Capitalism and Business Ethics|
Yaron Brook, Executive Director of the Ayn Rand Institute
Wednesday, July 19, 2000 at 1:00 p.m. EDT
The relationship between business ethics and free market capitalism has always been a delicate one. Many see it as impossible to serve both interests effectively, while others see the two as inextricably linked.
Our guest this week is Yaron Brook, Executive Director of the Ayn Rand Institute. The institute is of course named after the notable economist and novelist. In the 1940s and '50s, Rand brought to the masses a controversial philosophy of Objectivism and a moral defense of capitalism through her popular fiction works, "The Fountainhead" and "Atlas Shrugged."
Yaron Brook will join us live online for a frank discussion on capitalism and business ethics Wednesday at 1 p.m.
Can you begin by telling us what the objective is of The Ayn Rand Institute.
Yaron Brook: The purpose of the Ayn Rand Institute is to promote the ideas and works of Ayn Rand. The essentials of these ideas are reason, egoism, individual rights and capitalism.
welcome to today's discussion. We have lots of questions already so let's get started.
Silver Spring, MD:
How is the term "business ethics" different from a broader definition of the term ethics? Do you believe that capitalism can be harmonious with a more general sense of the term?
Yaron Brook: Business ethics is just a category of ethics that applies in the world of business. Objectivism upholds the idea that rational self-interest is the ethical basis for human behavior in general and therefore for business behavior in particularly. Businesses are ethical to the extent that they act in their own self-interest. For a public corporation this would mean that it is ethical if it works to maximize shareholder wealth. Thus there is no contradiction between ethical behavior and business.
yellow springs, oh:
How do you respond to the assertion that nothing in the language of capitalism provides for those who are thrown out of the system by its working as it should under its rules?
Yaron Brook: Under capitalism, every productive individual can make a living and do well. On the contrary, the mixed economy and socialism deny individuals the ability to make a living and work for themselves. According to Ayn Rand productivity is an essential virtue, and under capitalism productivity is always rewarded. For those who cannot help themselves or for some reason cannot be productive, they must be supported by those who are productive. Under capitalism they would do so by asking for that support as charity. Under socialism they do so by forcibly (by using the government) taking that support.
I have not been involved in any way with the Federal govt's suit against and attempt to break up Microsoft, so I don't know all of the details, but on the surface it certainly seems to be a story taken directly from Atlas Shrugged. What are your thoughts on the Microsoft case? What if Bill Gates just picked up his billions and checked out of society, creating no more jobs, no more wealth and no more progress?
Yaron Brook: The government's case against Microsoft is a travesty of justice. Bill Gates has created his wealth; he has earned it. There is no basis for the government's attack against him. More generally, anti-trust laws as such are unjust and make no sense ethically or economically. A major reason for people's confusion concerning Microsoft is their inability to differentiate between economic power and political power. The Microsoft case illustrates this difference. The government can unilaterally use physical force (Bill Gates will go to jail if he doesn't comply with the government's decrees). To achieve its economic power, Microsoft could not use physical force; it had to negotiate, it had to trade---it always had to give a value in order to receive a value. I would not blame Bill Gates for taking his billions and leaving. One would hope that the world would learn something from such an act.
Why do you think so many people are turned off by Rand's ideas?
Yaron Brook: Ayn Rand presents a new, revolutionary philosophy. It challenges every fundamental belief held in our culture. It espouses reason in an age where emotionalism is enshrined. It espouses egoism when our political and cultural leaders ask us to sacrifice at every opportunity. It espouses individual rights when even the Supreme Court has forgotten what these mean. It espouses capitalism in a world that is in the grips of the mixed economy. Ayn Rand also rejects religion and asserts the primacy of existence. Ayn Rand believed in truth, in right and wrong, while today's professors teach us that everything is subjective, i.e., there is no right and wrong, no truth. Thus, unless you are willing to question, to challenge much of what you have been taught, you will not be open to her ideas.
In an earlier response you said that the unproductive in society force the productive to supply their needs using the government. Our society is a democracy in which many more voters pay taxes than receive government benefits. Isn't it more accurate to say that the productive members of society have voted to provide benefits for those who can't?
Yaron Brook: A majority has no right to violate an individual's right to keep the wealth he has created. Charity should be every individual's private decision.
I think I remember reading about your institute and other similar organizations protesting Earth Day. Why would you be against Earth Day?
Yaron Brook: The Ayn Rand Institute opposes Earth Day because we oppose the notion that the environment has some value outside of its value to human life. Given that progress, industry, technology are human values and have brought about a steady and substantial increase in the quality of life, we oppose any attempts to forcibly curtail development in the use of nature for man's ends. Man as a species survives by changing his environment to suit his needs. By asking us to stop doing this, environmentalists are undercutting man's ability to survive. Environmentalists are not interested in saving nature FOR man, but instead in "saving" it FROM man.
For further details, see http://environmentalism.aynrand.org
There has always been a great debate about the triumph of capitalism. Looking at a company like Ben & Jerry's which for years took a very altruistic approach to selling ice cream recently sold out bowing to market and economic forces. Do you think it is realistic for there to be a marriage of extreme social responsibility and capitalism or are the two better off separated?
Yaron Brook: Ayn Rand's philosophy of Objectivism denies that there is such an idea as "social responsibility". Companies have a responsibility to their owners, i.e., their shareholders, to maximize long-term wealth. This entails creating great products, offering them at great prices for consumers, and providing great service. It is what has made American industry great. To the extent that companies do not work to maximize shareholder wealth, we all suffer. Instead of maximizing productivity, efficiency, the quality of their products, they are entwined in conflict, pursue unfocused goals, and ultimately, just like Ben & Jerry's, cannot make enough money to survive independently.
Ayn Rand illustrated this phenomenon in ATLAS SHRUGGED, a book I recommend to all of you.
Ayn Rand believed that it is never right to initiate the use of force. This belief rules out almost all taxation. One might argue that Rands belief makes sustaining a government impossible since the alternative to forced taxation - i.e. financing the government through voluntary contributions - is unworkable. How can Rand sustain a government?
Yaron Brook: I think that a government could easily finance itself through voluntary contributions and fees for services. For a more detailed discussion of Ayn Rand's position, see
"Government Financing in a Free Society" in THE VOICE OF REASON by Ayn Rand.
Why would an Objectivist not commit murder if he would gain from it and not be caught? Why is it selfish not to murder one's enemies?
Yaron Brook: Rational egoism does not imply a walking-over-corpses mentality; it does not imply a short term, emotional motivation. To initiate physical force against someone else is wrong: it is a denial of that person's individual rights and therefore it is a denial of reality. Such a denial is corrupting and harmful to one's self, and therefore can never be in one's self-interest. By denying someone else's individual rights, you are denying your own; by denying someone else's life as a value, you are denying every one of the virtues that make life possible, and therefore the value of your own life. Such a denial is disastrous to one's own life.
Anything gained through the initiation of physical force is not a value. While I cannot fully elaborate this here, I would suggest that you read the inductive proof provided in chapter 8 of OBJECTIVISM: THE PHILOSOPHY OF AYN RAND by Leonard Peikoff.
Do you have any comments on the Napster/Metallica controversy? Is what Napster is doing ethical?
Yaron Brook: Napster is in clear violation of the artists' and the music industry's property rights, and is therefore wrong. To read more on Ayn Rand's views on rights, see CAPITALISM THE UNKNOWN IDEAL by Ayn Rand.
A recent Wall St. Journal editorial suggested Russian president Vladimir Putin was similar to Ayn Rand based on his ideas for reforming the government and economy, To me it seems that a lot, not all, of Rand's philosophy can be applied here in the U.S. and work well. But what is you opinion on how those same principles can be applied in a struggling economy and fractured government like Russia's?
Yaron Brook: What makes it difficult to apply Ayn Rand's ideas in politics in the current culture is the philosophic context. Unfortunately, this context applies both in Russia and in the US. While I think we in the US have a much better chance of success than in Russia, it is still a long way off. What is needed first is a philosophical revolution, not an economic/political change.
To see why any political changes must rest on firm philosophic foundation, see Miss Rand's essay "Philosophy Who Needs It" in the book by the same title.
What's your definition of a "moral businessman." A lot of people would say it's an oxymoron.
Yaron Brook: On the contrary, it is businessmen who make life possible. Therefore, qua businessmen, they are moral. For a powerful depiction of why business is a moral endeavor and for a portrayl of heroic businessmen, see Ayn Rand's ATLAS SHRUGGED.
Mr. Brook, what is your opinion on China's relation with the US? China is becoming one of the largest economies and is predicted to over take the US by 2010 according to some. With the recent news on the block of hi-tech military trade with Israel among other issues by the US, how will this affect company's there now and in the future, if any.
Yaron Brook: China is a totalitarian, ruthless regime. It is immoral for the US to support such a regime and by doing so condones China's horrendous actions. In addition China has missiles pointed at US cities; by helping China we sacrifice our national security, making their threat more real.
See ARI's Web site for op-ed articles on this topic:
That's all the time we have for today. Thanks to Yaron Brook for taking time to be with us today.
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