Larry Breinhart of the Huffington Post and Barrett Sheridan of Newsweek are two of many commentators to use Alan Greenspan’s connection to Ayn Rand and Objectivism as a means to prove that Rand’s philosophy is incorrect and cannot work in the real world. The financial crisis, the argument goes, is directly due to Greenspan’s “full faith in the markets” and his reluctance to regulate the financial sector.
Any attempt, however, to ascribe Greenspan’s actions to Objectivism depends on a fundamental misunderstanding of Rand’s philosophy. Objectivism holds that laissez-faire capitalism is the only moral political/economic philosophy. Laissez-faire capitalism, as Rand stated, demands a complete separation between state and economics. It is incompatible with a Federal Reserve system, in which the government controls interest rates and the money supply by fiat. By running the Federal Reserve, Greenspan wasn’t acting on Objectivist principles–he was betraying them. Worse still, by keeping interest rates artificially low during the first half of this decade, Greenspan was one the principal architects of the current financial crisis. Manipulation of the money supply so often leads to boom and bust cycles, which is one of the many reasons Rand outright opposed the Federal Reserve and any other government intervention in the economy.
Greenspan was at one time a close associate of Ayn Rand. Nonetheless, as Yaron Brook of the Ayn Rand Center for Individual Rights puts it, “any belief Greenspan ever had in truly free markets was abandoned long ago”.
