e. Perhaps in utopian capitalism money would permit you to obtain for your goods and your labor exactly what they would be worth to the people who would buy them. Almost any conceivable system of real capitalism, however, includes all kinds of threats and blackmail; and if you want to lie, cheat, coerce, and use other means of "persuasion," the system neatly enables you to use them almost to your heart's content. It is certainly not unique in this respect--you can also prevaricate and steal under collectivism. But capitalism, above perhaps all other economic systems, which have widely prevailed in human history, encourages and enables various kinds of cheating and coercion, so that you can easily obtain for your goods and your labor more than they are worth to the people who buy them. To think that money permits no deals except those leading to mutual benefit by the unforced judgment of the traders is lunacy. Money exists in non-capitalist economies, too--including slave and collectivist economies--and in such systems it certainly permits deals, which are not mutually beneficial or made according to the unforced judgment of the traders. Even in relatively free capitalism, money merely allows mutual benefit by the unforced judgment of the traders; it hardly necessitates it.
If I gain political influence, or am a member of a socially powerful family, or acquire a monopoly on, say, the taxicab industry in a given town, I can easily force you to give me more money than you think fair for various goods and services that I offer you; and I can definitely trade with you more to my advantage than yours. Money may well enable traders to have unforced judgment for their mutual benefit in their deals; but the only way to ensure their dealing with each other in a fair and mutually beneficial manner is to grant them sainthood. This, essentially, is what Rand grants them in a book, Capitalism, The Unknown Ideal. In an interesting review of this book, Honor Tracy points out that in London's Hyde Park in the 1930s fanatics who denounced one thing and deified another vied with each other in fervent lunacy. Says Ms. Tracy: "A type there was yet nuttier than the rest, namely, he who knew what was wrong with mankind and, alone of his fellows, was able to put it right." (1966). The tone of Rand's book, with its monomaniac vehemence, is much like that of the thinkers in Hyde Park.
Tracy goes on to say: "Where businessmen are concerned, her notions are romantic indeed. Their minds are rational, creative, inviolate (at this point, for some reason, she hauls in Galileo), they stand for freedom, civilization, progress, joy: they form the elite of a society, if not--as Valery said that Europe did--"la partie prà ©cieuse du monde.' It is a view that some of us would like to explore in greater depth: an appendix, telling us exactly where these paragons are to be found, would have been most acceptable." (1966).
Money itself is a commodity whose value is constantly changed by forces beyond anyone's control. Failed currencies and inflation/deflation are proof of this. Moreover, Rand completely overlooks the fact that money itself is a commodity and subject to the law of supply and demand for it. If you are on a gold standard, then the supply of gold is quite outside the control of the individuals producing goods and services. Yet the supply of gold drastically affects their relative wealth in terms of purchasing power. For instance, the western world's economies were stagnant in the 1500s before the discovery of the new world's gold. There was no gold to buy new or expanded production so there was no new or expanded production. The infusion of gold from the new world gave people money to buy more and thereby put more people to work. However, as a result of they're being more gold, gold went down in value, buying less goods and services than before. The same is true of paper money. If the government does not print enough money to support the purchase of new and more products, then either those new products are not produced or some other products that were are stopped from being produced. If the government prints too much money, then the money in circulation goes down in value -- what we call inflation. Money is subjective, not objective; by nature since it value is determined by people's attitudes. Therefore her assertion that money is somehow an objective arbiter of anything is silly.
Moreover, individual capitalists are largely ignorant of macroeconomics and labor economics. Since, under capitalism, they direct the economy, we have the blind leading the blind, prejudiced by capitalism for short-term self-interests only. Individual businesspersons cannot control the whole economy by their individual actions and are therefore forced to use lowest common denominator to compete so their businesses survive. If one keeps some other industry's customers working, that does not mean that industry's workers will buy one's products. Like the fastest runner, they will survive if their competitors fail for any reason, not necessarily for producing an inferior product or service.
. International blockage and lag-time are facts. If the U.S. stimulates its workers with money spent buying goods from countries that don't buy our goods, this stimulation aids another country, and hurts our own. Frivolous production rather than substantial/sustainable production is an inescapable outcome of capitalism. More and more people must be employed in what is not necessary since machines will be brought in to replace workers. Some psychological fears innately caused by capitalism. 1) You can fail at any time. 2) You and your whole family's future are always at stake. 3) Selling promotes "rating," "needing," and self-esteem--mood swings based on others perceived view of you.
Furthermore, after one's needs are met, money becomes a burden itself. If one has more money and/or goods than one can use, one must spend time worrying about, maintaining, storing, insuring the goods, etc. These are not tasks that undisturbed people enjoy. Moreover, having a great deal of money makes one a target for those that want or need it. Therefore, more and more money and goods can be contrary to survival, security, piece of mind, and true friendships. To fixate on money as the only measurement the "good" is disturbed.
As an ironic example of how capitalism almost inevitably corrupts itself, because human beings are much interested in profit than they are in productive effort, the March 1968 issue of The Objectivist announced that even the Nathaniel Branden Institute had compromised its principles in order to take in some extra money. After logically being a purely profit-making corporation for the first decade of its existence, and after discouraging tax-exempt donations to its cause, this objectivist Institute established a nonprofit corporation Foundation for the New Intellectual, with Nathaniel Branden and Leonard Peikoff as trustees, and had it accepted as a tax-exempt organization by the United States Internal Revenue Service, so that people could make nontaxable deductions to help carry on its work. This procedure clearly takes advantage of "welfare state" tactics, is anti-capitalistic in any ideal sense, and beautifully demonstrates that the purest capitalists almost always get corrupted by the lure of easy monetary gains instead of sticking to truly productive labor. If even Branden and Rand must look to donations and altruism for support, is pure capitalism really a feasible ideal?
From the foregoing analysis, it can be seen that in numerous ways, which I have delineated--as well as in many more which would be redundant to examine--the relationship between Ayn Rand's theories of capitalism, the free market, money, and the value of labor to empirical reality is practically nil.
Rand's economic theory consists of one unverified (and often unverifiable) axiom after another, amounting to a huge tautology. It is a system of religious economics or economic religiosity. It presents some sophomoric arguments favoring capitalism; and it is of no advantage to the individual who believes, on more solid and empirical grounds, that capitalism may have distinct disadvantages, but that it nevertheless is a superior kind of economy. If anything, it should be of great solace and aid to the rabid collectivists, who may easily undermine its credos, and thereby may falsely convert some individuals to their own sometimes religious tenets: that collectivism has few failings and innumerable virtues. Essentially, Randian economics is an intellectual word game and an unexciting one at that!
(*Jimmy Walter revised, updated and contributed to this chapter.)
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