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To What Extent Was Rand a Misesian?

April 11, 2005

Tags Big GovernmentBiographiesFree MarketsHistory of the Austrian School of EconomicsPhilosophy and MethodologyPolitical TheoryPraxeology

This year marks the 100th anniversary of Ayn Rand's birth. Her books sold in the millions and were most effective in transforming a generation of readers into ardent anti-communists and strong capitalists. There is also a connection between the Austrian School and Rand, as shown by a new symposium from The Journal of Ayn Rand Studies (Spring 2005) entitled "Ayn Rand Among the Austrians."

This is a collection of scholarly papers by some of her most serious students. If we may generalize from their conclusions, it is this: though Rand calls herself an Objectivist, and appears to reject important aspects of Austrian economics—apriorism and subjective value theory—and claims that a scientific ethics may be derived  from an individual's right to life, Ayn Rand was essentially an Austrian and a Misesian. The contributors to this volume give insight into Rand's principles and offer reasons for reconciling Rand's Objectivism with Mises's subjectivism.

One important message in the writings of both Ludwig von Mises and Henry Hazlitt, is that ideas had consequences, and that the future of freedom will depend on an improved understanding of free market ideas. "Rand picked up that challenge and attempted to provide economic enlightenment to her readers through the story of Atlas Shrugged." (Boettke, 452)  During his years of teaching, Peter J. Boettke frequently used the book as a teaching tool, comparing the economic ideas it taught with those in John Steinbeck's Grapes of Wrath.

In his contribution to this volume, "Teaching Economics Through Ayn Rand:  How the Economy is like a Novel and How the Novel Can Teach Us About Economics," Boettke writes that Atlas "details the benefits from voluntary exchange, the importance of a sound monetary standard, and the role of individual initiative and creativity as the engine of economic progress. (447) Rand's work highlights the importance of private property rights in providing incentives, the mutually beneficial aspects of exchange, and exalts the human achievement of innovation and wealth creation." (451)  "Rand makes the very important point that the critique of socialism was never against rational planning per se. Rather the question was who was to do the planning and the scope and the scale of the planning proposed." (459–60) Rand "communicates to her readers within the context of a beautifully constructed story the basic insight concerning the perverse incentives of collectivism, the inability to engage in rational economic calculation without private property, the law of unintended consequences in interventionism, and the interest-group logic of political capitalism." (446) 

When Mises read Atlas Shrugged, he was so impressed by her criticism of bureaucrats that he wrote her a "fan letter":  Atlas was "not merely a novel. It is also—or may I say first of all—a cogent analysis of the evils that plague our society, a substantiated rejection of the ideology of our self-styled 'intellectuals' and a pitiless unmasking of the insincerity of the policies adopted by governments and political parties. It is a devastating exposure of the 'moral cannibals,' the 'gigolos of science' and of the 'academic prattle' of the makers of the 'anti-industrial revolution.'  You have the courage to tell the masses what no politician told them:  you are inferior and all the improvements in your conditions which you simply take for granted you owe to the effort of men who are better than you."  (Reisman, 356) 

In his massive treatise, Capitalism, George Reisman attempted to synthesize the teachings of Rand, Mises, and Ricardo. Here he deals with only one point. According to Reisman, Mises's "support of 'utilitarianism' and his efforts to make the case for capitalism in terms of its utility. . . . does indeed meet the test of Man's life as the standard."  Therefore, Mises and Rand are in agreement on "Man's life as the standard of value." (253) And Reisman gives Mises credit for "defending the most important of all objective [italics added] values—the individual's freedom." (255) 

Walter Block discusses three subjects Rand deals with in Atlas Shrugged—antitrust regulation of business, money, and government. Her stands on all three are staunchly "Austrian."  Although Rand "has not a single solitary good word to say about business regulation, antitrust, or any other such government interference with the marketplace," (260) she does point out that "The attempts to obtain special economic privileges from the government were begun by . . . businessmen who shared the intellectuals' view of the state as an instrument of 'positive' power, serving the 'public good'." (261)  Francisco d'Anconia's speech on money, Block says, is "a little gem of a lecture"; it shows that "money is the life-blood of an economy, and that gold is a form of money that has traditionally functioned free of deleterious government constraint." 

As to government, Block points out that "there is ambivalence on minarchism and anarchism both within Rand and Mises."  However, "[o]n the overwhelming majority of other such issues, ranging from welfare to economic regulation to fairness and justice, they [Rand and Mises] are as alike as two peas in a pod." (266)

Ayn Rand was reportedly proud when a former member of her "inner circle," Alan Greenspan, was appointed as President Ford's chairman of the Council of Economic Advisors. And his role as Fed chairman is ironic given that as an acolyte of Rand's in 1967, he had written:  "[G]old and economic freedom are inseparable . . . [U]nder the gold standard, a free banking system stands as the director of an economy's stability, central banks cause positive harm." (274–75)  Since then, according to Larry Sechrest, Fed Chairman Greenspan has faithfully pursued the Fed's obligations as a central bank—to act as a "lender of last resort" and as the monopoly issuer of legal currency—both of which "actually increase the instability of the banking system." (286)  If Rand were living today, would she still be proud of her association with Greenspan?   

Roderick T. Long, in "Praxeology: Who Needs It?" discusses Misesian praxeology and its features Rand found objectionable—its apriorism, its value subjectivism, and its claims to motivational psychology. (311)  Long claims Rand is as much of an apriorist as Mises (303) as she accepts "the validation of axioms by showing them to be presupposed in their very denials"—a "form of reasoning that most philosophers would likewise call a priori." (303)  And, as "all action involves the application of means to achieve desired ends," (308), are they not psychologically motivated?  And what are desired ends but personal, subjectively-valued ends?  On these points, says Long, Rand and Mises appear to be "in perfect agreement." 

According to Rand, life itself is an objective value. "Life can be kept in existence only by a constant process of self-sustaining action. . . . An organism's life is its standard of value." (318)  Richard C. B. Johnson reconciles the controversy over subjective vs. objective values by defining two distinct roles for ethics and economics. "[T]he science of economics should focus on trying to find objective economic principles, but in doing so should avoid the ethical dimension, leaving it to the science of philosophy. This seems only to be possible by treating the ultimate ends . . . of people as given—they might as well be totally subjective—and instead study the means by which people try to reach their ends. Making this distinction would keep the economic science objective as well, i.e., wertfrei, just as Mises claims. And values of ultimate ends still could be objective, as well as those of means, perfectly in accordance with Rand."  (330)

Edward W. Younkins writes about "Menger, Mises, Rand, and Beyond."  In attempting to reconcile Rand's objectivist position on value with Mises's subjectivism, he sees Menger as the link. (361)  Rand like Menger considers man's life as the ultimate value. "Although Menger speaks of economic value while Rand is concerned with moral value, their ideas are essentially the same. . . . Objective values support man's life and originate in a relationship between him and his survival requirements. . . . Values are linked to life and moral values are linked to human life." (358–59) "Misesian economics focuses on the descriptive aspects of human action by offering reasoning about means and ends . . . . Means only have value to the degree that their ends are valued." (362) 

In his paper "Two Worlds at Once:  Rand, Hayek, and the Ethics of the Micro- and Macro-cosmos," Steven Horwitz describes the conflict between the ethics that prevailed among our ancestors when they lived in a close-knit society and the ethics which is appropriate to today's far-ranging, highly specialized, division of labor economy. According to Hayek, "[O]ur evolutionary ancestors largely existed in small bands living on the edge of survival. In such groups, devotion to the group and agreement on collective ends was central to survival."  With the development of agriculture and improved means of transportation a market-based economy evolved. Those who sought profit through exchange were then able to benefit themselves directly, and their groups indirectly. (380)  "A variety of institutions, including money, language, the law, and markets can be understood as spontaneous orders. . . . The modern industrial market society is thus a spontaneous order" which has emerged as people followed "evolved rules of just conduct." (381)  Hayek sees these evolving rules of just conduct as paralleling the process which "lawyers and judges face in codifying the evolved common law; they are not inventing law, they are codifying what history has shown to work. . . . Given that the rules of morality are, in Hayek's view, an example of a complex spontaneous order that could not be designed ahead of time, those sets of rules that emerge out of social evolutionary processes gain a presumption of appropriateness." (388–89) Life in such a spontaneous order market society involves relationships "among anonymous others," rather than "face-to-face" interactions. (382)  "[A]n exchange-based society enables us to serve each other's needs (i.e., cooperate) without needing to know much at all about each other." (382)  "[W]e must constantly adjust our lives, our thoughts and our emotions, in order to live simultaneously within different kinds of orders according to different rules." (384) "[T]o understand that the self-interested behavior of the market and extended order should be seen as morally praiseworthy . . . Rand's ethical system might fill in this gap." (387) 

Hayek was not one of Rand's favorite persons. However, Horwitz quotes Hayek in support of Rand's portrayal of wealth production as ethical, moral:  "The morals of the market do lead us to benefit others, not by our intending to do so, but by making us act in a manner which, nonetheless, will have just that effect. . . . [T]here can be no doubt that most of those who have built up great fortunes in the form of new industrial plants and the like have thereby benefited more people through creating opportunities for more rewarding employment than if they had given their superfluity away to the poor." (386–87)

Horwitz also compares the contrasting views of Rand and Hayek on the family. Rand "sees the family as an institution that more often than not encourages the collectivism and altruism that she opposes." (389) "For Hayek, the key function of the family is as one of the central cultural institutions by which the rules of just conduct are transmitted across generations." (391)  "Hayek saw in the ethical systems of the twentieth century the danger that they were inappropriately attempting to extend the collectivism and altruism of the family to the broader order, but he might well have seen precisely the opposite danger in the Randian ethical system:  the inappropriate extension of the extended order's ethics to intimate groupings." (399)

Candice E. Jackson's "Our Unethical Constitution" shows how Rand's reasoning from the thesis that an individual has "one fundamental right:  the right of each person to his own life (406), and Rothbard's ethics which "begins with natural law and places a carefully defined concept of property rights at the center" (409) both "arrive at virtually identical fundamental principles of political ethics. . . . the individual rights ethics." (415)

However, neither Rand nor Rothbard look on the Constitution as a guide to ideal limited government. "The American colonists were more concerned with rule by consent of the public as opposed to [rule by] hereditary monarch, than with substantive limits on government qua government. . . . [T]he Constitution focused little on constraining government qua government or protecting individual rights, and instead frame the issue as a structural choice between many State government loosely confederated, or a truly national government."  (423, 425)  "[T]he lack of articulated political ethical principles to support the mechanics of the Constitution," therefore, "dooms the Constitution to perennial failure as a foundational document for a genuinely free and ethical society."  (427)

Also in this issue of Ayn Rand Studies is an exchange between Leland B. Yeager whose The Moral Philosophy of Social Cooperation, William Thomas reviewed in the Spring of 2004. Although Thomas says he and Yeager are substantially in agreement, Thomas criticizes Yeager's utilitarianism, and "defends Rand's rejection of ethical altruism against criticisms that it represents a 'corner solution' or an unrealistic slippery-slope argument." (480)


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