Tuesday, October 28, 2008


Devilstower, Daily Kos - In 1966, Ayn Rand collected a series of essays into the book, Capitalism: The Unknown Ideal. Twenty of the essays in the were written by Rand. The rest came from a trio of Rand's acolytes, followers who had already been writing the newsletter of her "Objectivist" cult for more than a decade. Among these were three essays from a member of Rand's inner circle; an economic advisor and dropout from the graduate economics program at Columbia -- Alan Greenspan.

Greenspan was such a close friend of Rand's, that she passed him manuscript pages of Atlas Shrugged while the book was being written. He paid rapt attention to her tale of mysterious genius John Galt -- brilliant engineer, physicist, philosopher, and organizer. Galt, who shows the world who is really in charge by leading a rebellion of industrialists against laws that interfere with their companies, was in perfect agreement with the essays that Greenspan was writing at the time. In those essays, Greenspan rails against the "statists" and their desire to blame failures leading to the Great Depression on greed and unsafe lending practices. Instead, says Greenspan, the economy was experiencing a "mild contraction" which would have amounted to nothing, had the government not overreacted. Greenspan also attacks the "welfare state" and its schemes to "confiscate the wealth of the productive members of society."

When John Galt leads his own inner circle of polymath geniuses to abandon the working classes and form a objectivist paradise, Greenspan must have cheered.

The essays Greenspan contributed to the 1966 collection, like the rest of the book, praised the idea of unfettered, unrestricted, unregulated, laissez-faire capitalism. Sure, there were problems in the system as it existed at the time, but those problems were not the fault of capitalism. Real capitalism, pure capitalism, had never been tried. Under pure capitalism, there would be a complete "separation of capitalism and state," and the resulting markets would be self-governing and self-correcting. It was only the intrusion of regulations into the system that brought on instability and immorality. Kick government out, and the system would not only flourish, but express the innate reasoning and positive force of selfishness.

Chief disciple Greenspan carried this torch for the next half-century and beyond. Pro-business conservatives (not surprisingly) found great comfort in a philosophy that said squeezing every dime out of the system was not only fair, but the only moral solution. Not long after the publication of his essays in Rand's book, Greenspan was invited to become an advisor to the Nixon administration. When Ford replaced Nixon, Greenspan became the chair of the Council of Economic Advisors. And when Reagan took power, Greenspan was no longer the voice crying in the wilderness, he was the very center of the establishment. Objectivism and Conservatism had united in Market Fundamentalism, and that force was on a jihad against regulation of any kind.

For the next thirty years, Greenspan would cheer the deregulation of the S&Ls and join John McCain in trying to protect Charles Keating from regulators. He would praise the deregulation of energy trading, and assure everyone that companies like Enron were pointing the way to greater efficiency and lower consumer prices -- and collect the 2000 "Enron Prize" in exchange. He would urge not only the creation of credit default swaps, but applaud their lack of regulation and invisibility in the system. He would argue against oversight, against limits on CEO pay, and for the increasingly complex systems by which banks generated new instruments of credit.

No one person did more to spread Rand's message of unregulated markets, unconstrained free trade, and unlimited power for corporate officers than Alan Greenspan.


At October 29, 2008 8:08 AM, Blogger Bigelow said...

“The central bank is an institution of the most deadly hostility existing against the principles and the form of our Constitution. I am an enemy to all banks discounting bills or notes for anything but coin. If the American people allow private banks to control the issuance of their currency, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the people of all their property until their children will wake up homeless on the continent their fathers conquered.” – Thomas Jefferson

At October 29, 2008 8:47 AM, Anonymous Rick said...

The Federal Reserve has the power to monetize the debt of any entity. When the government exercises this power, it makes the entity solvent again by deducting a small amount of value from the accounts of everyone who owns U.S. dollars (that's you and me and millions of others) without their consent.

As chairman of the Federal Reserve, Alan Greenspan was an exploiter. Were he a character in Atlas Shrugged, he'd be an agent of the corrupt government that John Galt, et al. opposed.

At October 31, 2008 1:58 PM, Blogger Martin said...

Alan Greenspan was not a free market economist. He betrayed his free market roots long ago, and his betrayal was made complete when he took over the Fed.

While all other disciples of Rand advocated the complete elimination of the Federal Reserve Bank, Greenspan took its helm. This is not consistent with a free marketeer.

Greenspan even repudiated some of his own earlier writings. For example, when asked if he still advocated the elimination of all antitrust laws (as he had back in the sixties), he said absolutely not.

Greenspan is now a straw man for those who want to tear down free markets. This debacle was caused by statism, not by freedom. Alan Greenspan was a huge part of that statism, because he was in charge of the second-most statist organization in the country (next to the IRS), and he relished the authority and power.

If you don't understand capitalism, then you can't understand that Greenspan was NOT a capitalist in practice. If you are setting out to show that Randian economics is unworkable, then you need to critique actual Randian economists, NOT Alan Greenspan.


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