Who is John Galt?
This is an essay I wrote for my final project in PST3105, an ethics class at Georgia Tech. Our assignment was to create a case study and then to analyze it. I don't feel as strongly about the points as I once did, but I still like the paper. Please send me your comments after you've finished reading it.
FeedbackBy Preston Hunt, 01 May 1993
In Atlas Shrugged, Ayn Rand writes in her usual objectivist style about a society on the verge of transforming itself from a capitalistic type economy to a more socialistic one. The novel is set in early industrial America and concerns itself with what some have heralded as the most important development in industrial America's history, the railroad system.

In Rand's story, Hank Rearden, one of the big guns in the steel industry, has invented a revolutionary steel alloy (which he cleverly dubs "Rearden Metal") that, among other things, will allow railroads to be built for half the cost of regular steel. More importantly, the new rails can handle roughly four times the load conventional rails can. That is, trains riding on the new rails can be twice as long and travel twice as fast as trains on normal rails.

Shortly after Taggart Transcontinental (the nation's largest railroad) converts over to Rearden Metal for its rails, the country's legislature, under intense pressure from the majority of businesses, considers the enactment of an "Equalization of Opportunity Bill." An excerpt from the book best describes the bill's purpose:

"[...] at a time of dwindling production, shrinking markets and vanishing opportunities to make a living, it was unfair to let one man hoard several business enterprises, while others had none; it was destructive to let a few corner all the resources, leaving others no chance; competition was essential to society, and it was society's duty to see that no competitor ever rose beyond the range of anybody who wanted to compete with him. The editorial predicted the passage of a bill which had been proposed, a bill forbidding any person or corporation to own more than one business concern."

This bill would be more far-reaching than may be at first apparent. For instance, consider the following comments from some of the novel's political pundits regarding the bill:
"Our culture has sunk into a bog of materialism. Men have lost all spiritual values in their pursuit of material production and technological trickery. They're too comfortable. They will return to a nobler life if we teach them to bear privations. So we ought to place a limit upon their material greed."

"There should be a law limiting the sale of any book to ten thousand copies. This would throw the literary market open to new talent, fresh ideas and non-commercial writing. If people were forbidden to buy a million copies of the same piece of trash, they would be forced to buy better books."

"A free economy cannot exist without competition. Therefore, men must be forced to compete. Therefore, we must control men in order to force them to be free."

To add fuel to the fire, many disadvantaged companies were calling for the adoption of "anti-dog-eat-dog" laws to hobble the productivity of the more efficient companies. One of these laws, the "Preservation of Livelihood Law," would regulate Taggart Transcontinental. Because Taggart had switched to using the superior Rearden Metal for its tracks, the other companies alleged that they were unable to compete. Therefore, they argued, Taggart should be restricted to running trains at the same length and speed as the other railroad companies.

Similarly, Hank Rearden's competitors wanted to limit the amount of Rearden Metal that he produced. They proposed that Rearden Metal sales should not be allowed to exceed the sales of the other mills' conventional steel.

Finally, the second anti-dog-eat-dog law, the "Fair Share Law," would require Rearden to give every customer who wanted it an equal amount of the now extremely limited supply of Rearden Metal. In other words, Rearden's mills were limited by the Livelihood Law to selling a mere fraction of what they could be selling, and what could be sold had to be divided equally among all who wanted it.

When asked to justify these new laws, one of the protagonists of them offered the following argument:

"And if they're great and I'm not--isn't that exactly why they should bow to me, because I'm not? Wouldn't that be an act of true humanity? It takes no kindness to respect a man who deserves respect--it's only a payment which he's earned. To give an unearned respect is the supreme gesture of charity."

Case Study Instructions

Use Rawls' Social Contract Theory to determine whether the laws proposed in the case study are morally appropriate. To summarize, the first law would prevent men from owning more than one business. The second would cripple two companies so that their competitors could survive. In essence, the assignment is to address whether it is acceptable for entrepreneurs to make significantly more money than regular working class people. If it is, is it morally suitable for the poorer classes to rise up and seize the wealth of the industrialists, as the proletariat rose against the bourgeoisie in Karl Marx's Das Kapital?

After determining the morality of the laws, consider the quotes presented in the case study. Generally speaking, the quotes seem to suggest that everyone is entitled to an equal share of the goodies, even if, out of apathy or vanity, they have not even worked to this end for themselves. Does reanalyzing the case study with this attitude in mind (the ideal that apathetic people ARE entitled to their share of the goodies) expose any weaknesses in the theory, at least with regards to this case study?

Analysis

The scenario presented here is one that has confused economic thinkers for centuries. Indeed, Karl Marx dedicated thousands of Das Kapital's pages to considerations of this type. Whereas Marx's and other economists may have been unable to justify the acts of the proletariat given these circumstances, though, John Rawls is fully able to render judgment using the Social Contract Theory and his theory of justice. This analysis will first recap Rawls' theory and then use the theory to analyze the situation presented in the case study.

Rawls begins by stating that we are all prejudiced in one way or another and are therefore incapable of providing an unbiased analysis of a moral dilemma. To overcome this problem, he proposes that an act's morality should be determined from behind a "veil of ignorance." The idea is as follows: People behind the veil would not know what their socioeconomic position in society outside of the veil would be. In this position, they would be unaffected by the prejudices and biases that they have picked up over their lifetimes.

Rawls argues that these blindfolded arbiters would always choose the morally correct path because they have a vested self-interest in their well being. Because every person behind the veil could possibly end up as a member of the most disadvantaged socioeconomic class, he maintains that everybody would ensure that this class would have a nominal standard of living that is not too far removed from that of the upper class.

From these assumptions, Rawls forms the two basic parts of his theory. The first, the Equal Liberty Principle, deals with political aspects. Much like the Bill of Rights, it is meant to establish the maximum compatible freedom for everyone. From behind the veil, people will reject unfair principles because they are ignorant of their ultimate position in society. As far as they are concerned, they should plan for the worst and protect the rights of the disadvantaged as vehemently as the those of the advantaged.

The second principle, the Difference Principle, concerns itself with social and economic matters. It may be thought of as a pressure valve for the first principle. It holds that all basic goods should be equally distributed in accordance with the equal liberty law, unless an unequal distribution is to the greatest advantage of the least well off. Indirectly, the Difference Principle recognizes that people are different--they have different abilities, talents, motives, etc. Indeed, it is these inequalities among individuals that compel society to evolve and advance. However, as stated earlier, the principle operates in a pressure reducing mode. Rawls hypothesized that if the gap between the advantaged and disadvantaged became too great, the disadvantaged would feel a sense of unfairness and revolt. The principle's solution is to allow for people to get as rich and powerful as they want, so long as they occasionally reflect upon the status of the less well off and give them a boost every now and then. This altruism would be in the upper classes' best interest, Rawls maintains, because the alternative is Karl Marx's bleak socialistic prediction--a revolution by the laboring class against the ruling class (or, in today's terms, by the blue collar workers against the white collar workers).

According to the theory, the first law (the "Equalization of Opportunity Bill") is immoral. First, the law violates the equal liberty principle of the theory. A man's ownership of one business does not preclude his right to another. The basic tenet of the equal liberty law is that everybody's freedoms should be as broad as possible without intruding on the rights of others. The argument that a man who owns more than one business is depriving others of their chance at work is weak at best. In a perfect society (by occidental standards, a capitalism), everybody has free access to the market, and is able to join in at any time if he feels he can offer a superior value to the consumer. The presense of others in the marketplace only makes this access a little more difficult. Further, a non-perfect economy (i.e., a hybrid like the U.S. economy) uses laws to prevent trusts, monopolies, and ogilopolies from thwarting others' chances at competition.

Given that the equal liberty principle is against the "Equalization Bill", does the difference principle regard this scenario as an exception? To override the equal liberty principle, an act must be to the greatest advantage of the least well off. In the case study, the argument is that men who own more than one business do not allow others the opportunity to provide similar services. However, this argument assumes that the disadvantaged would be able to provide the same or a better level of service as those already in business. If this were true, then the disadvantaged would be able to compete on their own merits and would not need assistance. If this is false, then replacing able men with their inept and incompetent peers would not be to the greatest advantage of the least well off. Thus, by either call, the theory finds this law unjust.

The analysis of the second law (the "Preservation of Livelihood Law") is not as straightforward. At first glance, the equal liberty principle seems to support the law. It would seem that if a company is literally driving all its competitors out of business, it must be doing something immoral. However, the equal liberty does not guarantee that everyone will be equally equipped in the world (consider what happened in Harrison Bergeron's world when the government decided that everyone had to be equal). Instead, it protects everyone's right to equal freedom. In the story, nobody forced Hank Rearden to invent Rearden Metal. Nobody forced Taggart Transcontinental to risk using Rearden Metal for its rails. If either company had failed, the results would have been devastating--and nobody would have offered aid. Thus, nobody has the right to complain when they succeeded. At least in Taggart's case, all the other railroads had the opportunity to invest in Rearden Metal.

The consideration of the difference principle and the second part of the assignment belong together. As explained above, the difference principle requires the rich to keep the gap between themselves and the less well off at a reasonable size. In this case, Taggart and Rearden have stretched the gap past its critical point. So, according to the difference principle, they have an obligation to bring the rest of society up to speed. Because they have failed to do so, the disadvantaged are making laws to force them to. By this token, the "Fair Share" and "Livelihood" laws are just.

However, the theory does not account for a situation in which men lapse into a state of apathy and are not impelled to work. The theory says that the gap between the haves and the have-nots must not be allowed to grow too great. The disadvantaged, then, do not need to work for their well being because they can count on the advantaged to take care of them. If everyone were to take this attitude, society would collapse.

Turning to the veil of ignorance does not seem to help. Consider the thoughts of a man behind the veil: If he ends up in a disadvantaged position in society, he will be taken care of. If he ends up in an advantaged role, he can always drop down to a lower status to avoid having to take care of the others.

Thus, the theory provides a logically flawed judgment for this situation. The theory assumes that men are inherently self-motivated and that they do not like to live off the charity or work of others, which, for this particular case study, is not a given. Perhaps this flaw could be extrapolated to a more general criticism of the theory. That exercise, however, is outside the scope of this analysis.

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