Eco view on mixed economy (Sorry Ayn)

Let us start with a premise that is so extensively and intensively elaborated by Ayn Rand: that there should be no state interventions into the field of economy if we want to avoid totalitarian regime. Ayn’s criticism of mixed economy system, system that she found first in Soviet Russia, but also in post Second World War USA, is not only abundant but meticulously designed as well. It is impossible to summarise objectivism (a philosophical background for this criticism) in couple of lines, but let us try at least to point out objectivist’s conception of economy. With this we already presuppose that what Ayn has to say about individual ethics of objectivism, regardless that it comes from the same source but has to be evaluated separately. And will be shortly.

Lobbyists as costly by-product

It seems natural that an enterprise that is focussed on relations with customers only (including suppliers) and would be free from any state interventions, would be less vulnerable than the one that has to deal with interests from other “interest groups” as well. Her description of market flaws that are a consequence of anti-trust state interventions (among other interventions) is extremely valuable and up to the point. Her “final” point that the system of mixed economy and state interventions is in fact producing more and more looters and is at the same time expelling producers, thus demolishing society from every possible angle is self-persuasive. If we only take in account the fact that objectivist’s economy would not need lobbyists that are costly part of mixed economy, it is enough to make a conclusion, that lobbyists for instance are not only costly by-product of mixed economy but example of looters as well. In a world where customers are the only concern of enterprises, where exchange of goods is limited to values related to goods (and services), this objectivist’s economy goes smoothly. But…!

States as living creatures!

But what if there are not only individuals and enterprises that can be understood as the living creatures of this world. What if all kinds of social “groups” are in fact as equal living entities as companies and individuals? And further: what if we combine the fact that there are various social “groups” to be taken as “living creatures” with another fact that all living entities do compete on their markets for resources needed for survival? Local municipality, global NGO, state,… they are all living creatures that for obvious reasons react and act as all living creatures on the basis of exchange of goods.

So the principle that is so important to Ayn Rand “fair exchange of goods”, metabolism, is running all living entities, including states for example; the same state that should not intervene into economy from Ayn’s point of view. It goes from Darwin: if states would not be sustainable metabolite entities, they would cease to exist.

And what do states live on; what do they exchange? Or better: how do states manage their welfare in a competition with other states? They survive applying management of their resources that they can exchange. First there was management of natural resources only, then industrial resources were added, later services and intangible resources came to the pool of goods for a state to trade (ingest and digest) with other states. In Europe for example this management is at the moment partly applied by all kinds of funds that European Commission allocates to specific regions, specific industries … In the world of Ayn Rand management of these funds should be an ultimate example of mixed economy that is a threat to economy and democracy. In her projections this trend should lead us into a realm of  One world totalitarian regime.

One world paradox of objectivism

Here, in “One world” issue we can find a first serious paradox of Ayn Rand thought. If we try to understand objectivism in the context of globalised world as it is now, there is no other possibility for objectivism to exist, than that of “One world” without any state. For: immediately when at least two states would exist, they would start a competition for resources with another state. This is a natural behaviour of any living creature. So we see that her objectivism, that is so afraid of “One world” totalitarian regime in fact necessarily produces “One world”. We also see that the only possibility to avoid “One world” totalitarianism is to welcome as many states to compete for resources as possible.

The main underlying mistake of Ayn Rand is thus that she does not understand that there are not only customers that are representing an environment for an enterprise. There are not only customers that a company has to exchange goods (values) with. Customers do not represent the totality of the environment. No living creature can correspond (exchange goods) only to that part of environment that suits that creature most and avoid other parts of environment. We cannot choose our environment – but we can adjust our relations with different parts of it. We have to adjust our metabolism to different levels of exchange – not only exchange of goods, but as well exchange of information, respects, sub ordinances, gifts … all being values (goods to exchange). We cannot avoid being a part of specific state (and various lover ranked entities) that treats us (individuals, enterprises) as a part of its resource. As in every biotope each part of that biotope is a food and a result of digestion in the same time. We thus cannot even theoretically conceive a world that would be objectivist’s world.

Not one world – not mixed economy – not objectivism

But that does not mean that Mixed economy would in fact be our blessing. Values namely exist on different levels, not only on the level of exchange of goods. Mixed economy on the level of traditional economy is a curse, but exchange of all other values does not happen within economy of goods and services. While it would be quite easy to enter One World ideology on the level of globalized markets, there are fortunately many other markets, markets that Ayn Rand does not perceive, that counteracts each other and with that prevents one world totalitarian recession.

We could thus conclude that if lobbyists are good, then they exchange values. If they are not, they would disappear.


Andrej Drapal