Sunday, May 17, 2015

The Objectivist Utopia, Part 2

This is continued from Part 1, posted earlier.

In Atlas Shrugged, the great industrialists, fed up with progressives, government, regulations, and taxes, decide to leave the world behind and retreat to a place of hiding, where they establish a new Atlantis.

The founder of this community was John Galt, a highly talented engineer who had invented a revolutionary motor that draws power from the air.  When the company he worked for succumbed to the policies of the progressives, he declared that he would stop them by going on strike.  He began a campaign to recruit others who were similarly disillusioned.  One of those recruits, a banker named Midas Mulligan, owned property in a secluded mountain valley in Colorado.  Upon leaving his bank, he converted his assets to gold, and moved to his property, along with food, seed, and livestock, where he built a home and lived permanently.  Mulligan paid Galt to conceal the valley from view and obscure roads leading to it.  Eventually, Galt and other strikers moved to the valley, leasing property from Mulligan, upon which they built comfortable homes.  The community was known as Galt's Gulch.

They produced fruit, vegetables, poultry, dairy, and livestock while also working part-time at their own businesses.  Mulligan established a bank in addition to growing wheat and tobacco.  Galt developed his motor into a source of cheap electric power for the entire valley.  There were water mains, electric distribution, telephone service, roads, a grocery store, a cigarette manufacturer, a copper mine and smelting operation, a shale oil extraction operation, and all manner of businesses built by the strikers in their spare time when they weren't working at agricultural production.  There was an aircraft landing strip.  There was at least one car, which was rented out by its owner for use within the valley.  There was no government.  All services were and goods were bought with cash from privately owned businesses.  Nothing was free.

The medium of exchange was gold.  One of the early recruits, Ragnar Danneskj√∂ld, became a pirate who made it his mission to take back all the money the strikers had paid in taxes.  He delivered gold to Mulligan's bank, which was deposited into accounts for the strikers.  There were accounts even for anticipated recruits who had not yet been persuaded to join the community.  Labor and goods were fairly cheap.  It seems that one could live in this economy for a dollar or two per day.  They minted coins from the gold and used them for their transactions.  One person was designated to acquire and bring in goods that were not otherwise available within the local economy.

So what's the problem with this idyllic community?  Let's start with basic necessities - food and shelter.  There must be sufficient production to meet those needs before any other kind of business or industry is even possible.  The first thing to note about a small, isolated economy, is that they don't have the advantage of mass production, which would provide an economy of scale.  In other words, they have to work harder to produce the same goods that they would have in a larger economic community with large-scale industrial and agricultural facilities.  Given that this community is in an isolated mountain valley, they would need to endure long, cold winters and a short growing season.  It would not be easy to meet their needs for food, and assuming that they did, how much spare time would they have to devote to other pursuits?  How did they feed themselves and their livestock during the winter?  Would it even be possible to grow exotic things like fruit and tobacco that don't survive well in this mountain climate?  Would this mountain valley have the resources to sustain the population, their agriculture, and their industries?

Their houses were made of logs, but were comfortable, multi-room buildings with modern amenities such as plumbing and electricity.  Who built them, and where did they get their resources?  Did they cut down all the trees in the valley?  Did the first few industrialists perform the all manual labor to run logging operations and also build their own homes?  Did they manufacture glass for windows, and metal pipes for their plumbing?  And where did they get the materials they needed?  They accomplished these things while at the same time growing the food they needed to survive.  It must have required a tremendous amount of labor, yet they apparently had time to devote to other businesses and interests.  One of the people who lived there was a scientist, and he even had his own science laboratory, where he conducted research in his spare time.  One was a music composer who performed concerts for a paying audience.  How nice.

Let us assume that there were two thousand people in this community, and this was at least a semi-industrialized economy.  How diversified could their industry possibly be with such a small population?  There was at least one copper mine and smelting operation.  Given the small population, would it be financially feasible to have such industries?  Who would they sell their copper to?  Could they have factories to produce a wide variety machines and hardware, and the workers to run them?  Would it be financially feasible to build and run a telephone service for one small town?  Could they have enough utility workers to lay water mains, electric and telephone lines?  Who built the roads, and who paid them do do it?

One prospective recruit who was a railroad magnate, upon seeing the copper mine, immediately started thinking about how she could build a railroad between the mine and the town.  This would reduce costs for the copper works.  But there was no thought about whether it would make economic sense.  A railroad that serves one single copper mine?  Where would the rails, the locomotive, and the train cars come from?  Who would construct all this, and what would it cost?  And would it be worthwhile?  How much copper would they have to ship to pay for it, and is there a market for that in this little town?  I have my doubts.

And there's another looming problem.  The strikers had gold in the bank.  The wealthier ones (which were most of the people recruited for the strike) must have had many thousands of dollars.  What reason would they have to labor for a few dollars when they could simply pay for what they need with their gold reserves?  It stands to reason that these people would have the leisure time to pursue their own private interests if they didn't have to spend all their time producing the necessities for survival.  But that means there must have been a labor force apart from these industrialists.  Given that this was a free economy with an obvious demand for labor and resources, and there were people with lots of gold, there would be a natural tendency to bid up the prices for goods and labor. 

Yet in this utopian community, economic reality never takes hold.  The free, unregulated economy meets the needs of everyone, and the people are happy.  Life is good.  Power is (magically) abundant and cheap.  There are roads and utilities (somehow).  Goods and services are cheap (despite the very obvious limitations of labor and resources).  There are no disputes over prices - just people happily agreeing on what to pay (and apparently always settling on cheap prices).  There is no concern about pollution or depletion of resources.  There is no concern about people who are unable to make ends meet.  And there are no taxes and no regulations.  What more could an objectivist ask for?

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