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Mark Skousen's critique of Ayn Rand

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Capleton

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With regard to Roark, I think he makes a fundamental mistake about Roark's motivation and method for building. He never built anything that was contrary to the desires of a client. He built precisely what they wanted. What he wouldn't do was sacrifice his own judgment to the irrational whims of potential clients. He wouldn't work for a client whose desires were irrational.

With regard to Atlas Shrugged, he faults Rand for portraying businessmen (and women) as "true believers" when in fact they are simply interested in "money making by whatever means." This is the mentality of the parasite, not of the producer. While I certainly don't believe that all business people are Dagny Taggarts or Hank Reardens, neither do I believe, as Mr. Skousen seems to, that they're all Ken Lay.

I'd also like to point out that this whole critique of Miss Rand's writing seems to fail to grasp one point: her novels were meant to portray things as they ought to be, not as they are. Is our culture so mired in naturalistic art forms that we can't recognize romanticism when we see it?

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This Skousen article looks like it was written to be exhibit one to explain the case "Why Ayn Rand denounced Libertarianism."

After just a quick look at Skousen's website it appears that he is a Libertarian economist, rather than a philosopher.

"There will never be enough principled business leaders to fight the system. The business world does not typically attract ideologues and true believers; it attracts people primarily interested in money making by whatever means. They wouldn't give John Galt the time of day."

Yikes! I am new to this board so I won't spike my post with colorful language, but if Peter Schwartz's article on "Libertarianism, the Perversion of Liberty" ever needs updating, he need look no further than this article for new material.

I'll go with just one comment: the thing I like about Rand is that she lays out the case for discrimination between right and wrong, good from evil, and true from false. As I read the Skousen article, it's ultimately his hostility to making value judgements that leads him to his conclusion. As a Libertarian he can't bring himself to the conclusion that Objectivist thought is correct (with the implication that other systems are INcorrect). I suppose he'd be fine with building a skyscraper that was bound to collapse, so long as "the people" wanted it built that way. Let him look for the Peter Keatings of the world to do that; the Howard Roarks would never do it for them, no matter the size of the majority demanding it.

And thus Skousen illustrates the insufficiency of Libertarian thought in comparison with Objectivism.

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  • 4 months later...

It sure is a flimsy critique:

But then Roark denies a basic tenet of sound economics--the principle of consumer sovereignty. When the dean of the architectural school tells Roark, "Your only purpose is to serve him [the client]," Roark objects. "I don't intend to build in order                      to serve or help anyone. I don't intend to build in order to have clients. I intend to have clients in order to build."  (1994:14) This bizarre, almost anti-social, attitude sounds                      like a perverse rending of Say's Law, "supply creates its own demand," or the statement made in the film Field of Dreams, "If you build it, they will come." But supply only creates                      demand if the supply can be sold to customers; and people come to a new baseball field only if they want to play or watch. Supply must satisfy demand, or it becomes a wasted                      resource.

Is this supposed to be a well-respected economist?

Say's law in my opinion is the perverse of reality. In reality there is a demand for goods and services. Such goods and services are then supplied as a matter of business, thereby satisfying a need. Supply never creates its own demand. Quite the opposite.

Roark, in The Fountainhead must learn to deal with the realities of demand. Because demand is off, and because he misreads it, is the main reason he winds up in a quarry breaking rocks. Of course, for Skousen to make his wimp critique work, he needs to skirt this fact.

Then he cites this passage:

As he states in his final court defense, "An  architect needs clients, but he dos not subordinate his work to their wishes.

His critique relies to heavily upon whim and collectivism. To subordinate my work as an architect to my clients is to place power in my clients' hands; such client can dictate to me how it is I may design, or how it is I may do business. That is contrary to proper business practice for me. Apparently, Skousen thinks it's okay for a client to dictate terms to an architect as a matter of the architect working for his sake, whereby in reality, the relationship between client and architect is of mutual consent. Clearly a collectivist view, that Skousen has.

Finally, Skousen cites Ludwig von Mises as one who agree with the bromide " true capitalist spirit can best be summed up in the Christian commandment, "Love thy neighbor as thyself."" That does von Mises an injustice.

So much for Skousen's respect for the rights of individuals.

His critique is pure folly.

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Yes he really does miss the point of it all doesn't he. Or purposely distorts things to prove one his own assertions, his title....

"THE TROUBLED ECONOMICS OF AYN RAND"

says it all. Of one really wanted to get at Rands Economics one should look at CTUI which is what she meant to cover that topic. Like someone else said her novels are "Romantic" portrayals of man as they should be, not systems of economics. Not once did he reference here works on Economics while referencing Wealth of Nations and Von Mises. Either he can't research or did not research. thats the only two conclusions I draw from the article.

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  • 2 weeks later...
Say's law in my opinion is the perverse of reality. In reality there is a demand for goods and services.

I think Say's Law is correct. The so-called law of supply and demand is based on context-dropping, and looks at the range of one moment (but offers, seemingly, conclusions that are much broader).

How much demand is there, in reality, for computers? 50 computers are enough for the world market, right? A top IBM executive said that, early in the computer era (I think it was in the early 1950's).

One can't answer the question without knowing the price they're offered at. The producer, not the consumer, controls this. At $10 per computer, I bet that each person would find that he "needs" a number of computers.

Of course, since the 1950's, Moore's "Law" has described the progress of miniaturization as producing a computer of twice the speed every 18 months. The costs fell dramatically in the first several decades, though I am not sure the cost of a chip is falling so fast any more (it's pretty cheap now).

You can't describe demand without first discussing what's offered, on what terms, and at what price. For example, my company makes a voice conferencing application which provides 3D positioning on each voice (kind of like a virtual conference table). It amazes me how many business executives say "we haven't had customer demand for 3D voice." I want to smack my forehead and say "duh!" They didn't know they could ask for it.

This is not to say that one can build a 40,000-seat baseball stadium in the middle of nowhere and suddenly fans will show up for 90 games per year. That's a straw-man...

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The so-called law of supply and demand is based on context-dropping, and looks at the range of one moment (but offers, seemingly, conclusions that are much broader).

This view is, then, at odds with Objectivism, as voiced repeatedly by Ayn Rand and as echoed by Leonard Peikoff. Here is just one quote from each which illustrates the Objectivist view.

--Ayn Rand, _The Objectivist Newsletter_, Vol. 4, No. 12, December 1965,

"Check Your Premises: What Is Capitalism?."

"The economic value of a man's work is determined, on a free market, by a single principle: by the voluntary consent of those who are willing to trade him their work or products in return. This is the moral meaning of the law of supply and demand; it represents the total rejection of two vicious doctrines: the tribal premise and altruism. It represents the recognition of the fact that man is not the property nor the servant of the tribe, that a man works in order to support his own life—as, by his nature, he must-that he has to be guided by his own rational self-interest, and if he wants to trade with others, he cannot expect sacrificial victims, i.e., he cannot expect to receive values without trading commensurate values in return. The sole criterion of what is commensurate, in this context, is the free, voluntary, uncoerced judgment of the traders."

--Leonard Peikoff, "Objectivism: The Philosophy of Ayn Rand," p. 396.

"Men create products and offer them for sale; this is supply. Other men offer their own products in exchange; this is demand. (The medium of exchange is money.) "Supply" and "demand," therefore, are two perspectives on a single fact: a man's supply is his demand; it is his only means of demanding another man's supply."

Edited by GreedyCapitalist
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Re: Say's Law

Three points:

First, Say's Law is the most important economic principle that is almost universally ignored in academia (...I've never seen it taught.)

Second, Thomas Sowell wrote a great book (his doctoral dissertation) on Say's Law. I'm sure your local university library will carry it.

Third, Say's Law states that supply constitutes its own demand, which is simply an econo-speak way of saying that you can't have consumption without production. Demand is *not* "I want it", demand is "I want it and can afford to buy it", and there is no such thing as "I can afford to buy it" without an "I have produced the means to buy it" (at least not in a Capitalist system.)

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This view is, then, at odds with Objectivism, as voiced repeatedly by Ayn Rand and as echoed by Leonard Peikoff. Here is just one quote from each which illustrates the Objectivist view.

Context, don't leave home without it.

I was addressing macroeconomics. In that field of study, the "law" of supply and demand looks at a snapshot, an instantaneous measure of the market. It then improperly attempts to form broad conclusions about what's really a dynamic system over time.

Have you ever invested in real estate in a town on the edge of suburbia? It's interesting that as the supply of homes available on the market increases, so do the selling prices. The "law" of supply and demand predicts the opposite.

Incidentally, I agree with both of your cites. However, they're not germaine to this discussion. I don't believe that a man should be forced to work as a slave. Moreover, you don't really think that I believe it, either. If I didn't know better, I'd guess that you're trying to "show" that I oppose the most basic ideas of Objectivism. This really isn't a good forum for that.

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Context, don't leave home without it.

Truth is contextual, but not infinitely flexible. Words have a specific meaning in whatever context they are used. It was stated that "The so-called law of supply and demand is based on "context-dropping." Not only does this assert that the law of supply and demand drops context, but the use of the qualifier "so-called" is demeaning of the law itself. And, since later the law is placed in scare quotes ("law"), the intention is quite clear.

Ayn Rand read and enjoyed von Mises' article on Say's law, and von Mises acknowledges, as did Say emphatically state, that commodities are governed by the law of supply and demand, as is money. As Dr. Binswanger is so fond of saying, supply is demand. And Richard Salsman, noted Objectivist economist, has noted that Say's law, which he refers to as the "A is A of economics," means that "supply is the source of demand." Or, even more accurately, that "supply and demand are the same things, but viewed from two different perspectives." There is no "context-dropping" involved, nor should one validly qualify the law of supply and demand by referring to it as "so-called."

I am not particularly interested in debating the details, but in addition to reading Say directly, I would suggest John Ridpath's excellent lectures on Say, available at the Ayn Rand Bookstore at: http://www.aynrandbookstore.com/

Edited by GreedyCapitalist
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