Critique of the Gulch
Posted by deleted 1 year ago to Ask the Gulch
Galt's Gulch is not possible in practice.
I may be mistaken in my logic, so, correct me where I went wrong.
The "book" appears to communicate the idea that a utopia will ensue once the "moguls" (productive/wealth-seeking people?) move away from the leecher masses and into their own secret society.
The problem with the above idea is that it doesn't consider the reason why the "moguls" are so productive/wealthy. The "moguls" in the book are thought to possess some magic ability to produce wealth, and, therefore, rightfully so deserve to be paid. However, there is a specific reason for this productivity. Usually, it arises out of things like "economies of scale" and "automation". These things require a huge time/financial investment. Most importantly, they require a huge market to make financially viable. A small community of highly productive people isn't going to sustain such investments. A lot of products exist today and are available for purchase only due to the massive market that exists for them, which is able to support the extreme development cost and the mind-bogglingly huge supply chain that are required for their production. There isn't enough hours in the day of Galt's Gulch members to produce much of anything. Star Trek levels of automation technology is required for what is described in the book.
I may be mistaken in my logic, so, correct me where I went wrong.
The "book" appears to communicate the idea that a utopia will ensue once the "moguls" (productive/wealth-seeking people?) move away from the leecher masses and into their own secret society.
The problem with the above idea is that it doesn't consider the reason why the "moguls" are so productive/wealthy. The "moguls" in the book are thought to possess some magic ability to produce wealth, and, therefore, rightfully so deserve to be paid. However, there is a specific reason for this productivity. Usually, it arises out of things like "economies of scale" and "automation". These things require a huge time/financial investment. Most importantly, they require a huge market to make financially viable. A small community of highly productive people isn't going to sustain such investments. A lot of products exist today and are available for purchase only due to the massive market that exists for them, which is able to support the extreme development cost and the mind-bogglingly huge supply chain that are required for their production. There isn't enough hours in the day of Galt's Gulch members to produce much of anything. Star Trek levels of automation technology is required for what is described in the book.
Within that context of a temporary refuge, no heavy-duty mass production was necessary - note the fact that many of these brilliant productive minds were spending their time in the Gulch running low-key essential businesses - even mundane tasks like gardening and cooking - to keep that small community prospering despite its removal from the general economy.
Assuming that the Gulch - as a tiny, insular community - is a model for a broader, permanent socio-economic structure is a misreading of the function of Galt's Gulch within the novel.
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I would say that Gulch members themselves wouldn't be in a much better position. They would have to spend 90% of their time "gardening" because they wouldn't be able to produce mechanized farm equipment/etc (for increased productivity) due to the required complexity of the supply chain for such things.
Even if they did return, the new population levels would still impose severe limitations on them.
I guess the book is a work of fiction, so, maybe I shouldn't take it too literally. But if that was to happen in reality, there would not be any painless way out of it even for productive people.
I think what I'm trying to say is that the point of the Gulch is wrong. This strategy would not work. Even as a threat.
Recall JG's words to DT near the end of the book:
"It's the end," she said. "It's the beginning," he answered.
If we want to extrapolate possible outcomes far beyond Atlas' scope and beyond the closing scenes of the novel we could do it all weekend (my speculation would be that there would almost certainly have to be some degree of armed conflict to drive out the remaining collectivist roaches before a civilization of human rights and liberty could be reestablished,) but again that extrapolation is beyond the purpose of Rand's novel.
Remembering the purpose of fiction - or any art - is key here. The novel had a theme to assert and an integrated plot was needed for exposition of that theme. As Rand herself pointed out in her discussions of aesthetics - not the least of which in the pages of The Fountainhead - great art does not throw in non-essential elements just for the fun of it. The artist restricts the work to what is needed. Galt's Gulch performed the role the novel needed it to perform - to illustrate the fact that without the mind no society can maintain any semblance of industrial civilization. Ultimately it would have to work, even if Galt had to continue poaching every competent worker from CEO down to conscientious janitor.
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The collapse sounded like a hard stop. That has some severe consequences. It would take at least decades to restart. Meanwhile, food production would be way down and population size would need to fall. You wouldn't be able to "go back to the world" and continue as usual, especially so soon after the events that transpired. I would guess they would have to stay put for a few years to let things settle down.
Did they really think they could to go back? They seem to be too sure that the masses are on the same page. It is possible people might attribute the collapse to something else, maybe possibly judging them as saboteurs that caused the mess in the first place. People can be stubborn in admitting their mistakes.
"The "book" appears to communicate the idea that a utopia will ensue once the "moguls" (productive/wealth-seeking people?) move away from the leecher masses and into their own secret society.
The problem with the above idea is that it doesn't consider the reason why the "moguls" are so productive/wealthy." - The book failed to communicate that to me, certainly. The Gulch just served as a place where they could temporarily remove themselves from a society that was neglectful and hateful towards them. Didn't sound like a utopia to me.
Interesting how people can get such different things from a book, especially this one. In many critical reviews of the book it's clear the person didn't ever read it. But, I think you did!
Edit to add. If somebody is very well-read they have come to realize that the tradition of great Russian literature is one of fiction. Fiction was the tool writers would use to make a huge, important statement/criticism without being sent to the gulags. Ayn Rand was a Russian Jew, so.... There is some fiction in the book. Hell, I understand that Solzhenitsyn wrote Gulag Archipelago in secret, actually burying the book in the dirt during its creation.(somebody let me know if I've got that wrong)
I do have other critiques of the ideas book, but maybe I'll bring those up in future posts.
As for "other critiques", I say bring them on! This has been the kind of discussion I like to see here in our virtual gulch.
I have a theory about wealth creation. It seems like nobody seems to understand where wealth comes from. The book didn't express it, which I found disappointing, but maybe I missed it. The gist of it is that increase in wealth is a result of increase in productivity. Any return from investment that doesn't result in increase in productivity is a zero-sum investment in which your gain is a loss of someone else in the economy. Making cars cheaper (=less man hours) to produce results in increase in wealth of not just the producer (at least initially) but of the entire economy. I argued with people about this, but not a lot of people seem to get it. Maybe I should create a separate post to discuss this.
I would also argue that menial jobs do require some level of intelligence. Technically speaking, all signals coming out of the brain are its product.
Wasn't Galt's menial labor job just a cover?
JG used his job at the railroad to keep an eye on Dagny, for sure, but he and others needed jobs on the outside. I don't recall the specific reasons. But others worked outside as well. Akston ran a diner. Owen Kellogg had several outside jobs. There was the conductor that whistled Halley's "5th Concerto".
As for "it will hurt other parts of the economy much more." That sounds like the comment that Oren Boyle, Jim Taggart, or Wesley Mouch might make. I think it was Floyd Ferris in the movie (I can't find it in the book, but maybe someone else knows) who said: "If Rearden metal IS good, then it's a social danger." Meaning suppliers of inferior products would be adversely impacted.
Regarding the motor, just removing fuel logistics would create huge time savings for everybody. So, I would agree, it would indeed create a huge amount of wealth.
So, you have no argument from me regarding those two inventions. The thing is, not all inventions have these properties.
I am not a fan of the "altruists" in the book, or in real life, especially ones that use someone else's money for their altruism. However, when I analyze the economy, I can observe certain activities in it that are harmful. I want to stop them not because I am an altruist. I want to stop them because they cause harm to me individually. It just so happens that this harm is done on a huge scale, transferring a little bit of wealth away from many while giving a large amount of wealth to a small number and burning a part of it as overhead of the process. Some of these activities are outlawed but some are not. The perpetrators might even be Ayn Rand fans!
Here are some examples:
- Ponzi schemes
- Advertising
- Insurance
Everybody agrees to participate in a ponzi, so, initially it doesn't look problematic. However, it generates no new wealth and has a large overhead, so, it is a net wealth loss for society. The wealth wasted on it could have been instead used more productively and eventually could have indirectly increased my own by a little bit.
Advertising can accelerate generation of new wealth in some specific situations, but I would argue most it is a huge drain on society. What happens is you get bidding wars between competitors for advertising space. This makes advertisers rich but hurts both competitors because they would bid up their ad costs to a point at which they are no longer generating profits. I would rather see that money going into new product development or decreased prices. Advertisers are probably going to squander this money anyway on figuring out how to spam us with ads some more. Even if they don't squander it, they have overhead which is mostly a waste. if there were not so much needless demand for ads, there would be less of them and everybody would be happier.
Insurance services are quite useful. However, I have observed a lot of fraud in the insurance industry. It is extremely hard to detect, which is why a lot of smart perps are into it.
I don't mind competition, however, it sometimes is at least partially harmful. If you are going to create competition for someone without offering a better product, you would be bidding down the price for the product. You will invest some amount of money into the endeavor. You will burn your investment because you will not be able to get ROI (due to no profit). You will cause issues for others in the economy because your competitor will lose part of their customer base and will have to downsize. The product will be cheaper, so, this will cause some shifts in the markets of alternatives as well. I guess the customers will get to keep more of their money, so, maybe it is not so bad. However, your investment capital could have been better applied in development of some completely new product that could have generated much more wealth, so, there would be loss there. Even if you had a better product, it wouldn't be better by that huge of a margin, so, you would at least be partially causing problems.
By the way, my understanding of altruism, especially in the book, is that at least some of the altruists are actually not altruists. They use the cover of altruism to create a situation that benefits them at the cost of others, basically a type of scheme like I describe above. I would like to see a novel like Atlas Shrugged but with altruists replaced by parasitic/predatory antagonists. The plot doesn't even need to change that much. And this is one of my criticism of Atlas Shrugged. IMHO Ayn Rand missed the mark.
I am willing to hear any reasonable criticism of the ideas above. If I have messed up somewhere, I would like to know about it.
Ponzi schemes, and advertizing, really, fall int the "buyer beware" category. There is no substitute for doing your homework. And using your mind. Is the seller promising something "too good to be true"?
Insurance, as you note, can be helpful. My problem comes when people want insurance to cover routine expenses. My car insurance doesn't cover oil changes. Why should my health "insurance " cover dental checkups?
Someone else may be able to address your comments on competition. My econ is rusty (one class 45 years ago). I think you made some pretty broad assumptions that may not be justified, at least not in all cases.
As far as predatory and parasitic, you don't get much worse than Wesley Mouch.
By the way, Thanks for bringing this stuff up. It's the kind of discussion I like to see here in the Gulch.
I don't think advertiser promises are the problem. It is wealth destroying activity (most of the time), kind of like selling heroin.
I think the checkups for insurance thing is not terribly problematic. What is problematic is sleazy insurance companies constructing misleading contracts in such a way that they can weasel out of paying for claims. I guess it goes both ways, customers can screw over companies as well.
I would love to hear about the wrong assumptions I have made regarding competition. It seems pretty clear to me that one should try to avoid competition, unless absolutely necessary.
I agree that advertiser promises are not the real problem. The problem is consumer gullibility.
I haven't had any issues with insurance companies, but I know some people do. I do my best to deal with reputable companies, and not just whoever sends me a low-ball price thru the mail. And there is a good bit of insurance fraud that goes on as well, driving up premiums for honest rate-payers. That's just theft, any way you look at it.
Your competition example seems to indicate producing a similar product at a similar price. I don't know who would start a business under those conditions. You would either build a premium product, which would command a premium price (Think Tesla) or you would build a product at a low price that would allow for high volume (Think Toyota Corolla). If you build a better (or cheaper) mousetrap, you succeed. Will some of your competitors fail? Possibly. Kind of like industrial Darwinism. Their employees can then go to work for you making better or more affordable products.
"Completely new" products are very few and far between. Almost all new products are improvements on other products. Even JG's motor was just a new way to generate electricity. Rearden Metal was a new steel alloy. A Tesla is just a better and much more expensive electric car.
One example where competition can be harmful would be the case of a large company artificially reducing prices, able to lose money temporarily or on one product line. In this case, a smaller company, with less flexibility, is put out of business, allowing the larger company to establish a monopoly.
1. Everybody is too poor because too many resources are being squandered. The population is able to support a limited number of industries and products.
2. Too large population for available resources, so, only a small number of viable business "slots" are available. People are forced to fight over those "slots" via competition.
3. Only a limited capital is available to develop new products, so, there are not many products yet just because there is not much capital for development.
The truth is probably all of the above and more.
I don't think competition necessarily leads to "total war". If that were the case, GM and Ford would not have time to build cars, because they would be too busy building weapons to fight each other!
I think competition being the only possible incentive for improvement must be one of those misconceptions. Increasing profit is certainly another one. Sometimes a company can exhaust their market, so, they can innovate and sell version 2.0 all over again. The universe presents plenty of challenges, we don't need to make things more difficult for ourselves.
I would say that government has the monopoly on force, so, GM and Ford aren't allowed to fight wars. My point was, war is bad and competition is the beginning stage. Competition should not be something to be proud about.
You could also read another AR novel, "We the Living". Spoiler alert - no happy ending.
The problem, as you say is when the state gets involved. When you have a large population, the number of unethical people can be quite large.
Also, when your credo is "from each according to his ability, to each according to his need" the human tendency is to suppress ability, and inflate need. This is what AR illustrated with the 20th Century Motor Company.
You are absolutely right that the credo of socialism is not workable, but I would qualify that with "in individualistic societies". It is quite possible that most societies are individualistic, so, socialism wouldn't work for most of them. However, I think a society might exist (at least theoretically) which may successfully practice it.
So, one of my criticism of Atlas Shrugged would be that it assumes individualism is the only thing that can ever exist. Nature shows (at least to me) that this may not be the case.
By the way, I am individualistic myself, so, socialism wouldn't be for me. However, I can place myself in the opposing position and see how someone might subscribe to it. The solution is to separate the two groups so they don't directly interact and "we shall have peace."
Many of the characters in Atlas Shrugged that I admire do not fit that description, they were wealth seeking but not moguls. They will not become wealthy moguls.
Withers. Hank's assistant. The engineer Dagny tried to recruit. Cheryl Brooks. the composer. the bus driver. the train driver. the tramp. the train conductor. the mathematician college caretaker. the philosophy prof. ..
(Pardon my memory for names).
Francisco, Galt, Ragnar are moguls but are plot carriage devices. Dangy and Hank are great realistic characters.
It is not the management of vast resources but it is self management, work ethic, honesty, and the thinking and eliminating of contradictions that makes them heroes.
How did Rand put it? Life should be a heroic endeavor.
Maybe your reading of the book has come to a mistaken conclusion. In fact the premise is not a road map of how to create or get to the Gulch, but the question of what attitudes of mind and behavior lead the way.
How close can we get? At least start in the correct direction.
that was no always the case, look at the Mormons and their trek
for myself, my Gulch is my choice to not provide solutions i see or even suggestions where i work
you want to violate my rights, lie to me, fine
my decision is to with hold my creativity until i can find another place to be
i will do not harm, but they cannot require me to be creative
if i chose to do so, it is for my purposes, not theirs
i help my co-workers when i can, but as the mis-treatment from above continues, i simply keep to myself more often than not
if i were not married i'd have walked away when they forced the covid fake shots on us, i'm happy that i went with the J&J one as it was not mRNA
we do the best we can with the resources at our disposal
i have prepared so i can take care of my family and like minded friends
I "shrugged" and went to work contracting, and eventually got a couple short term jobs pulling my old company out of the ditch. At about twice the pay. They had learned to "value" me the hard way.
promoted to positions of management over the competent.
When I gave notice to management that I was leaving
(after 2 years of un-appreciation) I offered to come back as a consultant
at half the rate my new employer would charge. It was obvious I would
be needed sometime in the next 6 months, but 'management' couldn't
admit that and declined the offer. (I had already arranged this with my new
employer where my job was as just such a consultant for their clients.)
Two months later I was needed for several months as consultant and
'management's' bad decision was made obvious ... again.
Two years later another of "management's" irrational decisions caught up
with them permanently: AIDS.
Competition tends to improve the product. If there were no competition, I don't think the current Mustang and Camaro, for instance, would be the cars they have become.
I don't see the connection between corporate competition and war. Competition between nations, perhaps, but that is a completely different topic.
I think people moving people, ideas, and goods freely is the key to wealth creation, so isolation is the way to poverty. The Gulch in the book is a metaphor for the idea that if you people are not free, people will stop producing and we’ll all be worse off for it.
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