Ayn Rand's Greatest Mistake -- updates, comments, corrections

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The BIG picture

So Ayn Rand's greatest mistake was to miss that folks and organizations involved in commerce are the most likely to seek and get government intervention -- in commerce.  

It's likely that the mysterious reason famous free-trader Adam Smith destroyed his followup to Wealth of Nations was his discovery of this same glitch, in those days, in naked mercantilism. This is what he noticed - - - 

People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices. --Adam Smith, The Wealth of Nations

This tendency of businesses to get in cahoots with governments predates Adam Smith.  This has it's roots solidly in the nature of the adventurous first tier of entrepreneurs who are brave enough to gamble on their vision.  Once they're successful, they often get bored and are only too happy to turn the day-to-day operations over to the staid bean counters who don't like gambles or taking chances.  And this is just one of the things they're up against - - - 

"Whenever you see a business that's done the same thing for a long time, a new guy can come in and do it better. I guarantee it." --Michael Bloomberg on the cover of Forbes, 25 Nov. 1991

And then there's this - - -

               WAL*MART founder Sam Walton

Ironically, it's this extreme power of markets which motivates business interests to recruit the government gun to help them against it.  

Which is what von Mises nailed like this remember - - -

The consumers do not care about the investments made with regard to past market conditions and do not bother about the vested interests of entrepreneurs, capitalists, land-owners, and workers... (It is precisely the fact that the market does not respect vested interests that makes the people concerned ask for government interference.) --Ludwig von Mises, Human Action

In fact, it's become SOP for businesses -- especially the big old clunky ones -- to use government force to protect themselves from disloyal customers and new-guy competition, subsidize them, and bail them out when they screw up. And, if you notice, that's now become one of the main things governments do.

And especially the well-heeled corporations have mastered the art of using government so well that - - - 

"There isn't one grain of anything in the world that is sold in a free market. Not one! The only place you see a free market is in the speeches of politicians" --Dwayne Andreas, ADM CEO, Mother Jones, July/August 1995

AND

"We don't have free trade anywhere except in the case of corporate profits." --N.J. Governor Jon Corzine

But it's not just business interests. Markets -- with their constant potential for rapid change and the arrival of new-guy competition -- are inherently "destabilizing" and disruptive. CNBC accurately calls such folks and businesses "The Disrupters" and has a periodic segment by that name. Business guru Peter Drucker explains it like this - - -

Society, community, family are all conserving institutions. They try to maintain stability and to prevent, or at least to slow down, change. But the organization of the post-capitalist society of organizations is a de-stabilizer. Because its function is to put knowledge to work---on tools, processes, and products; on work; on knowledge itself---it must be organized for constant change. It must be organized for innovation; and innovation, as the Austro-American economist Joseph Schumpeter (1883-1950) said, is "creative destruction." It must be organized for systematic abandonment of the established, the customary, the familiar, the comfortable---whether products, services, and processes, human and social relationships, skills, or organizations themselves. It is the very nature of knowledge that it changes fast and that today's certainties will be tomorrow's absurdities. --Post-Capitalist Society, pg 57

And this destabilizing effect of markets has been known and forcefully opposed for quite awhile remember - - -

"(h) The countryside was cut out of trade in the Middle Ages.
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'Up to and during the course of the fifteenth century the towns were the sole centers of commerce and industry to such an extent that none of it was allowed to escape into the open country' (Pirenne, Economic and Social History, p.169). 'The struggle against rural trading and against rural handicrafts lasted at least seven or eight hundred years' (Heckscher, Mercantilism, 1935, Vol. I, p. 129). 'The severity of these measures increased with the growth of 'democratic government' . . . . 'All through the fourteenth century regular armed expeditions were sent out against all the villages in the neighborhood and looms or fulling-vats [in which cloth was dyed] were broken or carried away.' (Pirenne, op.cit., p. 211)." --Karl Polanyi, The Great Transformation. (Boston: Beacon Press 1957), p. 277

Putting it all together, this is the bottom line:  

"Free enterprise can't be justified because it's good for business -- it isn't. It can only be justified because it's good for society." ...

AND

"Markets aren't perfect, they're not even very good. They're just better than anything else." -Peter Drucker quoted on CNBC, October 10, 2002, 17:52:05

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