From reading Ayn Rand on Capitalism it would seem that a laissez faire economy "automatically" takes care of wages for factory workers by creating competition between firms for labor. In her time, I believe this was true (The 1950s for example saw a lot of competition between firms for scarce labor) but I wonder if it is really true any more.
As corporate profits have exploded, worker salaries are at historical lows today. It seems that corporations can always outsource to what Ayn Rand would have called foreign "hell holes" (places where people have low wages and few rights) and therefore US workers can expect no bounty from today's version of factory capitalism. Indeed they have seen cut after cut as profits have increased.
One could, of course, tritely say that factory workers should all become hairdressers or artists or consultants but this is patently unrealistic. What is more likely is a gradual rise in unemployment, with attendant demands to "tax the rich" coupled to a steady erosion of manufacturing. This is not good.
What is the Objectivist position on this? Capitalism is supposed to make everyone well off in the long run but for many working stiffs today, the easy ability of companies to hire overseas labor at a fraction of Western wages, plus a focus on shareholder value maximization makes the social selling of Capitalism as a benevolent and desirable system almost impossible. Clearly a Bangladeshi is doing well when a South Carolinian is rendered jobless or has his wages dramatically slashed but why would the South Carolinian think this a desirable state of affairs? I am sure the Bangldeshis would demand some sophisticated goods that Americans could produce relatively efficiently but on the numbers game, US workers lose out since there are fewer highly sophisticated goods and they employer fewer people to make. Look at autos versus silicon chips. The lower skill area employs many times more people. The 3rd world gets employment and US workers see steady declines in opportunities and wages. Is that a desirable state ? What will it lead to?
This question pertains more to cultural change and what drives it than to economics. The question states: Economic conditions make "the social selling of Capitalism as a benevolent and desirable system almost impossible.... why would the South Carolinian think this [job outsourcing] a desirable state of affairs?"
In a follow-up comment, the questioner reinterates:
...why would anyone think that capitalism would actually ever be implemented, given that many people (there are more lower skilled folks than higher skilled ones) would suffer? If capitalism is something where only a small segment of the populace can ever really do well, why would it ever be a desirable thing for the many ? Stated otherwise, why would a country as a whole willingly choose capitalism when many people would not benefit? Of course socialism shows an even worse fall in living standards...
Aside from the economic issue of who stands to benefit from capitalism and to what degree, note the issue of cultural change in this formulation. The questioner apparently believes that social change is brought about because a majority of the populace is persuaded that it would be good. But that's not how Ayn Rand viewed the process of cultural change:
...the battle of human history is fought and determined by those who are predominantly consistent, those who, for good or evil, are committed to and motivated by their chosen psycho-epistemology and its corollary view of existence -- with echoes responding to them, in support or opposition, in the switching, flickering souls of the others.
(Page references are from the Signet paperback edition of FNI.)
More recently, Leonard Peikoff has offered a new theory of cultural change in his book, The DIM Hypothesis: Why the Lights of the West are Going Out. "DIM" stands for the three basic approaches to integration, namely disintegration ('D'), integration ('I'), and misintegration ('M'). There are also two important subdivisions within D and M, defined by how much 'I' they borrow (some or none).
In political theory, Objectivism advocates recognizing and upholding individual rights, first and foremost. Objectivism asks: by what right does an employee propose to restrict where a factory owner can build his factory, whom he can hire, how much he can pay his workers, and so on? If the owner wants to look outside his native country for the lowest cost of qualified labor that he can find, it's his right to do so. If he would rather shut down his factory entirely than put up with an endlessly accelerating burden of government regulation at home (as many did in Atlas Shrugged), it's his right to do so. Reducing the governmental burdens at home would make factory-building at home more economically attractive, although factories at home may still be unable to compete with foreign sources for low-skilled labor. That is an economic reality that cannot be altered by attempting to prohibit American factory owners from producing overseas, or prohibiting the importation of (or heavily taxing) goods made overseas.
There is no such thing as a nameless, faceless "system" which "the people" collectively can choose to adopt or reject. A socio-economic "system" is comprised of people, i.e., individuals, and individuals have rights, including property rights, and property owners include factory owners. A proposal to reject or undermine capitalism is a proposal to reject individual rights and initiate physical force against some individuals for the benefit of others.
Note, also, that the principle of individual rights arose and became widely accepted long before the Industrial Revolution had even begun (and, in fact, was a key step making the Industrial Revolution possible). How was the idea of individual rights explained and justified in the pre-industrial era? It was justified during the Enlightenment on the basis of reason as a cardinal value, with the morality of individualism as a logical consequence. Fortunately, American culture today has not yet entirely lost the esteem it once held for reason and individualism. Americans are not yet ready to dispense with all rights entirely, in the name of a feeble, last-ditch attempt to salvage a rapidly deteriorating society. The potential for that development in future decades is ominously real, but there is still a chance of averting it. The key will be developing a substantial layer of pro-reason intellectuals in the culture, who understand and uphold the philosophical context of individual rights -- intellectuals who can explain the justification of individual rights and persuade others who deal with ideas to produce cultural products embracing it. Dr. Peikoff's DIM book explains this process in more detail. The perspective of reason, egoism, individualism, rights and capitalism won't make many new inroads among "the masses" without knowledgeable, committed intellectuals driving it, tirelessly injecting it into their cultural products -- i.e., into their commentaries, art works, plays, movies, novels, social institutions, political platforms, educational materials, and so on. Metaphorically, it's like maneuvering an oceanliner with tug boats. It takes time, purpose, and consistency, but it can be done.
An observer such as the questioner should ask himself: do you want to participate in driving cultural change, or do you want merely to follow (or resist) cultural change driven by others?
answered Dec 06 '12 at 00:57
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