will live separate and apart as a community. So in the very establishment of individualism is the beginnings of communalism, which if allowed to over flourish, creates the next communist state.
None of the questions about regulation are as simple as those who are in extreme positions on either side are as simple as we wish they were.