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In Free Market Revolution,
co-authors Yaron Brook
and Don Watkins, colleagues at
the Ayn Rand Institute, undertook
a difficult task.
Since Ayn Rand
made the case for egoism as the morality
of capitalism in Atlas Shrugged
(and more pointedly in Capitalism:
The Unknown Ideal), numerous books have argued that free markets produce wealth, discussing various aspects capitalism, and criticizing every type of government interference with markets as impractical. From Milton and Rose Friedman’s
Free to Choose
to books by George Gilder and others, we have not been spared the practical arguments
for capitalism.
Yet the size, scope and power of our government controlled economy continues to
expand. Most advocates of
limited government treat the expansion as though it’s an inevitable consequence of the nature of government.
Brook and
Watkins show that the cause is
something else: ideas accepted in our culture. They have set out
to make the case, in a book that
is short and readable,
for a better set of ideas
and bring Rand’s morality into the mainstream.
This is an uphill battle. Profit and those who seek it
are almost universally viewed with suspicion. Many people assume that if someone is needy,
the government has a moral obligation to provide help. Advancing this view is
no way to defend capitalism. This is a key point
of Free Market Revolution.
Brook and
Watkins present an abbreviated
economic history, debunking welfare-statist lies,
and explore the mechanisms of free markets. They most importantly demonstrate that capitalism is moral.
“A moral
defense of the profit motive would
have to say that living
as a trader, for your own
happiness and by your own effort, is noble.”
This puts the emphasis on where it belongs:
living by your own
effort, trading with others, for the sake of your own happiness. When it is stated
this clearly, who could argue with it?
Throughout the book, they
provide insights that are
probably new to most readers, and will increase one’s understanding of how people coordinate
productive efforts in a free market.
For example, they discuss the problem known as “the coincidence
of wants.”
In barter one party may want what the other has, but the other party may not wish to reciprocate. One example in the
book is the case of one man who
makes shoes and another who catches fish. But the fisherman already has shoes, no trade is mutually
desired. Money, however, makes trade more efficient.
Suppose the shoemaker trades
his product for whatever commodity is used as money, knowing he can
always trade money for wheat or anything else.
Brook and
Watkins culminate their
discussion:
“…originally money was a material good—usually gold. Gold was the most marketable good in the economy…”
To grasp this is
to see the root of the problem with our present worldwide
system of irredeemable money. The government prohibits people from using the most marketable good, gold, in favor of the government’s
paper money. But the paper,
based on debt, is not marketable without legal tender laws that force people to accept it.
Free Market Revolution
also discusses competition and the relentless
pressure to respond to the market,
competitors, innovation, and other
changes. Brook and Watkins use an effective anecdote from
the early days of Intel
Corporation to illustrate the honesty,
discipline and focus required to remain in business. When new competitors were manufacturing computer memory chips. Intel was no longer able to make a
profit in that business, the co-authors
write, so Intel decided to focus on microprocessors
instead.
“Finally, [Intel executive Andy]
Grove asked then-CEO
Gordon Moore, ‘If we got
kicked out and the board brought in a new CEO, what do you think he
would do?’ Moore replied
without hesitation,
‘He would get us
out of memories.’ After
a long moment, Grove said, ‘Why shouldn’t you and I walk out the door, come back and do it ourselves?’” That’s what Intel did—and it paid off with impressive results for Intel, vendors and consumers.
Free Market Revolution is illuminating in this regard, especially for those unfamiliar with running a
business.
However, this book is most likely
to convince those already mostly convinced of the virtues of capitalism. It would fill a thick volume or series of volumes to cover the morality of self-interest with regard to capitalism, or a
decent history of markets and welfare-statist failures, or how free markets coordinate the activities of
all participants. Free Market Revolution makes the mistake of trying to traverse
all of these domains.
The writing is uneven.
There are many gems, though there are also missed opportunities
for greater clarity through editing. For example, in more than one case
an important term is defined within an “emdash”:
“The cornerstone of Marxian economics, for instance, is the
labor theory of
value— the idea that
the value of goods produced
is a function of the physical labor that went in to producing them.”
I doubt that this
will be clear to a reader who is new to Ayn Rand’s ideas and who has not studied economics (and if the reader already knows the labor theory of value, this is unnecessary).
Some definitions lack even an emdash. Rand fans and Objectivists
may be familiar with Immanuel Kant and his “categorical imperative”—an
unlimited moral duty to
sacrifice yourself (emdash
irony intended)—while others, such as Tea Party conservatives and independents,
may be lost.
Other parts need
more information to get the co-authors’
underlying point. Consider
this example: “Don’t be confused by the fact that we sometimes
pay more for a product than we would
like or get paid less than
we had hoped. The fact that a gain from trade isn’t as large as we would have preferred doesn’t change
the fact that it is a gain.”
This part, included in a section discussing
trade, may not suffice for someone who seeks to grasp why health
insurance costs so much compared
to, say, life insurance. Too much of Free Market Revolution reads like shorthand for those who know the philosophy, leaving those who don’t
know as much somewhat confused.
I often hear people complain that a free market doesn’t “work”. What I think they mean
is that they don’t think the free market gives them what
they want at the price they want. Brook and Watkins understand why this is an error,
but, again, their answers and explanations don’t always amount to a persuasive argument.
They write, for
instance, that “Upton
Sinclair’s socialist
propaganda aside, historian Gabriel Kolko notes that food makers
‘learned very early . . . that it was not to their profit to poison their customers…”
Will today’s readers recognize the reference to Sinclair’s The Jungle? If not, inserting a second author that most people haven’t read is not helpful.
General
audiences attracted to Ayn
Rand’s inclusion in the subtitle
may be receptive to Brook’s and
Watkins’ arguments, but those who like her
fiction and want to examine her
ideas more closely may be left
unmoved or, worse, confused. If one has read Atlas
Shrugged and
Ayn Rand did not
persuade him, then it’s worth asking: will Free Market Revolution?
Free Market Revolution
contains a few economics errors, especially in monetary science. Both Keynesians and Monetarists hold that
“inflation” means rising
prices. Brook and Watkins do no service to the reader—or to the cause of liberty—by ceding this error.
Most economists of the Austrian
school (to which I expect Brook and Watkins subscribe)
define inflation as an increase
in money and/or credit (Mine is
a more specific definition:
an expansion of counterfeit credit).
Promoting the view of
John Maynard Keynes and Milton Friedman, i.e., that
inflation means rising prices, is a serious error; industry is constantly
increasing efficiency, so this flawed
definition essentially cedes to the government that to steal the wealth of those who store it in dollars is acceptable.
Absent inflation, prices would
be falling.
Those who have studied Austrian economics and are familiar with what it
has to say about liberty are among
those who need the most help in putting
liberty into the context
of morality, and this
inflation error, repeated
in a number of places, may
weaken the co-authors’
credibility with free market scholars.
In many places, Free Market Revolution is excellent. It
is written to promote a cause
which is both crucial and urgent—especially
the cause of moving toward
the gold standard. But I am skeptical
that Free Market Revolution is likely to have a large
impact on today’s readers,
let alone on the culture. The challenge of writing such an important book,
with such an enticing title, is enormous. Brook and Watkins,
who deserve credit for making the effort, rise to it with
mixed results.
Copyright
© 2012 Keith Weiner
All Rights Reserved.
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