Recently I’ve been reading Ayn Rand’s classic novel Atlas Shrugged. In it, Rand tells the story of a future American society in which free enterprise is attacked and industrialists are hated and even viewed as society’s greatest problem. Government control and regulation are seen by the elites as the solution to all social problems. Naturally, the nation’s economy is crumbling, yet the ideologically blinded elites encourage even more regulation as the solution.
Reading it, I get the impression that Rand, who lived through the Russian October Revolution, is issuing a warning to her American audience to not repeat what happened in her home country under communism. The ability of the individual to enjoy the fruits of their labors is what made America prosperous in the first place, not some benevolent government that “willed” wealth and prosperity for its people as things that were owed to them.
The Background
The intellectuals, politicians, and socially conscious business leaders in the story openly talk about doing things for the social good. Businessmen under the sway of this philosophy brag proudly that they have never made a profit. Jim Taggart, CEO of the largest railroad company in America, when asked by his hard-nosed sister Dagny, why he built a railroad to poor rural Mexico when they need another to service a booming Colorado, replies along the lines of “America already has so many railroads and we must give the Mexicans a chance”. Illustrating the view that America’s prosperity came at the expense of Mexico, and only external actions toward Mexico could fix that.
The preoccupation of the book’s politicians is in controlling social outcomes. It doesn’t seem fair for a handful of authors to sell all the books, so one intellectual proposes capping the limit of copies sold per author to 1000, so every aspiring author gets their “fair chance” (a popular phrase in the book). Industrialist Hank Rearden, a self-made steel magnate, is vilified when he invents “Rearden Steel”, a product that will revolutionize all projects that rely on steel, making things vastly more efficient.
Why is society so outraged? Because what about the traditional steel producers and their workers, it’s “just not fair” for them to lose their jobs. But that’s only on the surface, these threatened businesses have powerful friends in Washington who do all in their power to shut Rearden down. Rand shows that the mental gymnastics involved in rationalizing this behavior come at a price, that of despising themselves and being constantly envious without able to realize why. A kind of self-created purgatory.
The Money Speech
All this context leads us into the most epic part of the book, known as the money speech, starting on page 380, where Francisco d’Anconia, a perceptive industrialist, lays bare to a crowd of elites the emptiness of their philosophy and how money actually works.
Overhearing someone say that money is the root of all evil, he lets them have it.
“So you think that money is the root of all evil?” said Francisco d’Anconia. “Have you ever asked what is the root of money?”
Money is a tool of exchange, which can’t exist unless there are goods produced and men able to produce them. Money is the material shape of the principle that men who wish to deal with one another must deal by trade and give value for value. Money is not the tool of the moochers, who claim your product by tears, or of the looters, who take it from you by force.
Money is made possible only by the men who produce. Is that what you consider evil?
When you accept money in payment for your effort, you do so only on the conviction that you will exchange it for the product of the effort of others. It is not the moochers or the looters who give value to money. Not an ocean of tears nor all the guns in the world can transform those pieces of paper in your wallet into the bread you will need to survive, tomorrow. Those pieces of paper, which should have been gold are a token of honor – your claim upon the energy of the men who produce. Your wallet is your statement of hope that somewhere in the world around you there are men who will not default on that moral principle which is the root of money. Is this what you consider evil?
Have you ever looked for the root of production? Take a look at an electric generator and dare tell yourself that it was created by the muscular effort of unthinking brutes. Try to grow a seed of wheat without the knowledge left to you by men who had to discover it for the first time. Try to obtain your food by means of nothing but physical motions – and you’ll learn that man’s mind is the root of all the goods produced and of all the wealth that ever existed on earth.
“But you say that money is made by the strong at the expense of the weak? What strength do you mean? It is not the strength of guns or muscles. Wealth is the product of man’s capacity to think. Then is money made by the man who invents a motor at the expense of the incompetent? By the ambitious at the expense of the lazy? Money is made – before it can be looted or mooched – made by the effort of every honest man, each to the extent of his ability. An honest man is one who knows that he can’t consume more than he has produced.”
And continuing on page 384.
“To the glory of mankind, there was, for the first and only time in history, a country of money – and I have no higher, more reverent tribute to pay to America, for this means: a country of reason, justice, freedom, production, achievement. For the first time, man’s mind and money were set free, and there were no fortunes-by-conquest, but only fortunes-by-work, and instead of swordsmen and slaves, there appeared the real maker of wealth, the greatest worker, the highest type of human being – the self-made man – the American industrialist.
“If you ask me to name the proudest distinction of Americans, I would choose – because it contains all the others – the fact that they were the people who created the phrase ‘to make money.’ No other language or nation had ever used these words before; men had always thought of wealth as a static quantity – to be seized, begged, inherited, shared, looted or obtained as favor. Americans were the first to understand that wealth has to be created. The words ‘to make money’ hold the essence of human morality.
And finishing on page 385
“Until and unless you discover that money is the root of all good, you ask for your own destruction. When money ceases to be the tool by which men deal with one another, then men become the tools of men. Blood, whips, and guns – or dollars. Take your choice – there is no other – and your time is running out.”
Lessons for Today
That passage is one of the greatest I have read in my life and I could recognize its significance before knowing that it’s internet-famous as “the money speech”. Perhaps it’s due to my own background as a child of immigrants who fled communism to be in America.
Skip over the line about the gold standard, and the passage bears astonishingly important economic lessons that many still don’t understand.
What drives a society to wealth? Is it by looting other countries that America became rich? (This is what many think). Is it by tricking and using other people that businessmen become rich? Is it immoral to be wealthy? Is wealth contained in a country’s stock of gold (aka mercantilism)?
Rand is able to explain these truths with powerful intuition, probably because she experienced both realities directly. The Soviet Union with its vilification of the capitalist, and America which held roughly the opposite ideology.
But since Rand felt the need to write this massive book which carries her personal and social philosophy, not merely entertainment, it seems America was headed in a Soviet-esque direction at the time.
Now, 65 years after its original publication, it seems we’ve lost track of the answers to these questions once again. Rereading Rand’s book would be a good place to start.
For the full speech click here.
