Wednesday, October 21, 2020

Essay That Got Me in the 3rd-Place Category in the Ayn Rand Institute’s 2009 Essay Contest: ‘Making Money Versus Having Money’

Stuart K. Hayashi

Stuart at the Ayn Rand Institute headquarters in July 2018; photo taken by Jonathan Hoenig

Below is the essay for which I received one of the five third-place slots in the Ayn Rand Institute’s 2009 Atlas Shrugged essay contest. That year there were 4,000 entrants — more than double the previous record.

In this essay, I explain that money, as a commodity, is a complement. This means that its value hinges upon the value of some other product. For instance, the value in my having a can opener — qua can opener — is contingent upon my having sealed tin or aluminum cans to open. Likewise, the value of money is contingent upon there already being goods and services, such as food and shelter, for which that money can be traded. Therefore, it is such wealth — these goods and services created by entrepreneurs — that confer value upon cash and credit.

The quantity of goods and services that can be produced in a society is directly commensurate with the amount of freedom — freedom from force and fraud — existing in that society. A totalitarian society can have trillions of monetary units in circulation in the form of cash and credit, but as the lack of incentive will discourage entrepreneurial production, that society will remain poor.

Grammatically, what you see below is not exactly the same as the version I submitted. Years later, I noticed that the draft I submitted split some infinitives. I have decided to change that for the version below.



Topic 2: Making Money Versus Having Money

In Atlas Shrugged, the heroes want to “make” money while the villains want, on the surface at least, to “have” money. What is the difference between these two views of money? Explain your answer by reference to actual events in the novel.


The conflict in attitudes that the heroes and villains have about money comes from their differing views on the nature of wealth. First, “wealth” must be defined properly. The measure of a person’s wealth is the usefulness that he finds in the products and services in his possession; “wealth” does not merely refer to cash and credit. The usefulness of any unit of currency comes from the fact that it can be exchanged for the goods and services that comprise wealth. As Francisco d’Anconia explains at James Taggart’s wedding: “Money is a tool of exchange, which can’t exist unless there are goods produced and men able to produce them” (Ayn Rand, Atlas Shrugged, 1957, [New York, New York: Signet, 1985 mass market paperback edition], 387).

John Galt notices that the villains do not consider the source of the world’s wealth (968); they are only aware that it exists, and they fuss over how they would like for it to be distributed (132). By contrast, the heroes understand that wealth is not something that automatically emerges into existence, independent of human initiative. The heroes recognize that all the wealth that exists, and has ever existed, was created by individuals who applied their volitional capabilities, first to discover the laws of nature, and then to utilize their understanding of such laws to convert natural materials into useful products.

The mere existence of crude oil, for instance, cannot be of immediate use to anyone while that oil remains stuck miles beneath the earth’s surface. It takes a capable entrepreneur to coordinate the activities of men and machines in an effort to bring this oil aboveground. That is precisely what Ellis Wyatt does, keeping other industrial concerns alive by reliably supplying them with oil (17). After Wyatt vanishes from public life, and after the government responds by placing further controls on the oil industry, there are no entrepreneurial individuals left who can competently organize oil-drilling endeavors. Resultantly, the country experiences a petroleum shortage (325). This demonstrates that wealth is conditional, that no one may have it unless there is someone willing and able and free to use his mind to create it.

When a man invents a new product that provides advantages that older products cannot, the new invention brings about an increase in wealth. Before Hank Rearden invented Rearden Metal, Dagny Taggart purchased steel for the reason that there was no better substance available for casting the rails for Taggart Transcontinental’s lines. Once Rearden brings his Metal into existence, it opens up previously untapped opportunities. Dagny observes that Rearden’s alloy is “tougher than steel, cheaper than steel, and will outlast any hunk of metal in existence” (28). Accordingly, a dollar that Dagny spends on Rearden Metal today will bring her greater benefit than did a dollar that she spent on steel in the past. This net benefit — this improvement in the quality of Taggart Transcontinental’s tracks — is new wealth that Rearden’s Promethean initiative has brought into reality.

Furthermore, two independently creative individuals can take advantage of one another’s creativity by making voluntary trades with each other, giving “value for value” (387). Rearden provides Dagny his Metal for her rails, and she provides him the service of shipping his Metal to his other customers (86). This trade is not executed through barter; Dagny and Rearden each pay one another with money, as money makes trading simpler in a society in which businesses perform specialized tasks. Dagny purchases cigarettes from a newsstand (64-65), but if all she had to trade for cigarettes was her railroad’s transportation services, then the newsstand owner would not agree to the trade if he had no desire to transport anything via rail. Money makes trading easier because it is a tool used specifically as a common medium of commercial exchange. Dagny can offer rail transportation to her customers in exchange for their money, and she can then offer some of that money to the newsstand owner in exchange for cigarettes.

Money is therefore the material representation of the product of one’s own effort, which one can then “exchange for the product of the effort of others” (387). To “make money” is to earn money in a two-step process: first create useful goods or services, and then trade them to willing customers in exchange for their money. Ergo, to “make money,” one must be a wealth-creator. A moneymaker is a producer.

Though wealth is created, the villains obtain it by means other than production and trade. Another way to acquire wealth is to receive it as a gift. The persons that primarily obtain their wealth not from working, but through alms, are those whom Francisco identifies as “moochers” who gain the product of your work “by tears” (387). Philip Rearden lives off of his brother Hank in such a manner (441). An even worse tactic of acquiring wealth is to engage in extortion or other forms of robbery. Those who employ this method are “looters,” who seize your wealth “by force” (387). As a case in point, in his unwillingness to try to persuade individuals to finance his scientific research consensually, Dr. Robert Stadler asks the government to confiscate money from citizens forcibly and have it redistributed to his State Science Institute (178, 183). Such moochers and looters often take money and have it, but they do not make any new wealth and therefore do not make money.

When an extortionist steals from his victim, most of society evaluates the extortionist as strong and the victim as weak. However, if strength is the ability to live as a rationally proud human being, then the productive victim is stronger. The victim survives by his own effort. By contrast, the extortionist is a parasite that lives off of its victims and will perish in the absence of victims.

Following Wyatt’s disappearance, for example, the government gives the State Science Institute full access to Wyatt’s oil fields. However, lacking the acumen to produce the same results that Wyatt did, the Institute fails to put the fields back into production and therefore fails to mitigate the petroleum shortage. To keep its building adequately heated, the Institute relies upon the oil that the government rations to it, but this quantity proves to be insufficient for satisfying Stadler’s needs (325-26). Rather than take any constructive action, Stadler simply laments that the temperature in his Institute’s building recently dropped so low that he “nearly froze to death” (325). Producers like Wyatt can survive without looters like Stadler, but looters like Stadler suffer when they no longer have producers like Wyatt around to produce for them.

If everyone in the USA lived as a productive individual, creating wealth and trading it with other wealth-creators, then the nation would flourish just as Galt’s Gulch does (652-756). Conversely, a society in which everyone was a moocher or a looter would inevitably destroy itself. The moochers and looters would find that the quantity of wealth available for consumption constantly shrinks when there are no moneymakers present to create new wealth. There would be no competent entrepreneurial efforts to generate electricity (1075), as there would be no one left to mine the coal that could supply it. The world would descend back into poverty (273), technological primitivism (1080), famine (869-870), and civil war (1029). Society would vanish “in a spread of ruin and slaughter” (390).

A particularly important principle is revealed when, just as the American economy falls into deprivation and chaos, Mr. Thompson — the nation’s Head of State — tries to coax John Galt into becoming the country’s economic dictator by offering him cash: “Want a billion dollars — a cool, neat billion dollars? . . . ...I mean straight out of the public treasury, in fresh, new bills . . . or . . . or even in gold, if you prefer.”

In reply, Galt asks rhetorically, “What will it buy me?” (1023). When there are so few quality goods and services being produced, a billion dollars will fetch very little value for its owner. To quote once again a statement of Francisco’s that was quoted in this essay’s beginning, the value of any sum of cash is predicated upon the fact that there are still “goods” being “produced and men able to produce them” (387). As the productivity of these men ceases to exist, so does the usefulness of any currency, and so it is the productive men “who give value to money” (387). The producers’ economic power comes not from merely possessing cash, but from making the wealth that gives cash its meaning.

Galt rightfully appraises Mr. Thompson’s bribe as pitiful, for having money is meaningless in a world in which there are no longer any men around to produce the goods and services that the money is supposed to purchase. That is the idea behind Francisco saying, “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” (387). In the final analysis, the money that one has can only retain its value as long as — and to the extent that — men still make their money freely.