Key Terms

Recently my students debated the merits, and demerits, of credit card companies. I was impressed by their level of argumentation. I was also struck by how the debate revolves around certain key terms.

The first term is the notion of being voluntary. For a trade to count as a trade it must be voluntary. The Radical Capitalists restrict this to the use of force or the threat of force. Anything else goes. There are reasons to draw the line here, but there are also reasons to ask whether jettisoning cargo in rough weather is also "voluntary" in the same way that just throwing cargo overboard for fun would be. There are differences in the criminal law that draw distinctions between various levels of intent and hence voluntariness. Does the level of need affect this?

The second term is information. There is nothing illogical about a system of total caveat emptor. Yet, such a system seems to define the very essence of a black market. Rand points this out when Rearden has to get coal on the black market. Genuine markets have some built in protections concerning the accuracy of information. All the Radical Capitalists believe in prohibiting fraud - but just what is fraud? Is it only telling a lie or can fraud be perpetrated through more subtle means?

Bill

Radical Capitalism

Logan H asks a good question: What is Radical Capitalism?

Most think it is laissez faire capitalism. However, I argue it goes beyond this. All of the authors for this course believe that liberty is a value that cuts across both the economic and political spheres. What makes these authors radicals that they advocate the maximal amount of liberty for individuals and that they see that all of our liberties are connected. This is the major theme of Friedman's Capitalism and Freedom and Rand's Atlas Shrugged.

Robert Nozick makes a very good point in Anarchy, State and Utopia: Liberty upsets patterns. If being conservative is preserving traditional patterns then liberty is quite radical. In this sense Radical Capitalist may be redundant, but it does signify that the most radical ideas are those that consistently promote individual liberty across all spheres of human conduct.

The Ambiguity of Business

In Atlas Shrugged, Rand clearly distinguishes between real business people and those who simply got the title because they are located in a business. What makes this distinction really difficult is that there is not a pithy name for the latter.

Real business people engage in production, trade, and competition. Those riding on the coat tails of business want to avoid competition. They do produce something, but it is clearly not like real business. In Atlas Shrugged Paul Larken and Mr. Mowen produce. The kicker is not that they do it in a mediocre fashion, but in their reasoning about the whole process. Rand is merciless with the Board of Taggart Transcontinental because they spend their efforts on anything but production.

The reason I point this out is many accuse Rand and Radical Capitalism of being pro-business and then cite the worst of the lot as evidence that such a theory is ludicrous. Not everyone who is called a "business" person really is. That's her point. There is a difference between extant businesses and the practice of business. For instance, recently Fed Ex and UPS were engaged in a political battle over the laws of unionization - each trying to get laws passed that hurt the other. They are businesses, they are engaged in business, but this mutual predation through the political process is not business. (Note they are not simply trying to protect their own - they are trying to hurt the other as well)

An equal mistake would be to say that everything a man parent did in the home was fathering. This is palpably false. Yet, people are willing to believe that everything that is done within the firm is business.

To understand Radical Capitalism is, I believe, to understand the difference between real and fake business.

Twitter

I am trying to get my twitter account to follow this blog. Please pardon my experimentation.

Economic Liberty

In the first chapter of "Capitalism and Freedom" Milton Friedman argues that economic and political liberty are connected. Specifically that economic liberty is necessary for political liberty. Friedman devotes most of the discussion to an analysis of freedom under socialism where socialism is understood as state ownership of the means of production.

His argument also applies to a host of market economists who do not see the connection. In "The End of Laissez faire" Keynes argues that semi-autonomous state agencies are the optimal form of organization. Friedman directly addresses whether such agencies could plausible be expected to remain autonomous.

Friedman's argument also directly addresses John Stuart Mill's claim in On Liberty that "the principle of individual liberty is not involved in the doctrine of Free Trade" (Chapter V pp 166-169. See Library Page ). As Friedman rightly points out, economic freedom is an important freedom in its own right. Second, the freedom that the principle of liberty seeks to protect is not somehow immune or separate from the economic sphere.

To live and believe as I see fit requires I be able to employ resources for my survival, comfort, and even promulgation of my beliefs. In a society where the state owned everything, if I disagree with the state it is no more possible to live my own life than it is to own my own property. Those who disagree with Walmart can shop, and seek employment, elsewhere. Those who disagree with the central committee have no such option.

Census Data

I'm putting this here now so that I don't lose the link :) U.S. Census Data on Business

I want to explore this data further, especially in light of the fact that government bailouts always focus on the importance of saving Huge enterprises. Fact is, on an initial glance, half of all employment is in firms of less than 500 people.

Also, is it just me, or does the reporting of these statistics seem to give the impression that bigger is more important. Notice the BIG numbers are actually summaries for firms of over 500 employees - making it look like this portion is much larger than it really is. No similar summary is given for firms between 1-499 employees.

Notice also that the 17,646,062 self-employed people are not included under the column "Paid Employees" further skewing the impression that firms over 500 are what is really important.

Here is the U.S. Census link: http://www.census.gov/epcd/www/smallbus.html#EmpSize

Ayn Rand

I've assigned Atlas Shrugged for my Radical Capitalism course. One reason I did so was because of her ongoing popularity. This article in Reason by Brian Doherty discusses how popular Atlas Shrugged is today: She's Back!

For the second reason (no pun intended) why I decided to include Atlas Shrugged in an academic classroom setting, please read and notice the quality of the comments.

Eddie Willers

*
I have just noticed - Rand gives no description of Eddie Willers.

Platitudes

Back from break and embarking on two courses this semester: Business Ethics and Radical Capitalism. This post is about business ethics.

It seems quite common for those speaking of business ethics to talk about the necessity, or moral goodness, of compliance with the customs and expectations of the community.

I am reading this now in Robert Solomon's It's Good Business, but it can also be found in Friedman's "The Social Responsibility of Business is to Increase Its Profits."

First - this is not necessarily true. Communities can harbor racist, sexist, or any number of horrible customs and expectations. The truth of this claim would seem to rest entirely on the prior morality of the expectations. Yet, even this contingent claim should be challenged.

What if the expectations of the community are moral? If one is a moral monist then there is only one right code and both community and business ought to abide by it. Notice, though, that even here the normativity does not stem from following community expectations - business is obligated for the same reason everyone else is: This hypothetical set of moral rules is the only right code.

If one is a moral pluralist, then the community may be following a legitimate custom, but there may be other equally good moral customs as well. Some people are married, some are single - should a business not produce products for singles? Should I not write books that most of the community disagrees with? As long as the business is following a morally acceptable alternative path, then there is no reason to claim an obligation to follow community customs and expectations.

I simply find no reason to support the claim that business, or anyone else, is obligated to follow community customs and expectations.