capitalism — VOICES for REASON

Here’s an unpublished letter ARC’s Yaron Brook sent to the Wall Street Journal in response to an op-ed by Heather Wilhelm:

Dear Editor,

After indulging in a truly dazzling series of ad hominem attacks on philosopher Ayn Rand, Heather Wilhelm does manage to raise one important issue: she asserts that Rand, whose books continue to sell in the hundreds of thousands a year, is not an effective salesman for capitalism. Whereas Rand is allegedly “elitist, cold and laser-focused on the supermen and superwomen of the world,” Wilhelm claims that what capitalism truly needs is an explanation of “how everyone, especially society’s neediest” benefit from economic liberty. That claim betrays an appalling ignorance of history.

Capitalism’s defenders have appealed to its beneficent effects since its inception. Accepting the conventional view that service to the needy is the essence of morality, they have downplayed and denied the essence of capitalism: the profit motive and the unrestricted pursuit of rational self-interest. This approach hasn’t worked. So long as even the free market’s defenders feel guilty and embarrassed by capitalism’s selfish nature, any attempt to reverse the anticapitalist trend is hopeless. Who is going to believe that vice is the path to the good?

What Rand offers is a radical alternative—a proper, moral defense of capitalism’s essence.

Rand argued that the proper standard of morality is the objective requirements of human life. She argued that human life requires productive achievement, and that the noblest act of moral virtue is using one’s mind to create life-sustaining values. She argued that profit is moral because it enriches the individual who achieves it—that someone like Bill Gates deserves the highest moral praise, not for giving away his wealth, but for creating it. Thus Rand advocated capitalism precisely because it is the only system that rewards the profit motive and respects the individual’s right to act on his own judgment in the pursuit of his own life and happiness. And yes, that includes not only the most intelligent and successful, but every individual committed to making his life the best life it can be. Capitalism is good, Rand argued, because selfishness, correctly understood, is a virtue.

Wilhelm’s views aside, Rand continues to be the greatest salesman capitalism has ever had. It’s not hard to discern why: whereas the rest of the world looked at capitalism and saw the hollow pursuit of material gain, Rand saw man the hero free to seek his highest values.

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I’ve just had an article on climate policy published in the journal Energy and Environment. It will appear in a special issue of the journal focusing on “Climate Policy and Energy Poverty.”

The article takes what I think is a pretty unique approach to the topic. I don’t focus on the science of climate change–i.e., I don’t specifically address the question of whether or not man-made greenhouse gases are the dominant agents driving the earth’s climate (though I don’t accept the ubiquitous assertion that they are). Instead, I address an entirely different question; one that I think the proponents of climate change alarm ignore completely.

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The Pope’s latest encyclical, Caritas in veritate, is not an isolated assault on capitalism. It is part of a longstanding antipathy toward capitalism.

For example, in 1967, Pope Paul penned a seminal encyclical in this assault, Populorum progressio – “On the Development of Peoples” — in which he (surprise) blamed all the world’s problems on the profit motive, and called for mass redistribution of wealth as the key to the “development of peoples.” By Pope Benedict’s own statement, his own “Caritas in veritate” cannot be understood without reading “Populorum Progressio.” And there is no better way to understand “Populorum Progressio” – and to understand the soul of the Vatican — than to read “Requiem for Man” — Ayn Rand’s profound analysis of “Populorum Progressio.”

Here is Benedict explaining the importance of the earlier work:

In 1967, when he issued the encyclical Populorum progressio, my venerable predecessor Pope Paul VI illuminated the great theme of the development of peoples with the splendour of truth and the gentle light of Christ’s charity.

At a distance of over forty years from the Encyclical’s publication, I intend to pay tribute and to honour the memory of the great Pope Paul VI, revisiting his teachings on integral human development and taking my place within the path that they marked out, so as to apply them to the present moment.

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A BBC story accurately summarizes a central theme of the latest encyclical (the highest form of Catholic teaching) emanating from the Vatican:

The letter, addressed to all Catholics “and people of goodwill”, reminds them of their moral duties in financial dealings.

“Profit is useful if it serves as a means toward an end,” he wrote.

“Once profit becomes the exclusive goal, if it is produced by improper means and without the common good as its ultimate end, it risks destroying wealth and creating poverty.”

He warned that globalisation, properly managed, could “open up the unprecedented possibility of large-scale redistribution of wealth on a world-wide scale”. But badly directed, it could “lead to an increase in poverty and inequality, and could even trigger a global crisis”.

The whole encyclical — all 144 pages of it — blames the profit motive for all the world’s problems, and calls for a worldwide redistribution of wealth by a world government as the solution.

A few thoughts:

• Why on earth do people take the economic advice of the Pope seriously? What is the Catholic Church’s record on economics? Creating and sustaining a Dark and Middle Ages? The Pope has about as much credibility dispensing advice on how to improve our economic lives as he does dispensing advice on how to improve our sex lives. (For more on this last, by the way, see “Of Living Death,” Ayn Rand’s essay on a Papal encyclical on sex, in The Voice of Reason. The essay was originally given as a lecture, available here.)
• There is one thing we should take seriously about this encyclical, which is that the seethingly anti-capitalist Vatican is an authority on the consistent application of religion to life. Those on the right who believe that it is possible to defend capitalism while putting faith before reason and by advocating self-sacrifice, not self-interest, as the essence of morality — let’s just say they have a lot of explaining to do, and I don’t hear any explanations.
• Yet again, the anti-capitalists cash in on the idea that capitalism has failed. We have to keep explaining that it was anti-capitalism, the mixed-economy, that failed. This is another failure of the right, very much related to its embrace of religion, religious morality, and the religious view of human nature (original sin).

I highly recommend reading the encyclical, especially if you are of the belief that religion and capitalism go together. But before you read it, there’s another essay you should read first, one that penetrates to the core of the Vatican’s assault on capitalism, and explains what it reveals about the true soul of the Catholic Church.

I will reveal this essay in my next post.

America is the nation of individualism and capitalism, but these values are being eroded—day-by-day, bailout-by-bailout, billion-by-billion, takeover-by-takeover.

That is why hundreds of thousands, maybe millions of Americans, myself included, will be protesting at Tea Parties this weekend. (I will be one of the speakers at the San Diego protest—if you’re in Southern California, please come and introduce yourself.)

Invoking the Boston Tea Party, one of the seminal events leading up to the American Revolution, we will be protesting against a government that seizes our wealth and our liberty in ways that King George could never have dreamed of.

But being against today’s government is not enough. What are we for—and why? A “free market”? Free from what, exactly? “Limited government”? Limited to what, exactly? When freedom is at stake, neither vagueness nor platitudes will do.

At the Ayn Rand Center, in the spirit of Atlas Shrugged, we stand for a separation of economy and state.

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Picking up on a press release from the Center for Economic and Policy Research, New York Times columnist Floyd Norris recently reported that the rate of unemployment in the U.S. is now equal to and may soon surpass that of Western Europe. Norris echoes the main thrust of the press release: “the current economic crisis . . . has turned the case for the U.S. model almost entirely on its head.” The CEPR authors imply that the European model of “large welfare states and high levels of labor-market regulation” should be the economic standard to which nations aspire.

Leaving aside the question of the validity of the data (unemployment data is notoriously politicized and difficult to acquire), it is telling that neither Norris nor the CEPR authors clearly identify what they take the U.S. model to be. There is only an assertion of “inherent” “flexibility” in the U.S. economic system, which Norris explains as meaning “it is easier to both hire and fire workers [in the U.S.] than in many European countries.”

The accepted premise, of course, is that the U.S. model is free market capitalism. But, as Ayn Rand argues, capitalism means 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.” This is not the system we have in America.

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There can be no doubt what social system Hugo Chavez upholds. At his most recent inauguration, in 2007, the Venezuelan dictator pledged: “Socialism or death–I swear it!” Then he added: “I swear by Christ—the greatest socialist in history.” More recently, he called on President Obama to “ally with us on the path to socialism, it’s the only road.” Commenting on the G-20 summit, Chavez said: “Capitalism needs to go down. It has to end. And we must take a transitional road to a new model that we call socialism.” And at a recent summit meeting, he gave our President a book claiming that capitalism has impoverished Latin America.

What has been our president’s response to Chavez’s insolent declarations? I haven’t heard anything of substance. Have you? The disgraceful truth is that the leader of the most capitalist society in history is unequipped to contrast capitalism’s virtues to the vices of socialism.

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The website Ednews,org recently posted an interview with Yaron Brook in which he discusses the importance of Ayn Rand and a number of other issues. (Update – April 28 – the Ednews website is presently down for maintenance.) One of these other issues is the question of whether greed is virtue or vice, and I find Dr. Brook’s remarks on the matter particularly insightful.

Here’s an excerpt:

The answer to this question really depends on what you mean by “greed.” If you mean the pursuit of short-term gratification at any cost, then I do think greed defined that way is bad. And indeed what we’re seeing is some–certainly not as many as the media would lead you to believe–some businessmen, some CEOs are pursuing short-term self-gratification at the expense of long-term profit, long-term happiness, and the long-term success of their shareholders, to whom they owe a fiduciary duty. Ayn Rand would be disgusted by this behavior-but she wouldn’t be surprised. She portrayed this kind of CEO in Atlas Shrugged, in characters such as Orren Boyle and James Taggart.

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I was reminded today that this year marks the 60^th anniversary of the publication of Ludwig von Mises’ “Human Action.” 

Why read a 60-year old economics textbook today? Because insights from economists such as von Mises are relevant for evaluating the claim that capitalism is at fault for today’s economic crisis, and for understanding its real cause. Ayn Rand put it best in a letter she wrote in 1960: Read the rest of this entry »

The upcoming Spring issue of The Objective Standard includes an article by ARC’s Yaron Brook and Don Watkins challenging the notion that America had a free market economy before the recent crisis. In  “America’s Unfree Market,” they argue that since World War I the U.S. economy has been increasingly saddled with–and damaged by–the anti-free market elements of taxes and government controls.

As noted in the article, with the latest federal budget surpassing $3 trillion and tens of thousands of regulations already on the books, people’s belief that America has a free market is only possible because of a gross misconception of what a free market actually is. That’s why I think one of the most important passages in the article is the following:

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