Analysis Of Virtue Of Selfishness By Ayn Rand
In her 1964 book Virtue of Selfishness, Ayn Rand mentioned that her ideal form of capitalism is one which is “a full, pure, uncontrolled, unregulated laissez-faire capitalism—with a separation of state and economics.” Indeed, this Objectivism viewpoint has been used by many conservative policy makers, such as Malcolm Fraiser , the former Prime Minister of Australia, and esteemed economists such as Alan Greenspan and Martin Anderson to craft policies that reduces the intervention of the government, thereby allowing individuals more freedom to pursue their economic interests. There have been many debates about the rights and the wrongs of these policies, and this essay seeks to discuss if individuals should be free to pursue their economic
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interests. In the context of this essay, the pursuit of economic interests shall be defined as an individual making decisions that results in the best outcome for that individual. The benefits of making that decision are often derived in terms of monetary gains. I believe the pursuit of economic interests leads to a more efficient market economy, thereby leading to more goods and services for all. However, there should be some form of regulations and constraints based on what is deemed legally acceptable by the society and the externalities it imposes on others.
The pursuit of economic interests leads to a more efficient market economy, which in turn leads to a trickle-down effect, where everyone benefits from more goods and services that can be consumed. A more efficient market economy would also incentivise profit maximisation, as it would encourage ways to reduce costs and methods to increase production to profit maximising levels. In the absence of externalities, this will result in society producing at a socially optimal level. This benefits society in general as it optimises the production of goods and services, thereby ensuring that there would be more goods and services for consumption for all members of the society. Further, the free market encourages innovation , thereby ensuring continued advancement of the economy, benefitting all members of society. A comparison could be made between the Soviet Union economy and the US economy in the 1980s, where during the peak of the Cold War, productivity levels in manufacturing in USSR was a quarter that of the United States , and this had a long lasting impact as the US was having a higher Gross Domestic Product and a higher standard of living as compared to their Soviet counterparts. Ultimately, it could be argued that the benefits brought about by the capitalist economy propelled the United States to victory, as they could incentivise higher production levels and this raised the living standards in the United States. This set the USA apart from the USSR, especially in a time where there was inherent ideological conflicts. Gorbachev’s ultimate adoption of Glasnost indicated that the USSR started to de-regulate in order to improve productions. This could be viewed as an example of how the pursuit of economic interests leads to a more efficient economy as compared to a closed economy, where bureaucrats determine outputs and productions. Thus, it can be argued that the freedom to pursue economic interests leads to a situation where individuals contribute to a more efficient, more well-oiled economy which benefits the entire population.
The inability to apportion negative and positive externalities means that there should be some form of regulation in the pursuit of self-interests.
This is because profit maximisation does not include non-monetary costs such as damages done to the environment. The absence of considering these costs leads to the formation of externalities. This leads to a socially inefficient outcome. While the individual profits from the pursuit of economic interests, society suffers due to the negative externalities imposed to the economy. An example that comes to mind would be climate change due to the indiscriminate burning of fossil fuels and industrialisation. For instance, in China, which had seen an exponential increase in Gross Domestic Product over the past 50 years , there had been huge impacts on the environment. Many cities are seeing pollutions level well above the acceptable levels and half of China’s water is deemed “too polluted for human consumption” . This indicates that without sufficient control through regulation, high levels of pollution and negative externalities exists because no individual would step up to take responsibility for the negative externalities. Similar levels of pollution were also seen in New York in the 1950s and 60s due to rapid industrialisation , indicating that this is a problem for cities and countries which are in the midst of developing. These case studies show how the environment suffered during periods of industrialisation and how the impact affected others negatively. A proposed solution is regulation, as it apportions the negative externalities onto corporations, leading to the mitigation of these negative externalities. A successful example would be the 1970 Clean Air Act in the United States, which was a reaction to the high pollution levels in New York in the 1950s and 60s. The act is still in place today and has been credited with preventing 205,000 lives from ending prematurely due to pollution, and having an economic
benefit of around USD$22tn . This indicates that government regulations to curb excessive economic liberties may be necessary to ensure that the good of the public is not harmed. By setting regulations, the government also ensures that there are boundaries that are not crossed during the pursuit of economic interests, and this ultimately has a beneficial effect on society in general.
In addition, while people should be free to pursue their economic interests, it should be limited to what is deemed legally acceptable by society. That if economic self-interests mean committing a crime or attacking the innocent, then it should not be allowed and should be curbed. Thus, the freedom to pursue economic interests should not come at the expense of what society believes to be morally correct and acceptable. For instance, an individual should not be allowed to rob a person or a bank to pursue their own economic interests, as it is not legally correct or acceptable by society. By that same definition, one should not cheat or commit criminal breach of trusts in one’s pursuit of economic interests. There should be constrains put in place to prevent these acts from happening, to ensure that the law of the land still holds. These constrains are necessary to ensure that society is protected from harmful acts that may harm them. Therefore, the freedom to pursue economic interests needs to have some boundaries and constraints to them.
On the other hand, it could be argued that the inherent self-serving nature of humans means that humans will push the limits of what is acceptable, and the costs may be too high to bear. It could be argued that human will push the limits of regulations and will find ways and means to circumvent the system , with catastrophic responses as a result. This was particularly evident in the 2008 Financial Crisis, during the Lehman Brothers collapse, where the indiscriminate pursuit of profits led to the approval of loans to many individuals who were unable to afford those loans. It led to the housing market bubble, and ultimately one of the largest collapse of the financial systems in the world, where many individuals who were not the cause of the problems were severely affected as they had lost their pensions and life savings. It could even be argued that even till today, the US is feeling from the effects of the recession and has not truly recovered from it. Another example that comes to mind would be the Bernie Madoff Ponzi scheme, where the Ponzi scheme had cheated individuals of USD$14bn and many more lost their retirement and pension funds. This shows that the indiscriminate pursuit of profits lead to a situation where society in general suffer, and thus, regulation is required to rein in the intrinsic human greed. This may be necessary to ensure that humans do not over-step their boundaries and break rules as they may have terrible consequences.
In conclusion, while individuals should have the freedom to pursue their economic interests, there should be some form of limitations in place, such as regulations or legal requirements, so that individuals do not infringe upon the rights of others. This could be viewed as a form of the Harm Principle, where individuals should be free to do what they want so long as it does not harm others.
interests. In the context of this essay, the pursuit of economic interests shall be defined as an individual making decisions that results in the best outcome for that individual. The benefits of making that decision are often derived in terms of monetary gains. I believe the pursuit of economic interests leads to a more efficient market economy, thereby leading to more goods and services for all. However, there should be some form of regulations and constraints based on what is deemed legally acceptable by the society and the externalities it imposes on others.
The pursuit of economic interests leads to a more efficient market economy, which in turn leads to a trickle-down effect, where everyone benefits from more goods and services that can be consumed. A more efficient market economy would also incentivise profit maximisation, as it would encourage ways to reduce costs and methods to increase production to profit maximising levels. In the absence of externalities, this will result in society producing at a socially optimal level. This benefits society in general as it optimises the production of goods and services, thereby ensuring that there would be more goods and services for consumption for all members of the society. Further, the free market encourages innovation , thereby ensuring continued advancement of the economy, benefitting all members of society. A comparison could be made between the Soviet Union economy and the US economy in the 1980s, where during the peak of the Cold War, productivity levels in manufacturing in USSR was a quarter that of the United States , and this had a long lasting impact as the US was having a higher Gross Domestic Product and a higher standard of living as compared to their Soviet counterparts. Ultimately, it could be argued that the benefits brought about by the capitalist economy propelled the United States to victory, as they could incentivise higher production levels and this raised the living standards in the United States. This set the USA apart from the USSR, especially in a time where there was inherent ideological conflicts. Gorbachev’s ultimate adoption of Glasnost indicated that the USSR started to de-regulate in order to improve productions. This could be viewed as an example of how the pursuit of economic interests leads to a more efficient economy as compared to a closed economy, where bureaucrats determine outputs and productions. Thus, it can be argued that the freedom to pursue economic interests leads to a situation where individuals contribute to a more efficient, more well-oiled economy which benefits the entire population.
The inability to apportion negative and positive externalities means that there should be some form of regulation in the pursuit of self-interests.
This is because profit maximisation does not include non-monetary costs such as damages done to the environment. The absence of considering these costs leads to the formation of externalities. This leads to a socially inefficient outcome. While the individual profits from the pursuit of economic interests, society suffers due to the negative externalities imposed to the economy. An example that comes to mind would be climate change due to the indiscriminate burning of fossil fuels and industrialisation. For instance, in China, which had seen an exponential increase in Gross Domestic Product over the past 50 years , there had been huge impacts on the environment. Many cities are seeing pollutions level well above the acceptable levels and half of China’s water is deemed “too polluted for human consumption” . This indicates that without sufficient control through regulation, high levels of pollution and negative externalities exists because no individual would step up to take responsibility for the negative externalities. Similar levels of pollution were also seen in New York in the 1950s and 60s due to rapid industrialisation , indicating that this is a problem for cities and countries which are in the midst of developing. These case studies show how the environment suffered during periods of industrialisation and how the impact affected others negatively. A proposed solution is regulation, as it apportions the negative externalities onto corporations, leading to the mitigation of these negative externalities. A successful example would be the 1970 Clean Air Act in the United States, which was a reaction to the high pollution levels in New York in the 1950s and 60s. The act is still in place today and has been credited with preventing 205,000 lives from ending prematurely due to pollution, and having an economic
benefit of around USD$22tn . This indicates that government regulations to curb excessive economic liberties may be necessary to ensure that the good of the public is not harmed. By setting regulations, the government also ensures that there are boundaries that are not crossed during the pursuit of economic interests, and this ultimately has a beneficial effect on society in general.
In addition, while people should be free to pursue their economic interests, it should be limited to what is deemed legally acceptable by society. That if economic self-interests mean committing a crime or attacking the innocent, then it should not be allowed and should be curbed. Thus, the freedom to pursue economic interests should not come at the expense of what society believes to be morally correct and acceptable. For instance, an individual should not be allowed to rob a person or a bank to pursue their own economic interests, as it is not legally correct or acceptable by society. By that same definition, one should not cheat or commit criminal breach of trusts in one’s pursuit of economic interests. There should be constrains put in place to prevent these acts from happening, to ensure that the law of the land still holds. These constrains are necessary to ensure that society is protected from harmful acts that may harm them. Therefore, the freedom to pursue economic interests needs to have some boundaries and constraints to them.
On the other hand, it could be argued that the inherent self-serving nature of humans means that humans will push the limits of what is acceptable, and the costs may be too high to bear. It could be argued that human will push the limits of regulations and will find ways and means to circumvent the system , with catastrophic responses as a result. This was particularly evident in the 2008 Financial Crisis, during the Lehman Brothers collapse, where the indiscriminate pursuit of profits led to the approval of loans to many individuals who were unable to afford those loans. It led to the housing market bubble, and ultimately one of the largest collapse of the financial systems in the world, where many individuals who were not the cause of the problems were severely affected as they had lost their pensions and life savings. It could even be argued that even till today, the US is feeling from the effects of the recession and has not truly recovered from it. Another example that comes to mind would be the Bernie Madoff Ponzi scheme, where the Ponzi scheme had cheated individuals of USD$14bn and many more lost their retirement and pension funds. This shows that the indiscriminate pursuit of profits lead to a situation where society in general suffer, and thus, regulation is required to rein in the intrinsic human greed. This may be necessary to ensure that humans do not over-step their boundaries and break rules as they may have terrible consequences.
In conclusion, while individuals should have the freedom to pursue their economic interests, there should be some form of limitations in place, such as regulations or legal requirements, so that individuals do not infringe upon the rights of others. This could be viewed as a form of the Harm Principle, where individuals should be free to do what they want so long as it does not harm others.