The Customer Isn't King, Nor Should He Be

Why Howard Roark Is Right and Supposed Libertarian Economists Are Wrong

Stuart K. Hayashi

In attempt to wipe away the smear that capitalists are dirty monopolists who exploit their customers, some libertarian economists wipe all the way to the other extreme end. They say that it is the customers who have all the power, and that vendors are mere subordinates who must always cater to the customers.  They therefore take issue with Howard Roark saying, "I don't build in order to have clients.  I have clients in order to build."  When Roark issues that statement, he is denying that the client -- the customer -- is more important to the transaction than is the vendor.



Ayn Rand the Anti-Capitalist? 😶
The right-wing economist Mark Skousen, who founded Freedom Fest and is popular in libertarian circles, proclaims that Roark's statement proves inconsistent with free-market economics.

...Roark denies a basic tenet of sound economics -- the principle of consumer sovereignty. When the dean of the architectural school tells Roark, "Your only purpose is to serve him [the client]," Roark objects. "I don’t intend to build in order to serve or help anyone. I don’t intend to build in order to have clients. I intend to have clients in order to build." (1994:14) . . .

But the goal of all rational entrepreneurship must be to satisfy the needs of consumers, not to ignore them! Discovering and fulfilling the needs of customers is the essence of market capitalism. Imagine how far a TV manufacturer would get if he decides to build TVs that only tune into his five favorite channels, the consumer be damned. It wouldn’t be long before he would be on the road to bankruptcy.

The Religious Right think-tank known as the Acton Institute agrees with Skousen:  "While such egotistical bluster may make for an interesting fictional character, this attitude can hardly be considered a solid foundation for capitalism."

I shall explain how Roark's position is not inconsistent with capitalism.  It is Mark Skousen and the Acton Institute who misunderstand capitalism and Say's Law of Markets itself when they proclaim that the consumer is more important to the transaction than is the vendor or producer.  An actual understanding of Say's Law of Markets recognizes that both sides of a voluntary trade are equally important to the trade, and that both sides of the trade are consumer and producer simultaneously.



Money Is a Product; Using Non-Monetary Items As Payment, You Purchase Money
Consider the barter economy. Suppose I have a paperback book you want, and you have a flash light I want. We trade one for the other. In that bartering, who was the producer and who was the consumer? The truth is that each party was both the producer and consumer. That relationship does not change when we introduce money into trading.

Money is itself a product that people purchase, and it is a tool that we use primarily for the purpose of trading. An automobile is a tool we use for transportation. A computer is a tool we use for storing information and disseminating it. And money is a tool for trading. And we pay for money by trading for it.

We can think of it this way. Normally, if I work for a business, I can be thought of as someone selling my time and labor to that business. That business is purchasing my time and labor from me, and pays me in the form of wages or salaries. But there is another way to view it: I am actually purchasing money from that business. My payment to that business -- in exchange for the money the business sells me -- comes in the form of my performing labor on behalf of that business.

In a country with a fiat currency, we can think of the treasury that prints the cash, and the central bank that has the ultimate power to extend credit backed by that fiat currency, as having a cartelish monopoly when it comes to the manufacturing of money. However, anyone who uses money can be thought of as a "cash retailer" -- someone who sells cash at the retail level.

Suppose you want to sell me a paperback book in exchange for seven U.S. dollars. There is another way we can look at it: you are trying to purchase seven U.S. dollars from me, and your payment to me for that seven U.S. dollar is the paperback book.  That is the proper understanding of Jean-Baptiste Say's Law of Markets:  because consumption is predicated upon production, it follows that, insofar as trades are peaceful, you are a consumer no more than the extent to which you are a producer.  That is, in a purely consensual economy, you are both the producer and consumer in every transaction.



Insofar as Our Economy Is Peaceful, You Are Consumer and Vendor in the Same Trade
It is true that when two parties agree to trade, one party can have more bargaining power than the other. If I go to a bank for a loan, I feel that the bank has an easier time than I do when it comes to specifying what will be the terms of our agreement. Sometimes when it comes to forging a trade agreement, one side has more sway than the other. However, that is a consequence of demand and supply. The principle holds: even if one side of a trade accord possesses more bargaining power than the other, both sides are equally important when it comes to determining whether the trade will happen. If both sides do not judge that they yield a net gain from the trade accord, the trade accord will not be executed.

Mark Skousen and other putative free-market economists say that Howard Roark is being a poor representative of capitalism when he turns down some clients based on his own preferences. Such economists say that a "true capitalist" would be like Peter Keating and prioritize the maximization of financial profit above being able to abide by his own standards consistently. But that is a misunderstanding -- libertarian economists, of all people, should remember that money is just one proxy for measuring wealth, and the true endgame for economics is that one maximizes his or her utility (Aristotelian "eudemonia" or "human flourishing").

Therefore, we can look at it this way. Howard Roark is not necessarily the subordinate to his client, Austen Heller. Rather, Howard Roark is a customer who is purchasing money from Austen Heller. Roark's payment to Heller is that Roark be able to design Heller's house in the manner that Roark prefers. If Heller considers that to be an unworthy form of payment, Heller does not have to accept it.

Therefore, contrary to Mark Skousen and economists who agree with him, Roark is not being a poor practitioner ofcapitalism when he points out that he has clients in order to build.  Roark is simply practicing consensualist economics in his own unique fashion -- a fashion that in no manner conflicts with the principles of voluntaryism.

You are both vendor and client in the very same trade.  When you purchase a paperback book and use seven U.S. dollars as payment, you are also selling the seven U.S. dollars and accepting the paperback book as payment for them.  You are therefore customer and vendor simultaneously.  To say that the customer has more power than the vendor, then, is to say that the customer is more powerful than himself.



On June 21, 2018, I updated the links and added a thumbnail.

Taking the Red Pill

Stuart K. Hayashi



Note from January 9, 2018:  I wrote this before the term red pill was co-opted and usurped by the "Men's Rights Movement" in particular and the "anti-Social-Justice-Warrior" vlogging community in general.

______________


I had never before met this deep-voiced, trench coat-wearing man. But something I noticed right away was that he insisted on wearing sunglasses indoors, in this barely-lit room. He offered me a choice. He told me I could take his red pill or his blue pill.

I opted for the red pill.

. . .

Then I woke up in the hospital. I needed to have my stomach pumped.

That's what happens when you take strange pills offered by big, scary, deep-voiced men who wear sunglasses indoors.

There Is No Right to Have the Government Supress the Truth About You

"There is no 'right to be forgotten.' But there is a 'right to remember.' History is important. Speaking the truth is a human right."

--Jimmy Wales, Monday, August 4, 2014


When legislation says you have a "right to be forgotten," what it really means is that it will use the force of law to shield people from facing the peaceable consequences of their own choices.

That Lots of People Copy an Original Artwork, Doesn't Make the Original Into Something Unoriginal

Stuart K. Hayashi

Did you notice how sometimes, a work of art is so original, that everyone ends up copying it? And then, decades later, people who are ignorant of the history of the genre end up dismissing the trailblazing artwork as uninspired and unoriginal?

For instance, I knew a girl who considered herself a vampire buff. And, as is customary for any buff, she pointlessly looked down on other buffs. She hated Twilight fangirls, because Twilight fangirls don't appreciate reeeeeeeal vampires. No. Any true vampire fan prefers Anne Rice novels and the Vampire role-playing game.

I once asked her if she had any appreciation for Dracula. She replied no, the Dracula character is one-note, trite, and uninspired, and to like Dracula you would have to be really stupid, like a Twilight fangirl.

Um, hello? There wouldn't be any Anne Rice vampire novels or Vampire RPG if not for Dracula.

Before Bram Stoker wrote Dracula, the idea of "vampires" was very different. They were just seen as smelly, vaguely humanoid creatures with no personal identity or individuality. They were pretty much like the Reavers from Firefly. Stoker and John Polidori (a friend of Mary Shelley's) were among the first writers to portray vampires, not as being homeless, but as being members of the aristocracy, and of having personalities. Moreover, they were among the first writers to portray vampires as being able to appear human and blend into human society. That trope comes from Stoker and Polidori. They were among the first to portray vampires as even being able to speak. If not for Polidori and Stoker, there would be no Lestat.

You can see how, over the years, various writers have built upon the mythology. Anne Rice's characters are more fleshed-out than Dracula was. Dracula seems somewhat primitive compared to Lestat. But, by that same token, one might say that the first mutant fish with legs, who first crawled upon land, were primitive compared to modern humans. The fact remains that, if not for those creatures, there wouldn't be modern humans. Likewise, all of this vampire buff's favorite vampire paraphernalia either would not exist, or would have turned out very different, if not forDracula.

Then again, this same vampire buff said that the Vampire RPG is for smart people, whereas you have to be stupid to like Dungeons & Dragons. Again, if not for Dungeons & Dragons, there wouldn't be a Vampire RPG, at least not in the form that it takes today.  -_-

The Death of My Namesake

Stuart K. Hayashi

The actor Efrem Zimbalist, Jr., died this week. Rest in Peace. :-(

I am actually named after him.

Yes, I am Efrem Zimbalist III.

Hee-hee; just kidding . . . sort of.  ^_^

This is how I am named after him.  In the TV series 77 Sunset Strip, he played a detective named Stuart Bailey.  My father said, "Stuart Bailey is so suave and sophisticated.  If I name my son Stuart, he will also turn out suave and sophisticated."

Was he right? 

I Pledge to Outcompete Bad Philosophy, Not Eradicate It

Stuart K. Hayashi

I am not going to destroy bad philosophy. Instead, I intend to outsell it. By that, I mean that I will not devote my best energies to explaining why bad philosophy is wrong. Instead, I want to focus on showing how my philosophy is good, correct, and desirable. And when people see how good my philosophy is, they will choose it over the bad philosophy. Thus, the bad philosophy does not have to be destroyed; it will simply be abandoned in favor of something greater. The bad philosophy will not die from battle, but from its own obsolescence.

I am not a militarist crushing the enemy in war. Rather, I will be John D. Rockefeller, Sr., earning considerable market share by offering a superior product.

The Reduction in the Infant Mortality Rate Deserves Praise, Not Dismissal

I notice people saying "Hunter-gatherer life expectancy was only lower than those of modern Europeans and Americans because hunter-gatherers had a higher infant morality rate. When you factor out their higher infant mortality rate, you find that if a hunter-gatherer lived past his first year, he would have the the same life expectancy as that of a modern Western European."

First off, I find it very conspicuous that they talk about the hunter-gatherers' high infant mortality rates as if it's no big deal. It's like, "Yeah, a large percentage of the hunter-gatherer population dies before reaching 50, but most of those people die as babies, so no big deal!" Likewise, they scoff at the modern First World's considerably lower infant mortality rate as if that's nothing. Contrary to those people, I think the reduction in the infant mortality rate is a tremendous achievement. If not for that reduction in the infant mortality rate, I might have died as an infant and not been able to write all this.

Secondly, when archaeologists look at the mass burial sites of hunter-gatherers, they can ascertain the age at which someone died by looking at the bones. Amidst the remains, they find people in their twenties, thirties, and forties, but it's extremely rare to find the remains of someone who died in his or her fifties, sixties, or seventies. This does indicate that, even if someone born into a hunter-gatherer society survived past infancy, that person would still have a lower life expectancy than a modern American or European.

The Encrypted E-Mail Serivce Edward Snowden Used: An Explicit 'Atlas Shrugged' Connection

Stuart K. Hayashi


 Do you remember how, in his first few months on the run, Edward Snowden used the encrypted e-mail service LavaBit?  And do you remember how, when the federal government demanded that LavaBit had over sensitive information on Snowden and its other users, LavaBit decided to shut down completely rather than capitulate to the State?  

Alexanader Cohen conducted the following 85-minute interview with LavaBit's owner, Ladar Levison, over Skype.  At the 0:31:00 mark, Levison talks very explicitly about how Atlas Shrugged -- Ellis Wyatt and Wyatt's Torch in particular -- helped inspire his decision to take the stand that he has.

Levison frequently uses the word sacrifice for his decision to close his business.  However, I do not believe he has sacrificed his deepest values.  Rather, he closed his business to preserve his greatest values.

At the very end of the interview, Levison says:

The Constitution wasn't designed to protect the majority.  It was designed to protect the minority. It was designed to protect the people who didn't have the votes, because they were a small cadre of individuals.  It was designed to protect them from being ridden over roughshod by Congress and the majority.

I'm glad there are still people in this world who will take such an important stand.