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IC's Top 25 Philosophical and Ideological Conservative Books
No. 17 - Ayn Rand: Capitalism: The Unknown Ideal
by Dr. Enrico Peppe
06 April 2004Capitalism The Unknown Ideal

The majority of Randians and recovering Randians are imbued with the concept that freedom is most desirable.


Ayn Rand (1905-1982) was born in St. Petersburg, Russia, to middle-class parents. Her academic ability, even as tot, was obvious to friends, family, and school officials.

Her father's prosperous pharmacy was taken by the Bolsheviks in 1917, forcing a move to the Crimea. Eventually, the family returned home where the teen scholar attended the university.

Her studies included history and the humanities, whereby she gained an appreciation of things American. She decided early on that she would leave totalitarian Russian and go to the free states.

But not before she finished her degree and studied cinema arts at the State Institute.

After brief stays in New York and Chicago, Miss Rand left for Hollywood. Randian scholar Stephen Hicks paints a vivid picture:

On Rand's second day in Hollywood, an event occurred that was worthy of her dramatic fiction and one that had a major impact on her future. She was spotted by Cecil B. DeMille...while she was standing at the gate of his studio. He stopped to ask why she was staring (at him). (She)...explained that she had recently arrived from Russia, that she had been passionate about hollywood movies, and that she dreamed of being a screen writer. (DeMille)...signed her on as an extra...(for)... 'The King of Kings.' Rand met Frank O'Connor, a young actor also working as an extra...(They)...were married in 1929, and they remained married for fifty years until his death in 1979.

She struggled financially while working as a script reader, yet was able to sell her screenplay Red Pawn to Universal. In 1932, her play, Night of January 16th, was produced in Hollywood and soon on Broadway.

(Rand had been drafting her thoughts in notebook form while in California. These entries were to become an outline of her anti-collectivist grand theory).

Her first novel, We The Living, was completed in
1933. It was rejected by many houses until MacMillan bit in 1936. Received poorly by reviewers (it was the era of egghead communist infatuation), she nevertheless persevered and completed first, The Fountainhead, and then Atlas Shrugged. After rejection struggle, both were published and became best-sellers (the former,
her protagonist Roark as the emblem for individuality and achievement, the latter, Galt, as the apotheosis of her creed, involving metaphysics, epistemology, economics, and psychology). Her fame as a novelist was just the beginning.

Dr. Hicks explains:

'Atlas Shrugged' was an immediate best-seller and Rand's last work of fiction. Her novels had expressed philosophical themes, although Rand considered herself primarily a novelist and only secondarily a philosopher. The creation of plots and characters and the dramatization of achievements and conflicts were her central purposes in writing fiction, rather than presenting an abstracted and didactic set of philosophical theses.

The success of her novels and its themes attracted readers who saw a flavorful emergent weltanschauung. Two of the most prominent were psychotherapist Nathaniel Branden and economist Alan Greenspan. Rand's association with these and other brilliant thinkers convinced her to write in the informative essay genre.

Ayn Rand became a worldwide icon in short time. For the rest of her life, she would lecture and write. Her essays appeared in her periodicals, The Objectivist, The Objectivist Newsletter, and The Ayn Rand Letter. Nine books emanated from the best of the pieces, the most significant of which are The Virtue of Selfishness (Ethics), Introduction to Objectivist Epistemology (Knowledge concepts), The Romantic Manifesto (Aesthetics), and the book under review, Capitalism: The Unknown Ideal.

As her husband's health worsened, she slowed her publishing activities, and ceased her newsletter altogether in 1976. Her own health began to slip after her husband's death.

She died in 1982.

Rand's system, "Objectivism," consists of three fundamental components: objectivist epistemology, objectivist ethics, and objectivist politics (I took a Suite 101 course on Objectivism from which a great deal of explication ensues. Possible misinterpretations of its concepts are mine, of course).

For review purposes, I will concentrate on Rand's political/ economic emphases.

For Rand, knowledge and values have as sole underpinning: reason (which, when composed of perception, logic, and concept) is the best source of survival living in society.

In her own words, (Objectivism):

...begins with the axiom that existence exists, which means that objective reality exists independent of any perceiver or of the perceiver's emotions, feelings, wishes, hopes or fears...(it)...holds that reason is man's only means of perceiving reality and his only guide to action. By reason, I mean the faculty which identifies and integrates the material provided by man's senses.

The above epistemic base leads cleanly into ethics: Also, from the 1964 Toffler Playboy interview:

Any system of ethics is based on and derived, implicitly or explicitly, from a metaphysics. The ethic derived from the metaphysical base of Objectivism holds that, since reason is man's basic tool for survival, rationality is his highest virtue...(his)...moral imperative...The standard of value of the Objectivist ethics is: man's life -- man's survival qua man -- or that which the nature of a rational being requires for his proper survival.

Randian axiology leads cleanly into practicality:

The Objectivist ethics, in essence, holds that man exists for his own sake, that the pursuit of his own happiness is his highest moral purpose, that he must not sacrifice himself to others, nor sacrifice others to himself.

Politics, for the Objectivist, relate to a search for the social system where freedom is best played out. Or, put another way, where individual rights versus the state becomes a crucial dialectic -- where talking points include the nature of objective rights, its ethical implications, and the role of government in rights procurement.

From the Suite 101 course:

The right of life is the principle that one's body and actions are inviolate: that is, that we have freedom to do what we want with our bodies. This is the fundamental right from which all others are derived. Corollaries emerge: the right of property and free speech. These are identical concepts since government ownership of land and communication resources inhibits the right of life.

Further, "This is why trying to dissociate self-ownership (right of life) and free action (civil liberties) from free trade and free property (capitalism) is futile and ultimately self-destructive: without one, the other cannot exist."

Since a right of something is not a right to something, the axiological maxim is that one's rights stop where another's begin. The sole role of the state is the forced protection of such. Anarchism holds that individuals are entitled to use force against individuals so as to enforce their singular ideals. Statism holds that governments are entitled to use force against individuals so as to realize a societal good. Anarchy breeds Fascism (might rules). Statism breeds Communism (might rules).

To sum up the subtle nature of Objectivist politics (From the Suite 101 Course):

Using egoism as a premise (which is based on reason), we propose that the optimal situation is one where 'everyone is free to pursue his own ...flourishing...where no one must be sacrificed for another,' (and ) this entails that the best political system is...that... which is dedicated to the protection of individual rights...Objectivist politics does not recognize a dichotomy (between) different kinds of force. It only recognizes the basic dichotomy as...freedom or statism.

Capitalism: The Unknown Ideal consists of twenty-four essays culled from Rand's newsletters. With the exceptions of three pieces by Greenspan, two by Branden, and one by Historian Robert Hessen, the rest represent Rand's take on capitalism. She states in her introduction that,

This book is not a treatise on economics. It is a collection of essays on the moral aspects of capitalism...our primary interest is not on politics as such, but man's nature and man's relationship to existence...(within)...the only system geared to the life of a rational being.

Ms. Rand makes it clear that she is not conservative, classical liberal, or libertarian. Her approach, one gathers, is unique:

...by their evasion of the clash between capitalism and altruism -- it is capitalism's alleged champions who are responsible for the fact that capitalism is being destroyed without a hearing, without a trial, without any public knowledge of its principles, its nature, its history, or its moral meaning.

She sets out to rescue capitalism by this collection. All essays are worth serious consideration.

However, four essays stand out for purposes of contemporary application: "What is Capitalism?," "The Roots of War," "Gold and Economic Freedom" (Greenspan), and "Conservatism: An Obituary."

"What Is Capitalism?"

Ms. Rand uses chiaroscuro rhetoric (she does this often) in which she takes on the 1964 "Encyclopedia Brittanica." For her, there is a moral justification for Capitalism, and it is decidedly not altruism. Its existence stems from rationality, "it protects man's survival qua man, and ...its ruling principle is justice."

But the Brittanica has it backward:

Few observers are inclined to find fault with Capitalism as an engine of production, Criticism usually proceeds either from moral or cultural disapproval of certain features of the...system...or from short-run vicissitudes with which long-run improvement is interspersed.

Her Objectivist Theory of Value is omnipresent. Blame is placed on both the Christian era (though not Aquinas) and post-Kantian epistemology for the lack of sound underpinning Capitalism receives. There has never been a pure Capitalism, just variations thereof:

Capitalism could not survive in a culture dominated by mysticism and altruism, by the body-soul dichotomy and the tribal premise. No social system (and no human institution or activity of any kind) can survive without a moral base. On the basis of the altruist morality, Capitalism had to be -- and was -- damned from the start.

For Rand, the guilty parties are not the collectivists. The culprits are the Capitalist theoreticians (she mentions no names) who lack the courage to challenge bad philosophy.

"The Roots Of War"

Appearing in 1966, this piece is as fresh today as when it was written. Ten points emerge:

1. Tribalism and statism hold that men achieve goals by "initiating" force against other men for some notion of public "good."

2. Rand: "Statism is a system of institutionalized violence and perpetual civil war."

3. Statism is "gang rule." It is not a system conducive to security and peace.

4. Rand: "Statism needs war; a free country does not. Statism survives by looting; a free country survives by production."

5. The period from the end of Napoleonic power (1815) to the beginnings of World War I -- the period the Left abhors because of its unbridled (though not necessarily "pure") capitalism -- was a period of relative peace.

6. Rand: "During the nineteenth century, it was free trade that liberated the world...wrecking the remnants of feudalism...and statist absolute monarchies."

7. War profiteers of mixed economies curry favor with custodians of government largess; in free markets, fortunes from death would not occur.

8. Both Roosevelts and Woodrow Wilson believed that the "benighted" areas of the world needed varying doses of freedom (in FDR's case, four).

9. Rand: "If men want to oppose war, it is statism that they must oppose."

10. For war to be outlawed, the "rule of force" must cease.

Notwithstanding Rand's weaknesses (to come later), this essay should be read and at least acknowledged as appropriate by Libertarians of all wings. The "official" Rand people should too.

"Gold and Economic Freedom" (Alan Greenspan)

Written by Greenspan before he succumbed to statism (1966), this well-written piece clearly lays out a sound defense of Gold and its necessity for the preservation and integrity of private property and resultant freedom.

His system is based on gold and the mechanism of credit extension based on production. The key is that the process be based on the convertibility of such to gold.

Which is how things were before the organization of the Federal Reserve System in 1913. Before, short-lived recessions were the rule. In 1927, however, with the Fed's philosophy of international bail-out through paper currency creation in place, the assist given Great Britain because of its gold drain turned sour for all aggregate economies. Mr. Greenspan notes,

The 'Fed' succeeded: it stopped the gold loss, but it nearly destroyed the economies of the world, in the process. The excess credit which (it) pumped into the economy spilled over into the stock market -- triggering a speculative boom. Belatedly (it) attempted to sop up the excess reserves and finally succeeded in braking the boom. But it was too late: by 1929, the speculative imbalances had become so overwhelming that the attempt precipitated a sharp retrenching and a consequent demoralizing of business confidence.

So, the economy collapsed.

But, under a gold standard, depressions are mostly thwarted, with recessions a brief occurrence. Credit is determined by asset tangibility. When this concept erodes, as is the case with the issuance of government bonds, the promise-to-pay-through-tax revenues approach yields higher and higher interest rates since financial markets are not in a position to soak these up. Under a solid gold standard (tangibility), government deficit spending is fortunately hampered.

Greenspan concludes,

The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves. This is the shabby secret of the ...statists' tirades against gold. Deficit spending is simply a scheme for the 'hidden' confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the...antagonism toward the gold standard.

If only Chairman Greenspan were to consult this piece!

"Conservatism: An Obituary"

As might be expected, both liberals and conservatives (and most libertarians, she says elsewhere) accept altruist morality. She forgives (or rather, understands) liberals because they are soft on communism; they think that there is some sort of altruistic message in Marxism.

But conservatives, well, that's another story.

With alarming prescience (she gave the speech at Princeton in 1960), she cuts to the quick:

There are three interrelated arguments used by today's conservatives to justify capitalism, which can best be designated as: the argument from faith -- the argument from tradition -- the argument from depravity.

She demolishes the faith people (one finds this currently in the Pat Robertson-Jerry Falwell camp). To hear prayer offered as the antidote to communism (terrorism?) is foolhardy and assumes the enemies of freedom have reason on their side. Rand is vehement on this point. She states,

The conservatives claim that their case rests on faith...that there are no rational arguments...to support the American system...(its) freedom, justice, property, individual rights...(their case) rests on a mystic revelation...and can be accepted only on faith.

The traditionalists claim that the truth of the American system is obvious because our ancestors chose it. It may not be that good, capitalism may not be that good, indeed the Declaration of Independence may not be that precious (too heavy on the "rights" thing), but it is unique and it is ours. As if she were speaking directly to George Will on a Chris Matthews segment, she says,

The argument that we must respect 'tradition'...merely because it is a 'tradition' means that we must accept the values other men have chosen, merely because other men have chosen them -- with the necessary implication of: who are we to change them? The affront to a man's self esteem...and the profound contempt for man's nature is obvious.

Rand goes somewhat bananas when discussing the third type, the type that defends capitalism based on man's depravity:

(The)...argument runs as follows: since men are weak, fallible, non-omniscient and innately depraved, no man may be entrusted with the responsibility of being a dictator and of ruling everybody else; therefore, a free society is the proper way of life for imperfect creatures. Please grasp fully the implications of this argument: since men are depraved, they are not good enough for a dictatorship; freedom is all that they deserve; if they were perfect, they would be worthy of a totalitarian state.

(I don't follow Rand fully on this last type, but IC readers, don't you smell "neoconservatism" a bit?)

For Rand, the axiology of Objectivism is the only sound way to defend capitalism.

There is no way that the book under review could have possibly escaped the IC Top 25 list. Detractors talk about her lack of academic pedigree. Is WFB's any better? Further, her "dogmatism" poses problems. We might, in this case, be forced to whittle down the "Great Books" a tad. There is also the talk about her "cult" following. What? There's no "cult" around Strauss?

These are non-issues.

Rand's book and her other non-fiction collections cleared away the cobwebs in many a person's head. There are still "pure" Randists around. There are many more recovering Randians. These can be found everywhere -- in schools, think tanks, in the military, some even at a Friday night Steak and Ale fest. The great majority are imbued with the concept that freedom is most desirable.

That is a good thing.

The book under review -- its ideas -- its impact -- played no small part.

This is not to say that there isn't a major problem concerning the innards of Rand's philosophic outlook.

It must be stated that writings pro or con, related to Rand, the person, and Rand, the champion of her own "objectivism," have been intellectually wanting. George Smith, in his Atheism, Ayn Rand, and Other Heresies, writes,

there has appeared relatively little in the way of competent reflection on Ayn Rand as philosopher. Accounts...written by admirers are frequently eulogistic and uncritical, whereas accounts written by her antagonists are often hostile, and what is worse, embarrassingly inaccurate.

Rand's main weakness rests on her concept of "survival." Her writings are replete with the words "survival" and "survive." This affects her system subset.

Rand's politics rest on six propositions: 

1. Man's actions are directed toward his rational interests;
2. Man's actions connect with his rights; 

3. Man's actions are his life, his sole standard of value; 

4. Man's actions under capitalism and freedom, only under capitalism and freedom, generate positive personal and societal virtues, the most important of which are productiveness and justice; 

5 Man's actions are inextricably linked to his survival, his life or death. 

6. Only under conditions of capitalism and freedom can man live.

Philosopher Robert Bass, in a fine piece, The Rights and Wrongs of Ayn Rand, concludes:

She...constantly uses and relies upon the generic 'man.' For example (in Rand's words), 'Productiveness is the recognition...that productive work is the process by which man's mind sustains his life...Productive work is the road of man's unlimited achievement and calls upon the highest attributes if his character.' While it is certainly true that without productive work, the human species would perish, it does not follow that every (mature) human being must engage in productive work in order to survive...(conversely)...if...'man' is meant to apply directly to the individual, the statement is simply false (as a generalization).

A summative judgment on Rand and her book must be made in positive terms. She has certainly contributed, whether she liked it or not, to the literature of the Libertarian Movement. Her general philosophy is comprehensive, at least. Her defense of capitalism and freedom, certainly novel.

Den Uyl and Rasmussen in their The Philosophic Thought of Ayn Rand bring it home:

Rand attempts to combine an essentially classical or premodern view of man with a modern political doctrine; that is to say, an Aristotelian view of man's nature is integrated with a liberal political doctrine. The argument...is that freedom of action in society is a function of what is proper to living a ...good life...what is necessary for the fulfillment of our human potential. There have been other intellectuals who have held a basically classical view of man and who were also political liberals. But no one else has shown the connection between these two outlooks as explicitly and successfully as Rand.

One might do worse than be a reader of Rand.

Capitalism: The Unknown Ideal is available on Amazon.com.

IC's Top 25 Philosophical and Ideological Conservative Books.

Dr. Enrico Peppe is a retired educator who runs the website The Third Way. A widower with too much time on his hands, he spends most of his time reading and thinking about the conservative movement, studying Catholic theology, working on his "Third Way" website, listening to Sinatra and Miles Davis, and admiring Ann Coulter.

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