A recent opinion piece published on the MarketWatch website and written by Paul B Farrell carried the headline “Ayn Rand vs. Adam Smith: the only midterm election that counts.” While this antithesis between Rand and Smith is an established debate among economists, Farrell’s article placed it in an aggressively political context and attached a level of importance to it that verged on the apocalyptic: “These two candidates are in a battle to dominate the world… [they] will decide the balance of power in the world and the survival of the planet.”
In the writer’s view it is conservatives in America who, having embraced Ayn Rand’s ideas, pose a threat to civilisation, ranging from Christianity to the climate. He warns that “Ayn Rand’s myopic, self-centered capitalism is killing Adam Smith’s moral capitalism, killing the American Dream, and will ultimately destroy Planet Earth.” The reality is that this is an important debate, but it is becoming overheated. In fairness, Ayn Rand has only herself to blame if the contemporary critique of her philosophy is couched in hyperbole, since she was never one to understate her views or extend rococo courtesies to her opponents.
We need to put this debate into a proper perspective. It would be helpful if capitalist theorists could adopt an approach to Ayn Rand that did not involve either worshipping or demonising her. If she was extreme in her demands for a laissez-faire form of capitalism that verged on economic nihilism, it is important to remember she had spent her formative years in the Soviet Union precisely during the period when Lenin and his heirs were constructing the system that suffocated freedom, killed millions of people and aggravated poverty.
The temptation, then, was to over-react, as Rand did, and strip capitalism of the discipline and altruism that Adam Smith had regarded as intrinsic to it. Rand denounced altruism: “I consider it evil.” Even her firmest supporters need to ask themselves what kind of society such an interpretation of the free market would produce. One of the greatest capitalists of recent times, Sir John Templeton, was also one of the greatest practitioners of altruism and philanthropy. Charity was one of the five “economic virtues” he defined, saying, “Profit and exchange alone are not enough to sustain the good in society. We need to care for those in society who cannot care for themselves.” Yet his free market and conservative credentials can hardly be denied.
Ayn Rand, in contrast, as a militant atheist and proponent of abortion, sits uneasily as a philosophical icon of the Republican Party. It is an objective reality that her tenets are incompatible with Christianity, which necessarily disqualifies her as a guru for many conservatives, especially cultural conservatives. That does not mean she did not offer many valuable insights into the need for free markets and the evils of collectivism. There is a danger, too, in the current debate, of misrepresenting Adam Smith as some kind of Christian altruist presenting a believer’s agenda in opposition to Rand. Smith was, like most of his so-called Enlightenment contemporaries, a deist – a conveniently vague euphemism that avoided his being pilloried as an atheist. His “Invisible Hand” is hardly an articulation of Christian theology, while his “Great Architect of the Universe” is a Masonic concept.
Nothing could be a more misleading distraction in the American debate on capitalism than to invent a false “Rand/Republican, Smith/Democrat” dichotomy. The sub-prime crisis was caused by social engineering policies introduced by the Clinton administration that ended with the US Justice Department compelling lenders to distribute largesse to insolvent borrowers from “minorities”. That would have given Ayn Rand a seizure; but anyone who imagines Adam Smith would have been dancing in the streets to celebrate such economically demented pseudo-altruism is deluded.
Today, undeterred by the lessons of the sub-prime crisis, ‘Obamanomics’ is subverting the market in America and turning the world’s leading capitalist nation into a hobbled “mixed” economy with all the potential for financial sclerosis that implies. China, a country whose financial health affects the entire globe, remains a command economy. The European Union, imposing its one-size-fits-all currency on vastly disparate member states, is reverting fast to neo-Keynesian intervention, manipulation and a level of bureaucracy reminiscent of the Soviet template.
Much of the world’s economic landscape, so far from reflecting an ideological victory for Ayn Rand, is regressing into models that Adam Smith would have recognised as wealth-destroying. A free market does not mean an unregulated free-for-all, nor is there any purpose in creating wealth if it does not benefit the whole of society – though such benefits should not come principally via state-directed welfare – not only for moral reasons, but because the drastically dispossessed will eventually rise up and overthrow such a system. Ayn Rand’s disciples and detractors alike need to end their grudge match and face the concerning realities of globalised economics in the 21st century.