Rand advocated a "philosophy" which she called "Objectivism". Her work was mainly produced in the form of novels such as The Fountain Head, and Atlas Shrugged. Adam Curtis describes her philosophy.
"Human beings were alone in the universe, they must free themselves of all forms of political and religious control and live their lives guided by their selfish desires. If they did this they would become heroic figures."In her own words
"If man want to live on earth his highest purpose is the achievement of his own happiness. He must not force other people, not accept their right to force him. Each man must live as an end in himself and follow his own rational self interest."
Rand herself was a charismatic figure who gathered a group of adoring disciples around her. Her ideas and her approach to life see pathological in retrospect. Her philosophy seems bizarre to us now, though she still has followers. This is a time when we see collective altruistic action as beneficial. Inspired by Live Aid we find ways to work together and some of the most significant events in the last few years have been the Arab Spring and the Occupy movement. And rightly so because empathy and altruism are our finest features, and we are social animals who thrive through cooperation. I've showed on my other blog that one literally cannot divorce reason from emotion. We are human beings, not Vulcans. Indeed we all know that his reason is both Mr Spock's strength and his weakness.
Rand was influential. Vastly influential. Many of the entrepreneurs in Silicon Valley had read Atlas Shrugged and saw themselves as Randian Heros. But it is her influence on Alan Greenspan I want to focus on here. Greenspan fell in love with Rand her ideas. He became one of her inner circle, though in the Curtis film other insiders claim that she never liked him. Now there is an irony, because of all her disciples Greenspan was most effective at implementing and spreading her ideas.
Akerlof and Shiller point out in their book that the original ideas of Keynes were watered down to make them more acceptable and that this watered down version was what people took for Keysian theory. Recent Peter Keen has pointed out that economists don't seem to read their own literature. Keynes General Theory was replaced by John R Hick's quantitative interpretation of it. Keynes did not assume that consumers were rational, he assumed that they were capable of irrational behaviour as well. This irrational component was played down, weakening the theory, and this allowed it to be replaced in the 1970's by the Neo-Classical model in which people rationally pursue their own self interest, and that governments should not interfere with people in pursuit of happiness. Sound familiar?
Neo-Classical economics is an extension of Ayn Rand's Objectivism, with Alan Greenspan as one of it's chief prophets. But like Rand herself, and her philosophy is anything but objective. And neither is Neo-Classical economics objective. It treats people and their behaviour in an extremely naive and unrealistic way. And it does not allow for the actual way that people behave which is not always rational.
What it lead to was the financial sector convincing politicians that they ought to be free of any government control and that this would lead to a kind of utopia in which everyone would benefit. As Curtis points out it was partly based on a belief that computers would facilitate a new kind of stability by predicting risk and allowing the financiers to hedge against it.
But we've seen what it has lead to. Multiple financial disasters. And now the world wide collapse of the banking system, at the same time as bankers salaries have grown exponentially. Greedy bankers have pillaged the world economies and got mega-rich doing so, all the while telling us that it is for the best. And it's politicians who have facilitated all this by removing restrictions on the finance sector and becoming Free Market evangelists, thinking that in the process they themselves might become Randian heroes.
Rand has cast a long shadow over the Western World. If we're ever going to get out into the light again, we need to shrug off Rand and her stupid ideas.