December 3, 2012
Missing from Ayn Rand's Economics
For a guy who started with Rand and then went on to economists, I was pretty impressed on my return trip with her grasp of free market economics. Atlas Shrugged is built on respect for property rights and capitalism, but her love for hard money and her understanding of spontaneous order seem deft in the middle of "a philosophy book." The invisible hand is well represented as is the nature of economic actors as both producers and consumers.
But it struck me this morning that she is missing Ricardo's comparative advantage, and that this omission leads to the suspicions of the heroic ideal nature of the characters. Eddie Willers is important to Taggart Transcontinental and Ms. Ives at Rearden Steel. I don't know if they are purposefully undervalued or merely overlooked, but it is never recognized that Hank should not be picking up his own dry cleaning.
Maybe Midas Mulligan grows a fine tomato and John Galt can swap out a faucet washer as quick as you please -- but recognizing a truly modern economy requires not only the benefit of trade but also of organization and comparative advantage. A is A, but Apple requires a Steve Jobs and a battery engineer and a type designer and some folks to keep the trash baskets emptied.
Maybe it's a small thing, but it is a miss. Left Eddie on the flippin' train, she did...