When Austrian-school theorists have examined the dynamics of market exchange, they have stressed the importance not only of the larger political context within which such exchanges take place, but also the ways in which politics influences and molds the shape and character of those exchanges. Indeed, with regard to financial institutions in particular, they have placed the state at the center of their economic theories on money and credit.

Throughout the modern history of the system that most people call “capitalism,” banking institutions have had such a profoundly intimate relationship to the state that one can only refer to it as a “state-banking nexus.” As I point out in Total Freedom: Toward a Dialectical Libertarianism:

A nexus is, by definition, a dialectical unity of mutual implication. Aristotle . . . stresses that “the nexus must be reciprocal . . . [T]he necessary occurrence of this involves the necessary occurrence of something prior; and conversely . . . given the prior, it is also necessary for the posterior to come-to-be.” For Aristotle, this constitutes a symbiotic “circular movement.” As such, the benefits that are absorbed by the state-banking nexus are mutually reinforcing. Each institution becomes both a precondition and effect of the other.

The current state and the current banking sector require each other. They are so reciprocally intertwined that each is an extension of the other.

Remember this the next time somebody tells you, as New York Times columnist Bob Herbert did, that “free market madmen” caused the current financial crisis that is threatening to undermine the global economy. There is no free market. There is no “laissez-faire capitalism.” The government has been deeply involved in setting the parameters for market relations for eons; in fact, genuine “laissez-faire capitalism” has never existed. Yes, trade may have been less regulated in the nineteenth century, but not even the so-called Gilded Age featured “unfettered” markets.

One reason I have come to dislike the term “capitalism” is that, historically, it has never manifested fully its so-called “unknown ideals.” Real, actual, historically specific “capitalism” has always entailed the intervention of the state. And that intervention has always had a class character; that is, the actions of the state have always benefited and must always benefit some groups at the expense of others.

No Neutral Government Action

Mises understood this when he constructed his theory of money and credit. For Mises, there is no such thing as a “neutral” government action, just as surely as there is no such thing as “neutral” money. As he pointed out in The Theory of Money and Credit and other works, “Changes in the quantity of money and in the demand for money . . . never occur for all individuals at the same time and to the same degree and they therefore never affect their judgments of value to the same extent and at the same time.” He traced how, with the erosion of a gold standard, an inflation of the money supply would diffuse slowly throughout the economy, benefiting those, such as banks and certain capital-intensive industries, who were among the early recipients of the new money.

One reason the gold standard was abandoned is its incompatibility with a structural policy of inflation and with a system heavily dependent on government intervention. (It should be pointed out that a free-banking system need not necessarily entail a 100 percent reserve gold standard, but I leave this discussion for another day.) The profiteers of systematic inflation are not difficult to pinpoint. Taking their lead from Mises, Hayek, and Rothbard and such New Left revisionist historians as Gabriel Kolko and James Weistein, Walter Grinder and John Hagel III point out:

Historically, state intervention in the banking system has been one of the earliest forms of intervention in the market system. In the U.S., this intervention initially involved sporadic measures, both at the federal and state level, which generated inflationary distortion in the monetary supply and cyclical disruptions of economic activity. The disruptions which accompanied the business cycle were a major factor in the transformation of the dominant ideology in the U.S. from a general adherence to laissez-faire doctrines to an ideology of political capitalism which viewed the state as a necessary instrument for the rationalization and stabilization of an inherently unstable economic order. This transformation in ideology paved the way for the full-scale cartellization [sic] of the banking sector through the Federal Reserve System. The pressure for systematic state intervention in the banking sector originated both among the banks themselves and from certain industries which, because of capital intensive production processes and long lead-times, sought the stability necessary for the long-term planning of their investment strategies. The historical evidence confirms that the Federal Reserve legislation and other forms of state intervention in the banking sector during the first decades of the twentieth century received active support from influential banking and industrial interests. . . . [“Toward a Theory of State Capitalism: Ultimate Decision-Making and Class Structure,” Journal of Libertarian Studies, 1977.]

As Grinder and Hagel explain, “[C]artellization [sic] of banking activity permits banks to inflate their asset base systematically.” This has the effect of strengthening the “ultimate decision-making authority” of banking institutions over “the activities of industrial corporations,” and, by extension, “the capital market.” These banking institutions serve as a key “intermediary between the leading economic interests and the state.”

Thus one of the major consequences of inflation is a shift of wealth and income toward banks and their beneficiaries. But this financial interventionism also sets off a process that Hayek would have dubbed a “road to serfdom,” for inflation introduces a host of distortions into the delicate structure of investment and production, setting off boom and bust and, in Grinder and Hagel’s words, “a process of retrogression from a relatively free market to a system characterized by an increasingly fascistic set of economic relationships.”

Just as the institution of central banking generates a “process of retrogression” at home, engendering additional domestic interventions that try to “correct” for the very distortions, conflicts, and contradictions it creates, so too does it make possible a structure of foreign interventions. In fact, it can be said that the very institution of central banking was born, as Rothbard argues in The Mystery of Banking, “as a crooked deal between a near bankrupt government and a corrupt clique of financial promoters” in an effort to sustain British colonialism. The reality is not much different today, but it is a bit more complex in terms of the insidious means by which government funds wars, and thereby undermines a productive economy.

So where does this leave us today?

Much has already been said about the most recent financial crisis, viewed from a radical libertarian and Austrian perspective, which helps to clarify its interventionist roots. (See, for example, Steven Horwitz’s “An Open Letter to My Friends on the Left,” and Sheldon Richman’s “Bailing Out Statism“). The seeds for this particular crisis were planted some years ago. The origins of the housing bubble can be traced to the creation of Fannie Mae and Freddie Mac, government-sponsored enterprises that extended risky loans to low-income borrowers in the hopes of expanding the “ownership society.” But the larger crisis must be understood within the wider political-economic context shaped by inflationary government and Federal Reserve policies that fueled a binge of reckless borrowing. Horwitz explains:

All of these interventions into the market created the incentive and the means for banks to profit by originating loans that never would have taken place in a genuinely free market. It is worth noting that these regulations, policies, and interventions were often gladly supported by the private interests involved. Fannie and Freddie made billions while home prices rose, and their CEOs got paid lavishly. The same was true of the various banks and other mortgage market intermediaries who helped spread and price the risk that was in play, including those who developed all kinds of fancy new financial instruments all designed to deal with the heightened risk of default the intervention brought with it. This was a wonderful game they were playing and the financial markets were happy to have Fannie and Freddie as voracious buyers of their risky loans, knowing that US taxpayer dollars were always there if needed. The history of business regulation in the US is the history of firms using regulation for their own purposes, regardless of the public interest patina over the top of them. This is precisely what happened in the housing market. And it’s also why calls for more regulation and more intervention are so misguided: they have failed before and will fail again because those with the profits on the line are the ones who have the resources and access to power to ensure that the game is rigged in their favor.

This is precisely correct; indeed, there are those of a certain political bent who might seek to place blame for the current financial crisis on the recipients of subprime mortgages, particularly those in minority communities. But if elements of the current housing bubble can be traced to Clinton administration attempts to appeal to traditional Democratic voting blocs, it’s not as if the banks were dragged kicking and screaming into lending those mortgages. This is, in a nutshell, the whole problem, the whole history, of government intervention, as Horwitz argues. Even if a case can be made that the road to this particular “housing bubble” hell was paved with the “good intentions” of those who wanted to nourish the “ownership society,” their actions necessarily generated deleterious unintended consequences. When governments have the power to set off such a feeding frenzy, government power becomes the only power worth having, as Hayek observed so long ago.

We heard a lot about “change” during the last presidential campaign, and about the necessity to end the influence of Washington lobbyists on public policy. But that influence exists because Washington has the power to dispense privilege. And privileges will always be dispensed in ways that benefit “ultimate decision-makers.” That’s the way the system is rigged. It is not simply that intervention breeds corruption; it’s that corruption is inherent in the process itself.

It is therefore no surprise that the loudest advocates for the effective nationalization of the finance industry are to be found on Wall Street; at this point, failing financiers welcome any government actions that will socialize their risks. But such actions that socialize losses while keeping profits private are a hallmark of fascist and neofascist economies. They are just another manifestation of “Horwitz’s First Law of Political Economy” (“Capitalists, Capitalism, and the Siren’s Song of Stability”): “No one hates capitalism more than capitalists.”

It is the government’s monetary, fiscal, and global policies that have created insurmountable debt and record budget deficits, speculative booms and bubble bursts. What is needed is genuine structural change. But the primary battle is an intellectual and cultural one. It requires that we question the fundamental basis of the current statist system.

It is odd to find the word “dialectics” conjoined with anything remotely having to do with “libertarianism.” And this is, perhaps, a result of the profound socialist influence on contemporary thought. Say the word “dialectics” and what might come to mind is the “thesis-antithesis-synthesis” waltz usually associated with Hegel (even though that triad more appropriately belongs to Fichte). Or one might think of the “historical materialism” of the Marxists, who view communism as the ultimate “synthesis.” Or one might even think of the claims made by some that dialectics is a means of “resolving” actual, logical contradictions, a means of showing that “A” and “non-A” are one and the same.

It is no coincidence that the same people who dismiss dialectics as an assault on logic are often the same people who view it as the methodology of socialism. But even some of the proponents of socialism would agree, for they have dismissed logic as a “bourgeois” prejudice, while viewing exploitation as the “logic” of capitalism.

The socialists have also criticized many of the advocates of capitalism for having embraced a dogmatic, ahistorical social ideal. Marx himself had derided bourgeois theorists as “Robinsonades”; the bourgeois, said Marx, had put forth an atomistic notion of human liberty that saw individuals as entirely separate from one another. Like “Robinson Crusoe” on a desert island, the bourgeois individual is unrelated to other individuals and unrelated to any social or historical context. And, for the most part, mainstream neoclassical economists agreed with him. Their static conceptions of “perfect” competition posited a rationalistic model of “Economic Man” in possession of “perfect” knowledge. Such a model had little to do with the dynamics of the real world.

But as F. A. Hayek and others have pointed out, the very word “capitalism” was a product of the socialist conception of history. It took a major effort by twentieth-century thinkers to provide a thorough reconceptualization of the market society and its foundations. Among these were Austrian economists, such as Ludwig von Mises and Hayek himself, who viewed the market in dynamic and institutional terms, and philosophers, such as Ayn Rand, who articulated an objective moral ethos at the base of “capitalism: the unknown ideal.”

A proper defense of the free society is one that must lay to rest the notion that classical liberalism, or libertarianism, as such, depends on static, ahistorical, or atomistic thinking. It is possible, nay, necessary, to present a form of libertarian social analysis that makes use of the very dialectical techniques that are its birthright. It is time to recapture dialectics as a tool for liberty.

That was the goal of my “Dialectics and Liberty” trilogy. On this tenth anniversary of the publication of its first two installments, I look back on the genesis and development of this project.

What is dialectics? Dialectics is the art of context-keeping. It counsels us to study the object of our inquiry from a variety of perspectives and levels of generality, so as to gain a more comprehensive picture of it. That study often requires that we grasp the object in terms of the larger system within which it is situated, as well as its development across time. Because human beings are not omniscient, because none of us can see the “whole” as if from a “synoptic” godlike perspective, it is only through selective abstraction that we are able to piece together a more integrated understanding of the phenomenon before us—an understanding of its antecedent conditions, interrelationships, and tendencies.

In social theory, the object of our inquiry is society: social relations, institutions, and processes. Society is not some ineffable organism; it is a complex nexus of interrelated institutions and processes, of volitionally conscious, purposeful, interacting individuals—and the unintended consequences they generate. A dialectical approach to social theory is one that recognizes that any given social problem will often entail an investigation of related social problems. What makes a dialectical approach into a radical approach is that the task of going to the root of a social problem, seeking to understand it and resolve it, often requires that we make transparent the relationships among social problems. Understanding the complexities at work within any given society is a prerequisite for changing it.

It is simply mistaken to believe that Marx and Marxists have had a monopoly on this type of analysis. It is also mistaken to believe that this emphasis on grasping the full context is, somehow, a vestige of Marxism.

In fact, the father of dialectics, the man whom Hegel himself called the “fountainhead” of dialectical inquiry, was Aristotle. In works such as the Topics—the very first theoretical treatise on dialectics—Aristotle presented numerous techniques by which one might gain a more complete picture of an issue by varying one’s “point of view.” The Topics serves as a grand discussion of how shifts in one’s perspective can reveal different things about the objects of our inquiry, and about the perspectives from which those objects are viewed.

I examine the broad history of dialectical thinking, from the ancients to the postmoderns, in part one of Total Freedom. Presenting that history is beyond our current scope. But it is important to recognize that these methodological techniques have long been an unheralded aspect of classical-liberal and libertarian analytical frameworks, as presented by such thinkers as Herbert Spencer, Carl Menger, Mises, Hayek, Rand, and Murray Rothbard.

Hayek’s Critique of Utopianism

For example, Hayek, who absorbs from Menger an Austrian emphasis on process and spontaneous order, enunciated a profoundly dialectical critique of utopianism. As I argue in Marx, Hayek, and Utopia, Hayek railed against both collectivist and atomist viewpoints. For Hayek, since no human being can know everything there is to know about society, people cannot simply redesign it anew. Human beings are as much the creatures of their context as they are its creators. Hayek’s rejection of utopianism is a repudiation of what he calls “constructivist” rationalism. The utopian relies on a “pretense of knowledge,” Hayek argued, in an attempt to construct a bridge from the current society to a future one. Whereas the collectivists have criticized bourgeois theorists for embracing “ahistorical” and “state of nature” arguments for capitalism, they themselves have embraced an ahistorical, exaggerated sense of human possibility in their projections of an ideal communist society.

Marx himself was critical of this “constructivism” in the works of the utopian socialists, but his own work succumbs to the same constructivist impulse. Implicit in his communist ideal is the presumption that human beings can achieve godlike control over society, as if from an Archimedean standpoint, virtually transcending unintended social consequences such that every action brings about a known effect. Hayek saw this as a “synoptic delusion,” an illusory belief that one can live in a world in which every action produces consistent and predictable outcomes.And, invariably, the quest for total knowledge becomes a quest for totalitarian control.

Whatever problems one might detect in Hayek’s various theories of social evolution—and I discuss these in Marx, Hayek, and Utopia—I believe that he contributes much to a dialectical-libertarian social theory. For example, in his classic book, The Road to Serfdom, Hayek presents us with a multidimensional view of the corrosive nature of government control. He does not focus on the one-dimensional economic effects of state regulation. In fact, one might say that his primary concern is with the insidious, multidimensional effects of statism—how its consequences redound throughout a nexus of social relations: economic, political, and even social-psychological. In other words, Hayek analyzes statism not only as a politico-economic scourge, but as a phenomenon whose effects can be measured on many different levels of generality and from many different vantage points. The more perspectives we take on statism, the greater will be our grasp of its characteristics and the means by which to undermine it.

For Hayek, “the most important change which extensive government control produces is a psychological change, an alteration in the character of the people.” There is a social-psychological corruption at work, therefore, in which causes and effects become preconditions of one another, part of a system of mutually reinforcing processes. “The important point is that the political ideals of a people and its attitude toward authority are as much the effect as the cause of the political institutions under which it lives,” he writes.¹ This is a system, then, of mutual implications, of reciprocal connections between social psychology, culture, and politics:

Freedom to order our own conduct in the sphere where material circumstances force a choice upon us, and responsibility for the arrangement of our own life according to our own conscience, is the air in which alone moral sense grows and in which moral values are daily re-created in the free decisions of the individual. Responsibility, not to a superior, but to one’s conscience, . . . the necessity to decide which of the things one values . . . and to bear the consequences of one’s own decision, are the very essence of any morals which deserve the name. That in this sphere of individual conduct the effect of collectivism has been almost entirely destructive is both inevitable and undeniable. A movement whose main promise is the relief from responsibility cannot but be antimoral in its effect, however lofty the ideals to which it owes its birth.²

Hayek understood that under advancing statism, culture tends to both promote and reflect those social practices that undermine individual self-responsibility. Likewise, a free society is one in which the culture tends to promote and reflect those social practices that require individual self-responsibility. For Hayek, political change is built on a slow and gradual change in cultural mores, traditions, and habits, which are often tacit; trying to impose such change, without the requisite cultural foundations, is doomed to fail. Moreover, Hayek argued, those cultural foundations are reflective of the historically specific circumstances of a particular time and place. For somebody who has often been derided as a conservative, Hayek embraced the essence of a radical, rather than a utopian, approach.“[W]e are bound all the time to question fundamentals,” he said;“it must be our privilege to be radical.”³

Rand and Dialectics

Despite serious differences with Hayek, Ayn Rand also appreciated the role of culture in shaping political realities. In Ayn Rand: The Russian Radical, I reconstructed Rand’s critical approach as a tri-level model of analysis: In her examination of any social problem, Rand focused on the reciprocal connections among personal factors (Level I), that is, a person’s methods of awareness, or “psycho-epistemology,” and ethics; cultural factors (Level II), that is, ideology, pedagogy, aesthetics, and language; and structural factors (Level III), that is, politics and economics. For Rand, each level of generality offers both a microcosm and a differential perspective on the growing statism of the mixed economy that was the object of her criticism. (Rand saw that system as an instance of the “New Fascism.”) She traced the mutual implications and reciprocal interconnections among disparate factors, from politics and pedagogy to sex, economics, and psychology.

In terms of the implications for a dialectical-libertarian analysis, the important point here is that Rand never emphasized one level of generality or one vantage point to the exclusion of other levels or vantage points. So, for example, even when she’d focus attention on Level III—the nightmarish labyrinth of government taxes, regulations, prohibitions, and laws constraining trade—she was quick to dismiss those who thought that an attack on the state was a social panacea. In the absence of an alteration of Level I and Level II social relations, which have a powerful effect on the character of political and economic practices and institutions, a change in Level III is not likely to be sustainable. For Rand, then, just as statism exerts its nefarious influence on all the levels of human discourse, so too must freedom be understood as a multidimensional achievement. Think Russia or Iraq—where, in the absence of a culture of individualism, all the “democratic” procedural rules in the world are not likely to bring about a free society.

Much like Hayek, Rand proclaimed herself a radical “in the proper sense of the word: ‘radical’ means ‘fundamental.’”⁴ And as a “radical for capitalism,” Rand argued that “Intellectual freedom cannot exist without political freedom; political freedom cannot exist without economic freedom; a free mind and a free market are corollaries.”⁵ When I teach this tri-level model to my students, I often ask them to consider any social problem of their choice. I then ask them to filter that social problem through the different levels of generality and the different vantage points offered within each level. As a prime illustration of this methodology, I point to Rand’s own analysis of the social problem of racism.

Like other great classical-liberal and libertarian theorists, Rand maintained that government intervention in the economy creates a civil war of all against all; advancing statism makes masters and slaves of every social group, with each vying for some special privilege at the expense of others. Paradoxically, even as statists try to create and rule society as a collective whole, their policies simultaneously create vast social fragmentation. The rule of force has the effect of engendering the formation of pressure groups, each with a design on the levers of power. Every group threatens every other group while acting in self-defense against the aggrandizement of its political competitors. Over time, Rand argued, the group becomes the central political unit of a statist society, and every differentiating characteristic among human beings—be it age, sex, sexual orientation, social status, religion, nationality, or race—becomes a pretext for the formation of yet another interest group.

Racism, in Rand’s view, was the most vicious form of social fragmentation perpetuated by modern statism. It was not a mere byproduct of state intervention; it was a constituent element of statism. From the perspective of Level I, Rand argued that racism was an immoral and primitive form of collectivism that negated individual uniqueness, choice, and values. Psychologically, the racist substitutes ancestral lineage for self-value and thereby undermines the earned achievement of any genuine self-esteem. Holding people responsible for the real or imagined sins of their ancestors, wielding the weapon of collective guilt, the racist adopts the associational, concrete-bound method of awareness common to all tribalists. This “anti-conceptual” tribalism is manifested in the irrational fear of foreigners (xenophobia), the group loyalty of the guild, the worship of the family, the blood ties of the criminal gang, and the chauvinism of the nationalist. Tribalism was “a reciprocally reinforcing cause and result” of the various caste systems throughout history.⁶

Such “psycho-epistemological” tribalism could only gain currency in a culture dominated by irrationalist and collectivist ideas (Level II). When the Nazis ascribed notions of good and evil to whole groups of people based on legitimating ideological doctrines of racial purity, they depended on the obliteration of individualism as a cultural ideal.

In terms of structural realities (Level III), Rand explored the various political and economic institutions and policies that both reflected and perpetuated racism—through outright slavery, genocide, or apartheid, or through the use of quotas, prohibitions, zoning laws, rent control, public housing, public education, compulsory codes of segregation and integration, and a self-perpetuating welfare bureaucracy that kept poor people poor, while inculcating a psychology of victimization among them.

What most interested Rand was the broad historical process by which racism predominates in modern societies. In Rand’s view, statism was born in “prehistorical tribal warfare.” Political elites often perpetuated racial hatred and scapegoated racial and ethnic groups in order to secure power. But “the relationship is reciprocal,” said Rand: Just as tribalism was a precondition of statism, so too was statism a reciprocally related cause of tribalism.⁷

“The political cause of tribalism’s rebirth is the mixed economy,” Rand wrote, “the transitional stage of the formerly civilized countries of the West on their way to the political level from which the rest of the world has never emerged: the level of permanent tribal warfare.”⁸ In Rand’s view, advancing statism and tribalism went hand-in-hand, leading to a condition of “global balkanization.”

What Is to Be Done?

Ten years later I continue to argue for the necessary integration of dialectical method and libertarian theory. A dialectical-libertarian approach to social inquiry exhibits one of the key hallmarks of radical thinking. If one’s aim is to resolve a specific social problem, one must look to the larger context within which that problem is manifested, and without which it would not exist. This is why context-keeping is so indispensable to a radical libertarian political project.

As the brief example of racism makes clear, deeply embedded social problems demand analysis not only in terms of their political and economic dimensions, but also their preconditions and effects in the realms of morality, social psychology, psycho-epistemology, ideology, and culture. The dialectical theorist uses all the tools of empirical investigation to ascertain the factors at work across many dimensions in the consideration of any social problem. But it takes a supreme act of integration to note the connections among social problems, viewing these not only as related to one another, but as constituent relations of a larger system in need of radical change.

This large-scale theorizing might give the impression that one must analyze everything before one can change anything. But this is as much of a “synoptic delusion” as is the notion of central planning. What is required is a more fully developed critique of the system that generates such social problems—and a corresponding vision for social change that resolves these problems at their root, in all their personal, cultural, and structural manifestations. A genuinely radical project beckons, one that integrates the explanatory power of libertarian social theory and the context-keeping orientation of dialectical method.

Notes

1. F. A. Hayek, The Road to Serfdom (Chicago: University of Chicago Press, 1994 [1944]), p. xxxix.
2. Ibid., 231-32.
3. F. A. Hayek, “The Dilemma of Specialization,” in Studies in Philosophy, Politics, and Economics (Chicago: University of Chicago Press, 1980 [1967]), p. 130.
4. Ayn Rand, “Conservatism: An Obituary,” in Capitalism: The Unknown Ideal (New York: New American Library, 1967), p. 201.
5. Ayn Rand, For the New Intellectual (New York: Signet, 1961), p. 25.
6. Ayn Rand, “The Missing Link” in Philosophy: Who Needs It (New York: New American Library, 1982), pp. 50-51.
7. Ayn Rand, “Racism,” in The Virtue of Selfishness (New York: New American Library), p. 128.
8. Ayn Rand,“Global Balkanization,” in The Voice of Reason (New York: New American Library), p. 123.

Born in Russia on February 2, 1905, the late novelist and philosopher Ayn Rand would eventually emigrate to the United States and make an indelible mark on intellectual history.  (She died in 1982.) As we celebrate the centennial of her birth, it is fitting to recall Rand’s unique contribution to the defense of capitalism as expressed in her magnum opus, the best-selling novel Atlas Shrugged.

In 1945, when Rand began outlining that work, she made a self-conscious decision to create a “much more ‘social’ novel than The Fountainhead.”¹ She wished to focus not simply on the “soul of the individualist,” which The Fountainhead had dramatized so well, but to proceed “from persons, in terms of history, society, and the world.” This new “story must be primarily a picture of the whole,” she wrote in her journal, making transparent the cluster of relationships that constitute society as such:

Now, it is this relation that must be the theme.  Therefore, the personal becomes secondary. That is, the personal is necessary only to the extent needed to make the relationships clear. In The Fountainhead I showed that Roark moves the world—that the Keatings feed upon him and hate him for it, while the Tooheys are consciously out to destroy him. But the theme was Roark—not Roark’s relation to the world.  Now it will be the relation.²

Atlas Shrugged explores these relations in every dimension of human life. It traces the links between political economy and sex, education and art, metaphysics and psychology, money and moral values. It concentrates on the union of spiritual and physical realms and on the concrete means by which certain productive individuals move the world, and by which others live off of their creations. It shows the social importance of the creative act by documenting what would happen if the prime movers, the “men of the mind,” went on strike.

Most important, however, Atlas Shrugged provides a manifesto for a new radicalism—not a political radicalism per se, but a methodological radicalism, a radical way of thinking on which political and social change is built.  As we celebrate the Rand centenary, it is fitting to explore the implications of Rand’s radicalism.

“To be radical,” Karl Marx said, “is to grasp things by the root.”³ Unlike Marx, however, Rand repudiated communism and its root, the “basic premises of collectivism” it embodied.  Rand’s attack was “radical in the proper sense of the word.”  As she explained: “ ‘Radical’ means ‘fundamental.’ Today, the fighters for capitalism have to be, not bankrupt ‘conservatives,’ but new radicals, new intellectuals and, above all, new, dedicated moralists.”⁴

The analytical power of Rand’s radical framework went beyond a search for roots. In seeking to understand the system of statism, Rand showed how various factors often mutually support one another in sustaining its irrationality. She explores how coercive relations are at war with human beings and with life itself; they are “anti-man, anti-mind, anti-life.”⁵

Mind-Body Integration

Rand’s case for capitalism is a metaphysical and moral case built on a total and unequivocal rejection of the mind-body dichotomy and all the false alternatives it engenders.  In her philosophic journals, Rand explained how her novel was meant to “[v]indicate the industrialist” as “the author of material production.”⁶ But underlying this vindication was Rand’s desire to secularize the spiritual and spiritualize the material:

The material is only the expression of the spiritual; that it can neither be created nor used without the spiritual (thought); that it has no meaning without the spiritual, that it is only the means to a spiritual end—and, therefore, any new achievement in the realm of material production is an act of high spirituality, a great triumph and expression of man’s spirit. And show that those who despise “the material” are those who despise man and whose basic premises are aimed at man’s destruction.⁷

In Rand’s view, the “spiritual” does not pertain to an other-worldly faculty. It refers to an activity of human consciousness.  Reason, as “the highest kind of spiritual activity,” is required “to conquer, control, and create in the material realm.”⁸ She did not limit material activities to purely industrial production. She wished to “show that any original rational idea, in any sphere of man’s activity, is an act of creation.”⁹ This applies equally to the activity of industrialists and artists, businessmen and intellectuals, scientists and philosophers. Each of these spheres is accorded epistemological significance—and supreme respect.

By connecting reason and production, thought and action, theory and practice, fact and value, morality and prudence, Rand intended to uncover the “deeper, philosophical error” on which these various dichotomies were based. As such, Atlas Shrugged was designed to “blast the separation of man into ‘body’ and  ‘soul,’ the opposition of ‘matter’ and ‘spirit.’ ”¹⁰ Rand rejected the metaphysical dualists who had bifurcated human existence. She proclaimed in her journal that “Man is an indivisible entity.” Mind and body “can be considered separately only for purposes of discussion, not in actual fact,” she explained. Thus, in the projection of her “ideal man,” John Galt, there is “no intellectual contradiction and, therefore, no inner conflict” between mind and body.

The Sanction of the Victim

Galt’s revolution against human fragmentation is also a revolution for those who have been victimized by it and by the altruist morality that feasts on self-immolation. Throughout Atlas Shrugged, Rand showed how altruism is used by some (the “looters”) to instill guilt in others (the “producers”), by putting the virtues of the latter at the service of the former. She argued that the altruist’s demands for individual self-sacrifice to a “common good” require the “sanction of the victim.”¹² The creators have for too long implicitly collaborated with their exploiters. That Galt grasps this principle, and that Hank Rearden and Dagny Taggart do not, sets up the main plot conflict in the novel. When Rearden begins to understand the implications of his actions, and the vast social consequences of a reckless moral code, he refuses to participate in his own martyrdom or to condone the government’s confiscation of his property. He tells his persecutors: “Whatever you wish me to do, I will do at the point of a gun.  If you sentence me to jail, you will have to send armed men to carry me there—I will not volunteer to move.  If you fine me, you will have to seize my property to collect the fine—I will not volunteer to pay it.  If you believe that you have the right to force me—use your guns openly.  I will not help you to disguise the nature of your action” (479).

By withdrawing the “sanction of the victim,” the men of the mind strike out against the altruist core of statist political economy.  But it is the “pyramid of ability” that explains why the strike works so effectively by draining the economy of talent.  Those at the top of their intellectual craft contribute the most to those below them, while those at the bottom free-ride on the achievements of the innovators above them.  Rand did not view this as a static class pyramid, for she believed that individuals can rise to levels consonant with their developed abilities. When human beings relate to one another on the basis of these abilities, exchanging value for value, a benevolent harmony of interests becomes possible. When “need,” rather than ability, becomes a criterion for the acquisition of values, it sets off a degenerative social process in which the “needs” of some place a moral claim on the lives of others.  This is the evil of altruism, says Rand; it becomes a pretext for oppressing the most creative individuals in society.

Cultural and Political Decay

Moral and social deterioration go hand in hand with cultural and political degeneration, in Rand’s view.  In the dystopian society of Atlas Shrugged, Rand contrasted the “symphony of triumph” that is Richard Halley’s “Concerto of Deliverance” with the “dreary senselessness of the art shows” in vogue.  And yet it is the senseless that receives public adulation and government subsidies.  As the literary leader of his age, Balph Eubank declares:  “No, you cannot expect people to understand the higher reaches of philosophy. Culture should be taken out of the hands of the dollar-chasers. We need a national subsidy for literature. It is disgraceful that artists are treated like peddlers and that art works have to be sold like soap” (141).

This is the same cultural figure who asserts that “Plot is a primitive vulgarity in literature”—a claim like that of Dr. Simon Pritchett, who adds: “Just as logic is a primitive vulgarity in philosophy.” And Mort Liddy, who proclaims: “Just as melody is a primitive vulgarity in music” (134).

As another sign of the cultural and philosophic bankruptcy of the society portrayed in Atlas Shrugged, we are introduced to Pritchett’s book, The Metaphysical Contradictions of the Universe, which “proved irrefutably” that “Nothing is absolute.  Everything is a matter of opinion” (265).  And then there is Dr. Floyd Ferris of the State Science Institute, which produces the top-secret “Project X,” an apparatus of death.  Ferris is the author of Why Do You Think You Think?—a book that declares that “Thought is a primitive superstition” and that “Nothing exists but contradictions” (340–41).

Rand made it clear that such books flourish in this degraded society and that their floating abstractions have actual implications:  “You think that a system of philosophy—such as Dr. Pritchett’s—is just something academic, remote, impractical?  But it isn’t.  Oh, boy, how it isn’t!” (265).

The ultimate concrete testament to the deadly implications of a culture that denigrates reality, logic, certainty, principles, ethics, rights, and the individual is the fatal voyage of the Taggart Comet, a train that disappears into the eternity of a tunnel, each of its passengers sharing “one or more” of the ideas of a nihilistic age.

Rand also showed that such nihilism could never triumph if its death premises were fully articulated.  Those ideas can gain currency only when rationalized as means to glowing “social” ends.  Rand illustrated how the use of a certain political language serves the thoroughly corrupt material interests of those who wield political power. “The State Science Institute is not the tool of any private interests or personal greed,” we are told; “it is devoted to the welfare of mankind, to the good of humanity as a whole—” (819).  These “sickening generalities” and Orwellian slogans, repeated over and over again by the politically privileged, are the veneer that covers up the looting of the productive and the development of weapons of mass destruction and torture.

Every government bill, every political organization, is a study in euphemisms. Corporations slurping at the public trough, while using antitrust rulings to crush their competitors? That’s the “Anti-Dog-Eat-Dog Rule” in action. Then there are companies like the “Interneighborly Amity and Development Corporation” or the “Friends of Global Progress,” which campaigns for the “Equalization of Opportunity Bill,” the forced “social” sharing of productive assets. “The Bureau of Economic Planning and National Resources” and other government agencies focus on “Essential Need” Projects. “The Unification Board,” the “Railroad Unification Plan,” the “Steel Unification Plan,” the “Order of Public Benefactors” all aim for “the democratization of industry.” Such acts in the “public interest” destroy private property, genuine social accountability, and individual responsibility.  Rand documented, painfully, how the destruction of the market economy and its specialization and division of labor is, ultimately, a destruction of the “division of responsibility.” In a statist social order, where everybody owns everything, nobody will be held responsible for anything.  “It’s not my fault” is the statist’s credo.”¹⁴

This irresponsibility is only one aspect of the process by which a statist economy implodes.  In Atlas Shrugged, the economic system careens from one disaster to another, as the “men of the mind” withdraw their sanction from a government that regulates, prohibits, and stifles trade. Statist politicians attempt to exert more and more control over the machinery of production. To no avail. In the end, directives are issued, like Number 10-289, which attach workers to their jobs, order businesses to remain open regardless of their level of profit, nationalize all patents and copyrights, outlaw invention, and standardize the quantity of production and the quantity of consumer purchases, thereby freezing wages and prices—and human creativity.

The “pyramid of ability” is supplanted by the “aristocracy of pull.” A predatory neofascist social system, which survived parasitically, must ultimately be destroyed by its own inner contradictions, incapacitating or driving underground the rational and productive Atlases who carry the world on their shoulders.

Rand’s radical legacy, as presented in Atlas Shrugged, led her, in later years, to question the fundamentals at work in virtually every social problem she analyzed.  She viewed each problem through multidimensional lenses, rejecting all one-sided resolutions as partial and incomplete. On the occasion of the 100th anniversary of Rand’s birth, it is important to remember that her conception of human freedom depended on a grand vision of the psychological, moral, and cultural factors necessary to its achievement. Hers was a comprehensive revolution that encompassed all levels of social relations: “Intellectual freedom cannot exist without political freedom; political freedom cannot exist without economic freedom; a free mind and a free market are corollaries.”¹⁵

Notes

1. Ayn Rand, Journals of Ayn Rand, ed. David Harriman (New York: Penguin Dutton, 1997), p. 390.
2. Ibid., p. 392.
3. Karl Marx, “The Critique of Hegel’s Philosophy of Right,” in Early Writings, trans. and ed. T. B. Bottomore; foreword by Erich Fromm (New York: McGraw-Hill, 1963 [1843]).
4. Ayn Rand, “Conservatism: An Obituary,” in Ayn Rand, Capitalism: The Unknown Ideal (New York: New American Library, 1967), p. 200.
5. Ayn Rand, “Is Atlas Shrugging?” in ibid, p. 151.
6. Journals, p. 550.
7. Ibid., p. 551.
8. Ibid.
9. Ibid., p. 550.
10. Ibid., p. 551.
11. Ibid., p. 512.
12. Ayn Rand, Atlas Shrugged, 35th anniversary ed. (New York: Dutton, 1992 [1957]), p. 454. Subsequent quotes from the novel are indicated by page numbers in the text.
13. Journals, p. 507.
14. Atlas Shrugged, p. 222.
15. Ayn Rand, For the New Intellectual: The Philosophy of Ayn Rand (New York: New American Library: 1961), p. 25.