Yesterday I picked up a copy of Animal Spirits by George A Akerlof and Robert J Shiller. In the preface to their book they discuss how Keynes’s General Theory included non-economic motivations and non-rational behaviours – the animal spirits of the title.
But following the publication of the General Theory, Keynes’s followers began to root out the animal spirits, partly to facilitate quantitative versions of the theory and partly to make it more accessible to the old guard. But this left Keyne’s theory weakened, so much so that in the 1970’s a group of economists rooted the animal spirits out altogether.
The belief that government should not interfere with people in pursuit of their own self interest has influenced national policies across the globe (p.xi).
Now this reminded me very much of something I had seen in an Adam Curtis documentary called All Watched Over by Machines of Loving Grace. I managed to find it online and watced the first episode again. Here’s how Rand describes her own philosophy:
“If man wants to live on Earth, his highest pupose is the acheivement of his own happiness. And he must not force other people, nor accept their right to force him. Each man must live as an end in himself and follow his own rational self interest.”
Adam Curtis also provides a summary:
“Human beings were alone in the universe. They must free themselves of all forms of political and religious control and live their lives guided only by their selfish desires. If they did this they would become heroic figures.”
Most of Rand’s disciples left her after it emerged that she had been having an affair with one of her disciples, Nathaniel Branden, who was married. But one of them stayed loyal. This was Alan Greenspan who later become Chairman of the Fed. Having been a Logical Positivist in his 20’s Greenspan met Branden who introduced him to Rand. Greenspan enthsiastically took up Rands doctrine of rational selfishness. It was Greenspan who convinced Clinton to forget spending borrowed money to stimulate the economy to abdicate his remaining political power to the markets, a process that Nixon had begun in 1971 (the UK took similar action to deregulate the finace sector at about the same time). The take over of government by finance was aided by Clinton’s becoming embroiled in scandal.
Whoever was responsible the philosophy of the Neo-Classical economists, and the finance sector players such as Goldman-Sachs was essentially Randian. The bribed and cajoled politicians into removing all limits on their pursuit of wealth. Then the Randian Hero’s of the finance sector began to systematically exploit the world’s economies, causing disaster after disaster because of their greed and selfishness.
It was always obvious that Rand was a deluded and alienated person, with a distorted and dangerous view of the world. I suppose any philosophy is always going to attract supporters. But few ideas so pernisicious as Rand’s have found their way into the hearts of our leaders. Even Hitler wanted to benefit his people. But not these priests of the Cult of Greed.
It is past due time that we shrug off the dead hand of Ayn Rand. Selfishness does not produce progress and wealth. It destroys both. Altruism is our highest virtue, and our enormous capacity for empathy is what separates us from mere predators. Although these parasites have infested every orifice we must seek the medicine that will flush them out. We need to reinstate the protections that Roosevelt put in place to protect ordinary folk from this dangerous internal enemy. And if we blanch at taking on the power of the financiers we need only reflect on what happened in Europe in the 1930’s where politicians failled to grasp the nettle. In the USA there was the New Deal and prosperity; in Europe we had Fascism and WWII.
From a Renegade Correspondent – Jayarava
Economist, Professor Richard Werner, discusses modern banking with host, Ross Ashcroft.
Narcissism, the corporate psychopath and neoliberalism are the three key characteristics that dog Western society.
How much do we really know about the dynamics of money?