Quote of the week...please share your favourite line from Ayn Rand's writings

“Happiness is that state of consciousness which proceeds from the achievement of one's values.”

Saturday, February 6, 2010

Ayn Rand's Troubled Economics?

Mark Skousen is an economist I respect a lot. He is inclined towards Capitalism, and is a consistent critic of Keynesian economics. However, in his article “THE TROUBLED ECONOMICS OF AYN RAND”, he proves that he has grossly misunderstood Ayn Rand’s philosophy and the concept of consumer sovereignty. Howard Roark, Skousen writes, denies a basic tenet of sound economics–the principle of consumer sovereignty, when he says. “I don’t intend to build in order to serve or help anyone. I don’t intend to build in order to have clients. I intend to have clients in order to build.”

The principle of consumer sovereignty was (and is) espoused by many sound economists, including Ludwig Von Mises and W H Hutt. They are right in saying that in a free market, people are urged to produce goods which are demanded by the consumers. But, this is far from proving that the consumer is “sovereign”. It was one of the greatest achievements of Ayn Rand to prove the fallacy of consumer sovereignty, a notion which has misled even great economists. As she put it, “There are the economists who proclaim that the essence and the moral justification of capitalism is "service to others—to the consumers," that the consumers' wishes are the absolute edicts ruling the free market, etc. What all such theorists fail to mention is the fact that capitalism grants economic recognition to only one kind of consumer: the producer.” Even Ludwig Von Mises would have agreed that people pursue their monetary interest “only to the extent that other things are equal.” The consumer is not sovereign. He hasn’t’ (and shouldn’t have) the right to compel producers to produce goods he desire.

Sovereignty is in fact, a political concept, as expressed in statements such as “The King is sovereign”. It doesn’t apply to economics. As an economist wrote, “Sovereignty” is the quality of ultimate political power; it is the power resting on the use of violence. In a purely free society, each individual is sovereign over his own person and property, and it is therefore this self-sovereignty which obtains on the free market. No one is “sovereign” over anyone else’s actions or exchanges. Since the consumers do not have the power to coerce producers into various occupations and work, the former are not “sovereign” over the latter.”

Mark Skousen is off the mark when he says “Randian selfishness ignores the interest of others.” I wonder whether he has carefully studied Ayn rand’s philosophy. There is no clash between legitimate interests of people. One doesn’t ignore the interests of others when pursuing ones selfish interests. One, in fact, aids it.

1 comment:

  1. Thanks for the article. I lost interest in Skousen many years ago because he inserts naive statements in otherwise good writing. His inability to grasp Objectivism is not his only weakness, but I think he means well.
    Cecil R. Williams