Ayn Rand’s Atlas Shrugged is one of the
greatest contemporary novels which describes and analyzes the function of
entrepreneurs in our economics, and depicts the catastrophe which might happen
when the entrepreneurship has been limited and destroyed by central government
regulation. Rand use her stunning talented skill to create a real world, which
is so sophisticated that perfectly reflecting the relationship between
industries and government. Atlas Shrugged represents an essence of Rand’s
philosophy- the prosperity of our world is the result of those who work hard to
chasing their own profit independently.
Starts
from the economic reform in 1978, China’s political and economic begin to
transform from central planning economy to free market economy. However, the
Communist Party still want to maintain their socialism political framework.
This cause the extremely complex economy situation in today’s China. Since
China joined the World Trade Organization in 2000, numerous private enterprises
began to establish their leading place in manufacture and international
trading, and state-owned enterprise begins their reforming attempt to
privatization. But on the other hand, there is still strong obstruction
maintaining state ownership and workers’ welfare. Today’s China economy is a
mixture of central planned economy and free market economy. The Chinese economy
within last decades shows a major conflict between free economy and
state-reglated economy. In other words, it is also a conflict between
entrepreneurship based on self-interest and government regulation based on mass
welfare. In this sense, the main theme of Atlas Shrugged reflects the conflict
which China is facing now. The difference is that China is at the midpoint of
the transition from government regulation to free economy, while in Atlas
Shrugged the country is in the transition from free economy to government
regulation.
Firstly, I want to discuss about the
state-owned or government-regulated industries. The core thread of the novel is
following the regulation changes in the railway system. Both the Taggart and
the Chinese Railway System are troubled by the idea of “serve for the society.”
In the novel, several government restriction policies have been conducted in
the railway system, including the Anti-Dog-Eat-Dog Rule and Railway Unification
Plan. Since the competition environment worsen and the regulation and central
planning from government, the business of Taggart Transcontinental becomes
inevitable to decline and collapse. There are accidents occurs due to
unsuccessful regulation from Unification Board. There are useless routes only
construct according to the administration or James Taggart’s “international
friendship” or “the awareness of overall”, such as the San Sebastián Line. And
the company is struggle in the restriction of low transportation fee while they
have to fulfill the “needs” of public.
Chinese railway system is managed by the
Ministry of Railways, a member of government system. The purpose to having a
state-owned rail way system is to control the “important industry.” The railway
system is responsible for fulfill the “priority needs” of public and state-own
industries. Similar to the idea of James Taggart, for the benefit of the
“mass”, since last decade the Ministry of Railways began to use a great amount
of funds to construct the High Speed Rail (civilian use and low passenger
capacity) instead of to expand their ordinary railway network, which is more
demand in the industrial transportation. Because of the huge blindness
investment in constructing the High Speed Railway, as well as maintaining the
high worker welfare, the China Railway System has huge deficit, and even no
money for continue the ordinary route construction for the urgent need of
industries such as coal mining. The record shows until 2011 first season, the
Ministry of Railways has 3000 billion US dollars in debt. Not only the China
Railway System, but also a huge number of state-owned industries have been in
finance difficulties when the government stops to provide support funding. They
get in trouble because they invest in “public need” and “mass benefit”, instead
of the most profitable route. Irony, the price system based on supply and
demand tells us that the most profitable route is exactly the most needed
route. Rand will oppose the idea of sacrifice to meet the “mass welfare”
because it violates the private incentive to innovate and allocate the
resources in maximum the benefits. Those industrials which aim of “mass
welfare” are destined to fail because there is no private incentive to meet the
demand of market, but losing money in unnecessary projects. On the other hand,
I would argue that the failure is also because both the Taggart and the China
Railway have become “common goods” in some sense. They provide cheap and huge
transportation services to public. As Garrett Hardin argues in his article “The
Tragedy of the Commons”, the public tend to exploit these resources. “An
unmanaged commons in a world of limited material wealth and unlimited desires
inevitably ends in ruin.” Cheap price and huge route network will be extremely
hard for the railway company to avoid losses. Moreover, both the Twentieth
Century Motor Company and the Chinese state-owned companies tend to fail,
because people the “lack of incentive” to work hard and bear the loss. As
Misses argues, the socialism cannot succeed because of the lack of individual
responsibility. The owner of the twentieth Century Motor didn’t give punishment
on the workers who are lazy. Same in the Chinese state-owned industries, those
who work in the China Railway System enjoy huge welfare and it is not easy to
fire them, and they have huge incentive in being lazy and making money from
cutting corner. Therefore the quality of the service or even the quality of the
railway is low.
On
the opposite side of state-owned industries which aim at “public welfare”,
there are private enterprises which seek individual interest. In the novel, the
saviors of the world are those entrepreneurs who have strong individual
incentive to work hard and innovate, in order to gain private profits. In
Rand’s philosophy, the individual incentive is the motor that driving the
world. Hank Reardon, Dagny Targget, Ellis Wyatt, and others make profit by
chasing their own benefit, instead of sacrifice to meet the “mass benefit.”
Rand regarded them as the “motor” of the world
Wenzhou is one of the major areas where the
manufacturing small and middle enterprises gather. In contrast to those falling
state-owned industry, these small enterprises have a huge vitality and making
great profit. The entrepreneurs in Wenzhou are willing to take risk and make
profit. Wenzhou becomes one of the wealthiest cities in China and generates the
most billionaire. However, there is a major problem that small enterprises
cannot get sufficient funding, since state-owned banks regulated to lend most
of their money to state-owned industries. In addition, the private loan is
illegal in China. In order to maximize their production, entrepreneurs have to
lend illegal usury. Similar to our heroes in the novel, these entrepreneurs are
suffer from the accusation from ordinary people of “greedy” and “profiteering”
Since 2011, numerous owner of this small
enterprise has run away, leaving the factory stop and workers become
unemployed. The reason is because they cannot repay their debt in usury and
therefore, their financial chain has been cut off. Ordinary people begin to
condemn this entrepreneur as “selfish”, they hope the government can “regulate”
the small enterprise lending market for the benefit of workers and ordinary
people. They did not realize that the activity that those entrepreneur who take
risk to lend money to seek profits generate the wealth of the society. They did
not realize that the problem is not on those entrepreneurs but on the
regulation of private lending. The Chinese economist Mao Yushi, who recent got
the Milton Friedman Liberty Prize, said that to deal with this crisis, the
government has to legalize the usury market. However, his comment has been
criticized as “speaking for the riches.” Like the ordinary people and looters
in Atlas Shrugged, they did not realize that money is not evil itself, but only
a medium of exchange, and make through production. The money helps the
thousands of process to link together and complete the production. The small
enterprise lending usury is only to make greater production. To deal with this
problem, the central government is planning to establish a “Small Enterprise
Administration Bureau” to regulate the small enterprise. If the activities of
small enterprises are regulated by government, they will lose possibility to
take risk for their individual incentives, which is the most important part in
entrepreneurship.
From reading the catastrophe brought by
government regulation on free market, we know that Rand is opposed to the
state-ownership. In her view, the ideas of “sacrifices for the mass benefit”
are evil and “individual incentives” are noble. The force pushing the society
to go forward is not sacrifice, but individual pursuit benefits. In order to
assure the release “individual incentives”, there should not be any government
regulations in the economy. The Rand’s philosophy may give a lesson to the
conflicts in China between free economy and government regulation.
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