Atlas Shrugged and Capitalism

A Prophetic Look into the current state of our economy

I recently read Atlas Shrugged, a cult classic by infamous author Ayn Rand. Little did I know, reading this book would spark many contentious discussions with my peers. Discussions on free speech, property rights, capitalism, socialism, communism, virtue, and selfishness. Without spoiling the book for you, I would like to give you an insight into what I learned.

First and foremost, I feel it is necessary for me to state that the book is a work of fiction. What this means to me, is that Ayn Rand has the liberty to explore themes and concepts without the limitation of adhering to reality. Atlas Shrugged is a fantastical tale of industrialist characters. Each one of them are faced with challenges mostly dealing with an ever-increasingly totalitarian state. The state constantly is working to own more and more of the fruits of the industrialists’ labour.

My hope is that you read Atlas Shrugged and use its lessons to guard against a similar rise in totalitarian policies and ideologies. Additionally, I want you to see how Bitcoin is a tool that protects you against the kind of run-amuck communism described in Atlas Shrugged.

A Prophetic Novel

Atlas Shrugged was written in 1957, so it is eerie reading it in 2021, as much of what Rand has written about has come true in one form or another. The book is largely a warning of a particular set of ideologies and practices at the governmental, and industrial levels. That is, communistic, and socialist ideologies run amuck.

In the book, the entire world is in the midst of an economic crisis. Supply chains are falling apart, and civil unrest is proliferating throughout society. The government in power progressively nationalizes more and more of the industrialists’ businesses in order to try to control the outcome of the crisis. Some businesses are shut down, and others are outright acquired by force or otherwise coercive measures. Lastly, businesses that have gained favour with politicians are given subsidies, stimulus, and special privileges.

Progressively more Nationalized and Monopolized

Again, while Atlas Shrugged is a work of fiction, I find it eerily similar to how world events have played out in the last 50 years. Starting in 1971 with Nixon taking the world off a gold standard, we’ve moved closer and closer to a monopolized money supply. The 2008 and 2020 financial crash are great examples to point to with respect to how this power to print money can be abused.

In both cases the federal reserve injected large sums of money into the stock market through quantitative easing. This is just a fancy way of saying that they are acquiring stocks of companies listed on the stock market. To me, this looks like the progressive nationalization of businesses, except that the federal reserve is a private entity not connected directly to the government.

In the case of 2008, money was printed and given to failing banks, the CEOs of which still received end of year bonuses to the tune of millions of dollars.

Furthermore, in the midst of the 2020 crash, the Federal Reserve has been given full discretion by Congress to allocate capital as they see fit1. To reiterate, the Federal Reserve has

  1. The ability to print money infinitely

  2. The ability to allocate printed money at their sole discretion

I associate the centralization, nationalization, and monopolization of the money supply to be an idea that is based on socialism and communism. That is, management of a core resource and its price by a central entity. This is the sort of “run-amuck” socialism that I am speaking of, and that Ayn Rand explores within her novel.

Central Entities Cannot Distribute Resources Effectively

The entirety of Atlas Shrugged is about how centralized entities as large as the government are not good allocators of capital. The people that built, and ran the business from inception are best suited to run their own business.

The more businesses the government acquires in Atlas Shrugged, the worse job they do at running a country. The reason is that governments are NOT steel producers, railroad engineers, or oil field tycoons. They do not have the necessary business intelligence in order to effectively run the business.

Ayn Rand posits that businesses should be left to operate without regulation and control. I agree with this to an extent. The less regulation the better, except if the business is infringing upon the property rights and freedoms of others.

Businesses should also be given free reign to reap the rewards, and consequences of their actions. A business should have the freedom to fail. But if businesses also have the ability to get bailed out if they make a mistake, then this presents a dire moral hazard2. We, as a society, have stopped letting businesses fail as a natural consequence to their environment or a result of their own doing. Instead private businesses are taking risks, and letting society foot the bill if they’re wrong.

Some Sort of Reset is Coming

Reset, Crash, Economic Crisis. Whatever you want to call it, it’s coming. In my mind, we’re far past the point of no return in terms of our economic trajectory. This is why Atlas Shrugged is prophetic as Rand portrays a reset of sorts taking place. The mistakes of government culminate to the point where the motor of the world simply stops.

This may come in my lifetime, and it may not. I’m betting that it will. I think it’ll take place this decade. I hold this belief so strongly that I converted all of my money into what I perceive to be the strongest, hardest, soundest money in existence; bitcoin.

I asked myself, what sort of money will be around after the collapse of the fiat monetary system? Ayn Rand makes the argument that gold is the universal currency of the people that liberates them from centralized control of money. But she wasn’t around for the invention of Bitcoin. If she were, I believe without a doubt that she would recognize Bitcoin is gold 2.0, and is far more effective at being the people’s choice of currency, than gold.

Regards,

Keegan

There are many ideas and themes that I could not touch on in this short newsletter. Ayn Rand explores and critiques in depth the doctrine of communism “From Each According to their Ability, To Each According to Their Need”. The seemingly straightforward and beautiful expletive has dark and far reaching consequences for any society that has taken seriously the notion of implementing this in the past. I may do an entire newsletter in the future breaking down just how this doctrine led to the destruction of hundreds of millions of lives in communist regimes in the past century.