The Bear’s Lair: Atlas Has Developed Spinal Injuries

Ayn Rand’s “Atlas Shrugged” was published in 1957, yet its atmosphere is that of the late 1930s (when much of it may have been in first draft). Trains are the overwhelmingly dominant means of transportation and coal the main source of energy; everywhere outside the United States is run by dictatorships and the overall impression is of Art Deco rather than the brutalism of the 50s. Moreover, her businessmen are impossibly noble, with even the largest companies (run by good guys) dealing fairly with suppliers, competitors, employees and the public. Yet the overall zeitgeist of the book, with a mighty economic power running down slowly and inexorably until it comes to a standstill, feels remarkably appropriate today.

Ayn Rand herself had seen it all before, albeit in a much more primitive and brutal form than the elegiac twilight decline she portrays in the book. Born into a Jewish pharmacist’s family in St. Petersburg in 1905, her childhood was destroyed by the Russian Revolution, which confiscated her father’s pharmacy and forced the family into intense poverty, although she was able to graduate from Petrograd State University before she emigrated to the United States in 1925. Thus, her loathing of statism was derived from bitter personal experience, making her uncompromising. Given this background, the choice by National Review in 1957 of a former Soviet spy Whittaker Chambers to review “Atlas Shrugged”, and still more the review’s title “Big Sister is Watching You” and its closing line “To a gas chamber — go!” were in about as poor taste as it is possible to imagine, as well as being philosophically completely counter-productive.

The economics of “Atlas Shrugged” are a little strange. For one thing, there appear to be very few diseconomies of scale. The huge business empires of “Reardon Steel” and “d’Anconia Copper” are both controlled by one titanic individual, with absolutely no management structure around him, so that the company can either defy the world in noble isolation or destroy itself to such a degree that nothing is left, without any Board of Directors or middle management raising so much as a squawk.

Modern management in large corporations does not work like that and did not even in the 1930s/1950s. Any company that is large enough to be broadly publicly held has all kinds of checks and balances that prevent any such displays of macho grandeur or folly, reducing the company’s strategic moves to an arthritic shuffle, albeit punctuated by pyrotechnic displays of financial engineering as a takeover or spin-off is attempted. Probably the one area of Rand’s big businesses that reflects the 1930s/1950s more than today is the total lack of Human Resources staff – “oh, bliss was it in that dawn to be alive,” as Wordsworth foolishly said about the French Revolution.

Rand’s small businessmen are absurdly deferential to her big ones; on the rare occasions when they appear they metaphorically touch their forelocks to the tycoons and fall in behind whatever schemes their betters propose, often to their own huge detriment. This is economically nonsensical. In the real world almost all genuinely valuable new ideas and productivity enhancements spring from small businesses, which in comparison are not constrained by the bureaucratic undergrowth that is so magically absent in Rand’s book, and are less constrained by the political swamp creatures who are only too resoundingly present.

Rand’s politicians are much more convincing than her businessmen, both in their characterization and in their policies. This may be because the Swamp has taken over much more of American life than it had in 1957, so Rand’s extreme characterizations appear more lifelike. However, I put it to you that her pallid colorless overlord “Mr. Thompson” could easily be President Joe Biden, while her intellectual designer of ever-more complex bureaucracies Wesley Mouch strongly resembles Sen. Elizabeth Warren (D.-Mass). As for her thuggish enforcer Cuffy Meigs, I think Governor Andrew Cuomo of New York is auditioning for that part but has not quite got there yet.

Rand’s politicians’ legislation is also realistic, perhaps more so than in 1957, although not more so than in the 1930s (before the liberating midterm elections of 1938) when the New Deal was designed. The Equalization of Opportunity Bill (prohibiting anybody from owning more than one business) is surely already in draft, probably to be included in Sen. Schumer (D.-N.Y.)’s gigantic “Infrastructure Bill” to be passed using the reconciliation process. Then there was Rand’s Directive 10-289, forcing all workers to stay at their jobs, all businesses to stay in operation at their existing capacity and forbidding the introduction of any new goods and services. I am quite sure some “woke” economist is currently designing something pretty close to this for President Biden to sign as an Executive Order in the inevitable next downturn. One caveat: they won’t use Ayn Rand’s text; it makes matters altogether too clear and leaves no scope for trial lawyers.

There are two groups of statists missing from Atlas Shrugged, because of when it was written: environmental regulators and central bankers. The environmentalists are already there in character, with their humorless nagging and their destructive impulses towards business; if you imagine Lillian Rearden going into politics or senior environmental regulation, you have the type. As for central bankers, even Ayn Rand could not imagine the oily self-assurance with which they distort interest rate policy, producing asset bubbles favoring woke billionaires and destroying the possibilities of honest innovation. A second edition of “Atlas Shrugged” with these additional Destroyers added is much needed.

As a description of the U.S. economy’s progress, Atlas Shrugged has recently appeared alarmingly accurate, except in the first three pre-COVID Trump years. The economy operates well below full employment and far below optimal output, while every year additional directives and regulations are piled on, restricting it further. Productivity growth in the world of Atlas Shrugged is undoubtedly negative; in the world of President Obama it was abnormally low by historical standards, and it may well turn fully negative under Biden. The one apparent difference, derived from Atlas Shrugged having been conceived in the late 1930s, is that there is very little inflation; those of us with memories of the 1970s know that inflation simply adds to the general malaise and economic decline. It might take a full term of President Biden to return fully to the air of winding down and despair that pervades Atlas Shrugged, but I am pretty confident that we will get there.

The difference of course, will be in the attitude of America’s top businessmen. In Atlas Shrugged, the mind goes on strike: the top businessmen close or even destroy their businesses and retreat to a secret hideout in the Colorado mountains. Atlas, the giant who holds up the world, shrugs, and tosses the world off his shoulders.

In today’s United States, there is no chance that top businessmen will follow the path of Hank Rearden. Instead, they have shown themselves only too ready to cooperate with the Wesley Mouches, even going further than is legally necessary, for example by the disgraceful boycotts of Georgia over its modest election legislation. Through the media and the social media, the power of the left to coerce business into its corner is far greater than was imagined in Ayn Rand’s lifetime, and businessmen have shown themselves only too willing to submit to the left’s coercion. Today, there is a fourth group of state manipulators, beyond Wesley Mouch, Cuffy Meigs and Mr. Thompson, in the “social influencers” whose slightest breath of “woke” disapproval causes top businessmen to run for the hills.

We have to accept it. In today’s world, there is no hope of Atlas Shrugging, and restoring an improved free-market Utopia, as Rand optimistically prognosticated. Instead, Atlas will continue to bear the burdens laid upon him, even conspiring with government to add new ones, in the hope of gaining an edge over competitors and favor with the woke. This will have only one result – Atlas will develop serious spinal injuries, and eventually break down altogether.

(The Bear’s Lair is a weekly column that is intended to appear each Monday, an appropriately gloomy day of the week. Its rationale is that the proportion of “sell” recommendations put out by Wall Street houses remains far below that of “buy” recommendations. Accordingly, investors have an excess of positive information and very little negative information. The column thus takes the ursine view of life and the market, in the hope that it may be usefully different from what investors see elsewhere.)