Ayn Rand and Adam Smith

Mark Mills in SharkAttack (‘a blog show casing the musings of Mark Mills’) here writes:

‘You don’t need to be selfish to believe in capitalism"

“Klein suggests that Rand is merely reproducing the ideas of Adam Smith. The reality is very different. The difference between these two thinkers shows just how little a market economy has to do with amorality. Both Smith and Rand explore how humanity can benefit from the actions of self interest individuals but Rand takes this principal much further. Smith is concerned principally with commerce and industry (his great book is called ‘the wealth of nations’), while Rand makes no effort to set a limit on self interest. Smith’s ‘Theory of moral sentiments’ is a hymn to the value of charity. By contrast, characters in Rand’s books that show generosity are scorned. To see the value of wealth accumulation as a driver of wealth creation does not require you to give up on the idea that in much of life concern for others is a great and noble virtue.

One thing that Klein does not seem to get is that there is a distinction between self-interest and selfishness. It is quite possible to do something that makes you better off but which does no one else any harm (and in fact may be benefiting them). To my way of thinking, this is not selfishness because that requires you to be causing harm to others. This is no semantic difference, it is key to how operates in practice. While self-interest is rewarded, there are laws to prevent selfish behaviour such as lying, stealing, bribery, breaking contracts and using violence. For the market to work there must be legally enforceable limits to the harm people can do to each others. Without them you will have anarchy (or Yeltsin’s Russia as it is otherwise known). This idea was not alien to Smith who imbibed against the power of monopolies, while Rand would doubtless have seen the competition commission as an undue restriction on the strong for the benefit of the weak.

At the root of the different viewpoints of Smith and Rand are fundamentally different views of morality itself. Rand’s philosophy simply turns the world on its head and makes virtue into a vice. Smith is attempting something much more complicated, to set how to create a good society composed of people who are not necessarily good. If we look closely at his famous saying that ‘it is not for the benefit of society that ‘It is not from the benevolence of the butcher the brewer, or the baker that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity, but to their self-love, and never talk to them of our own necessities, but of their advantages.’ We see not a celebration of self interest but a statement of how Smith believed things were. Smith might wish us to be entirely virtuous but he knows we’re not. He understood that to try to build a socialist utopia on such shaky foundations was futile and we would be better off trying to turn mans vices into virtues through the market.

To be a free marketeer a la Adam Smith is miles away from being a cold hearted, Randian sociopath. Trying to win an argument by claiming that your opponents are greedy rather than misguided is low and even Naomi Klein should know better.”

Comment
I know nothing about Naomi Klein or Mark Mills, so I cannot comment on their ‘quarrel’. I do know about Ayn Rand and Adam Smith, though it is many years since I read ‘Atlas Shrugged’ and her shorter philosophical books (The Virtue of Selfishness', 'Capitalism the Unknown Ideal', The New Left', etc.,) which I still have in my library in France from 47 years ago. I recently watched some video’s of talks Ayn Rand gave to a class of students on U-Tube. Because she spoke well, and delivered a very clear philosophical theme, I am sure she won converts to her philosophy. She was a remarkable person.

But she had little in common with Adam Smith, and if Naomi Klein thinks differently then she has not studied either Ayn Rand or Adam Smith very closely. Nor for that matter may Mark Mills have studied Adam Smith closely.

Theory of Moral Sentiments is not a hymn to ‘charity’. It’s about the moral social harmony of society, not from people loving each and everybody else, but from their anonymous dependence on each other, most of whom they never know of, nor need to be concerned about two or more links along the chain of connections among them.

Whereas family connections are framed in social bonds among the members, with diminishing intensity of the bonds as friends and then acquaintances are considered, finally diminishing to zero as the vast world of strangers comes into contact. But our market connections continue productively whether we act from love or indifference and anonymity, if there is a ‘mercenary exchange of good offices’ between us, and we breach no laws and cause no harm.

Going to the extreme of selfishness (‘greed is good’) is neither necessary nor appropriate. Absolute independence is from long-gone past ages of mankind in which self-sufficiency was a virtue, perfect equality ruled, and everybody was poor to the same degree (and life spans were shorter).

Commercial society changed all that.

Absolute dependence of all on everybody else is today’s virtue (Rousseau was wrong!), inequality is its price and everybody is ‘rich’ to different degrees (the poor in the rich countries are incomparably better off materially than the poor in any previous societies), and life spans are longer.