The editors of New Ideal are delighted to republish, with permission, chapter 5 from Free Market Revolution: How Ayn Rand’s Ideas Can End Big Government, by Yaron Brook and Don Watkins.
December 11, 2008. The details were unclear but the bottom line was not: Bernie Madoff had carried out the largest Ponzi scheme in history. His investors had lost billions.
One of those investors was the French aristocrat René-Thierry Magon de la Villehuchet. De la Villehuchet was head of the hedge fund Access International Advisors. As the economy started to slow in 2008, de la Villehuchet’s company revved up its investment in Madoff’s fund, which was one of the few still showing strong returns. By December, de la Villehuchet had invested all of his personal wealth with Madoff, along with 20 percent of his brother’s, and nearly half of his company’s funds. On December 23, shortly after learning that Madoff had been arrested for fraud, de la Villehuchet was found dead of an apparent suicide. His death symbolized the almost inconceivable scale of destruction Madoff had caused.
“How could he do such a thing?” Madoff’s victims asked. The answer they were given: Madoff was greedy and selfish. Indeed, Madoff has come to personify selfishness. To be selfish is to be like Madoff: to screw anyone, even family and friends, in order to get more, more, more for me, me, me.
Madoff is just the latest poster boy for the evil of selfishness. Before him there was Kenneth Lay. Before Kenneth Lay there was Charles Keating. And before Charles Keating there was a long line of villains stretching back thousands of years, each embodying the same proposition: to be concerned with one’s own interests is cruel, evil, and dangerous.
Of course, if these lowlifes were true representatives of selfishness, then who could object? No one disputes that they are evil (save for those who dispute that anyone is evil). But historically, another kind of man has been an archetype for selfishness as well: the producer.
The Prisoner and the Producer
For years Apple CEO Steve Jobs had a vision of a single device that would unite a phone, a PDA, an MP3 player, and the web surfing capability of a computer. But the technical challenges were daunting. How to design an operating system that used up minimal memory, but had excellent functionality? How to design a touch screen that wouldn’t get scratched in people’s pockets? How to keep radiation to safe levels? And how to do it all for a price customers would be willing to pay? “It was a great challenge,” said Jobs. “We had a big debate inside the company whether we could do that or not. And that was one where I had to adjudicate it and just say, ‘We’re going to do it. Let’s try.’ The smartest software guys were saying they can do it, so let’s give them a shot.”1
One by one, Apple’s engineers solved these seemingly impossible problems. But Jobs demanded still more. With the release date looming, he looked at the enclosure design of what would become the iPhone and announced to his team, “I just don’t love this. I can’t convince myself to fall in love with this.” Jobs was asking his team to toss out a year’s work and start over. “And you know what everybody said?” Jobs later recalled. “Sign us up.”
But with only three months left before Jobs was to announce the product at MacWorld, the iPhone still did not work. The pressure on Jobs’s staff was tremendous. They worked days. They worked nights. They argued, fought, battled, quit, and returned. Said Jobs:
My job is to not be easy on people. My job is to make them better. My job is to pull things together from different parts of the company and clear the ways and get the resources for the key projects. And to take these great people we have and to push them and make them even better, coming up with more aggressive visions of how it could be.2
Jobs was the quintessential producer—someone who devoted his mind and every ounce of his energy to creating material values. The result was the Apple II, the Macintosh, Pixar, the iPod, iTunes, the iPhone, the iPad, and much, much more. Jobs made Apple the world’s most valuable company and radically improved the way we live in the process.
But throughout his career, and indeed in the doorstop-sized biography published just after his death, Jobs was also routinely derided as selfish. Whatever his virtues, people said, Jobs was primarily concerned with his vision and his company’s success—not with the welfare of others. In the wake of his resignation from Apple, shortly before his death, some even rushed to condemn Jobs for focusing his efforts on profit-seeking rather than philanthropy. Andrew Sorkin, for example, penned a missive in the New York Times in which he acknowledged that Jobs was a “visionary” and an “innovator” who “clearly never craved money for money’s sake and has never been ostentatious with his wealth.” Nevertheless, Sorkin complained, “there is no public record of Mr. Jobs giving money to charity.”3 A 2006 column in Wired put it more bluntly: Jobs was “nothing more than a greedy capitalist who’s amassed an obscene fortune. It’s shameful.”4
In some ways, though, Jobs is the exception that proves the rule. Unique among businessmen, he was admired by many for his unrivaled creativity and passion for making “insanely great” products. If even he could not escape charges of “selfishness” and “greed,” then what chance have other producers had? Indeed, from Morgan to Rockefeller to Ford to Walton to Gates, virtually no successful businessman has been immune from the accusation that he is selfish.
But here’s the trillion-dollar question: Does it really make sense to equate producers like Jobs with criminals like Madoff—to accuse them of the same dark motive and the same moral crime (in spirit, if not in scale)? One creates wealth; the other steals it. One thrives by trading with other people; the other destroys the lives of everyone he touches. One works incredibly hard to build a product or company he can be proud of; the other spends his time trying to cover up the fact that he has nothing to be proud of. In what sense are the two at all similar?
If you moved to a foreign land and you were told that the worst thing you could call someone is a “flobber,” and that this designation applies to Adolf Hitler, Charles Manson, and Abraham Lincoln, you would probably think, “That’s a pretty stupid word.” Well, whenever we hear people label destructive monsters like Madoff and benefactors like Jobs “selfish,” it strikes us as no less senseless.
It’s not that Steve Jobs wasn’t selfish. However much his work benefited others, that was never his primary motive, and he did not benefit them at his own expense. (If Jobs’s chief goal was to benefit others, he could have sold his notoriously expensive products at a fraction of the price.) While men like Jobs are clearly not indifferent to other people, their driving motive is to profit by creating products they think are good. They are obsessed with value-creation; the effects on others are secondary to them. “Going to bed at night saying we’ve done something wonderful,” Jobs said, “that’s what matters to me.”5 Indeed, Jobs was famous for eschewing focus groups and instead designing products that he and his team loved. As he said of the difference between the übersuccessful iPod and the total flop that was Microsoft’s Zune:
We won because we personally love music. We made the iPod for ourselves, and when you’re doing something for yourself, or your best friend or family, you’re not going to cheese out. If you don’t love something, you’re not going to go the extra mile, work the extra weekend, challenge the status quo as much.6
If being unselfish meant serving and sacrificing for others—giving up worldly wealth and happiness à la Mother Teresa—then who could deny that Jobs epitomized selfishness?
The real question is: By what standard is Madoff supposed to be selfish? Exactly what concern did he ever show for his actual, long-range interests?
Truth be told, we find it hard to think of a less selfish life than Madoff’s. For starters, his scheme turned his days into a constant wave of lies and anxiety. As Madoff himself put it:
It was a nightmare for me. It was only a nightmare for me. It’s horrible. When I say nightmare, imagine carrying this secret. . . . Look, imagine going home every night not being able to tell your wife, living with this ax over your head, not telling your sons, my brother, seeing them every day in the business and not being able to confide in them.7
When Madoff’s scheme finally did collapse, he confessed, “I wish they had caught me six years ago, eight years ago.”8
And what did life look like for Madoff after he had been caught? In the days immediately following his arrest, he and his wife attempted suicide. Today, Madoff lives separated and estranged from his family, surrounded by criminal slime, unable to attend his own son’s funeral (a funeral Madoff was probably responsible for: two years after Madoff was arrested, Mark Madoff hanged himself from the ceiling of his Soho loft). Bernie Madoff’s external life now matches his inner life. A man whose inner demons consumed him is now trapped in an existential nightmare.
If Madoff is surprised by how all this turned out, he shouldn’t be. It would not have taken a great deal of thought to realize that all Ponzi schemes eventually crumble, that honesty is the best policy, and that betraying his friends, family, coworkers, and customers was a recipe for low self-esteem and a medium-security prison stay. But thinking about his actual interests is precisely what Bernie Madoff did not do.
A Package Deal
Make yourself worse off for the sake of others or make others worse off for your own sake: Mother Teresa or Bernie Madoff. That’s the moral alternative we’ve traditionally been offered. How does this apply to the world of business?
Well, it is undeniable that business is a selfish activity and, by extension, that free markets encourage and reward selfish behavior. But it doesn’t follow that business is about harming, using, or exploiting others. As we’ll argue, what we actually observe when looking at successful markets and companies is not ruthless exploitation but mutually beneficial production and trade: an Apple economy, not a Madoff economy.
Business involves individuals producing wealth in order to make themselves better off. To gain customers, however, businesses have to create valuable products and services, since a trade takes place only when both parties believe they will benefit. Profits are the result, not of fraud and exploitation, but of value-creation—of producing something more valuable than what was used to create it. The greater the value created, the greater the profit earned.
Business has nothing to do with harming others. Although it would surely be ridiculous to call men like Steve Jobs self-sacrificing altruists, it is equally bizarre—not to mention unjust—to lump them in with suicidal criminals.
This is why Ayn Rand called the conventional notion of “selfishness” a package deal: it groups together things that are crucially different based on superficial similarities.9 To equate Jobs with Madoff morally because both were “after money” is like equating George Washington and Adolf Hitler morally because both pursued victory in war. Our conventional category of “selfish” is a package deal that leaves us no means of classifying and morally evaluating traders—people such as Jobs who neither sacrifice others as Bernie Madoff did nor sacrifice themselves as Mother Teresa did.
Conclusion: Unpacking the Package Deal
In earlier chapters, we’ve talked about “selfishness” without questioning its meaning. But the fact is, the way we usually use the word “selfish” doesn’t make any sense. It leads us to treat magnates as monsters, heroes as hucksters, suicide as self-interested, profitable trade as exploitation.
Bottom line: It’s true that Madoff is evil—but not because he was selfish. And it’s true that business and free markets are selfish—but not because they unleash Madoffs.
In the next chapter, we’re going to sketch Ayn Rand’s re-conceptualization of “selfishness.” What she does is scrap the package deal and start fresh by asking: What genuinely promotes a man’s long-term best interests? Her unprecedented conclusion is that only a life of production is selfish, that one person’s pursuit of his self-interest does not conflict with the interests of others—and that sacrificing others is not actually selfish at all. She argues that genuine selfishness consists of the rational, principled pursuit of your objective well-being, neither sacrificing yourself to others nor sacrificing others to yourself.
It is in this sense, we’ll see, that the profit motive is selfish, and it is this kind of principled, rational behavior that the free market makes possible and rewards.
Image credit: Justin Sullivan/Getty Images News via Getty Images
Do you have a comment or question?
- Steve Jobs, “Steve Jobs Speaks Out,” interview by Betsy Morris, CNN, March 7, 2008, http://money.cnn.com/galleries/2008/fortune/0803/gallery.jobsqna.fortune/index.html (June 8, 2011).
- Andrew Ross Sorkin, “The Mystery of Steve Jobs’s Public Giving,” New York Times, August 29, 2011, http://dealbook.nytimes.com/2011/08/29/the-mystery-of-steve-jobss-public-giving/ (October 3, 2011).
- Leander Kahney, “Jobs vs. Gates: Who’s the Star?” Wired, January 25, 2006, http://www.wired.com/gadgets/mac/commentary/cultofmac/2006/01/70072 (October 3, 2011).
- Quoted in “Jobs vs. Gates: A thirty year war,” CNN.com, May 25, 1993, http://money.cnn.com/galleries/2008/fortune/0806/gallery.gates_v_jobs.fortune/2.html (October 3, 2011).
- Quoted in Walter Isaacson, Steve Jobs (New York: Simon and Schuster, 2011), p. 407.
- Steve Fishman, “The Madoff Tapes,” New York Magazine, February 27, 2011, http://nymag.com/print/?/news/features/berniemadoff-2011-3/ (June 7, 2011).
- Steve Fishman, “Bernie Madoff, Free at Last,” New York Magazine, June 6, 2010, http://nymag.com/news/crimelaw/66468/ (June 7, 2011).
- Ayn Rand, “Introduction,” The Virtue of Selfishness (New York: Signet, 1964).