Friday, October 24, 2008

Ayn Rand is not good for you

We have now the spectacle of even Alan Greenspan going for more regulation of the market. O tempora o mores, I suppose. Perhaps this strange sight signals - whatever the level of destruction of this possibly very deep and exceptional downturn - that a return to some degree of sanity has finally begun. It is not that these collapses would not have been foreseen and forecast - they were, by many anxious and worried observers. It is just that reason went overboard with the long bull market, as it inevitably will in connection with any complex large scale human activity, and especially when it comes to the market place. It is self-evidently a feature, not a bug. That is why we desperately will always need balancing forces, safety nets, income transfers, progressive taxation and so on - not only do they keep the society open for fair competition and high social mobility but they also guarantee a certain, basic and crucial level of stability that is inherently missing from raw capitalism. In the last analysis these factors are the fundamental foundation of any effectively functioning and flourishing market economy. It is the very success of social democracy that I guess makes the market enthusiasts so blind to its salutary effects. History, our brutal human history, has a knack though of reminding us of the realities every now and then. Hopefully we will escape now with only a reminder - it seems quite possible that much worse things could be on offer. Interesting times certainly.


john said...

1) Could your country afford its social democracy without your governmnent's oil money income? Doubtful. Socialism is a bankrupt idea.

2) any resemblance between Greenspan and Ayn Rand's ACTUAL system is total illusion.

Greenspan DID make a monstrous error: he blamed "a flaw in market forces." How craven. He should have said: "I am totally shocked and ashamed I allowed myself to believe that market forces could continue to clean its own stables while half-regulated, politicized/subsidized, throughly federalized and social-mandate-driven. Instead, the men of integrity and production were driven out and scoundrels flourished. I guess Miss Rand was right after all. This was all in her book."

John Donohue
Pasadena, CA

stockholm slender said...

Well, fair enough, I know that this system of thought is not actually falsifiable by empirical observation. It is foolproof, so to speak - so all one can hope for is a reconversion back to our common reality, a question of losing faith rather than an argument. This used to go for the Marxist-Leninists too. In the end history won over even most fervent Communist belief and perhaps there is a beginning of the same process here. In any case it will be an interesting process to observe.

john said...

Frankly, while I hate the thought, it appears the US is going to attempt a deeper trial of Social Democracy by electing progressive social democrat Obama and with a democratic-controlled congress. Indeed interesting to watch.

stockholm slender said...

I suppose you wouldn't be surprised to hear that I would welcome such a change. I just wonder if a centrist Democrat and basically a center-right Congress will imply anything more than cosmetic reform. The public finances might be facing (thanks to good right wing "care") scary imbalances that won't even allow any new openings even if there were will. I'm not a social democrat, but I do think that due to our deeply imperfect and irrational human nature we will need social democracy to counterbalance the market economy. Current times are excellent - and empirical - proof of the correctness of this conviction.