Ayn Rand was born on this day in 1905. “It usually begins with Ayn Rand,” said author Jerome Tuccille of this Russian-American thinker, novelist and screenwriter. An amazing number of people have come to support a free society and a free-market economy through reading her novels, especially The Fountainhead (1935) and Atlas Shrugged (1957), in their student years. Those novels may not be works of great literature. The characters are little nuanced, more mouthpieces for Rand’s political and philosophical views. But decades on, they remain hugely influential, because they have what young people – and others looking for some purpose in life – actually want. Their weaknesses are the obverse of their strengths. Her heroes are role models: ambitious, purposive, independent and strong; ruthlessly self-interested and yet deeply moral. These are stories with a message, a coherent worldview that conquers all: the morality of rational self-interest. Atlas Shrugged, for instance, describes a world in which industry leaders overcome the stifling controls of over-mighty governments by closing down production and creating an alternate order based on freedom and strict respect for personal property. Unlikely, for sure: but it makes you think.
No surprise, then, that many of the world’s leading businesspeople have been influenced by this twentieth-century Russian émigré to America, whose fiction and philosophy has sold 25 million copies. One, Lars Seier Christensen, founder and CEO of the hugely successful online investment broker Saxo Bank, gave the Adam Smith Institute’s annual Ayn Rand Lecture in London last year. Even though Rand died in 1982, he observed, her robust individualist approach to economic and social life is needed more now than ever.
Rand held that the key thing that makes human beings unique is their reason. We betray our species and our selves if we do not use it. But to act rationally, we need a long-term view of the world. It might sound good to tax the wealthy and spend the money on education, welfare and much else. But there is no free lunch. Those short-term benefits come at a long-term cost, because taxation depresses risk-taking and enterprise. As in Atlas Shrugged, the majority cannot exploit the minority and expect them to put up with it forever.
The long-term view reveals that most regulation is irrational. Minimum wage laws, for example, might boost the wages of poorer workers; but by making it too costly for employers to hire unskilled or untested applicants, they deny hundreds of thousands of young people jobs and consign them to the welfare rolls. American regulations that forced banks to lend to poorer people gave families ‘affordable housing’ but created the sub-prime crisis and the crash.
It is the same in business. Rational self-interest means long-term self-interest, not short-term greed. Greed comes back to haunt you, as certain bankers will testify. It is interesting that about the only American bank to come out of the financial crash unscathed was BB&T, run by John Allison – an adherent of Ayn Rand’s principles and another past Ayn Rand Lecturer. There are only two stable relationships, he insists: win-win or lose-lose. You don’t need self-sacrifice or even altruism. You benefit yourself by benefiting others.
Money is not the end. Happiness is. If people in a business – from the CEO to the cleaners in the works canteen – know that they are part of an enterprise that makes a positive difference to others, they will have purpose and self-esteem. That will make it a better business – and will make them happier, more complete human beings.