Ayn Rand's Error

Ayn Rand is the author of the classic novel “Atlas Shrugged” and one of the foremost thought leaders of the freedom movement.

Her critique of socialism, and socialist thinking is quite good.

Her defense of freedom is IMHO significantly less so.

To my mind her argument is a variant of the following:

Greed is good.
Selfishness is a virtue.
Everyone should support it because it has trickle down effects that will benefit all.


This is hardly motivating.

I believe that Ayn Rand fundamentally misunderstood the basic nature of exchange.

The way she saw capitalism was not entirely different than the way that the socialists see it.

She saw people who acted greedily doing well for themselves and attributed the fact that they did well to the fact that they acted in their own self interest without regard to others.

This is simply a fundamental error in her interpretation of reality.

She basically adopted the same view of the world as the socialists and sought to defend it.

But it is the view itself that is erroneous.

It is, of course, true that many very successful people do, on occasion, act in a way that can be seen as greedy. But it is a logical fallacy to attribute their success to this behavior.

Invariably such people become wealthy not because of greed but in spite of it.

Consider the examples of Bill Gates and Steve Jobs.

Both of these men became very rich not because they sought to “take” for themselves but rather because they sought to “give” something of value to the world.

Bill Gates dreamed of a computer on every desk. He wanted to provide the software for that computer which enabled people to utilize this incredible new technology to make their lives better.

Steve Jobs had a similar dream. Apple Computer delivered the very first such desktop computers to the world. He saw an opportunity to deliver value to people and he pounced on it. He did the same with the iPod and the iPhone. He saw a need that was not being met and he took it upon himself to meet that need.

Both of these men, at times, acted greedily.

But each time that they did, however, it hurt them rather than helped them.

Bill Gate’s attitude towards competition, for example, hurt him badly.

He seems to have instructed his product managers to focus on the main competitors for each product with the intent of wiping out the competition.

Influenced by game theory he believed that fewer competitors made it easier to win.

Creating monopolies tends to kill innovation however. This was not his intent. He was all about innovation. But without healthy and vigorous competition the financial incentive to innovate deteriorates.

A fear-based view of competition which sees competitors as a threat is a selfish view because the act of wiping out a competitor does not “give” to anyone. It is an act of taking. It is a barbarian instinct to use force against an external threat to make it go away.

[Note the association of “fear” and “selfishness”. Fear is the destructive emotion which causes us to turn off empathy and become self-absorbed. I’ve written about this extensively elsewhere: http://tinyurl.com/9drnvy]

Instead, people who view competition as something that should be enthusiastically welcomed tend to do well without creating feelings of animosity towards themselves. Competition drives self-improvement and helps us to give more to others.

Ultimately the bad feelings generated towards Microsoft as a result of this behavior led to anti-trust lawsuits being filed against the company.

Having created so many enemies Microsoft was left without any defenders to fend off this attack from the state.

Contrast that behavior with those of the executives of Google whose motto is “Don’t be evil”.

Google continues to grow and has done so without making enemies.

The state, therefore, is loathe to attack them because if they choose to do so, Google will be able to rally public opinion behind them in a way that Microsoft was not able to do.

Ayn Rand was simply wrong.

Selfishness is not the cause of success.

The opposite is true.

Selfishness is the cause of failure.

The universe gives back to each in proportion to what they give to it.

The universe also takes from each in proportion to what they seek to take from it.

It’s all about give and take.

Some incorrectly believe that they can get away with stealing a little more for themselves without having to pay for it.

They are mistaken.

The law of reciprocity is real.