APA 2014-1: The moral basis of capitalism, or something

by Massimo Pigliucci

As I have done at the previous incarnation of Scientia Salon, the Rationally Speaking blog [1], from time to time I will report on this webzine on interesting conferences or workshops in which I participate. After all, the chief point of Scientia Salon is for academics to engage in discussions with a broader public about what they do.

My first report from this year’s meeting of the American Philosophical Association, being held in Philadelphia, will be a bit strange, as it covers a session off the main program, sponsored by none other than the Ayn Rand Society, and entitled “The moral basis of capitalism.”

Now, Randians, or Objectivists as they prefer to be called, are nowhere near the mainstream of academic philosophy, being pretty much ignored by any moral or political philosopher I know. Still, there are some professional philosophers in the group, and they do get together at the APA, if for nothing else but to put up their (usually pretty much entirely unvisited) book exhibit during the meeting.

At the 2014 APA-Eastern, the Randian session was chaired by James G. Lennox (University of Pittsburgh), and the speakers were James Otteson (Wake Forest University), Peter Boettke (George Mason University), and Yaron Brook (Ayn Rand Institute). Here is the gist of what they said, with my most certainly not neutral commentary.

James Otteson (Wake Forest University) got things started with a talk on Adam Smith’s theory of freedom as discernible from his The Theory of Moral Sentiments [2] and other writings. Smith, if anything, was even more anti-metaphysical than Hume, if possible, and therefore not particularly prone to elaborate on formal theories of this kind. Still, of course that doesn’t mean he did not at the least implicitly have a theory of human freedom, which is what Otteson is after.

According to the latter, Smith considers self-command to be a virtue, and one that requires deliberation and conscious intentionality. Smith thought that we naturally seek the pleasure of approval from others, which affects our judgment, sometimes in a negative fashion. Self-command, then, is what allows us to distance our judgments from what we would be delivering if we were simply seeking sympathy from others, moving us toward more of an impartial observer’s point of view.

Because we are social animals, we are subject to conditional imperatives that regulate our behavior toward others, of the kind “if you want to be happy / survive / have relationships etc. then do X.” Our default mode of operation is to comport with others’ expectations because we are social animals, but we can also choose not to comply with such expectations, if morally necessary. Smith says – possibly following Aristotle – that it takes practice to achieve self-command in the pursuit of virtuous choices.

Smith’s approach in moving us toward a more virtuous society, according to Otteson, amounts to a more palatable (to the Objectivist) version of what nowadays is called “libertarian paternalism.” In The Wealth of Nations [3] Smith concludes that governments should play a limited role in our lives, including maintaining security and public works such as infrastructures that facilitate commerce, primary schooling and so forth. Also, every citizen should be required – according to Smith – to acquire minimal educational skills (reading, doing arithmetic).

Comparing Smith’s with modern libertarian paternalism, as presented in the recent book Nudge [4], the main difference is that Smith talked about virtue arising locally, from decentralized sources; the authors of Nudge, Thaler and Sunstein, instead propose a centralized source for the proper “nudges,” involving the deployment of expertise by a small number of individuals (the experts in whatever the specific subject matter happens to be). Needless to say, Otteson thinks that Smith’s system is “morally beautiful,” while Thaler and Sunstein’s is reprehensible.

I’m not quite sure what to make of the above. I am no expert on Adam Smith, though what I read of him (and of his close friend, David Hume) definitely makes him come across as much more concerned with the human condition and much more skeptical of the intrinsic power of free markets than he is usually portrayed to be by the likes of Otteson.

I don’t doubt (though I stand to be corrected by any actual expert on Smith) that he advocated a limited role of government, which of course Otteson stressed over and over during his presentation. But there are two obvious considerations that ought to seriously temper any attempt at claiming Smith for the Randian camp: first, and most obvious, since it isn’t denied even by Otteson, Smith did see a role for government not just in providing security (the only role allowed by Rand herself), but also in building infrastructures and providing education. Second, yes, Smith talked explicitly only of elementary education and of what by modern standards would have been somewhat limited kinds of public infrastructure. But that was the 18th century, people! Who knows, perhaps a modern-day Smith would be fine with the Eisenhower highway system, or with free public education up to high school included. Things scale up during the course of the centuries, after all. And this, of course, without considering the obvious objection: okay, that’s what Smith thought. Too bad for what Smith thought…

On to the second speaker, Peter Boettke (George Mason University), who spoke on the relationship between the ideas of economist Ludwig von Mises [5] and those of Ayn Rand. According to Boettke the defining ideologies of the 20th century were decidedly anti-libertarian, namely, socialism, national-socialism, communism, environmentalism, feminism and other types of collectivism (yes, I know, environmentalism and feminism on the same level as the others? Wait, it gets worse). They were together responsible for hundreds of millions of deaths (I told you it was going to get worse! Environmentalism and feminism responsible for countless deaths? When?).

Ayn Rand was – according to the author – arguably one of the chief critics of collectivism (notice that from now on there is no distinction within the talk between the different types of collectivism, which are all subsumed under “socialism”; after all, they are all deadly). Rand approached the issue “from the heart” (his words, I ain’t kidding), while von Mises’ approached it “from the head.” The suggestion is that one needs both: a scientific (head) and a moral (heart) critique of collectivism.

Why, asked Boettke echoing Rand, is it so easy for socialist ideologies to penetrate young minds, why are they so appealing to idealist young people, despite the evidence of endless destruction brought about by socialism and other collectivisms?

This is puzzling to libertarians, particularly because socialism did not fail because of the shortcomings of humanity, as its defenders often maintain, but because it does not take into account the nature of humanity. (On this I actually agree, though of course I think that libertarianism suffers from precisely the same problem, just on the polar opposite of the economic-moral spectrum.)

von Mises apparently did not present a moral critique of collectivism – indeed, he committed the unpardonable sin (for the Objectivist) of granting its moral appeal. The economist focused instead on the economic irrationality of collectivism, on what he regarded as strictly “scientific” grounds (which are actually highly debatable, as macroeconomics is not a science in the desired sense of the term, like physics or biology, in my mind [6]). Of course von Mises was deeply committed to the ideal of a value-free economic science (which, I would argue, is simply bizarre), and since for him capitalism, but not socialism, can solve the problem of economic calculation (i.e., figuring out what is the best way to run the economic system), socialism is therefore doomed regardless of how morally appealing it may be, it is an unachievable utopia.

Enter Ayn Rand, the strongest critic of collectivism from a philosophical and artistic perspective – according to Boettke – by way of her novels and short stories, and then eventually her non fictional essays.

Rand agreed with von Mises’ economic analysis (of course), but strongly disagreed with his moral one: for her individual rights are the means to submit society to the moral law, and anything that goes against that precept is simply evil.

Rand, said Boettke, realized that economic literacy is needed in society, but that it is difficult to achieve for most people, so she saw her novels as a way to teach economics (as well as philosophy) to the masses. At this point I had to call on all my Stoic self-control not to audibly grunt in the middle of the small room. I am happy to report that I succeeded.

So back to Rand: collectivism is a false ideal in part because it works via taxation, which in her mind amounted to theft and to the fostering of a culture of parasitism. Rand’s protagonists in her novels are men (yes, usually men) of achievement who demonstrate what would happen to society if the real producers of innovation and wealth, “shrugged,” to recall the title of one of her most famous works of fiction.

At this point Boettke launched into a rant against the ideas of Paul Samuelson, a leading economist of the ’50s and ’60s (and hence contemporary to the von Mises-Rand debate), who was a strong critic of laissez-faire capitalism, and therefore a major target of Rand. “The social responsibility of businesses is to earn profits, nothing more, nothing less,” stated Boettke rather categorically, arguing that it was a “culture of moochers and looters” that leads to the ruin of humankind. That is what Rand was rebelling against in her famous discussion of Robin Hood, for her a symbol of the idea that need, and not achievement, is the source of rights in collectivist societies. (The fact that the overwhelming majority of people think of Robin Hood as a moral individual, given the circumstances of the story, was completely glossed over and left unaccounted. No need to argue with the moochers and their supporters.)

Boettke concluded by bringing the debate up to date: socialism, he suggested, is still an animating ideology, as seen with the recent Occupy movement (despite the fact that Occupy actually had a highly heterogeneous ideological matrix, but let’s not get ugly facts get in the way of a beautiful theory…). The socialist debate is not a dead horse, he said, it is a live one, and it is for each generation of political and moral philosophers to continuously engage it, just like Ayn Rand did. (Groan.)

Finally, the evening concluded with Yaron Brook (Ayn Rand Institute), who talked more directly about Ayn Rand’s moral basis for capitalism, the topic that, after all, gave the title to the entire session. Rand objected to reliance on the common defense of capitalism (a la von Mises), the idea that it maximizes some economically defined utility function. For her the idea of the common good is undefinable and simply an excuse for collectivists to take over. (To be fair, as far as I can muster, Rand had some seriously justified issues with the “collectivism” she and her family experienced in the Soviet Union, but of course Stalin was no Marxist, nor was he an environmentalist or feminist…)

The moral justification of capitalism, rather, is that it is the only system consonant with man’s nature as a rational being. Reason is assumed to be the key to all man’s successes, the instrument by which all human values are attained (please notice that the continuous use of the terms “man” and “mankind,” rather than human beings and humankind, are the author’s not mine). Moreover,and crucially for Rand, reason is the attribute of an individual, not a group property (she acknowledged that people can correct each other’s thinking, but cannot think for one another – this, of course, represents an extremely naive view of human epistemology, to say the least [7]).

The goal of man is flourishing, “the survival of man qua man,” as Rand put it, apparently unfazed by the fact that to define “flourishing” is just as challenging as defining the common good. She rejected any value that puts the emphasis on the group, and emphasized that we don’t know what is good for us, we discover it through our use of reason. (This sounds superficially, but only superficially, like Aristotle, the only philosopher who Rand acknowledged as an influence on her thinking.)

Rand stated the obvious when she claimed that you cannot put a gun to an engineer and tell him that from now on 2+2=5. A little less obvious is the similarity she draws between that case and the idea that one cannot put a (governmental) committee in charge of telling a company the value or appropriateness of a new drug. The metaphorical gun in the latter case, of course, is the regulatory force of government, and for Rand it is far more devastating than the one pointed to the head of our unfortunate engineer.

So, collectivism (in all its forms, environmentalism and feminism included) for Rand restricts the ability of man to flourish, destroying both the possibility for innovation and the motivation to innovate. The kind of strong individual rights favored by Objectivists, then, become the necessary bridge concept between human (individual) reason and the workings of society. Rights mean freedom from coercion, and the only real right is the right of the individual to pursuit his own goals and flourishing, however he sees fit. Property rights – so dear to libertarians (for whom Rand had little sympathy) are a derivative of individual rights, since property is necessary for the flourishing of the individual.

Capitalism, according to this logic, is the system that protects all of us because it recognizes individual (and property) rights. Notice, incidentally, that all property, in Rand’s view, ought to be privately owned, there should be no such thing as public land or buildings, and that the sole job of government is the protection of individual rights, i.e. the protection from physical force by others (contra Adam Smith, see above). Rand’s capitalism is a “leave me alone” capitalism, none of this “mixed” system so fashionable today, concluded Brook.

The author went so far as to state that the essence of the idea of justice is the idea of trade: the individual’s ability to offer value for value. Capitalism rewards reason and innovation, and irrationality is penalized. Capitalism is a morally just system, because you get what you deserve via your ability to trade. (Double groan, if you permit me.)

Why, then, is socialism so appealing to people? (This seemed to be a recurring question that really bugged all speakers at the session.) Because, according to Rand, people believe in altruism as a paragon of moral behavior, and socialism is an altruistic system, despite its practical failures. The idea of service to others is a moral ideal for many, which is why people are willing to evade the horrific consequences of socialism and the obvious successes of capitalism. Needless to say, this is entirely mistaken, and it is selfishness that is truly moral, in Rand’s universe.

I hope the absurdity of the Objectivist notions discussed at the session is evident enough [8], perhaps nudged a bit by my interspersed comments (except for the groaning, that’s not an argument, just an emotional relief valve). The interesting thing for me was that – this being, after all, a professional meeting of philosophers – I learned precisely nothing new about Rand, Objectivism, capitalism or collectivism. All I was exposed to was dogma – both economic and moral-political – devoid of supporting argument. I’m sure this was entirely satisfactory to most of the people in attendance, being already part of the Objectivist club, but it was astonishing how the session actually made it onto the program of the APA (albeit as a special one, outside the main set of events). Fortunately, there was a nice dinner and a significant amount of wine waiting for me to conclude the evening…
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Massimo Pigliucci is a biologist and philosopher at the City University of New York. His main interests are in the philosophy of science and pseudoscience. He is the editor-in-chief of Scientia Salon, and his latest book (co-edited with Maarten Boudry) is Philosophy of Pseudoscience: Reconsidering the Demarcation Problem (Chicago Press).

[1] See, for instance: Metaethical antirealism, evolution and genetic determinism, by M. Pigliucci, Rationally Speaking, 28 December 2012.
[2] The Theory of Moral Sentiments, Wiki entry.
[3] The Wealth of Nations, Wiki entry.
[4] Nudge: Improving Decisions About Health, Wealth, and Happiness, by R.H. Thaler and C.R. Sunstein, Penguin Books, 2009.
[5] Ludwig von Mises, Wiki entry.
[6] Rationally Speaking podcast, episode 51: Joseph Heath on Economics Without Illusions.
[7] Social Epistemology, by Alvin Goldman, Stanford Encyclopedia of Philosophy.
[8] If not, I invite you to read my four-part series on Objectivist “philosophy,” published at Rationally Speaking: Metaphysics, Epistemology, Ethics, and Politics.