Greenspan was a friend and close associate of Ms. Rand’s during the 1960s and 1970s. During that time, he contributed articles to her monthly publications, some of which have been published in books on Objectivist thought. It is this association that has drawn attention to Ayn Rand, a self-described “radical for capitalism” and whose philosophy of Objectivism I fully subscribe to. But Greenspan has never, to my knowledge, ever considered himself an Objectivist. Based on some of his testimony, I doubt he ever fully understood it.
To be sure, I don’t think Rand ever came up explicitly at his hearing. But as perhaps the most famous of her close philosophical associates, his words represent for many to be proof of the invalidity of Ayn Rand, her ideas, and of laissez-faire capitalism. This is grossly unfair and intellectually dishonest. Greenspan is, in effect, being set up as a straw man with which to attack Rand and capitalism, without any effort on the part of the critics to understand or define Rand’s ideas or laissez-faire capitalism.
There is no question that Greenspan was influenced by Rand. But he is not in any way representative of her or of her philosophy of Objectivism, as anyone who has studied her work fully knows. If he ever was an advocate of laissez-faire capitalism, he certainly hasn’t been one in a very long time. If he were, he never would have taken the job of Fed Chairman, which is essentially a monetary dictator. Taking that job completely disqualifies him from any valid connection with Rand's ideas.
In short, Ayn Rand is a victim of guilt-by-association.
On Rand, there is a gross misunderstanding in calling her a “libertarian”. In fact, she totally repudiated the libertarian movement, believing their members to be amoral, anarchistic, anti-intellectual “hippies of the Right”.
Rand never advocated selfishness as an unqualified virtue. In fact, she condemned the type of behavior that fit the conventional definition of selfishness…that of a person who achieves his aims by taking advantage of others through dishonesty or trampling their rights, etc. Ethics is a complex subject, but a good key to Rand’s concept of selfishness is provided in this brief definition from the book Ayn Rand Answers, page 109:
What do you mean by “selfishness”?
I mean the pursuit of one’s rational self-interest. I mean that the central purpose of one’s life is to achieve one’s own happiness, not to sacrifice oneself to others or others to oneself. “Selfishness” means to live by the judgement of one’s own mind and to live by one’s own productive effort, without forcing anything on others.
She was a champion of every individual’s right to the pursuit of his own rational self-interest, free from the coercive, predatory interference of others…whether private or governmental. The key to her ethics of egoism is the concept rational, which includes consideration of long term consequences in determining what is actually in one’s self-interest. Not enough Ayn Rand is the problem.
Rand never advocated the view of capitalism as a system of “survival of the fittest” (or Social Darwinism). She explicitly renounced that concept as completely invalid as a definition of capitalism. The wealth required by man to live and thrive does not exist in nature, to be fought over like animals in a forest. Instead, it must be produced by a process of individual productive work guided by his reason. Capitalism provides the social framework of freedom from the initiation of physical force that makes the production of an ever-expanding array of products, services, and jobs possible, courtesy of the most productive members of society…entrepreneurs, businessmen, and inventors. Equating the human predation implicit in the concept of “the survival of the fittest” to a system and philosophy of individual rights is a logical impossibility.
Rand’s broadly philosophical conception of laissez-faire capitalism is of a system that embraces much more than free markets. It is of a social system based on the recognition of individual rights and of a government limited to the vital task of protecting those rights through rigidly objective laws. The protection of those rights, which are rights to freedom of action (to free speech, trade, religious practice, etc.) and the property one earns, takes the form of defense against domestic criminals and foreign aggressors…as well as the mediation of disputes through the civil courts. In other words, America’s primary founding principles. Laissez-faire capitalism is, in fact, the only social system fully consistent with individual rights. The “self-regulating” nature of free market capitalism, which rewards rational behavior and penalizes the irrational in the long term, can only function when it actually exists.
Greenspan is looking for a scapegoat in placing the blame for his blunders and the current financial crisis on his allegedly “laissez-faire” beliefs. In fact, laissez-faire capitalism disappeared from American finance decades ago, and is nowhere to be seen today. Laissez-faire means the separation of state and economics, just as with state and church, and for the same reasons. Under laissez-faire, there would be no central bank or government money monopoly, no ban on gold or gold-backed currency, no ban on private bank-issued currency, no government-imposed restrictions relating to reserve requirements, capital ratios, mergers, bank branching, etc., and no government setting of interest rates. There would be no government-insured mortgages, no Fannie and Freddie, no CRA, and we wouldn’t have the extensive political interference in the housing and mortgage markets designed to “encourage” homeownership based on FDR’s fraudulent declaration of the “right” to own a home. There would only be free individuals thinking and acting on their own judgement, and a government protecting their right to do so…including the vigorous enforcement of laws against fraud and deception.
Laissez-faire in American finance? Where does anyone see it? In fact, American banking is so heavily regulated and controlled today as to make it a quasi-branch of the government. One need not excuse the irrational behavior of many lenders, borrowers, and investors to understand that the current crisis must clearly be laid at the hands of government, any minimal pseudo-deregulation or free market remnants notwithstanding. To blame laissez-faire capitalism for today’s debacle is to attack a non-existent target in order to switch the blame away from the real cause. With all of the angry calls for more government regulation, no one is asking the question…Who will “regulate”, or protect us from, the regulators? We are witnessing the culmination of decades of interventionist policy failures, and the anti-laissez-faire drumbeat is only a cover for a renewed lurch toward fascism that should make any American who values his freedom shudder.