Atlas Shrugged: Part 1 the movie directed by Paul Johansson based on the 1957 novel by free market advocate Ayn Rand.

Along with last week’s opening of part one of Atlas Shrugged, a movie based on the novel by libertarian zealot Ayn Rand, the economic philosophy of the “free market” and laissez-faire capitalism has been receiving a lot of buzz in the political arena. Rand wasn’t the first advocate of the free market, but 60 years after she reinvigorated the idea as a moral imperative her work is still impacting our political and economic discourse today.

This old economic philosophy was the driving force behind the libertarian Tea Party movement which cropped up recently in the midterm elections. They were a conservative freedom-loving group who presented themselves as the sort of down-to-earth and common-sense type folks that ordinary people could trust. And at first, the idea of simply allowing the free market to do its job, may seem to be a pure and simple common-sense solution to a freedom loving people’s complex economic troubles.

Newly elected leaders like Minnesota Governor Scott Walker and Republican Congressman Paul Ryan of Wisconsin are putting the theory into practice in order to confront looming state debts. The idea being that the economic crisis which began in 2008 can be resolved by simply returning the economy to a free market, whether it be reducing government spending on social programs, cracking down on public sector unions, handing over government responsibilities to private corporations or deregulation of the private sector in general.

Rand believed, as Adam Smith did, in the notion of the “invisible hand.” She believed that national wealth production was best achieved through competition based on the motive of a man to make money: the so-called “profit motive.” It worked on the principle that the man who ran the best business and produced the most objectively superior product would make the most money, and would win out in competition, even if it turned that business into a monopoly.

Randites believe that the government should not interfere in the economy. But if we trust in the invisible hand will the country really be heading for a free market solution? Or will Americans find themselves further entrenched in corporate oligarchy?

A sense of growing distrust of large corporations has been growing among the American Public. From the 2008 mortgage and loan crisis, which has been attributed to the intentional and careless gambling of too big to fail banks, to the Citizens United ruling in the Supreme Court which allowed corporations to spend unlimited amounts of money on political elections, people are beginning to view the influence of large corporations as the greatest threat to democracy.

And there’s a reason for this distrust because the corporations themselves who have acted as the champions of this free market philosophy haven’t really allowed this process to develop freely, in what would be the traditional democratic process. Rather corporations like Koch Industries began funding the election campaigns of people like Scott Walker, in order to get this free market started. But are these corporations really proponents of free markets? Or are they and their political representatives just saying that?

It’s hard to imagine how any large modern corporation came to exist as it does today without special treatment by the government. The U.S. Government feels obliged to subsidize big corporations or otherwise give them special treatment, because these corporations have such a huge impact on our economy. And corporations love subsidies, they love tax breaks, they love money! Even the Koch brothers, the flag-bearers of the Randian free market, the self made billionaires who own the second largest corporation in the country–the kind who like to say they built their entire empire all by the sweat of their own brows–eat the words of their own philosophy by their hypocritical actions.

Photo by freemarketmyass

Protesting the Wall Street bailouts at the Federal Reserve Chicago Board of Trade.

As Rand would say, any moral and honest libertarian should reject attaining influence in government, reject government loans, reject subsidies, and should reject the high taxes that fund those subsidies, because this is the anti-thesis to the free market. These policies create unfair competition, and represent a manipulation of the all-hallowed free market. Yet Koch industries accepts subsidies for cattle and logging. They are even involved in ethanol production, an energy source which they have publicly criticized. But in a letter to reassure their employees they explained that they’d began producing ethanol simply because the government was granting huge subsidies for ethanol production. Koch industries also spent $40 million lobbying the government, a large portion of which went to funding the Tea Party.

So who really believes in the free market? Is it the man on main street who knows he must close his shop, when Wal-Mart moves in offering products at lower prices? It certainly isn’t Wal-Mart, a company which has received over $1 billion in various forms of government subsidies.

Wether you believe in the free market or not, there is a major flaw in our economic thinking. We assume, as a rule of thumb in economics, that larger companies are simply those that have navigated the free market the most successfully, and therefore provided the best quality product to consumers–that they have played the best game according to the incontrovertible rules of economics. But this is a misconception.

In today’s world corporations have succeeded, not based on providing the best product or creating the best business. Instead, they have maximized profit by diminishing quality to lowest acceptable standard, by squeezing wages and by overburdening their workforce. Through these unethical, however legal, policies they have grown and swallowed other companies who could not compete with their harsh business practices. (Rand might have argued, that in a free market the employees would move to the better work environment, but that concept gets thrown out the window when there is a constant unemployment rate and therefore a desperate labor force.) These large businesses, having amassed a sheer size and volume that allows them to manipulate the government, can now leverage demands through lobbying efforts, that the man on main street would never even be able to attempt. And in the case the government did not act to prevent monopolies, corporations could very well acquire power over the people and the government itself because they have no sense of responsibility to the country.

Atlas Shrugged by Ayn Rand originally published in 1957 has become the Bible for conservatives, libertarians and other believers in the philosophy of the free market.

Rand might defend her philosophy against this scenario saying that the government’s meddling in the free market has already corrupted the potential for a working free-market system beyond repair, as was the case in her last great novel. She might also mention how her philosophy of Objectivism–the idea that objective standards be used to value a product and a business–has been subverted by huge investments by corporations in the deceptive practice of marketing and advertising. But the country that Rand was writing about 60 years ago, is a much different place now, and it would be thoroughly interesting to see how she might react to today’s world–a world of trans-national corporations, of predatory lending, hedge funds, globalism, neo-liberalism, derivatives trading and out-sourcing.

Although Rand is critical of her country, she writes with a sense of patriotism and admiration of being a citizen in the freest country on earth. And although, she trashes the term “social responsibility” as a means of serving the interests of people who do not work and contribute anything of value to society, a group of people she calls looters, nonetheless, her characters still have a since of responsibility for their society. The fact, that she wrote so much about what she saw was a flawed and disastrous economic system, is good proof of her personal sense of responsibility to her country. Additionally, within the pages of her work, Rand creates an industrial tycoon, who despite being profit-minded, pays his workers a wage much higher than the industry standard. And she creates a railroad Tycoon, who even has so much of a heart to takes charity on a destitute man who has snuck aboard her train. Even Adam Smith, realized the importance of what he termed the “home bias,” that a businessman should prefer to conduct his business within his own country, for the benefit of his own country. But in a world moving full speed ahead toward, neo-liberalism and globalism, these megalithic trans-national corporations have no sense of home bias, of responsibility or loyalty to a country, and their concern for people has diminished. The only thing that hasn’t changed is their motivation for profit.

Of course, to legislate that “sense of responsibility” doesn’t really solve the problem either because this creates a collectivist society by force. This is the evil that Rand was trying to warn people about. And although the concept of a society where everyone works for the common good sounds wonderful, Rand may have been very right about this one thing, it goes against human nature. If we’ve learned anything about democracy we know that people don’t agree, and they may never agree. And clearly, we all know what is in the common good isn’t always in the interest of everybody. The danger in socialism is not necessarily in the lack of motivation that accompanies the inability to make more money then your neighbor, which would be Rand’s argument. It is foreseeable that a society itself could actually profit in one way or another by adopting a utilitarian system of governance, but men themselves would not be free. If it is not inevitable, there is the grave potential that a socialist system leads to the establishment of a virtual dictatorship in order to determine and enforce what is best for the common good. Whether it be a group of scientists or a philosopher king, no dictatorship is a good dictatorship. We have to be free and empowered to act in our own best interest and in the interest of others in a democratic way.

The philosophy of the free market continues to live on because it may very well be the most natural and healthy economic system for a free people, but the free market is not the solution in and of itself. Despite Rand’s very compelling attempt to lay out an impregnable literary canon for the one and only rational economic system, there is no such thing as a pure economic solution. Without a sense of community, without some sense of honor and responsibility to a group of people which contains that free market, then there is nothing to prevent exploitation from being an acceptable component of business.

The question then is how do we restore that sense of responsibility? We must work to communicate awareness and develop a culture of action to reinvigorate our own communities, so that we can act together in unity on the national stage to reign in the ills of a free market on the loose. And if we cannot appeal to the CEOs of trans-national corporations, the very least we can do is work together with the businessmen in our own communities creating sustainable infrastructure, strengthening our own local economies, and investing in local renewable energy sources. Perhaps its naive, perhaps it violates the rules of economics, but this is the best place to begin.

Tags: economics, government