Tuesday, February 22, 2011

Ayn Rand, selfishness and reciprocity

In Atlas Shrugged the Movie, I said in part

II have deliberately not looked at any of the arguments around the film, although again I can guess, nor have I sought to read the book again. I internalised it a long time ago, and I don't want current arguments or even my current thought to distort my perceptions before I can put them down.

That sounds fine. However, I have a bad habit of wanting to check basic facts such as when the book was written. So I went on line to do that. Inevitably, this drew me into the arguments around Ayn Rand, about the things she argued, about certain ways of thinking. I now wanted to respond to those arguments.

I may decide to do this. However, having seen the arguments and also looked at the comments from Neil and Ramana on my original post, I want to make a short and limited comment.

At the time I first read the book I was heavily into fiction of all types including science fiction where Heinlein was a particular favourite. I had not heard of the Austrian School, Hayek was a writer whose books rested unread on my father's shelves, Milton Friedman was unknown, I had never heard of neoclassical economics nor of the free market. I was reading for my personal pleasure, fascinated by pictures of different societies, absorbing ideas.

The concept of wreckers and parasites is central to Atlas Shrugged. The big train crash in the book occurs because money required for maintenance and proper support was plundered to meet immediate individual needs, self-gratification. Sound familiar?

Rand juxtaposes this with the concept of selfishness. However, this is not selfishness as the word is normally used. Rather, she argues that personal relations, the contribution made by one individual to another, has to be earned. When it comes to personal relations, no-one has rights. There is only contribution, reciprocity. By implication, this extends to the corporate sphere.

Forget all the free market wrapping she put around the book. Rand herself saw this as central, but it is secondary. It leaves open a question that Rand herself never really addressed in the book: what happens if the market is used by the wreckers?

I said that Rand had had an enduring influence on my thinking in all sorts of ways. Take my own thinking on management and especially people management.

I have, I think, had a pretty good track record at getting good results from people. I have sometimes seemed to be a soft manager, but I am actually quite hard. Rand is central to this.

in modern management, expectations are set by targets, key performance indicators. These are set from above. The whole language associated with productivity, with improved performance, is one way. What can I get from you, how do we get the best results from what we have?

In some ways this is wrecker language because there is rarely reference to what should be provided in return. It is all one way.

Rand's concept of selfishness, reciprocity, is personal; modern economics and management language is not. People have been removed from the equation

As a manager, I want good results - above average results - from my staff. To achieve this, management has to be personal, reciprocal.

The staff are paid money. They provide labour in return for cash. That is one element. But what can reasonably be expected for that cash? If you constantly ramp up pressure on staff seeking to get more for the same money without offering any gain to the staff, by increasing pressure on the staff, you risk becoming a Rand wrecker. You become the person who caused the train crash.

if you want above average returns from people, you have to offer above average returns. You have the basic equation of what you can expect from people for the money you pay. Then, to go beyond this, you have to give something back. This need not be money. Motivation, a sense of self-value, recognising people's needs, flexibility, all come into play. It is all personal.

What do you do if someone does not deliver? Well, you have to be fair. You have to understand the basic equation. You have to work with the person. You need to know the why. Finally, if someone is not delivering on the basic equation, then they may have to go. In the end, it's all a question of personal judgement. There may be formalised rules, but in the end it's about equity and reciprocity.

This is why I say that my approach to people management is in some ways perceived as soft while in fact being hard. I have been perceived as soft because I try to accommodate people, because I will fight for my people. Yet the reality is I that I generally get far better returns. Further, and unlike a lot of managers, I won't tolerate long term under performance because it's easier. I try to solve it. Most times I can.

And who are Ayn Rand's wreckers today? Well, consider this.

What about the advisers, financiers, CEO's and managers who focus on and have contracts expressed in terms of their immediate financial rewards, who bend everything to achieve their pay and bonuses regardless of the impact on others, who play corporate games, accept no concept of reciprocity beyond that which suits their immediate needs?  

I accept that my interpretation of Atlas Shrugged is personal. It is also a very long time since I read the book. There are many other aspects of Ayn Rand's philosophy. I have spoken of just one element, I think the central element, that came to be important to me

In Atlas Shrugged, Dagny Taggart fights to save the railroad. Later she joins with Henry Rearden. It was these fights that I found the most satisfying part of the book. By contrast, I found the ending unsatisfactory. But that's another story.  


In a comment, Winton Bates drew my attention to two posts he wrote on the selfishness issue. I am writing from a memory a long time ago. Winton has read Rand more recently. The posts are:


Winton Bates said...

Hi Jim
I agree with you on the question of selfishness in Atlas Shrugged. You might be interested in my comments here and here .

However, I find it hard to understand your view that the free market wrapping Rand puts around the book is secondary. I don't really understand what the incentive would be for 'the market' to be used by 'the wreckers'. As I see it markets are about mutually beneficial exchanges.

Jim Belshaw said...

Winton, I either missed or had forgotten these particular posts. I will bring them up in the main post.

Markets may be efficient but are, I would argue, simply a mechanism. The question of ethics applies to the participants.

The corporate executives at Enron, the deal makers who triggered the global financial crisis, those trading in blood diamonds, the marketers of Ponzi schemes, were/all or market participants.

The participants in Atlas Shrugged withdrew from one set of transactions and activities to create another one based on and limited to those who shared the same ethical standards.

Winton Bates said...

Thanks for your explanation, Jim. I accept that it is possible to have opportunism in private business without government complicity.

However, I think the impact of the Moochers in the industry department and the industry associations on the incentives of (Schumpeterian) entrepreneurs is central to the story in Atlas Shrugged. The main message seems to me to be about how people who work for governments - who seem to have the welfare of everyone at heart - can mess things up completely.

Anonymous said...

Jim will quite rightly say that the following conflates several concepts, and he will be correct in that. But my response is simply – “well that’s life, as we live it”.

These people who, in Jim’s words withdrew from life to pursue a different course with those who shared their ethical standards are what I think of as “virtuous elites” for want of a better phrase. And I would possibly grant them their virtue, but not their self selecting, and self perpetuation.

I think it is true that there always individuals among us who provide the small leaps forward, and who “carry” the rest of us along with their vision and success. But I also think that their accomplishments cannot be viewed in isolation, with complete disregard to what has preceded their innovation. And who gets to decide the worth of these leaps? The Leapers of course. And this ignores the possibility of parallel innovation, each possibly of immense importance, both subject to the market and further ongoing innovation. Suppose VHS vs Beta was of such significance, for instance.

My belief is firstly that this very ethical elite class of innovators exist only at one moment in time; that they innovate on the back of previous generations; but that they refuse to see their innovation as just one step in a continuum.

And then, of course, they find nothing exceptional in the thought that the fruits of their innovation should be passed on by the simple rule of progeny: to the three children, who between them may not have in total the brain cells of their parent. Or the will, or the ethics, or even the ability to butter their own toast.

Secondly – and I will stop here: Because a man does one good thing, he is assumed to always do only good things - never bad or useless things, just plain human things? That is not the human condition as I have ever witnessed it.


Anonymous said...

And just a final thought: in the next 50 years when the philosopher says "I need to eat; and I need fresh water" it will be very interesting to see how the selfish reciprocity works out.


Jim Belshaw said...

Hi Winton. We need to debate your point re Industry Department further, but that will distract at this point.

Just focusing on Atlas Shrugged, the book details the way in which special interest groups work to ensure that they get the results they want. Here we are in complete agreement!

Jim Belshaw said...

Now KVD, I would argue that Rand's principle expresses a view about personal relationships as a philospohical principle. The whole book is in a sense about a breach of that principle.

To my mind, and this bears upon my discussion with Winton, a statement of as to what personal values are desirable says very little about exceptions or broader issues.

Anonymous said...

Yes I do accept that Jim. I apologise for my distracted post; it was tapped out in a document offline while I was watching the events unfold in New Zealand.

I think I will only hold to my basic thought that principles are always subject to the ever-changing real world in which they must be applied. But of course that should not distract from examination as to their worth.


Winton Bates said...

I can't resist responding to your comment about VCRs. As a person who is sometimes still reminded by my children that I made the wrong choice in purchase of a VCR, I have tended to argue in my own defence that Beta was a technically superior system. I have been told, however, that this claim may not actually be valid because VHS systems had longer recording time. There seems to be a fairly strong argument that this is why VHS won/retained greater market share and more VHS videos became available for rental.
In any case, even if VHS dominance can be explained in terms of first mover advantage and path dependency, this didn't save this system when DVDs came along.

Anonymous said...

Yes Winton; and then came Blu Ray - also complete with competition.

I expect it is no solace for you, but I could not afford a VCR until just after the Beta battle was settled; and then it was stolen within 24 hours, along with my wife's engagement ring. Took us ages to recover from the sense of violation.

But it's the principle which is important.


Winton Bates said...

kvd: I agree that the negative feelings associated with making a mistake as a consumer don't compare with those associated with being robbed of personal items. Unfortunately, our thieves didn't take the VCR. Actually, when I think about it, that can't be attributed to the low resale value of Beta VCRs. The theft occurred in the 1970s - before we owned a VCR.