Adam Smith — VOICES for REASON

In his blistering review of the new Atlas Shrugged movie, political humorist P.J. O’Rourke vows not to criticize Rand’s novel itself. “I don’t have the guts,” he assures us. “If you associate with Randians—and I do—saying anything critical about Ayn Rand is almost as scary as saying anything critical to Ayn Rand.”

I will try not to scare Mr. O’Rourke. But his treatment of Rand includes a number of errors (and, notwithstanding his declaration of cowardice, a number of insults). Most of them aren’t worth addressing, but one goes to the essence of Rand’s thought: her view of selfishness.  Here is how O’Rourke describes Rand’s view:

In “Atlas Shrugged” Rand set out to prove that self-interest is vital to mankind. This, of course, is the whole point of free-market classical liberalism and has been since Adam Smith invented free-market classical liberalism by proving the same point.

The idea is that Rand had nothing new to say about self-interest or free markets, but was merely fictionalizing Smith’s “invisible hand” argument. Rand, however, didn’t see it that way. During a radio appearance, she described the difference between her defense of capitalism and Smith’s:

I am not an advocate of Adam Smith’s philosophy. I do not believe in invisible hands leading men to altruism through the pursuit of their private interests. I reject altruism, public service, and the public good as the moral justification of free enterprise. Altruism is what’s destroying capitalism. Adam Smith was a brilliant economist; I agree with many of his economic theories. But I disagree with his attempt to justify capitalism on altruistic grounds. My defense of capitalism is based on individual rights, as was the American Founding Fathers’, who were not altruists. They did not say man should exist for others; they said he should pursue his own happiness.

Rand was not picking nits. In Atlas Shrugged and in her nonfiction works, she shows that there is an inescapable contradiction between the morality of altruism, which says that the good consists of self-sacrifice, and capitalism, which enshrines the selfish pursuit of profit. This contradiction, she argues, is what explains the disintegration of economic freedom in America: although the Founding Fathers created a system based on the individual’s political right to pursue his own happiness, that system could not stand without a defense of the individual’s moral right to pursue his own happiness.

That is what Atlas Shrugged provides—a new code of morality that defines the good in terms of what is required for each individual to make the most of his own life, and so lays the foundation for a social system in which the individual can make the most of his own life.  (This is the theme of my colleague Onkar Ghate’s riveting talk, Atlas Shrugged and the Morality of Freedom.)

Rand’s point and Smith’s are anything but the same. Smith proposed that free markets lead self-interested actors “as if by an invisible hand” to act for the “public good.” But morally speaking, he said, self-interest was not noble. That is precisely what Rand—author of The Virtue of Selfishness—challenged.

Rand did not champion self-interest for its social consequences, because it was “vital to mankind.” Rather, she championed self-interest  (what she called rational self-interest) because it is vital to each individual. The essence of virtue, she argued, is the individual’s pursuit and achievement of his own interests. And markets? They are moral because they free the individual to pursue and achieve his own self-interest.

Whatever one’s evaluation of Rand’s argument, there is no question that she is saying something profoundly new and challenging.

In 2006, O’Rourke wrote a commentary on Adam Smith’s Wealth of Nations because he noticed that, while everyone talks about Smith’s ideas, few have a clue what he actually said. It’s a lesson that O’Rourke might have seen fit to apply to another of capitalism’s great champions.

My colleague Onkar Ghate has written a guest post for the Division of Labour blog answering a question on the moral views of Adam Smith and of Ayn Rand. The question was prompted by a recent debate between ARI’s Yaron Brook and Prof. James Otteson (a scholar of Smith). That spirited debate took place at the annual conference of the Association of Private Enterprise Education. The question:

Take Smith’s famous thought experiment about — by some fantastic unstated mechanism — you (“a man of humanity in Europe”, in 1759) could prevent an earthquake in China by cutting off your pinky. Smith says that of course you would do so, and then addresses why. Yaron, would you cut off your pinky? Assume that knowledge of the whole affair would necessarily remain entire personal. If yes, and you claim to square that with “selfishness,” aren’t you using words in an opportunistic and unmanageable way?

In response, Dr. Ghate begins his post:

The question’s undertone is that everyone “just knows” it’s right to cut off your finger. Moral theory’s task is to rationalize this incontrovertible conclusion; Rand’s theory can’t, however, because it’s an abuse of language to call the action selfish.

But it’s a mistake to think that Rand’s ethics begins with the moral beliefs that happen to saturate the culture, not with reality. True, it would be an abuse of language to label the action Smith envisions “selfish”: it is self-sacrificial. Precisely for this reason, Rand’s ethics would pronounce the action immoral.

To understand the radical difference between Smith and Rand here, one must grasp the principles at work.

Read the whole thing.

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