Editor's Note: This essay was written in 1991 about the fall of the Soviet Union. Today, it appears that socialism is coming back from the grave. The basic differences between socialism and capitalism highlighted in the article have not changed.
The ghost of Karl Marx, a specter that haunted Europe for over a century, was finally exorcised when the Soviet Union abolished its Communist Party, and then abolished itself. But socialism isn't dead. Will capitalism survive? If it does, it will owe a large debt to a woman who witnessed the birth of communism, and became one of the most eloquent defenders of capitalism.
Ayn Rand was born in St. Petersburg, in what was then czarist Russia. She was twelve when Lenin seized power, and spent her youth observing the horrors of Marx's ideas in practice. She fled the Soviet Union as a young woman, arriving in New York with little English and less money. She wrote two best-selling novels, The Fountainhead in 1943, and Atlas Shrugged in 1957, which continue to sell at a vigorous pace. She founded a philosophical movement, Objectivism, which challenged the conventional wisdom in philosophy, psychology, politics, and other fields.
Rand was the most profound critic of socialism, and defender of capitalism, in our time. She was not an economist. It's obvious now that Marx wasn't much of an economist either. But like Marx she was a prophet who grasped the deep moral issues at stake in the way we organize our economic life, and wrote with a passion that inspired moral idealism in her followers.
Like other socialists, Marx played on the widespread sentiment that capitalism was conceived in sin: that it bred selfishness and materialism. He promised a society in which wealth would be shared, and each would live for others in communal solidarity.
The opponents of socialism said it wouldn't work, and of course they were right. They praised capitalism because it did work; it produced abundance on an unprecedented scale. But they never addressed the ethical complaints against capitalism, or questioned the notion that socialism is a noble ideal.
Rand enraged the political left by denying their claim to the moral high ground. If their intention was really to alleviate human suffering and extend freedom, she argued, they would never have defended for so long a system that produced only bloodshed, poverty and oppression. These were not accidental consequences. They flowed from the essence of the system; they flowed from the doctrine that the individual must live for the good of society. "Socialism is the doctrine that man has no right to exist for his own sake, that his life and work do not belong to him, but belong to society, that the only justification of his existence is his service to society." Even as a youth during the Russian Revolution, she grasped that this doctrine was wrong--not merely impractical, but morally evil.
Rand agreed with the socialists that capitalism is incompatible with an altruist moral code. So much the worse, she argued, for altruism. A free society rests on the principle that every human being is an end in himself. But this implies a moral right to live for oneself, to pursue one's own life and happiness as values not to be sacrificed. Rand has been described as the apostle of selfishness––and she was. She held that we are not our brothers' keepers, because an honorable person doesn't wish to be kept. But she did not accept the usual concept of selfishness––the grasping concern for status and power over others––because she had an exalted view of the self. To be selfish, she argued, is to remain loyal to one's own vision and values, and to be above the need for comparisons. In place of the ethic of communal sharing, she offered the ethic of the producer, who acts on his own judgment, sustains himself by his own effort, and deals with others by voluntary trade.
Isn't generosity a virtue? Yes, but it is not primary. "Creation comes before distribution––or there will be nothing to distribute. The need of the creator comes before the need of any possible beneficiary. Yet we are taught to admire the second-hander who dispenses gifts he has not produced above the man who made the gifts possible." This passage, from the climactic trial scene of The Fountainhead, ought to be read aloud daily to those politicians who speak loudly of compassion as they pass out other peoples' money.
The heroes of Rand's novels are inventors, engineers, architects, men and women who produce steel and run railroads. She attacked the ancient prejudice that material production is a mundane, mechanical, unexalted affair. Wealth is a value to human life, on a par with art or science; and the creation of wealth requires the same qualities of intellect, imagination, courage, integrity, and discipline. She saw through the false dichotomy between matter and sprit, and had no patience for the alienated writers, artists and intellectuals who pride themselves on being above the bourgeoisie.
This is the key to her defense of the free market. Not that it produces material wealth, although that is important, but that it protects and rewards those human and heroic qualities that make creation of any type possible. Capitalism is the only system that permits individuals to act on their own judgment, in the service of their values. It is the only system that allows human beings to deal with each other voluntarily, as independent equals.
What she meant by capitalism is not the mixed economy characteristic of all the industrialized countries, in which the government consumes a third or more of all production, and heavily regulates the rest. She meant laissez-faire––"with a separation of state and economics, in the same way and for the same reasons as the separation of state and church." The function of government is solely to protect individual rights, including property rights. When it redistributes wealth, nationalizes industries, or regulates voluntary transactions among consenting adults, it commits the moral fallacy of socialism, the fallacy of treating the individual as a means to the collective good.
With the resurgence of socialism, it is incumbent on us to rethink the meaning of capitalism. We might start by recalling the principles of its greatest prophet.