Can Greenspan’s Story Be Seen as Rand’s Ideal Model of Individual Conduct in a Capitalist Society?
The fact that a capitalist society can accommodate and allow for the kind of individual conduct exemplified by Greenspan may well be a source of its vitality and creativity. It is also likely one of the key reasons why Rand regarded capitalism as a moral system.
Author: GUDORDI | 2024-08-21
故有無相生，難易相成，長短相形，高下相傾，音聲相和，前後相隨。
是以聖人處無為之事，行不言之教；萬物作焉而不辭，生而不有，為而不恃，功成而弗居。──《道德經》第二章
Therefore, being and non-being give rise to one another; difficult and easy complement each other; long and short define each other; high and low depend on each other; sound and tone harmonize with each other; front and back follow one another.
Thus, the sage attends to affairs through non-action and teaches without words. All things arise, yet he does not claim ownership of them; he nurtures them, yet does not possess them; he acts, yet does not rely on his achievements; he accomplishes his work, yet does not dwell upon it.
— Tao Te Ching, Chapter 2
In the previous article, the author discussed how Alan Greenspan can be regarded as a legendary figure in modern history. There are many differing views regarding his place in history. The criticism most frequently directed at him is his perceived “leniency” toward the market. Greenspan consistently emphasized that markets should, as far as possible, develop their own mechanisms of regulation, and that governments and regulatory agencies should refrain from intervening unless absolutely necessary.
Some critics argue that it was precisely this stance that allowed unhealthy practices on Wall Street to flourish unchecked. As a result, they contend that Greenspan bears some responsibility for the U.S. subprime mortgage crisis and the subsequent global financial crisis.
Shocked by the Greed on Wall Street
These are profound and complex issues. The author has not conducted in-depth research into the causes of the U.S. subprime mortgage crisis and the global financial crisis, nor do I hold particularly strong views regarding the extent of Greenspan’s responsibility. What the author would point out, however, is that it is difficult to imagine that an event of such complexity and far-reaching consequences could be attributed entirely to one or two individuals.
Regarding this issue, Greenspan once stated that he was shocked by the greed on Wall Street. He had assumed that the interests of shareholders would act as a restraint on such behavior, but this did not prove to be the case.
In any event, although many public officials claim to believe in free markets, very few truly adhere to that principle in practice. Judging from many indicators, Greenspan was someone who genuinely understood and believed in the power of markets. Many observers have noted that the vitality and dynamism of the American free-market system are considerably stronger today than they were several decades ago.
In the 1980s, many people worried that the United States might be surpassed economically by Japan. Today, however, few would doubt that the United States remains the strongest of the world’s capitalist economies. To what extent Greenspan deserves credit for this is also a question worthy of deep reflection.
Greenspan’s Greatest Contribution Was to the Global Monetary and Financial System
In my view, however, Greenspan’s greatest contribution lay in the global monetary and financial system. Those who have not studied the evolution of the international monetary system over the past century may not be able to conceptualise the shock caused by President Nixon’s sudden announcement in 1971 that the United States would no longer guarantee the conversion of U.S. dollars into gold.
To put it somewhat dramatically, the announcement was like planting a delayed-action nuclear bomb within the entire system. The foundation of the postwar global monetary order was that the U.S. dollar would assume the role previously played by gold, with the dollar’s value backed by America’s gold reserves. After 1971, however, the system was left resting largely on confidence alone.
This meant that unless sufficient trust in the system could be established within a reasonable period of time, the entire framework risked collapsing. From this perspective, the stagflation and economic difficulties experienced by the United States during the 1970s can be understood as warning signs that the system itself might be beginning to unravel.
Act Without Attachment, Accomplish Without Claiming Credit
History is sometimes full of irony. If we carefully read the articles that Greenspan wrote in his younger years (now collected in Rand’s essays), we find that he held a strong belief that a monetary system detached from gold was deeply problematic and, to some extent, even a form of intentional or unintentional deception. Ironically, a man with such convictions later became Chairman of the Federal Reserve. Yet it may well be that meaningful reform is best carried out by someone who understands the system’s weaknesses more clearly and thoroughly than anyone else.
In any case, during his tenure as Chairman of the Federal Reserve, Greenspan succeeded in convincing the markets that he was “the one who knows.” For more than a decade, whenever economic or financial crises emerged in the United States, he managed to guide the situation through difficulties and restore confidence in both the U.S. dollar and the Federal Reserve. That confidence, in turn, helped sustain the entire monetary system.
Moreover, many people may not realize that although some commentators argued that the Federal Reserve should not become involved in government fiscal policy, Greenspan was able to work closely with the Clinton administration. For a period of time, this cooperation helped the U.S. government eliminate its budget deficit and even achieve a fiscal surplus.
From this perspective, his contribution to the American economy—and perhaps even to the global economy—is difficult to measure. Yet despite this, Greenspan rarely promoted or celebrated his own achievements. He often emphasized that he had no grand strategy and that many of his ideas came to him while soaking in a bathtub at night. In this respect, he seemed to embody the attitude described by Laozi in the passage quoted at the beginning of this article: acting without attachment, accomplishing without claiming credit.
A Model of Individual Conduct in Rand’s Eyes?
From one perspective, Greenspan simply did what he believed was worth doing and personally bore the effort and risks involved. Although his actions brought enormous benefits to others, he himself seemed largely indifferent to such recognition and had little interest in seeking approval from others.
The ability of a society to accommodate this kind of individual conduct may well be the source of the vitality and creativity of capitalism. It is also likely one of the key reasons why Rand regarded capitalism as a moral system.
It is worth noting that in Rand’s novels, the qualities of independence, boldness, and acting according to one’s own convictions are often expressed primarily in the realm of romantic relationships. Greenspan, however, elevated these qualities to a higher level, providing a different kind of example of what self-interested behavior can mean.
This is the third reason why Rand’s ideas deserve deep reflection. As for the fourth reason, I believe that Ayn Rand can be regarded as one branch of the broader tradition of Russian intellectuals and artists. I will return to this topic in next article.