Articles | On the 50th Anniversary of Atlas Shr . . .
On the 50th Anniversary of Atlas Shrugged
October 29, 2007
On October, 1957, Ayn Rand's novel Atlas Shrugged first
appeared. It was greeted by one reviewer with what I regard as
the supreme put-down in the history of literary criticism: "This
is the worst American novel since The Fountainhead."
It is a conceptually confused novel. It was offered in the
name of individual liberty, yet its description of how capitalism
works is so wrongheaded that it undermines what Rand regarded as
a call to economic liberty. I can think of few books that have
more completely misunderstood how capitalism works. It has
always baffled me that anyone who understands the nature of the
capitalist system would find much in this book to praise.
The book's theme is this: the captains of industry are
intellectually gifted people who are the source of the capitalist
system's productivity. There are very few of them. At some
point in the future, they bond together by their commitment to
the defense of liberty of thought and personal creativity. When
they see that the political deck is stacked against genius and
creativity, they retreat from society to hole up like Butch
Cassidy's Hole in the Wall Gang. They hole up in a Colorado
valley, not in Wyoming.
Without their presence, society begins to break down. The
government's mismanagement brings everything to a grinding halt.
The closing image of the book is a train wreck, which was the
result of lame-brained government officials. This train wreck
symbolic of both social decay and discontinuity.
Fact: It was not government that destroyed passenger trains.
It was the airplane. This was no discontinuity. It was a steady
process that was far advanced in 1957. Why Rand used a train
wreck as her symbol of discontinuity is unclear to me. Why not a
I can imagine no more confused description of capitalism and
the battles we faced in 1957 and still face today. The captains
of industry are not high-minded intellectual giants. They are
people with the peculiar knack of making money. This knack is
ultimately personal and unique. It cannot be taught. It cannot
be reduced to formulas. Entrepreneurship is the ability to
forecast the economic future and then allocate resources so as to
meet consumer demand. This is the thesis of Ludwig von Mises in
Human Action. The works of Mises' student Israel Kirzner best
explain the uniqueness of the entrepreneurial knack.
Far from being intellectual giants, successful capitalists
display above-average intelligence, but genius is as rare among
them as it is in all other above-average IQ populations. They
share no common traits, other than the ability to find ways to
exploit the ignorance of their competitors regarding future
supply and demand. High-minded? Hardly. Adam Smith described
them well in 1776: ready to collude together against the public
interest whenever they can get the state to provide them with a
monopoly through state coercion.
Consumers pay them for only one thing: their ability to
deliver the goods at a low prices. Capitalists stand ready at
any time to get the state to skew the conditions in their favor.
Smith did not have one good word to say for businessmen as a
class. He distrusted their motives completely. But Rand treated
them as if they were heroes under siege by the state. Better to
see them as ideological trimmers laying siege on their
competitors and consumers alike by means of the state's collusion
Rand did not understand entrepreneurship. She did not
understand that society-transforming entrepreneurship is not
about doing great, creative things. It is about doing little,
unconventional things for 250 consecutive years. It is not about
rugged individualism. It is about using the prevailing system to
make a buck any way you can, and then stay out of jail.
Consumers are in charge. They don't make capitalists rich
because businessmen are ideologically pure or heroic defenders of
property rights. Consumers hand money over to them to get what
they want. Capitalists respond to incentives. The main
incentive is money, not the applause of the public for a job
ideologically well done.
We get what we pay for. We pay for delivery of the goods in
the situation at hand. We need not fear that Atlas will shrug.
We should instead fear that he will pay off some key politicians
to get an edge against the ever-fickle, ever-demanding consumers:
The heart of the free market's competitive order is the
threat of replacement. Sellers fear replacement by other
sellers. Consumers fear replacement by other consumers.
Producers look over their shoulders and think, "If I could just
shut these guys out of the market." Consumers look over their
shoulders and think the same thing about rival consumers.
For every captain of industry ready to retire, there are a
dozen or more up-and-coming hot-shots ready to replace him. The
free market rewards captains of industry with huge benefits. The
idea that there are only a few of these people, and their
departure into Colorado could in any way undermine the creativity
of entrepreneurs, is ludicrous. There are always smart,
innovative people ready to replace retirees, no matter why they
Whatever appeal the novel has had to budding capitalists, it
is utterly misguided. It misrepresents the motives of the
captains of industry. It also misrepresents their crucial
ability: not ideological purity but rather the ability to make a
Sellers are ready to sell the country's freedom in exchange
for an edge against other sellers. Consumers are ready to do the
same against other consumers. Meanwhile, the great economic goal
of special-interest group politics is to keep competition out of
the marketplace. This, politics has done with great skill.
Rand described a great discontinuity: the retreat of the creative
elite from participating in the capitalist system. She ignored
the obvious: the creative elite in capitalism is in it for the
money. "Show me the money" is their universal mantra. The
greatest discontinuity that we face today is the discontinuity
imposed by a government-licensed central banking cartel that has
lured entrepreneurs into high-risk projects. How? With false
signals: low interest rates produced by fiat money rather than
thrift. The threat is not that Atlas will ever shrug. It is
that he will lift the earth too high, stagger, and then drop it
without warning. His looming problem is not shrugging. His
looming problem is a hernia, followed by a slipped disc.
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