Highlights from all books

I've kicked plenty of ass before. You don't work as a roughneck, you don't hang out with roughnecks, without getting in a brawl or two. Flatlanders might find that shocking, but for Belter work crews, a dustup can be nothing more than a way to clear the air, let some grievances out. Settle things. It's a guy thing. You're friends again afterwards. Didn't understand that when I came out here. Shortarse nerdy Flatlander kid, liked science fiction books and video games, boss's son, and so on. Dad knew I had to learn it. Dad never bailed me out. They're doing this for a reason, Marc. Yes, they are simple, but simple isn't the same as stupid. Hazing the new guy isn't pointless sadism; it's a test. They're testing to see if they can rely on you to have their back out there. You need to prove to them you have the guts to do your part in a crisis.

The night is going by in bite-sized pieces, and sleep is as far away as it ever was.

I don't say the other part out loud. The part where you get tired of having your stuff stolen, and you hide their shipments and trajectories. Space is really big. Easy to hide a flying barge in, with no big glowing drive flame to give it away. Unless somebody talks. And for the right money, someone always talks. So then you put trackers on it, and recording instruments. Which your thief then learns to knock out with an electromagnetic pulse from a deliberately misfired fusion drive. So then you send armed escorts, a nest of angry little wasps clinging to your payload, strong drives, modest fuel tanks, a railgun, and not much else. By this point, you're good and mad… escorts are expensive and they eat into profit margins. But what else can you do? It's not like we're on Earth and have governments to go pirate hunting for you. And even if there were… well, wait'll you hear about something they call “taxes.” At least I don't pretend to be your friend while I rob you.

I'm just telling you that the game is rigged in your favor, and has been since the moment you all got your hands on alien tech that we don't and can't have. It's a monopoly that the so-called free market doesn't fix. Competitors can't duplicate Starlight's research, because there is no research to duplicate. They didn't invent anything. They just picked apart something that was already there, something we don't get to look at.

“You're not a Belter… you grew up on Venus. You're barely over six feet tall. Like it or not, that makes you a Flatlander like me. And as for being working class, your father was a CEO, for heaven's sake.” “Princess, my dad had a pair of secondhand hulls and a work crew of like twenty-five dudes. Your family owns Arachne, Europa, half of Mars, the biggest shipbuilding company in existence, a big chunk of the Starlight Coalition, and who knows what else. We're not the same.” She does that thing she always does, cocking her head to one side like a kitten. “Of course we're not. I'm educated, intelligent, and attractive, and I don't smell like engine grease. That's not my point. What I'm asking is why you pretend to be one of them. They're losers.” “Princess, those losers are the reason you have air to breathe, water to drink, and steel to build your fancy habitats out of.” “And what do they get for it? Not much. Why do you keep on with all this 'Belter pride' stuff? It doesn't make sense.” “They—we—do something meaningful. Hard work that matters. You could maybe use a little bit of that in your life.” “And you could use a reality check. Life is a game with winners and losers. And here you are, trying to put on this… this loser aesthetic. It's tacky, and it doesn't do a thing for you.”

The word is that there is an eccentric philosopher living here whose teachings and arguments are hard to ignore, namely, that people can change, that the world is simple and that everyone can be happy.

“People are not driven by past causes but move toward goals that they themselves set”—

Without question, there is no shortage of behavior that is evil. But no one, not even the most hardened criminal, becomes involved in crime purely out of a desire to engage in evil acts. Every criminal has an internal justification for getting involved in crime. A dispute over money leads someone to engage in murder, for instance. To the perpetrator, it is something for which there is a justification and which can be restated as an accomplishment of “good.” Of course, this is not good in a moral sense, but good in the sense of being “of benefit to oneself.” YOUTH: Of benefit to oneself? PHILOSOPHER: The Greek word for “good” (agathon) does not have a moral meaning. It just means “beneficial.” Conversely, the word for “evil” (kakon) means “not beneficial.” Our world is rife with injustices and misdeeds of all kinds, yet there is not one person who desires evil in the purest sense of the word, that is to say something “not beneficial.” YOUTH:

In Adlerian psychology, we describe personality and disposition with the word “lifestyle.” YOUTH: Lifestyle? PHILOSOPHER: Yes. Lifestyle is the tendencies of thought and action in life.

“If only I could be like Y” is an excuse to yourself for not changing.

have a young friend who dreams of becoming a novelist, but he never seems to be able to complete his work. According to him, his job keeps him too busy, and he can never find enough time to write novels, and that’s why he can’t complete work and enter it for writing awards. But is that the real reason? No! It’s actually that he wants to leave the possibility of “I can do it if I try” open, by not committing to anything. He doesn’t want to expose his work to criticism, and he certainly doesn’t want to face the reality that he might produce

YOUTH: So life is not a competition? PHILOSOPHER: That’s right. It’s enough to just keep moving in a forward direction, without competing with anyone. And, of course, there is no need to compare oneself with others. YOUTH: No, that’s impossible. We’ll always compare ourselves to other people, no matter what. That’s exactly where our feeling of inferiority comes from, isn’t it? PHILOSOPHER: A healthy feeling of inferiority is not something that comes from comparing oneself to others; it comes from one’s comparison with one’s ideal self.

YOUTH: So you’re out to condemn me. But you’re calling people liars and cowards. And saying that everyone is my responsibility. PHILOSOPHER: You must not use the power of anger to look away. This is a very important point. Adler never discusses the life tasks or life-lies in terms of good and evil. It is not morals or good and evil that we should be discussing, but the issue of courage. YOUTH: Courage again! PHILOSOPHER: Yes. Even if you are avoiding your life tasks and clinging to your life-lies, it isn’t because you are steeped in evil. It is not an issue to be condemned from a moralistic standpoint. It is only an issue of courage.

PHILOSOPHER: I will add to that by saying that Adlerian psychology is not a “psychology of possession” but a “psychology of use.”

YOUTH: So even if the child hasn’t been studying at all, you’re saying that, since it’s his task, I should just let him be? PHILOSOPHER: One has to pay attention. Adlerian psychology does not recommend the noninterference approach. Noninterference is the attitude of not knowing, and not even being interested in knowing what the child is doing. Instead, it is by knowing what the child is doing that one protects him. If it’s studying that is the issue, one tells the child that that is his task, and one lets him know that one is ready to assist him whenever he has the urge to study. But one must not intrude on the child’s task.

Forcing change while ignoring the person’s intentions will only lead to an intense reaction.

Then suppose you had done the separation of tasks. How would things be? In other words, no matter how much your boss tries to vent his unreasonable anger at you, that is not your task. The unreasonable emotions are tasks for your boss to deal with himself. There is no need to cozy up to him, or to yield to him to the point of bowing down. You should think, What I should do is face my own tasks in my own life without lying.

YOUTH: Sure, maybe I do! It’s like this: It’s not so difficult to judge what others expect of one, or what kind of role is being demanded of one. Living as one likes, on the other hand, is extremely difficult. What does one want? What does one want to become, and what kind of life does one want to lead? One doesn’t always get such a concrete idea of things. It would be a grave mistake to think that everyone has clear-cut dreams and objectives. Don’t you know that? PHILOSOPHER: Maybe it is easier to live in such a way as to satisfy other people’s expectations. Because one is entrusting one’s own life to them. For example, one runs along the tracks that one’s parents have laid out. Even if there are a lot of things one might object to, one will not lose one’s way as long as one stays on those rails. But if one is deciding one’s path oneself, it’s only natural that one will get lost at times. One comes up against the wall of “how one should live.”

PHILOSOPHER: There is no reason of any sort that one should not live one’s life as one pleases. YOUTH: Ha-ha! Not only are you a nihilist, you’re an anarchist and a hedonist to boot. I’m past being astonished, and now I’m going to start laughing any moment. PHILOSOPHER: An adult, who has chosen an unfree way to live, on seeing a young person living freely here and now in this moment, criticizes the youth as being hedonistic. Of course, this is a life-lie that comes out so that the adult can accept his own unfree life. An adult who has chosen real freedom himself will not make such comments and will instead cheer on the will to be free.

The fact that there are people who do not think well of you is proof that you are living in freedom. You might have a sense of something about this that seems self-centered.

Adlerian psychology refutes all manner of vertical relationships and proposes that all interpersonal relationships be horizontal relationships. In a sense, this point may be regarded as the fundamental principle of Adlerian psychology.

That’s right. Accept what is irreplaceable. Accept “this me” just as it is. And have the courage to change what one can change. That is self-acceptance.

YOUTH: You’re saying that taking advantage of someone is the other person’s task, and one can’t do anything about it? That I should be resigned, in an affirmative way? Your arguments always ignore our emotions. What does one do about all the anger and sadness one feels when one is taken advantage of? PHILOSOPHER: When one is sad, one should be sad to one’s heart’s content. It is precisely when one tries to escape the pain and sadness that one gets stuck and ceases to be able to build deep relationships with anyone. Think about it this way. We can believe. And we can doubt. But we are aspiring to see others as our comrades. To believe or to doubt—the choice should be clear.

PHILOSOPHER: For the sake of convenience, up to this point I have discussed self-acceptance, confidence in others, and contribution to others, in that order. However, these three are linked as an indispensable whole, in a sort of circular structure. It is because one accepts oneself just as one is—one self-accepts—that one can have “confidence in others” without the fear of being taken advantage of. And it is because one can place unconditional confidence in others, and feel that people are one’s comrades, that one can engage in “contribution to others.” Further, it is because one contributes to others that one can have the deep awareness that “I am of use to someone” and accept oneself just as one is. One can self-accept. The notes you took down the other day, do you have them with you? YOUTH: Oh, you mean that note on the objectives put forward by Adlerian psychology? I’ve kept it on me ever since that day, of course. Here it is: “The two objectives for behavior: to be self-reliant and to live in harmony with society. The two objectives for the psychology that supports these behaviors: the consciousness that I have the ability and

PHILOSOPHER: Earlier, we were talking about desire for recognition. In response to my statement that one must not seek recognition, you said that desire for recognition is a universal desire. YOUTH: Yes, I did. But honestly, I’m still not entirely certain about this point. PHILOSOPHER: But I am sure that the reason people seek recognition is clear to you now. People want to like themselves. They want to feel that they have worth. In order to feel that, they want a feeling of contribution that tells them “I am of use to someone.” And they seek recognition from others as an easy means for gaining that feeling of contribution. YOUTH: You are saying that desire for recognition is a means for gaining a feeling of contribution? PHILOSOPHER: Isn’t it so?

beings who choose freedom while aspiring to happiness.

PHILOSOPHER: In any case, whether it is one’s studies or one’s participation in sports, either way one needs to make a constant effort if one is to produce any kind of significant results. But the children who try to be especially bad—that is to say, the ones who engage in problem behavior—are endeavoring to attract the attention of other people even as they continue to avoid any such healthy effort. In Adlerian psychology, this

PHILOSOPHER: For example, one wants to get into a university but makes no attempt to study. This an attitude of not living earnestly here and now. Of course, maybe the entrance examination is still far off. Maybe one is not sure what needs to be studied or how thoroughly, and one finds it troublesome. However, it is enough to do it little by little—every day one can work out some mathematical formulas, one can memorize some words. In short, one can dance the dance. By doing so, one is sure to have a sense of “this is what I did today”; this is what today, this single day, was for. Clearly, today is not for an entrance examination in the distant future.

YOUTH: Are you telling me to affirm that way of living? That I should accept my father’s constantly work-burdened existence . . . ? PHILOSOPHER: There is no need to make yourself affirm it. Only instead of seeing his life as a line that he reached, start seeing how he lived it, see the moments of his life. YOUTH: The moments.

PHILOSOPHER: Not having objectives or the like is fine. Living earnestly here and now is itself a dance. One must not get too serious. Please do not confuse being earnest with being too serious. YOUTH: Be earnest but not too serious. PHILOSOPHER: That’s right. Life is always simple, not something that one needs to get too serious about. If one is living each moment earnestly, there is no need to get too serious.

YOUTH: Then, please tell me! How can I assign proper meaning to a meaningless life? I do not have the confidence yet! PHILOSOPHER: You are lost in your life. Why are you lost? You are lost because you are trying to choose freedom, that is to say, a path on which you are not afraid of being disliked by others and you are not living others’ lives—a path that is yours alone.

PHILOSOPHER: No matter what moments you are living, or if there are people who dislike you, as long as you do not lose sight of the guiding star of “I contribute to others,” you will not lose your way, and you can do whatever you like. Whether you’re disliked or not, you pay it no mind and live free. YOUTH: If I have the star of contribution to others high in the sky above me, I will always have happiness and comrades by my side. PHILOSOPHER: Then, let’s dance in earnest the moments of the here and now, and live in earnest. Do not look at the past, and do not look at the future. One lives each complete moment like a dance. There is no need to compete with anyone, and one has no use for destinations. As long as you are dancing, you will get somewhere.

YOUTH: If I change, the world will change. No one else will change the world for me . . . PHILOSOPHER: It is similar to the shock experienced by someone who, after many years of being nearsighted, puts on glasses for the first time. Previously indistinct outlines of the world become well defined, and even the colors are more vivid. Furthermore, it is not only a part of one’s visual field that becomes clear but also the entire visible world. I can only imagine how happy you will be if you have a similar experience. YOUTH: Ah, if only I’d known! I wish I had known this ten years ago, or even just five years ago. If only I had known five years ago, before I got a job . . .

We argue that the philosophical essence of “competition” in economics and broader social affairs is a clash of alternative hypotheses as to what is really true.

Moreover, it is historically unprecedented as a technology that offers virtually no potential utility towards violent ends whatsoever, and yet high defensibility against violence.

Consider that prices emerge from action, and the truth of prices comes from experimentation. It is not dictated. It is discovered iteratively. Every transaction spreads knowledge, inching a price towards a better consensus, yet consensus itself is a moving target.

The power of prices is the process of dynamic discovery that underpins their emergence, not the fleeting consensus of a specific moment in time. The price is never right, but prices are as right as can be hoped for at that moment. Attempts to coerce prices without the ability to change the reality they communicate are, therefore, bound to run into trouble. And yet we do not seem capable to accept the truth of prices whenever it is inconvenient. To ensure that consensus can arrive at valid social truths, we require systems or institutions that withstand attempts at coercion and which tap into decentralized discovery.

We think that, fundamentally, the EMH is contradicted by the implications of value being subjective,

“Risk” characterizes a non-deterministic system for which the space of possible outcomes can be assigned probabilities. Expected values are meaningful and hence prices, if they exist in such a system, lend themselves to effective hedging. “Uncertainty” characterizes a non-deterministic system for which probabilities cannot be assigned to the space of outcomes. Uncertain outcomes cannot be hedged. The proposition is meaningless.

By “uncertain” knowledge, let me explain, I do not mean merely to distinguish what is known for certain from what is only probable. The game of roulette is not subject, in this sense, to uncertainty […] Or, again, the expectation of life is only slightly uncertain. Even the weather is only moderately uncertain. The sense in which I am using the term is that in which the prospect of a European war is uncertain, or the price of copper and the rate of interest twenty years hence, or the obsolescence of a new invention, or the position of private wealth owners in the social system in 1970. About these matters there is no scientific basis on which to form any calculable probability whatever. We simply do not know.

The subjective valuations on which its success depends are revealed by the experiment, and you can’t repeat the experiment pretending you don’t now know this information.

The investor better intuited the subjective values of future consumers than did the average market participant. Very likely they justified this on the basis of a heuristic or two. They staked capital on this bet — which was not risky and random but uncertain and unpredictable — and exposed themselves to a payoff that turned out to be huge, because they were right!

The most unfortunate aspect of this use of the term “competition”; is of course that, by referring to the situation in which no room remains for further steps in the competitive market process, the word has come to be understood as the very opposite of the kind of activity of which that process consists. Thus, as we shall discover, any real-world departure from equilibrium conditions came to be stamped as the opposite of “competitive” and hence, by simple extension, as actually “monopolistic.”

In making sense of this, we have to assume some kind of “function” from the space of information to price. We think it is acceptable to mean this metaphorically for the sake of exposition, without implying the quasi-metaphysical existence of some such force. We might really mean something like, the market behaves as if operating according to such and such a function or, such and such a function is a reasonable low-resolution approximation of market dynamics. Adam Smith’s famed invisible hand is an instructive comparison. For the time being, we will talk as if some such function exists. We can maybe imagine information as existing as a vector in an incredibly high-dimensional space, at least as compared to price, which is clearly one dimensional. We could even account for the multitudes of uncertainty we have already learned to accept by suggesting that each individual’s subjective understanding of all the relevant factors and/or ignorance of many of them constitutes a unique mapping of this space to itself, such that the true information vector is transformed into something more personal for each market participant. Perhaps individuals then bring this personal information vector to the market, and what the market does is aggregate all the vectors by finding the average.[32] Finally, the market projects this n-dimensional average vector onto the single dimension of price. If you accept the metaphorical nature of all these functions, we can admit this model has some intuitive appeal, in the vein of James Surowiecki’s The Wisdom of Crowds. The problem is that this is clearly not how anybody actually interacts with markets. You don’t submit your n-dimensional information/intention vector; you submit your one-dimensional price. That’s it. The market aggregates these one-dimensional price submissions in real time by matching the flow of marginal bids and asks.

Perhaps ironically, this points to the only sensible way in which markets can be called “efficient.” They are efficient with respect to the information they manipulate and convey: As a one-dimensional price, it is the absolute minimum required for participants to interpret and sensibly respond. Markets have excellent social scalability;[33] they are the original distributed systems, around long before anybody thought to coin that expression.

Provided with information, individuals can, and do, produce a price. But given a price, nobody — never mind a third-party observer or even the entire market — can (re)produce the information that created it. And this is the whole point. The “function” from information to price is not random, not ill-defined, and certainly not an “aggregation.” Rather, it is a very specific kind that serves a very specific purpose: It is the perfect compression of economically relevant information. It strips the noise of subjective values, preferences, and interpretations of reality down to pure objective signal, the same for everybody, and hence that the algorithm of the market can aggregate, entirely indifferent

engaging with markets requires individuals to compress the economic signal nascent in the n-dimensions of their information, heuristics, judgments, and stakes, and project it onto the single dimension of price, and that markets do not project the aggregates; they aggregate the projections.

One thing we especially like about Lo’s approach is his idea of “evolution at the speed of thought,” often rhetorical as much as anything else. We think this provides a useful conceptual tool to deal with what we deemed to be the only consistent deficiency in the material we covered on complex systems: Arthur, Holland, et al., seem to us so focused on the comparison to biological evolution, and on shifting the comparative conceptual framework from physics to biology as a whole, that they forget the role of purposeful human beings in all of this. Economic “mutation” is not random, it is creative, intuitive, and judgmental. It happens at the speed of thought because humans think on purpose. They do not cycle through the space of every thought that can possibly be had until they hit on one that happens to be a business plan.

genes mutate, but humans think.

At the heart of capitalist growth, however, is not the mechanistic homo economicus but conscious, willful, often altruistic, inventive man. Although a marketplace may work mechanically, an economy is no sense a great machine. The market produces only the perfunctory denouement of tempestuous drama, dominated by the incalculable creativity of entrepreneurs, making purposeful gifts without predetermined returns, launching enterprise into the always unknown future. The market is the conduit, not the content; the low-entropy carrier, not the high-entropy message. Capitalism begins not with exchange but with giving, not with determinist rationality but with creation and surprisal.

Information theory is the nemesis of those who would reduce markets to material laws. As manifestations of the interplay of human minds, markets are more analogous to biological phenomena. As the controlling knowledge of economics resides deep inside the companies that make up the market. You cannot predict the future of markets or companies by examining the fractal patterns of their previous price movements. There is no information there.

Value is subjective, which means uncertainty governs all economic phenomena. This creates a complexity that resists equilibria and is constantly changing besides. Within such a system, prices convey the minimal possible information necessary for economic agents to purposefully react. They do so with judgment and heuristics, not “perfect information,” which is nonsensical, as is “perfect competition” and “rational expectations.” For these reasons, prices may pass statistical tests for randomness, but they are not themselves random (although it is plausible that their randomness is random, and that randomness is random, and so on) but rather are unpredictable on the basis of market data alone. They are, however, predictable to the extent that the predictor accurately assesses the future subjective valuations both of economic agents and fellow market participants, and backs up this prediction with staked capital. This act of staking changes the uncertainties at play, rendering any attempt at genuinely scientific analysis futile. You can beat the market, it’s just hard, and it depends on understanding people, not data. And it’s meaningless if you do it in theory but not practice.

this it is, of course, not intended to infer that some rational and distinct meaning cannot be expressed through the word “capitalism,” but simply that it is far too often made an excuse for muddled thinking.

“The ideology of modern finance replaced the capitalist’s appreciation for free markets as a context for human creativity with the worship of efficient markets as substitutes for that creativity. The result was a divorce of entrepreneurial knowledge from economic power.”

Goods that are used to create consumable goods are a form of capital,

Capitalism — an economic system respecting and encouraging the nurturing, replenishment, and growth of capital — thus requires a delicate balance of the extremity of social interdependence. We must not be so loosely connected as to be unable to form no nascent markets in which capital can be made more or less liquid, but not so tightly connected as to disallow differentiation in these markets. People need to agree enough to be able to trade but also disagree enough to be willing to trade. The consensus enabled by price discovery in a market really is a discovery, not rhetorically, but in fact: It is a distributed discovery of a social truth. Individuals do not find their own private truths in isolation, nor is a politically correct truth dictated and imposed on all. Price is the maximally compressed signal of economically relevant information. Entrepreneurs react to what information they think might be captured by the signal — what about broader economic reality they think this signal might mean — by manipulating whatever capital they can bring under their control.

The obsession with GDP growth that fuels financialization also leads us to forget that inventing new things to produce tomorrow is as important, if not more so, than increasing what is produced today. So-called capitalists in such a regime can resemble the Soviet Union apparatchiks who focused exclusively on increasing output at the expense of managing the inputs or improving the quality of anything produced. Since the value of genuine innovation can’t be measured, it tends to be discarded in a world focused exclusively on forever increasing such meaningless statistics as GDP and stock market capitalizations with no understanding of why these numbers ought to go up. In many ways it is like a cargo cult: When good things happen, stocks go up — so stocks going up must be a good thing!

Larry White says of those who deny by definition that such a thing can even happen that they, “Are only looking at the blackboard and not at what is happening outside the window.”[63] Bitcoin doesn’t feel like it makes sense, and it is nowhere to be found in the textbooks, therefore it doesn’t. This is a curious approach to understanding novel phenomena, that, in general, we would not recommend. Reality doesn’t care how you describe it.

If a start-up then came along, people might well say, “That’s not a business because it doesn’t make a profit,” or “That’s not a business because it doesn’t have a defined business plan.” Clearly, this would be ill-advised. That is not to say that their models and definitions would be perfectly wrong instead of perfectly right, but rather that things are not so binary. Reality is messy, and it is reality we should care about, not our theories of reality that, it turns out, have never really been tested.

What this shows is that a “double coincidence of wants” that makes barter untenable at any worthwhile scale has little to do with “convenience” and is first and foremost a product of knowledge. We can only have a limited appreciation of others’ valuations, and this appreciation diminishes the further removed from us they are in circumstance and in time. And note, this includes our future selves: We do not know for sure what we will value in the future because we do not know what will happen to us in the future. Money is useful to us because of economic uncertainty: Our fundamental inability to know much at all about what all others think and about what is going to change.

Humans act in ways that make sense to them. This simple axiom is practically a tautology and is certainly at least obviously true from experience, and yet contemporary academic economics has somehow contrived to ignore its consequences: A human being necessarily understands what they are doing, but another human being almost certainly does not understand what the first is doing; in most cases will not, and in many cases cannot.

loop you go. The entirety of the chain of prices across all exchanges is shown to be a series of independent and real-time decisions about how to value one’s own time and

the entrepreneur does not, cycle through the space of every thought that can possibly be had until they hit on one that happens to be a business plan. That is to say, the creation of capital is not a mathematical or a probabilistic exercise. It requires creativity, intuition, and judgment. It requires a theory of mind and an empathy for the subjective preferences of others.

is worth being as clear as possible that money is not capital. Money is the right to time entirely in general. It is liquid and fungible. Capital is time that has been crystallized towards a specific end.

As for the incumbent, they might worry its highly dilutive mechanism could not be trusted at all; that the capital formation it supports is toxic and unstable; that its overall operation is highly uncertain and that, as this perception seems to be spreading, its long-term utility and the size of its network is in increasingly serious question. They might reason that, like Esperanto, its elaborate design may make it pleasing to its designers yet fragile and encumbered in the real world, whereas natural languages and natural moneys emerge and evolve to fulfill a decentralized demand.

The Semantic Theory of Money we satirically articulated in Chapter Four has a spiritual counterpart here: That by all manner of semantic contortions, we can convince ourselves that we can consume more than we produce, reap more than we sow, borrow more than we repay. As Ludwig Wittgenstein said in Philosophical Investigations, “philosophy is a battle against the bewitchment of our intelligence by means of language.” Let us not be so bewitched

The tricky thing about growing the capital stock is that it is by its nature an uncertain process. It cannot be automated, nor reduced to an algorithm. It is necessarily experimental. New capital is as much discovered as invented. This is why money is so important to efforts to create capital: These efforts themselves take time and energy that might otherwise have gone towards more certain avenues of production. Only some small group may have the knowledge and skills to credibly experiment with creating a particular new tool or new organization, and they may not be willing to take the risks required. Some other group may have the willingness to take the risks but not the knowledge or skills to do so. Money provides a means for coordinating the risks of attempting to create capital such that those contributing to the risk taking are not necessarily those bearing the risks.

To start with, the oversupply of debt forces the price of debt down to clear the market.[81] The ranking of experimental viability that the market might have carried out to allocate scarce capital becomes irrelevant and all prospective experiments are carried out. This juncture is key. These experiments are, by their nature, uncertain. The price of the capital they would faithfully attract can hardly be better described than a crowd-sourced best guess as to their risk relative to the opportunity set. It is possible that these guesses are conservatively false and that all will succeed. But it is likely that more bad experiments will fail than would have otherwise, hence more debt will tend to mean more bad debt.

A risky entrepreneurial endeavor making a return below this inflation rate will no longer be creating wealth for its owners but losing it — not as fast as holding fungible pan-bank liabilities (money), admittedly, but then money on its own is thought to have no risk. The point of the risk of entrepreneurship is to get a real return. Hence all return-seeking capital assets are unnaturally incentivized to lever up to stay ahead of inflation. Of course, all that is really happening here is that by swapping equity for debt, the experiments themselves are forced to become riskier than they ought to be.

In a highly centralized and industrialized food-supply system there can be no small disaster. Whether it be a production “error” or a corn blight, the disaster is not foreseen until it exists; it is not recognized until it is widespread. By contrast, a highly diversified, small-farm agriculture combined with local marketing is literally crisscrossed with margins, and these margins work both to allow and encourage care and to contain damage.

money is useful not because it fits some or other semantic scheme that holds up if and only if nothing in real life changes, but because real life does change, and money provides certainty in an uncertain world. But this is not to say that uncertainty is harmful. Capital formation is by necessity highly uncertain but greatly beneficial. Money provides a means of socially scaling the embrace of this uncertainty, provided it gives us certainty in the first place.

Software is productive capital for which the raw ingredients are coherent human thoughts.

amount of money lent to a government, and the interest amount charged, is assumed to be risk-free because it is in turn assumed that a government can tax, borrow, or print further amounts of money to pay its debt. These three options are indeed available to a modern government, but one must not ignore the fact that the government has no access to risk-free rates of return when investing the borrowed money. The above-mentioned options are in fact nothing more than means of passing on the bill to others when the fact of a non-risk-free

Frederic Lane and Reinhold Mueller note in Money and Banking in Medieval and Renaissance Venice that “both ‘medium of exchange’ and ‘standard of value’ are sufficiently ambiguous to make ‘moneyness’ a matter of degree,”

The heart of the claim, when stripped of emotional resonance, is that money, via capital, enables individuals to better be a part of the whole; to behave more responsibly, to contribute more effectively, and to make choices more purposefully. These cannot be effectively dictated top-down.

A complex system that works is invariably found to have evolved from a simple system that worked. The inverse proposition also appears to be true: A complex system designed from scratch never works and cannot be made to work. You have to start over, beginning with a working simple system.

In fact, the Internet Protocol suite[138] are all free and open source. However, to return to Lessig, these are minimalistic and push complexity to the edge of the network. Few can be described as “applications,” and those that can are extremely simple. None are expected to add “new features” with any regularity whatsoever. They are explicitly intended to be building blocks for further applications, and so necessarily tolerate network congestion as a trade-off to remain open. This minimalism aids consensus formation. Notice that for a potentially complex pseudo-protocol, management by a centralized private party elegantly solves many of the problems raised thus far. Identity can be centrally issued and authenticated. The complexity of the application can be arbitrarily high without incurring trade-offs in consensus, as users are merely clients. The application can be updated arbitrarily often and quickly for the same reason.

Scarcity, consensus, and identity are closely related. In the absence of scarcity, consensus is simply not required. But where scarcity exists, value exists, where value exists, markets exist, and market prices are a kind of consensus.

But … now we actually can pay in little chunks. Your humble authors have personally paid on the order of $0.03 for coffee, and even that was really just a gimmick as the coffee may as well have been free, but it could easily have been $0.003, $0.003c, or $0.000000003c. If you can pay $0.0003c online with next to no fees, why not pay $0.0003c per second to stream music? If you listen to Spotify three hours a day, that would come out at around $10 per month. And why stop at music and movies? Why not podcasts, too?

The idea that energy consumption is de facto bad, either for the environment or in general, is imbecilic and profoundly anti-human, and should not be accepted as an axiom of our support for Bitcoin, or any other technology that indisputably benefits humanity. Bitcoin does not

Bitcoin fixes this: This is no longer necessary, because Bitcoin is digital infrastructure that can be built out to natural generation sites at comparatively minuscule cost, and mining offers a clearing price for energy that requires no transmission costs.[157] It is our prediction that the mechanism just outlined will start to greatly reduce the financing costs and operational complexities of nuclear,

“leverage” in Chapter Three, This Is Not Capitalism, as “induced vulnerability to shocks in exchange for a magnified gain in their absence”:

Knowledge and competence are arguably the theoretical and practical sides of the same coin: the hard-won product of experience and discovery.

It is a peculiarly modern fantasy that civilization makes life easier: That it frees us from the shackles of a state of natural oppression and allows us all to find and to be our true selves. This is juvenile quackery. Civilization certainly makes life better, but earned at the cost of hard work. Civilization is proof of work. Civilization is the choice, as a community of individuals opting into voluntary cooperation to defer gratification: to invest rather than to consume. Individuals are perfectly free to opt out of these hard choices by returning to a pre-civilizational state, but it would be preferable to all if, in doing so, they had the decency to in fact remove themselves from civilization rather than skimming its consumable surplus while contributing nothing to its maintenance.

It is not as though the complaints from the left against the petroleum companies, the agribusinesses, the producers of GM crops, the developers, the supermarkets and the airlines were all based on fabrications, or as if these businesses can be run just as they are without any lasting environmental damage. In fact, the greatest weakness of the position that John Gray describes as “neo-liberalism” — the ideological summoning of the market, as the sole remedy to all social and economic problems — is the refusal to make the distinction, apparent to all reasonable people, between big business and little business. When businesses are big enough they can cushion themselves against the negative side effects of their activity, and proceed as if all objections could be overcome by a consultant in “Corporate Social Responsibility,” without any change in the way things are done.

As was detailed in Chapter Six, Bitcoin Is Venice, government that big — and, in particular, that indiscriminately wasteful and destructive on account of its bigness — will not survive a Bitcoin standard. Bitcoin is the negative feedback that forces it to reckon with its own unsustainability. As Ostrom, Scott, and Scruton would have recommended all along, government and business alike will be forced to become far more local, contextual, knowledgeable, and competent.

Capital is whatever can be transformed or used to produce goods that satisfy human wants.

capital is, like value, entirely subjective. We call capital that which we use in the process of creating a good. Milk may be the good which will satisfy our want for a beverage, but it can also be the capital which we can use to produce a cake which will satisfy our hunger. Capital is thus an abstract idea we superimpose on reality to describe things which have subjectively useful potential energy

Our imagination and recognition of objects, concepts, or associations as capital makes them such. To see is to create. At the core of forming and accumulating capital is our ability to mutually recognize and agree on its existence and to record it such that there is an accessible consensus for consultation and resolution of dispute.

Cooperation is necessarily sacrifice for the very simple reason that people are different. They have different experiences and they want different things, not only of the available scarce resources but, even more irreconcilably, of each other. Cooperation over a period of time greater than this very moment likely requires a promise, which is a sacrifice of that agent’s own future wants and preferences, which by then may have changed.

Returns are never guaranteed as all economic activity is fundamentally uncertain, and savers hoping for a return must turn their liquid money over to an entrepreneur. The act of transforming liquid, fungible money into illiquid, nonfungible capital is anti-entropic.

The entrepreneur does work in suffusing money with her creativity and agency to transform disorder into order. But she does so specifically and locally. She has a purpose and a goal in mind. One can save in general but one cannot invest in general. One must invest in something.

A dictator may be a social planner — and may even be a highly competent and effective social planner, in the short run — but he is not a social capitalist. Throughout history, humans’ ability to create social capital has always been linked to de Soto’s understanding of capital as fundamentally being an idea: a layer of abstract consensus by which humans subjectively contextualize objective reality.

The shift to architectural central planning (among many other equally awful varieties) after the Second World War was precipitated by three major developments: the spread of mass manufacturing, the rise of the automobile, and the success of exactly this mode of planning during the war.[187] Taken together, these forces remolded man’s relationship with urban space. The automobile blurred the landscape into a green haze onto which we did not mind imposing industrial-scale monotony. Developments became grand affairs that fit in an even grander vision. The aesthetic dreams of intellectuals replaced the varied tastes of people.

Just as planned economies suffer from an inability to tap into distributed knowledge, planned cities ignore the reality on the ground.

He conceived of good planning as a series of static acts; in each case the plan must anticipate all that is needed and be protected, after it is built, against any but the most minor subsequent changes. He conceived of planning also as essentially paternalistic, if not authoritarian. He was uninterested in the aspects of the city which could not be abstracted to serve his utopia.

“Breathe, breathe in the air. Don’t be afraid to care,” we hear on the opening song of Pink Floyd’s magisterial The Dark Side of the Moon. A parent gives their newborn the

Paul Graham gives a more socially motivated explanation of essentially the same issue in the essay, Hackers and Painters, and with a potent punchline:   Everyone in the sciences secretly believes that mathematicians are smarter than they are. I think mathematicians also believe this. At any rate, the result is that scientists tend to make their work look as mathematical as possible. In a field like physics, this probably doesn’t do much harm, but the further you get from the natural sciences, the more of a problem it becomes. A page of formulas just looks so impressive (Tip: for extra impressiveness, use Greek variables.) And so there is a great temptation to work on problems you can treat formally, rather than problems that are, say, important.

Scott’s general criticism of high

People only see as much as they want to see.

Finally, I shrugged. “I tend to be something of an incurable optimist; I figure we’ve got to have enough time, so we will have enough time.” Shura’s eyes focused again, and he grinned at me, “You may be right, but I have no intention of getting lazy, and there’s nothing better than a suspicion that time’s running out, to keep you working hard.”

Shura and I were coming to know the dark sides of each other. My problem was one which—I was beginning to realize—troubled a majority of humans on earth: I did not, at the very deepest level, believe in my own worth.

How do I stop being afraid? “Know that there is no safety anywhere. There never was and there never will be. Stop looking for it. Live with a fierce intent to waste nothing of yourself or life.”

“Yes, that sounds pretty much like what’s going on while I’m reading the paper: focused thinking and a chronic impatience underlying it. I’d have to say you’re right on the button!” I asked, “What are you chronically impatient about?” There was another brief silence, then he replied, “Myself, mostly. All the things I want to get done and am not getting done.” He shrugged, “You know, the usual.”

There is no effort to inform, to educate, to provide the complex body of information that will allow the exercise of judgment. Rather, there is given the simple message that drugs kill. This is your brain. This is your brain on drugs. Sizzle, sizzle, sizzle, and the egg is suddenly fried. Your sweet, virginal daughter was killed because she didn’t learn about drugs. She should have learned to, “Just Say No.” None of this can be called education. It is an effort to influence behavior patterns by repeating the same message over and over again. It is propaganda.

I’d like to see us ethically and technologically aligned on progress. I’d like to see humanity believing math is good. Believing generating nuclear power is good. Believing getting to Mars is good. Believing expanding is good.

Mortality is the main source of scarcity. If we had more time (or infinite time), we would be less concerned with whether something was faster. The reason speed has value is because time has value; the reason time has value is because human life spans are finite.

In 2009, it would have been remarkable to claim “$100 billion in equity value is being held back by outdated taxi and hotel regulations.” Uber and Airbnb showed it was true. The “next big thing” was being held back by those eighty-year-old regulations. Very, very few people were thinking about them. These things are so remarkable and hard to understand that they go unseen constantly.

A philosopher named Frederic Bastiat has a parable about this, about what is seen and what is unseen. It requires more empathy and more imagination to think about value that isn’t seen. You can see a skyscraper. You can’t see what could have been built but wasn’t. You can’t see the cities we could build if we had regulations allowing skyscrapers to be built in two weeks rather than two years.

The movie Limitless is about a guy who finds a wonder drug that unlocks the use of our fullest intelligence. There are side effects, but the movie is so refreshing because, at the end, the guy works out the bugs. With his super intelligence, he’s able to figure out the better version of the pill. That’s how it works in real life. We aren’t like Icarus. We had some crashes, but we figured out how to have safe, reliable planes stay up in the sky. We engineered the failures away. We figured out a way around the seemingly un-figure-out-able. Believing the next problem is solvable is a fundamental tenet of the philosophy of technology.

The issue that stems from abstraction is people get alienated from complexity and start to believe things are easy. That’s just humans being humans. Actually, putting all those things behind an easy interface is ridiculously hard. It’s really, really, really hard to do. It’s really hard to make something easy.

Technology changes microeconomic leverage. It expands the range of options available to each person: Accept ignorance vs. search Google Accept a broadcast vs. reply on social media Accept fiat vs. buy Bitcoin You may want to know, talk back, or opt out. Now you can.

Technology is the driving force of history. It lies upstream of culture, and thus upstream of politics.

Feudalism was enforced by knights on horseback in shining armor with heavy swords; guns changed that. Guns reduced the importance of physical inequality. Any man (or importantly, woman) with a gun could kill any other man, even if the shooter was old and frail and the shootee was Sir Lancelot himself. Guns destabilized the feudal hierarchy; a strong right arm was suddenly worth less than a strong left brain, because the technology and supply chain to produce muskets was suddenly critical. The gun helped catalyze the transition from feudal

It’s not so much that decentralization is a panacea. It’s that when you are over-centralized, you decentralize. And then, if people over-decentralize, they recentralize—but around new hubs each time. So it’s bundling, unbundling, then rebundling.

They didn’t understand programmability, permissionlessness, or peer-to-peer, and they overestimated the robustness of legacy institutions. History repeats with crypto. Crypto is more than an asset class because it transforms the custody, trading, issuance, governance, and programmability of anything scarce. It’s a new financial system, not just some ticker symbols.

On disk → Online → On-chain. On-chain is like the third level of deployment. Files that only you care about stay on your local disk. Files that are important to others get put online. And files that are *really* important to others will get put on the blockchain. When you put information online, you get distribution, sharing, collaboration, etc. When you put it on-chain, you get immutability, verifiability, monetization, etc. On-chain is not suitable for everything, just like you don’t put everything online.

We should prioritize this because life extension makes everything relatively cheaper. If a purchase used to cost you $100 and now costs you $1, that purchase takes 100x less time from your life because your working life produced that $100 or $1 by trading your time. Rather than spending, say, one hundred minutes of your life, you spent one minute. Life extension, or reversing aging, is the ultimate scarcity reduction. It gives everybody lots of time.

Technological history is the history of what works; political history is the history of what works to retain power.

The opinions of others are imperfect proxies for analyzing the data yourself. The more technical knowledge you have in an area, the less you need to rely on reputational signals. A few scientists publish a study; a few dozen people summarize it; a few million read the summaries. Then everyone argues with each other. Most of the nodes involved in that scenario are signal repeaters. What actually matters for determining truth are signal sources. Signal repeaters are valuable because they bring items to your attention. Sometimes their summaries are even reliable. But the truth is upstream.

Popular opinion: platitude Popular fact: triviality Unpopular opinion: heresy Unpopular fact: innovation

Everybody knows exactly how much Bitcoin you have, whether you’re Palestinian or Israeli, Democrat or Republican. There’s actually no contention over who owns what Bitcoin, which is amazing, because it’s a trillion-dollar piece of international property. That’s the kind of thing people usually fight over. That says something.

Progress is doing some math today and doing some more math in the same area tomorrow. A little bit of compounding progress along the same direction each day adds up to something, but time spent on these sites add up to nothing. I’m not saying they have zero value; there’s some value to serendipity. You do learn the pulse of what a community is thinking. But I think we are overconsuming novelty and underconsuming purpose.

That is news you can use, news where the locus of control is you; you can do something about it. Imagine your personal dashboard for your own fitness, diet, and sleep, and then maybe a family dashboard.

You start tracking something completely differently, which is to the reader’s benefit. This is a new concept for basically all health magazines. All fitness content could immediately do this. Enough health tracking devices are out there now.

Clicks and prestige would be zero-sum metrics for a decentralized activist community, but sentiment is not. You’re convincing the external world something is a good idea. Fill up the sentiment bar, and we can go to Mars.

The time selects for the technology, and the technology selects for the ideology. The era of centralized technology had mass production and mass media. The political ideologies enabled by those technologies were Communism, Nazism, and Democratic Capitalism. For the past hundred years, they slugged it out.

The ledger of record is the combination of all feeds of on-chain data. It subsumes social media feeds, data APIs, event streams, newsletters, and RSS. It’ll take years to build but will ultimately become the decentralized layer of facts that underpins all narratives.

Perhaps we will see “full stack writers” who go from writing articles to producing movies themselves, like the full stack developer.

As a guiding philosophy, “win and help win” will always outcompete “live and let live.”

Without something to build, any intellectual movement degenerates into a status competition, where participants feel the righteousness of finding everyone else wanting without the responsibility of building what they actually want.

Many people don’t understand that wealth can be created. My first counterexample for them: who did Steve Jobs steal all the iPhones from? If wealth is a zero-sum game, where one person’s gain is someone else’s loss, where did the phones come from? This simple example shows wealth can be created. A surprising number of people seem to believe profit is a function of sufficient malevolence. Wealth creation always attracts entitled predators.

Money seems to be locally zero-sum (after a trade happens, Person A has –$1, Person B has +$1), but actually money is globally positive-sum. In a voluntary exchange, A and B both gain in wealth because they both get non-monetary benefit from making the trade.

Over time, competitors with higher-quality products arose, and regulations effectively criminalized the sale of beta-quality products. Barriers to entry rose, increasing the capital required to challenge incumbents. In these industries, starting a company in your garage became much more difficult.

These pioneers had some time before competitors and regulations created barriers to entry. The messy process of innovation resulted in many deaths from refinery fires, railroad collisions, car explosions, airplane crashes, and drug overdoses. At first, this was accepted as the price of progress. Over time, competitors with higher-quality products arose, and regulations effectively criminalized the sale of beta-quality products. Barriers

Today, there are four possibilities for the frontier: the land, the internet, the sea, and space. If we assess where we are right now, we learn that currently 7.7B people are on land, 3.2B on the internet, about 2–3M on the high seas, and fewer than 10 in space.

Bad Leaders Divide. Great Leaders Create. Nothing is more costly than incompetent leadership. Here is my ranking of types of leaders: socialist < nationalist < capitalist < technologist.

As we go from demagogic socialist to nationalist to capitalist to technologist, the degree of difficulty gets harder, but more value is added to society in the medium- to long-run. Every other group benefits from technologists. Planes work. Trains work. We take all this for granted now,

“Works in practice, not in theory.” So much stuff I saw as a scientist at Stanford worked in theory but not in practice. Many ideas are exactly the opposite. You can study some concepts only once you’ve actually built products.

That is harder than it looks!

Why is Mark Zuckerberg the CEO of Facebook? Because he founded Facebook. He didn’t get three billion people to agree to make a twenty-year-old kid a CEO. Every single piece of support—an employee, a user, a customer buying ads, a backlink—he acquired over time. This was a series of one-to-one transactions where he gave each of them more than they’d gotten before, making mutually beneficial trades.

The state has far more money than anyone else. But NASA is behind SpaceX because tech isn’t capital-limited; it’s competence-limited.

Founders are neither dictators nor bureaucrats because they are legitimate and competent. The bureaucrat is selected by election, and the dictator is selected by power, but neither is selected for competence. The selection mechanism really, really matters because it is not simply the current state of the system but how that state was achieved that is important for leaders to understand. People tend to think an institution will endure just because it has so far.

In terms of execution heuristics, perhaps the best is Peter Thiel’s “one thing.” Everyone in the company is responsible for one thing. Each person should at all times know what their one thing is, and everyone should know everyone else’s too.

In the early days of a startup, the most important number is the burn rate. Every single person must be indispensable. Eventually, if successful, the company starts building up some structure. Conservatism takes over. With the business growing consistently, the founder adds structure, career tracks, and a stable hierarchy. The new important measure becomes the “bus number,” the number of people who can get hit by a bus with the company still remaining functional. Suddenly, every single person must now be dispensable.

Venture capital has many, many faults. But there are a couple interesting things about it. One of the biggest is VCs are very interested in whether they were wrong. If they pass on companies that become successful, they want to understand why they were wrong. They want to admit they were wrong and potentially invest in them now. They have financial incentive for discovering truth, which is uncommon.

Tech’s best feature? The past is past. There is always another train leaving the station, another rocket ship blasting off. Found it, fund it, or join it. We’ll

This business of making myself thoroughly unpleasant to the body which God gave me is something that has fascinated me for almost as long as I can remember

He found that she could run and reach off the wind – as Slocum’s Spray had been able to do – for long periods under reduced and balanced canvas, long enough for him to get sufficient sleep before she gybed and threw him out of his bunk below. The boat had always possessed these abilities, but it had required necessity and the abandonment of other methods to discover them. This is what sailors have always done as long as they have gone to sea in boats, and it is only the recent invention of efficient self-steering systems that has brought about the widespread atrophy of this skill in modern sailors.

He ate well. Skinny all his life, with a tendency to lose weight, he began to gain, always for him a sign of a sympathetic environment. His unceasing close communion with the three constant physical elements of his world – his boat, the sea, and the weather around him – filled him with joy. And to complete the picture of happy asceticism, his hair and beard had grown long and matted until he resembled a sailing holy man.

Harnesses have unquestionably saved people from going overboard, but they have also failed, come undone, broken, chafed through, and sent people to their deaths. An overreliance on them breeds an atrophy of the best of all devices to keep a sailor aboard: a fully developed horror of going overboard.

The photographs sailors take of the great waves that impress them so at the height of a storm, are always later disappointing in their inability to convey what such a scene ‘felt like’. Ironically, the impossible and wholly unrealistic computer-generated waves and conditions depicted in a film like The Perfect Storm do in fact provide very accurate impressions of what it looks like far out at sea in a terrible storm. It is their excessive exaggeration that mirrors the subjective impression of the human observer. Yet the movie feels safe. It comes without the horrifying realisation that this is real, there’s no way out, nothing in all the world will save you now but luck

I wrote about it here https://blog.felixzieger.de/a-voyage-for-mad-men/

“I went up to him, afterwards, and told him I used to do a show in Patchogue, and we had a code, but it couldn’t do many numbers, and the range of colors was shorter, I asked him, ‘How do you carry so much information?’” The mindreader was so proud of his code that he sat down and explained the whole works to my father. My father was a salesman. He could set up a situation like that. I can’t do stuff like that.

And then I thought to myself, “You know, what they think of you is so fantastic, it’s impossible to live up to it. You have no responsibility to live up to it!” It was a brilliant idea: You have no responsibility to live up to what other people think you ought to accomplish. I have no responsibility to be like they expect me to be. It’s their mistake, not my failing.

So I wrote them back a letter that said, “After reading the salary, I’ve decided that I must refuse. The reason I have to refuse a salary like that is I would be able to do what I’ve always wanted to do—get a wonderful mistress, put her up in an apartment, buy her nice things…. With the salary you have offered, I could actually do that, and I know what would happen to me. I’d worry about her, what she’s doing; I’d get into arguments when I come home, and so on. All this bother would make me uncomfortable and unhappy. I wouldn’t be able to do physics well, and it would be a big mess! What I’ve always wanted to do would be bad for me, so I’ve decided that I can’t accept your offer.”

During the conference I was staying with my sister in Syracuse. I brought the paper home and said to her, “I can’t understand these things that Lee and Yang are saying. It’s all so complicated.” “No,” she said, “what you mean is not that you can’t understand it, but that you didn’t invent it. You didn’t figure it out your own way, from hearing the clue. What you should do is imagine you’re a student again, and take this paper upstairs, read every line of it, and check the equations. Then you’ll understand it very easily.” I took her advice, and checked through the whole thing, and found it to be very obvious and simple. I had been afraid to read it, thinking it was too difficult.

I understood at last what art is really for, at least in certain respects. It gives somebody, individually, pleasure. You can make something that somebody likes so much that they’re depressed, or they’re happy, on account of that damn thing you made! In science, it’s sort of general and large: You don’t know the individuals who have appreciated it directly.

I started to say that the idea of distributing everything evenly is based on a theory that there’s only X amount of stuff in the world, that somehow we took it away from the poorer countries in the first place, and therefore we should give it back to them. But this theory doesn’t take into account the real reason for the differences between countries—that is, the development of new techniques for growing food, the development of machinery to grow food and to do other things, and the fact that all this machinery requires the concentration of capital. It isn’t the stuff, but the power to make the stuff, that is important.

when you have a very wide range of people who contribute without looking carefully at it, you don’t improve your knowledge of the situation by averaging.

The liberation of a large part of the global economy from political control will oblige whatever remains of government as we have known it to operate on more nearly market terms. Governments will ultimately have little choice but to treat populations in territories they serve more like customers, and less in the way that organized criminals treat the victims of a shakedown racket.

Taxing capacity will plunge by 50-70 percent. This will tend to make smaller jurisdictions more successful.

Microprocessing reduces the size that groups must attain in order to be effective in the use and control of violence. As this technological revolution unfolds, predatory violence will be organized more and more outside of central control.

When the state finds itself unable to meet its committed expenditure by raising tax revenues, it will resort to other, more desperate measures. Among them is printing money. Governments have grown used to enjoying a monopoly over currency that they could depreciate at will.

Before the nation-state, it was difficult to enumerate precisely the number of sovereignties that existed in the world because they overlapped in complex ways and many varied forms of organization exercised power. They will do so again. The dividing lines between territories tended to become clearly demarcated and fixed as borders in the nation-state system. They will become hazy again in the Information Age. In the new millennium, sovereignty will be fragmented once more. New entities will emerge exercising some but not all of the characteristics

Market forces, not political majorities, will compel societies to reconfigure themselves in ways that public opinion will neither comprehend nor welcome. As they do, the naïve view that history is what people wish it to be will prove wildly misleading.

“The universe rewards us for understanding it and punishes us for not understanding it. When we understand the universe, our plans work and we feel good. Conversely, if we try to fly by jumping off a cliff and flapping our arms the universe will kill us.”11 —JACK COHEN AND IAN STEWART

In our view, the key to understanding how societies evolve is to understand factors that determine the costs and rewards of employing violence. Every human society, from the hunting band to the empire, has been informed by the interactions of megapolitical factors that set the prevailing version of the “laws of nature.” Life is always and everywhere complex. The lamb and the lion keep a delicate balance, interacting at the margin. If lions were suddenly more swift, they would catch prey that now escape. If lambs suddenly grew wings, lions would starve. The capacity to utilize and defend against violence is the crucial variable that alters life at the margin.

Power, as William Playfair wrote, “has always sought the readiest road to wealth, by attacking those who were in possession of it.”

We explained why the “War on Drugs” was a recipe for subverting the police and judicial systems of countries where drug use is widespread, particularly the United States. With tens of billions of dollars in hidden monopoly profits piling up each year, drug dealers have the means as well as the incentive to corrupt even apparently stable countries.

the world. In spite of the central role of violence in determining the way the world works, it attracts surprisingly little serious attention. Most political analysts and economists write as if violence were a minor irritant, like a fly buzzing around a cake, and not the chef who baked it.

THE VANITY OF WISHES The tendency to overlook what is fundamentally important is not confined solely to the couch dweller watching television. Conventional thinkers of all shapes and sizes observe one of the pretenses of the democratic nation-state —that the views people hold determine the way the world changes.

Millions of words have been uttered and written about economic justice and injustice for each page devoted to careful analysis of how violence shapes society, and thus sets the boundaries within which economies must function. Yet formulations of economic justice in the modern context presuppose that society is dominated by an instrument of compulsion so powerful that it can take away and redistribute life’s good things.

If our meaning is not entirely intelligible in places, that is not because we are being cute, or using the time-honored equivocation of those who pretend to foretell the future by making cryptic pronouncements. We are not equivocators. If our arguments are unclear, it is because we have failed the task of writing in a way that makes compelling ideas accessible.

To see “outside” an existing system is like being a stagehand trying to force a dialogue with a character in a play. It breaches a convention that helps keep the system functioning. Every social order incorporates among its key taboos the notion that people living in it should not think about how it will end and what rules may prevail in the new system that takes its place. Implicitly, whatever system exists is the last or the only system that will ever exist.

The basic causes of change are precisely those that are not subject to conscious control. They are the factors that alter the conditions under which violence pays. Indeed, they are so remote from any obvious means of manipulation that they are not even subjects of political maneuvering in a world saturated with politics. No one ever marched in a demonstration shouting, “Increase scale economies in the production process.” No banner has ever demanded, “Invent a weapons system that increases the importance of the infantry.” No candidate ever promised to “alter the balance between efficiency and magnitude in protection against violence.” Such slogans would be ridiculous, precisely because their goals are beyond the capacity of anyone to consciously affect. Yet as we will explore, these variables determine how the world works to a far greater degree than any political platform.

As a rule, large numbers of people do not suddenly and all at once decide to abandon their way of life simply because they find it amusing to do so. No forager ever said, “I am tired of living in prehistoric times, I would prefer the life of a peasant in a farming village.” Any decisive swing in patterns of behavior and values is invariably a response to an actual change in the conditions of life.

“Looking back over the centuries, or even if looking only at the present, we can clearly observe that many men have made their living, often a very good living, from their special skill in applying weapons of violence, and that their activities have had a very large part in determining what uses were made of scarce resources.”16 —FREDERIC C. LANE

Even today, however, you should not underestimate the impact of suddenly colder weather in lowering real incomes—even in wealthy regions such as North America. There is a strong tendency for societies to render themselves crisis-prone when the existing configuration of institutions has exhausted its potential. In the past, this tendency has often been manifested by population increases that stretched the carrying capacity of land to the limit. This happened both before the transition of the year 1000 and again at the end of the fifteenth century. The plunge in real income caused by crop failures and lower yields played a significant role in both instances in destroying the predominant institutions. Today the marginalization is manifested in the consumer credit markets.

4. Technology

Balance between offense and defense. The balance between the offense and the defense implied by prevailing weapons technology helps determine the scale of political organization. When offensive capabilities are rising, the ability to project power at a distance predominates, jurisdictions tend to consolidate, and governments form on a larger scale. At other times, like now, defensive capabilities are rising. This makes it more costly to project power outside of core areas. Jurisdictions tend to devolve, and big governments break down into smaller ones.

Equality and the predominance of the infantry. A key feature determining the degree of equality among citizens is the nature of weapons technology. Weapons that are relatively cheap, can be employed by nonprofessionals, and enhance the military importance of infantry tend to equalize power. When Thomas Jefferson wrote that “all men are created equal,” he was saying something that was much more true than a similar statement would have seemed centuries earlier. A farmer with his hunting rifle was not only as well armed as the typical British soldier with his Brown Bess, he was better armed. The farmer with the rifle could shoot at the soldier from a greater distance, and with greater accuracy than the soldier could return fire. This was a distinctly different circumstance from the Middle Ages, when a farmer with a pitchfork—he could not have afforded more—could scarcely have hoped to stand against a heavily armed knight on horseback. No one was writing in 1276 that “all men are created equal.” At that time, in the most manifestly important sense, men were not equal. A single knight exercised far more brute force than dozens of peasants put together.

Other things being equal, the more widely dispersed key technologies are, the more widely dispersed power will tend to be, and the smaller the optimum scale of government.

Wherever farming took root, violence emerged as a more important feature of social life. Hierarchies adept at manipulating or controlling violence came to dominate society.

Seen in this perspective, the advent of agriculture entailed more than a change in diet; it also launched a great revolution in the organization of economic life and culture as well as a transformation of the logic of violence. Farming created large-scale capital assets in land and sometimes in irrigation systems. The crops and domesticated animals farmers raised were valuable assets. They could be stored, hoarded, and stolen. Because crops had to be tended over the entire growing season, from planting through harvest, migration away from threats became less attractive, especially in arid regions where opportunities to grow crops were confined to the small areas of the land with dependable water supplies. As escape became more difficult, opportunities for organized shakedowns and plunder increased. Farmers were subject to raids at harvesttime, which gradually raised the scale of warfare. This tended to increase the size of societies because contests of violence more often than not were won by the larger group. As competition over land and control of its output became more intense, societies became more stationary. A division of labor became more apparent. Employment and slavery arose for the first time. Farmers and herders specialized in producing food. Potters produced containers in which food was stored. Priests prayed for rain and bountiful harvests. Specialists in violence, the forefathers of government, increasingly devoted themselves to plunder and protection from plunder. Along with the priests, they became the first wealthy persons in history. In the early stages of agricultural societies, these warriors came to control a portion of the annual crop as a price of protection. In places where threats were minimal, yeoman farmers were sometimes able to retain a relatively large degree of autonomy.

Decentralized authority, which optimized output under some circumstances, also gave rise to stronger local powers who sometimes blossomed into full-fledged challengers for dynastic control. Even Oriental despots were by no means free to do as they pleased. They had no choice but to recognize the balance of raw power as they found it.

In general, risk-averse behavior has been common among all groups that operated along the margins of survival. The sheer challenge of survival in premodern societies always constrained the behavior of the poor. An interesting feature of this risk aversion, explored in The Great Reckoning, is that it reduced the range of peaceful economic behavior that individuals were socially permitted to adopt. Taboos and social constraints limited experimentation and innovative behavior, even at the obvious cost of forgoing potentially advantageous improvements in settled ways of doing things.13 This was a rational reflection of the fact that experimentation increases the variability of results. Greater variability means not only potentially greater gains but—more ominously for those at the very margin of survival—potentially ruinous losses.

Markets always place the greatest pressures on the weakest holders. Indeed, that is part of their virtue. They promote efficiency by removing assets from weak hands.

Farming created stationary capital on an extensive scale, raising the payoff from violence and dramatically increasing the challenge of protecting assets.

Whenever technological change has divorced the old forms from the new moving forces of the economy, moral standards shift, and people begin to treat those in command of the old institutions with growing disdain.

Although almost no one knew it, medieval society was dying. Its death was neither widely anticipated nor understood. Nonetheless, the prevailing mood was one of deep gloom. This is common at the end of an era, as conventional thinkers sense that things are falling apart, that “the falcon cannot hear the falconer.” Yet their mental inertia is often too great to comprehend the implications of the emerging configurations of power. Medieval historian Johan Huizinga wrote of the waning days of the Middle Ages, “The chroniclers of the fifteenth century have, nearly all, been the dupes of an absolute misappreciation of their times, of which the real moving forces escaped their attention.”8 Myths Betrayed Major changes in the underlying dynamics of power tend to confound conventional thinkers because they expose myths that rationalize the old order but lack any real explanatory power. At the end of the Middle Ages, as now, there was a particularly wide gap between the received myths and reality. As Huizinga said of the Europeans in the late fifteenth century, “Their whole system of ideas was permeated by the fiction that chivalry ruled the world.”9 This has a close second in the contemporary assumption that it is ruled by votes and popularity contests. Neither proposition stands up to close scrutiny. Indeed, the idea that the course of history is determined by democratic tallies of wishes is every bit as silly as the medieval notion that it is determined by an elaborated code of manners called chivalry.

At the end of the Middle Ages, as now, there was a particularly wide gap between the received myths and reality. As Huizinga said of the Europeans in the late fifteenth century, “Their whole system of ideas was permeated by the fiction that chivalry ruled the world.”9 This has a close second in the contemporary assumption that it is ruled by votes and popularity contests. Neither proposition stands up to close scrutiny. Indeed, the idea that the course of history is determined by democratic tallies of wishes is every bit as silly as the medieval notion that it is determined by an elaborated code of manners called chivalry. The fact that saying so borders on heresy suggests how divorced conventional thinking is from a realistic grasp of the dynamics of power in late industrial society.

In warfare, the most useful value systems induce people to behave in ways that short-term rational calculation would rule out. No organization could mobilize military power effectively if the individuals it sent into battle felt free to calculate where their own best advantage lay, and join in the fight or run away accordingly. If so, they would almost never fight.

These new gunpowder weapons could be fired by commoners. They required little skill to use but were expensive to procure in quantity. Their proliferation steadily increased the importance of commerce as compared to agriculture, which had been the foundation of the feudal economy.

The uniforms aptly symbolize the new relations between the warrior and the nation-state that went hand in hand with the transition from chivalry to citizenship. In effect, the new nation-state would strike a “uniform” bargain with its citizens, unlike the special, divergent bargains struck by the monarch or the pope with a long chain of vassals under feudalism.

Piety and Compassion The piety that rationalized the saturation of society by organized religion in the late Middle Ages served the same purpose as the “compassion” that is meant to justify the political domination of life today. The sale of indulgences to satisfy a desire for piety without morals parallels lavish welfare spending to slake the pretense of compassion without charity. It was largely immaterial whether the actual effect of received practices was to improve moral character or save souls, just as it is largely immaterial whether a welfare program actually improves the lives of the people to whom it is directed. “Piety,” like “compassion,” was an almost superstitious invocation.

Rome, like most premodern states, ultimately lacked the capacity to compel adherence to the monopoly of violence that the ability to starve people provides. The Roman state outside of Africa could not cut off water for growing crops by denying unsubmissive people access to the irrigation system. Such hydraulic systems supplied more leverage to violence than any other megapolitical configuration in the ancient economy. Whoever controlled the water in these societies could extract spoils at a level almost comparable to the percentage of total output absorbed by modern nation-states.

Compared to Communism, the welfare state was indeed a far more efficient system. But compared to other systems for accumulating wealth, such as a genuine laissez-faire enclave like colonial Hong Kong, the welfare state was inefficient. Again, less was more. It was precisely this inefficiency that made the welfare state supreme during the megapolitical conditions of the Industrial Age. When you come to understand why, you are much closer to recognizing what the fall of the Berlin Wall and the death of Communism really mean. Far from assuring that the democratic welfare state will be a triumphant system, as has been widely assumed, it was more like seeing that a fraternal twin has died of old age. The same megapolitical revolution that killed Communism is also likely to undermine and destroy democratic welfare states as

But wait. You may be saying that in most jurisdictions there are many more voters than there are persons on the government payroll. How could it be possible for employees to dominate under such conditions? The welfare state emerged to answer exactly this quandary. Since there were not otherwise enough employees to create a working majority, increasing numbers of voters were effectively put on the payroll to receive transfer payments of all kinds.

When returns to violence are high and rising, magnitude means more than efficiency. Larger entities tend to prevail over smaller ones.

Because the emerging middle class soon had enough money to tax, it was no longer essential, as it previously had been, for rulers to negotiate with powerful landlords or great merchants who were, as historian Charles Tilly wrote, “in a position to prevent the creation of a powerful state” that would “seize their assets and cramp their transactions.”

During the Industrial Age prior to 1989, democracy emerged as the most militarily effective form of government precisely because democracy made it difficult or impossible to impose effective limits on the commandeering of resources by the state. Generous provision of welfare benefits to one and all invited a majority of voters to become, in effect, employees of the government. This became the predominant political feature of all leading industrial countries because voters were in a weak position to effectively control the government in their role as customers for the service of protection.

Democracy had the still more compelling advantage of creating a legitimizing decision rule that allowed the state to tap the resources of the well-to-do without having to bargain directly for their permission. In short, democracy as a decision mechanism was well fitted to the megapolitical conditions of the Industrial Age. It complemented the nation-state because it facilitated the concentration of military power in the hands of those running it at a time when the magnitude of force brought to bear was more important than the efficiency with which it was mobilized.

States that could employ nationalism

Nation-states formed by underlining and emphasizing characteristics that people held in common, particularly spoken language. This facilitated rule without the intervention of intermediaries. It simplified the tasks of bureaucracy. Edicts that need only be promulgated in one language can be dispatched more quickly and with less confusion than those that must be translated into a Babel of tongues. Nationalism, therefore, tended to lower the cost of controlling larger areas. Before nationalism, the early-modern state required the aid of lords, dukes, earls, bishops, free cities, and other corporate and ethnic intermediaries, from tax “farmers” to military contract merchants and mercenaries to collect revenues, raise troops and conduct other government functions.

Throughout history, violence has been a dagger pointed at the heart of the economy. As Thomas Schelling shrewdly put it, “The power to hurt—to destroy things that somebody treasures, to inflict pain and grief—is a kind of bargaining power, not easy to use but used often. In the underworld it is the basis for blackmail, extortion, and kidnapping, in the commercial world, for boycotts, strikes, and lockouts.… It is often the basis for discipline, civilian and military; and gods use it to exact discipline.”

Although we tend not to perceive it in these terms, the proportion of assets that are controlled and spent coercively, through crime and government, provides a rough measure of the megapolitical balance between extortion and protection. If technology made the protection of assets difficult, crime would tend to be widespread, and so would union activity. Under such circumstances, protection by government would therefore command a premium. Taxes would be high. Where taxes are lower and wage rates in the workplace are determined by market forces rather than through political intervention or coercion, technology has tipped the balance toward protection.

We wrote in The Great Reckoning that the computer is enabling us to “see” the formerly invisible complexity inherent in a whole range of systems.I Not only does advanced computational capability enable us to better understand the dynamics of complex systems; it also enables us to harness those complexities in productive ways.

When Lane wrote in the middle of this century, the Information Society was nowhere in sight. Under the circumstances, he may well have supposed that the competition to employ violence in the world had reached its final stage with the appearance of the nation-state. There is no hint in his works that he anticipated microprocessing or believed that it was technologically feasible to create assets in cyberspace, a realm without physical existence. Lane had nothing to say about the implications of the possibility that large amounts of commerce could be made all but immune from the leverage of violence.

Lane’s study of the violent medieval world attracted his attention to issues that conventional economists and historians have tended to neglect. He saw that how violence is organized and controlled plays a large role in determining “what uses are made of scarce resources.”8 Lane also recognized that while production of violence is not usually considered part of economic output, the control of violence is crucial to the economy.

Under conditions that have heretofore existed, any group or agency that you could employ to successfully protect your life and wealth from attack would also necessarily have had the capacity to take either. That is a drawback for which there is no easy answer. Normally, you could look to competition to keep providers of an economic service from ignoring the wishes of their customers. But where violence is concerned, direct competition often has perverse results. In the past, it has usually led to increased violence. When two would-be protective agencies send their forces to arrest one another, the result is more akin to civil war than protection.

They will maximize the freedom to know, to go, to do, and to be.

The examples of Somalia, Rwanda, and others you will soon see on television offer a Technicolor proof that violent competition for control of territory does not yield the same immediate economic gains as other forms of competition. To the contrary.

when violence is “highly competitive,” this usually means that there are significant obstacles to the projection of power at any distance. In military terms, defense is predominant over the offense.

“During a late phase of the second stage many tribute takers attract customers by special offers to agricultural and commercial enterprise. They offer protection at low prices for those who will bring new lands into cultivation, and special policing services to encourage trade such as that organized by the Counts of Champagne for merchants coming to their fairs.”46 In other words, when they were able to establish a sufficient control over territory to negotiate credibly, local warlords did what local merchants do when they need to increase market share: they discounted their services to attract customers. The warlords later used the added resources from additional economic activity to consolidate their control over larger territories. Once that control was firmly established, they began

Indeed, for reasons spelled out in previous chapters, the military survival of an industrial nation-state largely depended upon the fact that no effective limits could be placed upon its claims on the resources of its citizens.

The presence of large-scale industrial firms would not have been possible in a disordered environment with more competitive violence, even if the result of the competition had been to shrink the overall share of output taken by government. This is why capital-intensive operations are uneconomic in the American slums, as well as in Third World societies where ad hoc violence is endemic. Industrial society as a whole was able to proceed because a certain kind of order was established and maintained. Enterprises were subject to regular, predictable shakedowns, rather than erratic violence.

This fifth phase involves competition in cyberspace, an arena not subject to monopolization by any “violence-using enterprise.” It is not subject

Unlike the past, when the inability to monopolize protection in a region meant higher military costs and lower economic returns, the fact that governments cannot monopolize cyberspace actually implies lower military costs and higher economic returns.

The first potential beneficiary of the Seychelles law is a white South African who became wealthy by circumventing the economic sanctions against the former apartheid regime. Now he faces the danger of economic retribution by the new South African government and is willing to pay the Seychelles for protection.52 Whatever the merits of any individual case, the example shows why attempts by governments to maintain a cartel for protection on the ground are doomed to failure. Unlike the medieval frontier, in which the competition was between two authorities only, the frontier in cybercommerce will be between hundreds of jurisdictions, with the number probably rising rapidly to thousands. In the age of the virtual corporation, individuals will choose to domicile their income-earning activities in a jurisdiction that provides the best service at the lowest cost. In other words, sovereignty will be commercialized. Unlike medieval frontier societies, which were in most cases impoverished and violent, cyberspace will be neither. The competition that information technology is driving governments to engage in is not competition of a military kind, but competition in quality and price of an economic service —genuine protection. In short, governments will be obliged to give customers what they want.

That older software allocated computational capacity according to rigid priorities in much the same way that the central planners at Gosplan in the former Soviet Union used to allocate goods to boxcars by rigid rules. The new systems are controlled by algorithms that mock market mechanisms to allocate resources more efficiently by an internal bidding process that mimics the competitive processes in the brain. Instead of giant computer monopolies conducting important command-and-control functions, they will be decentralized in the new millennium.

The need for protection against bandits on the Information Superhighway will require widespread adopting of public key-private key encryption algorithms. These already allow any individual user of a personal computer to encode any message more securely than the Pentagon could have sealed its launch codes only a generation ago. These powerful, unbreakable forms of encryption will be necessary to secure financial transactions from hackers and thieves.

“What the Net offers is the promise of a new social space, global and anti-sovereign, within which anybody, anywhere can express to the rest of humanity whatever he or she believes without fear.

The new technology creates for the first time an infinite, nonterrestrial realm for economic activity.

In almost every competitive area, including most of the world’s multitrillion-dollar investment activity, the migration of transactions into cyberspace will be driven by an almost hydraulic pressure—the impetus to avoid predatory taxation, including the tax that inflation places upon everyone who holds his wealth in a national currency.

Paper money also contributed significantly to the power of the state, not only by generating profits from depreciating the currency, but by giving the state leverage over who could accumulate wealth. As Abu-Lughod put it, “when paper money backed by the state become the approved currency, the chances for amassing capital in opposition to or independent of the state machinery became difficult.”

F. A. Hayek argued, there is “no clear distinction between money and non-money.” He wrote, “although we usually assume there is a sharp line of distinction between what is money and what is not—and the law generally tries to make such a distinction—so far as the causal effects of monetary events are concerned, there is no such clear difference. What we find is rather a continuum in which objects of various degrees of liquidity, or with values which can fluctuate independently of each other, shade into each other in the degree to which they function as money.”

The capacity of digital money to deliver micropayments will facilitate the emergence of new types of businesses that heretofore could not have existed, specializing in organizing the distribution of low-value information. The vendors of this information will now be compensated through direct-debit royalty schemes that overcome previously daunting transaction costs.

Setting aside transition difficulties, which could last for decades, the long-term prospects for the global economy should be highly bullish. Whenever circumstances allow people to reduce protection costs and minimize tribute paid to those who control organized violence, the economy usually grows dramatically. As Lane said, “I would like to suggest that the most weighty single factor in most periods of growth, if any one factor has been most important, has been a reduction in the proportion of resources devoted to war and police.”

Some technologies have been relatively egalitarian, requiring contributions of many independent workers of approximately equal utility; others have put power or wealth into the hands of a few masters while most people were little more than serfs. Both history and technology have shaped different nations in different ways. The Factory Age produced one shape, and the Information Age is producing another, less violent, and therefore more elitist and less egalitarian than the one it is replacing.

In the Information Age, familiar locational advantages will rapidly be transformed by technology. Earnings capacity for persons of similar skills will become much more equal, no matter in what jurisdiction they live. This has already begun to happen. Because institutions that have employed compulsion and local advantage to redistribute income are losing power, income inequality within jurisdictions will rise. Global competition will also tend to increase the income earned by the most talented individuals in each field, wherever they live, much as it does now in professional athletics. The marginal value generated by superior performance in a global market will be huge.

Williamson defined six different methods of operation and control. Among them is the “entrepreneurial mode,” “wherein each workstation is owned and operated by a specialist.”27 Another is what Williamson calls the “federated workstations” in which “an intermediate product is transferred across stages by each worker.”28 There is no physical reason why the thousands of employees could not have been replaced by a gaggle of independent contractors, each renting space on the factory floor, bidding for parts, and offering to assemble the axle or weld the fenders onto the chassis. Yet you would look in vain for an example of an industrial-era automobile factory organized

“In a market, you don’t do something because somebody tells you to or because it is listed on page thirty of the strategic plan. A market has no job boundaries.… There are no orders, no translation of signals from on high, no one sorting out the work into parcels. In a market one has customers, and the relationship between a supplier and a customer is fundamentally nonorganizational, because it is between two independent entities.”31 —WILLIAM BRIDGES

In the postindustrial period, jobs will be tasks you do, not something you “have.” Before the industrial era, permanent employment was almost unknown. As William Bridges put it, “Before 1800—and long after in many cases—job always referred to some particular task or undertaking, never to a role or position in an organization.… Between 1700 and 1890, the Oxford English Dictionary finds many uses of terms like job-coachman, job-doctor, and job-gardener—all referring to people hired on a one-time basis. Job-work (another frequent term) was occasional work, not regular employment.”34 In the Information Age, most tasks that were formerly captured within firms as an expedient to reduce information and transaction costs will migrate back to the spot market.

The model business organization of the new information economy may be a movie production company. Such enterprises can be very sophisticated, with budgets of hundreds of millions of dollars. While they are often large operations, they are also temporary in nature. A movie company producing a film for $100 million may come together for a year and then dissolve. While the people who work on the production are talented, they have no expectation that finding work on the project is equivalent to having a “permanent job.” When the project is over, the lighting technicians, cameramen, sound engineers, and wardrobe specialists will go their separate ways. They may be reunited in another project, or they may not. As scale economies fall, and capital requirements for many types of information-intensive activities fall simultaneously, there will be a strong incentive for firms to dissolve.

As in the medieval period, there are once again growing diseconomies of scale in the organization of violence.

The leading welfare states will lose their most talented citizens through desertion.

The mere fact that developments embracing the whole globe are commonly described as “international” shows how deeply the nationalist paradigm has penetrated into our way of conceiving the world. After two centuries of indoctrination in the mysteries of “international relations” and “international law,” it is easy to overlook that “international” is not a longstanding Western concept.

“A language is a dialect with an army and a navy.” —MARIO PEI

When returns to violence were rising, a common tongue facilitated the exercise of power and consolidated jurisdictions.

Our main focus in this book is on objective “megapolitical” factors that alter the costs and rewards of human choices.

Seen in their proper light, however, as Hirshleifer points out, many of the paradoxes of “altruism” are semantic muddles that frequently confuse or mislead people into losing sight of the context of competition in which “helping” could convey a survival advantage: “ ‘If an altruism choice of strategy is to be viable in competition with non-altruism, altruism must contribute to self-survival more than non-altruism does, and therefore it can’t really be altruism.’

The triumph of capitalism will lead to the emergence of a new global, or extranational, consciousness among the capitalists, many of whom will become Sovereign Individuals. Far from depending upon the state to discipline the workers, as the Marxists imagined, the ablest, wealthiest persons were net losers from the actions of the nation-state. It is clearly they who have the most to gain by transcending nationalism as markets triumph over compulsion.

The current innovation of information technologies is quite different from the innovation of industrial technologies that the world experienced in recent centuries. The difference lies in the fact that most current technological innovations with labor-saving characteristics tend to create skilled tasks and reduce scale economies.

In the use of violence there were obviously great advantages of scale when competing with rival violence-using enterprises or establishing a territorial monopoly. This fact is basic for the economic analysis of one aspect of government: the violence-using, violence-controlling industry was a natural monopoly, at least on land. Within territorial limits the service it rendered could be produced much more cheaply by a monopoly. To be sure, there have been times when violence-using enterprises competed in demanding payments for protection in almost the same territory, for example, during the Thirty Years’ War in Germany. But such a situation was even more uneconomic than would be competition in the same territories between rival telephone systems.

On the other hand, declining decisiveness in battle, which corresponds to the superiority of the defense in military technology, contributes to the dynamic stability of anarchy. Therefore, the apparent impact of information technology in reducing the decisiveness of military action should make the anarchy between minisovereignties more stable and less prone to be replaced through conquest by a large government. Less decisiveness in battle also implies less fighting,

We offered a paradoxical explanation in Chapter 5, namely that democracy flourished as a fraternal twin of Communism precisely because it facilitated unimpeded control of resources by the state.

“People learn to want what they see they can get, but they can also change their minds if they see that they do not like what they wanted and what they got.”

The most talented executives in the world could be attracted to run faltering governments if they could be paid on the basis of results they actually achieve for society. A leader who could significantly boost real income in any leading Western nation could justly be paid far more than Michael Eisner. In a better world, every successful head of government would be a multimillionaire.

What we now think of as “political” leadership, which is always conceived in terms of a nation-state, will become increasingly entrepreneurial rather than political in nature. In these conditions, the viable range of choice in putting together a “policy” regime for a jurisdiction will be effectively narrowed in the same way that the range of options open to entrepreneurs in designing a first-class resort hotel or any similar product or service is defined by what people will pay for. A resort hotel, for example, would seldom attempt to operate on terms that required guests to perform hard labor to repair and extend its facilities. Even a resort hotel owned or controlled by its employees, like the typical modern democracy, would try in vain to force customers to comply with such demands, especially after better accommodations became available. If the customers would rather play golf than do heavy labor in the hot sun, then on that question, at least, the market offers little scope for imposing arbitrary alternatives. In such conditions, presently “political” issues will recede into entrepreneurial judgments, as fragmented jurisdictions seek to discover which policy bundles will attract a viable cross-section of customers.

As the monopoly on violence enjoyed by the “bigger battalions” breaks down, one of the first results to be expected is increasing prosperity for organized crime. Organized crime, after all, provides the main competition to nation-states in employing violence for predatory purposes.

The alternative to destructive “interference” competition is collaborative competition, and collaborative competition is the central idea of Adam Smith, and also of Malthus and of William James. The archetype of destructive competition is the conqueror. He destroys his competitors in order to seize their assets, which may include taking over their countries and may involve the enslavement of their peoples. The archetype of collaborative competition is the merchant. It is in the interest of the merchant that the customer should be satisfied with the transaction, because only a satisfied customer comes back for more trade. It is also in the interest of the merchant that the customer should be prosperous, because a prosperous customer has the money to go on buying. Conquest implies the destruction of the other party; commerce implies the satisfaction of the other party. As modern technology has made conquest an extraordinarily dangerous policy, commerce has become the only rational approach to the problems of survival.

The destruction of tradition has been a necessary condition of scientific progress. If we all still believed that the sun revolved around the earth, then we could not have developed satellite communications. Indeed what we believe to be science itself is only a series of hypotheses, imperfect explanations due to be replaced by other explanations, stronger but still imperfect. Yet the destruction of tradition has been a disaster to the moral order of the world.

“collapse” is what happens when a centralized control system is no longer worth what it costs.

Disaster at sea can happen in a moment, without warning, or it can come after long days of anticipation and fear. It does not always come when the sea is fiercest but may spring when waters lie as flat and imperturbable as a sheet of iron. Sailors may be struck down at any time, in calm or in storm, but the sea does not do it for hate or spite. She has no wrath to vent. Nor does she have a hand of kindness to extend. She is merely there, immense, powerful, and indifferent. I do not resent her indifference, or my comparative insignificance. Indeed, it is one of the main reasons I like to sail: the sea makes the insignificance of my own small self and of all humanity so poignant.

“When everybody agrees,” Taggart’s voice suddenly went shrill, “when people are unanimous, how does one man dare to dissent? By what right? That’s what I want to know—by what right?”

Nathaniel Taggart had been a penniless adventurer who had come from somewhere in New England and built a railroad across a continent, in the days of the first steel rails. His railroad still stood; his battle to build it had dissolved into a legend, because people preferred not to understand it or to believe it possible.

We both know that if Taggart Transcontinental runs trains in Colorado the way it did five years ago, it will ruin me. I know that that is what you people intend to do. You expect to feed off me while you can and to find another carcass to pick dry after you have finished mine. That is the policy of most of mankind today

This, she knew, was a tribute to her, the rarest one person could pay another: the tribute of feeling free to acknowledge one’s own greatness, knowing that it is understood.

Eddie asked him once, “Francisco, you’re some kind of very high nobility, aren’t you?” He answered, “Not yet. The reason my family has lasted for such a long time is that none of us has ever been permitted to think he is born a d‘Anconia. We are expected to become one.”

The heirs of Sebastián d‘Anconia had been an unbroken line of first sons, who knew how to bear his name. It was a tradition of the family that the man to disgrace them would be the heir who died, leaving the d’Anconia fortune no greater than he had received it. Throughout the generations, that disgrace had not come. An Argentinian legend said that the hand of a d‘Anconia had the miraculous power of the saints—only it was not the power to heal, but the power to produce.

there’s nothing of any importance in life—except how well you do your work. Nothing. Only that. Whatever else you are, will come from that. It’s the only measure of human value. All the codes of ethics they’ll try to ram down your throat are just so much paper money put out by swindlers to fleece people of their virtues. The code of competence is the only system of morality that’s on a gold standard. When you grow up, you’ll know what I mean.”

“Mother, do they think it’s exactly in reverse?” she asked. “What?” asked Mrs. Taggart, bewildered. “The things you were talking about. The lights and the flowers. Do they expect those things to make them romantic, not the other way around?” “Darling, what do you mean?” “There wasn’t a person there who enjoyed it,” she said, her voice lifeless, “or who thought or felt anything at all. They moved about, and they said the same dull things they say anywhere. I suppose they thought the lights would make it brilliant.”

The capacity for unclouded enjoyment, she thought, does not belong to irresponsible fools; an inviolate peace of spirit is not the achievement of a drifter; to be able to laugh like that is the end result of the most profound, most solemn thinking.

“The State Science Institute represents the best brains of the country, Mr. Rearden.” “So I’m told.” “Surely you do not want to pit your own judgment against theirs?” “I do.”

“But he knows nothing about the steel business!” “What has that got to do with it? He needs a job.” “But he couldn’t do the work.” “He needs to gain self-confidence and to feel important.” “But he wouldn’t be any good whatever.” “He needs to feel that he’s wanted.” “Here? What could I want him for?” “You hire plenty of strangers.” “I hire men who produce. What has he got to offer?” “He’s your brother, isn’t he?” “What has that got to do with it?” She stared incredulously, in turn, silenced by shock. For a moment, they sat looking at each other, as if across an interplanetary distance. “He’s your brother,” she said, her voice like a phonograph record repeating a magic formula she could not permit herself to doubt. “He needs a position in the world. He needs a salary, so that he’d feel that he’s got money coming to him as his due, not as alms.”

“Now why do you want to use such words?” “I might as well tell you—and I think you know it—that I am not good at games of that kind. I have neither the time nor the stomach to devise some form of blackmail in order to tie you up and own my mines through you. Ownership is a thing I don’t share. And I don’t wish to hold it by the grace of your cowardice—by means of a constant struggle to outwit you and keep some threat over your head. I don’t do business that way and I don’t deal with cowards. The mines are yours. If you wish to give me first call on all the ore produced, you will do so. If you wish to double-cross me, it’s in your power.”

She could not descend to an existence where her brain would explode under the pressure of forcing itself not to outdistance incompetence. She could not function to the rule of: Pipe down—keep down—

He knew no weapons but to pay for what he wanted, to give value for value, to ask nothing of nature without trading his effort in return, to ask nothing of men without trading the product of his effort.

By the essence and nature of existence, contradictions cannot exist.

“This book may have no philosophical value whatever, but it has a great psychological value.” “Just what is that?” “You see, Dr. Stadler, people don’t want to think. And the deeper they get into trouble, the less they want to think. But by some sort of instinct, they feel that they ought to and it makes them feel guilty. So they’ll bless and follow anyone who gives them a justification for not thinking.

They have the brain, but I have the heart. They have the capacity to produce wealth, but I have the capacity to love. Isn’t mine the greater capacity? Hasn’t it been recognized as the greatest through all the centuries of human history? Why won’t they recognize it?

“So you think that money is the root of all evil?” said Francisco d.‘Anconia. “Have you ever asked what is the root of money? Money is a tool of exchange, which can’t exist unless there are goods produced and men able to produce them. Money is the material shape of the principle that men who wish to deal with one another must deal by trade and give value for value. Money is not the tool of the moochers, who claim your product by tears, or of the looters, who take it from you by force. Money is made possible only by the men who produce. Is this what you consider evil?

Money permits no deals except those to mutual benefit by the unforced judgment of the traders.

“Money will always remain an effect and refuse to replace you as the cause. Money is the product of virtue, but it will not give you virtue and it will not redeem your vices. Money will not give

“Then you will see the rise of the men of the double standard—the men who live by force, yet count on those who live by trade to create the value of their looted money—the men who are the hitchhikers of virtue. In a moral society, these are the criminals, and the statutes are written to protect you against them. But when a society establishes criminals-by-right and looters-by-law—men who use force to seize the wealth of disarmed victims—then money becomes its creators’ avenger.

“If you ask me to name the proudest distinction of Americans, I would choose—because it contains all the others—the fact that they were the people who created the phrase ‘to make money.’ No other language or nation had ever used these words before; men had always thought of wealth as a static quantity—to be seized, begged, inherited, shared, looted or obtained as a favor. Americans were the first to understand that wealth has to be created. The words .‘to make money’ hold the essence of human morality.

who is the guiltiest man in this room tonight?” “I suppose—James Taggart?” “No, Mr. Rearden, it is not James Taggart. But you must define the guilt and choose the man yourself.” “A few years ago, I would have said that it’s you. I still think that that’s what I ought to say. But I’m almost in the position of that fool woman who spoke to you: every reason I know tells me that you’re guilty—and yet I can’t feel it.” “You are making the same mistake as that woman, Mr. Rearden, though in a nobler form.” “What do you mean?” “I mean much more than just your judgment of me. That woman and all those like her keep evading the thoughts which they know to be good. You keep pushing out of your mind the thoughts which you believe to be evil. They do it, because they want to avoid effort. You do it, because you won’t permit yourself to consider anything that would spare you. They indulge their emotions at any cost. You sacrifice your emotions as the first cost of any problem. They are willing to bear nothing. You are willing to bear anything. They keep evading responsibility. You keep assuming it. But don’t you see that the essential error is the same? Any refusal to recognize reality, for any reason whatever, has disastrous consequences. There are no evil thoughts except one: the refusal to think. Don’t ignore your own desires, Mr. Rearden. Don’t sacrifice them. Examine their cause. There is a limit to how much you should have to bear.”

He shook his head slowly, in protest. “Hank, I want nothing from you except what you wish to give me. Do you remember that you called me a trader once? I want you to come to me seeking nothing but your own enjoyment. So long as you wish to remain married, whatever your reason, I have no right to resent it. My way of trading is to know that the joy you give me is paid for by the joy you get from me—not by your suffering or mine. I don’t accept sacrifices and I don’t make them. If you asked me for more than you meant to me, I would refuse. If you asked me to give up the railroad, I’d leave you. If ever the pleasure of one has to be bought by the pain of the other, there better be no trade at all. A trade by which one gains and the other loses is a fraud.

“Did you really think that we want those laws to be observed?” said Dr. Ferris. “We want them broken. You’d better get it straight that it’s not a bunch of boy scouts you’re up against—then you’ll know that this is not the age for beautiful gestures. We’re after power and we mean it. You fellows were pikers, but we know the real trick, and you’d better get wise to it. There’s no way to rule innocent men. The only power any government has is the power to crack down on criminals. Well, when there aren’t enough criminals, one makes them.

“If you want to see an abstract principle, such as moral action, in material form—there it is. Look at it, Mr. Rearden. Every girder of it, every pipe, wire and valve was put there by a choice in answer to the question: right or wrong? You had to choose right and you had to choose the best within your knowledge—the best for your purpose, which was to make steel—and then move on and extend the knowledge, and do better, and still better, with your purpose as your standard of value.

The look of shock on their faces was not the shock of people at the sudden explosion of a bomb, but the shock of people who had known that they were playing with a lighted fuse. There were no outcries, no protests, no questions; they knew that he meant it and they knew everything it meant. A dim, sickening feeling told him that they had known it long before he did. “You ... you wouldn’t throw your own brother out on the street, would you?” his mother said at last; it was not a demand, but a plea. “I would.” “But he’s your brother ... Doesn’t that mean anything to you?” “No.” “Maybe he goes a bit too far at times, but it’s just loose talk, it’s just that modern jabber, he doesn’t know what he’s saying.” “Then let him learn.” “Don’t be hard on him ... he’s younger than you and ... and weaker. He ... Henry, don’t look at me that way! I’ve never seen you look like that.... You shouldn’t frighten him. You know that he needs you.” “Does he know it?” “You can’t be hard on a man who needs you, it will prey on your conscience for the rest of your life.” “It won’t.” “You’ve got to be kind, Henry.” “I’m not.” “You’ve got to have some pity.” “I haven’t.” “A good man knows how to forgive.” “I don’t.” “You wouldn’t want me to think that you’re selfish.” “I am.”

“Mr. Rearden, the law which you are denouncing is based on the highest principle—the principle of the public good.” “Who is the public? What does it hold as its good? There was a time when men believed that .‘the good’ was a concept to be defined by a code of moral values and that no man had the right to seek his good through the violation of the rights of another. If it is now believed that my fellow men may sacrifice me in any manner they please for the sake of whatever they deem to be their own good, if they believe that they may seize my property simply because they need it—well, so does any burglar. There is only this difference: the burglar does not ask me to sanction his act.”

“Are we to understand that if the public deems it necessary to curtail your profits, you do not recognize its right to do so?” “Why, yes, I do. The public may curtail my profits any time it wishes—by refusing to buy my product.” “We are speaking of ... other methods.” “Any other method of curtailing profits is the method of looters -and I recognize it as such.”

“I work for nothing but my own profit. I earn it.” There was a gasp, not of indignation, but of astonishment, in the crowd behind him and silence from the judges he faced. He went on calmly: “No, I do not want my attitude to be misunderstood. I shall be glad to state it for the record. I am in full agreement with the facts of everything said about me in the newspapers—with the facts, but not with the evaluation. I work for nothing but my own profit—which I make by selling a product they need to men who are willing and able to buy it. I do not produce it for their benefit at the expense of mine, and they do not buy it for my benefit at the expense of theirs; I do not sacrifice my interests to them nor do they sacrifice theirs to me; we deal as equals by mutual consent to mutual advantage—and I am proud of every penny that I have earned in this manner. I am rich and I am proud of every penny I own. I have made my money by my own effort, in free exchange and through the voluntary consent of every man I dealt with-the voluntary consent of those who employed me when I started, the voluntary consent of those who work for me now, the voluntary

“Dagny,” he said, looking at the city as it moved past their taxi window, “think of the first man who thought of making a steel girder. He knew what he saw, what he thought and what he wanted. He did not say, ‘It seems to me,’ and he did not take orders from those who say, ‘In my opinion.’ ” She chuckled, wondering at his accuracy: he had guessed the nature of the sickening sense that held her, the sense of a swamp which she had to escape. “Look around you,” he said. “A city is the frozen shape of human courage—the courage of those men who thought for the first time of every bolt, rivet and power generator that went to make it. The courage to say, not ‘It seems to me,’ but .‘It is’—and to stake one’s life on one’s judgment.

She looked as if this were her place, her moment and her world, she looked as if enjoyment were her natural state, her face was the living form of an active, living intelligence, a young girl’s face with a woman’s mouth, she seemed unaware of her body except as of a taut instrument ready to serve her purpose in any manner she wished.

Guilty?—guiltier than I had known, far guiltier than I had thought, that day—guilty of the evil of damning as guilt that which was my best. I damned the fact that my mind and body were a unit, and that my body responded to the values of my mind. I damned the fact that joy is the core of existence, the motive power of every living being, that it is the need of one’s body as it is the goal of one’s spirit, that my body was not a weight of inanimate muscles, but an instrument able to give me an experience of superlative joy to unite my flesh and my spirit.

broke their code, but I fell into the trap they intended, the trap of a code devised to be broken. I took no pride in my rebellion, I took it as guilt, I did not damn them, I damned myself, I did not damn their code, I damned existence—and I hid my happiness as a shameful secret.

a place for such state of being, everything I want to deal with—even if this is the only way I can deal with you and be of use to you at present.” “Why?” whispered Rearden. “Because my only love, the only value I care to live for, is that which has never been loved by the world, has never won recognition or friends or defenders: human ability.

“You’ve got to get there, Kip,” said the man ominously, in that stubborn monotone of the unthinking which asserts an end without concern for the means. “God damn you, don’t you suppose I know it?” Kip Chalmers had curly blond hair and a shapeless mouth. He came from a semi-wealthy, semi-distinguished family, but he sneered at wealth and distinction in a manner which implied that only a top-rank aristocrat could permit himself such a degree of cynical indifference. He had graduated from a college which specialized in breeding that kind of aristocracy. The college had taught him that the purpose of ideas is to fool those who are stupid enough to think. He had made his way in Washington with the grace of a cat-burglar, climbing from bureau

There had been a time when the self-interest of his employers had demanded that he exercise his utmost ability

He thought of the passengers—the three hundred passengers aboard the Comet. He thought of his children. He had a son in high school and a daughter, nineteen, of whom he was fiercely, painfully proud, because she was recognized as the most beautiful girl in town. He asked himself whether he could deliver his children to the fate of the children of the unemployed, as he had seen them in the blighted areas, in the settlements around closed factories and along the tracks of discontinued railroads. He saw, in astonished horror, that the choice which he now had to make was between the lives of his children and the lives of the passengers on the Comet. A conflict of this kind had never been possible before. It was by protecting the safety of the passengers that he had earned the security of his children; he had served one by serving the other; there had been no clash of interests, no call for victims. Now, if he wanted to save the passengers, he had to do it at the price of his children. He remembered dimly the sermons he had heard about the beauty of self-immolation, about the virtue of sacrificing to others that which was one’s dearest. He knew nothing about the philosophy of ethics; but he knew suddenly—not in words, but in the form of a dark, angry, savage pain—that if this was virtue, then he wanted no part of .it.

He had no desire to be a martyr for the sake of allowing people safely to indulge in their own irresponsible evil.

It is said that catastrophes are a matter of pure chance, and there were those who would have said that the passengers of the Comet were not guilty or responsible for the thing that happened to them. The man in Bedroom A, Car No. 1, was a professor of sociology who taught that individual ability is of no consequence, that individual effort is futile, that an individual conscience is a useless luxury, that there is no individual mind or character or achievement, that everything is achieved collectively, and that it’s masses that count, not men.

The work gave her the calm she needed; she had not noticed how she began it or why; she had started without conscious intention, but she saw it growing under her hands, pulling her forward, giving her a healing sense of peace. Then she understood that what she needed was the motion to a purpose, no matter how small or in what form, the sense of an activity going step by step to some chosen end across a span of time.

His smile had to be deserved, it was intended for an adversary who traded her strength against his, not for a pain-beaten wretch who would seek relief in that smile and thus destroy its meaning. He could help her to live; he could not help her to decide for what purpose she wished to go on living.

But it is not true—she thought, as she stood at the door of her cabin, on this morning of May 28—it is not true that there is no place in the future for a superlative achievement of man’s mind; it can never be true. No matter what her problem, this would always remain to her—this immovable conviction that evil was unnatural and temporary. She felt it more clearly than ever this morning: the certainty that the ugliness of the men in the city and the ugliness of her suffering were transient accidents—while the smiling sense of hope within her at the sight of a sun-flooded forest, the sense of an unlimited promise, was the permanent and the real.

“Dagny, we can never lose the things we live for. We may have to change their form at times, if we’ve made an error, but the purpose remains the same and the forms are ours to make.”

remain. I don’t know what is right any longer.” “Check your premises, Dagny. Contradictions don’t exist.”

“Yes, Dagny, it was our own guilt.” “Because we didn’t work hard enough?” “Because we worked too hard—and charged too little.” “What do you mean?” “We never demanded the one payment that the world owed us—and we let our best reward go to the worst of men.

“I don’t think I can stop you now,” he said, “if you’ve made your choice. But if there’s one chance left to stop you, it’s a chance I have to take.” She shook her head slowly. “There isn’t. And—what for, Francisco? You’ve given up. What difference does it make to you whether I perish with the railroad or away from it?” “I haven’t given up the future.” “What future?” “The day when the looters will perish, but we won’t.” “If Taggart Transcontinental is to perish with the looters, then so am I.” He did not take his eyes off her face and he did not answer. She added dispassionately, “I thought I could live without it. I can’t. I’ll never try it again. Francisco, do you remember?—we both believed, when we started, that the only sin on earth was to do things badly. I still believe it.” The first note of life shuddered in her voice. “I can’t stand by and watch what they did at that tunnel. I can’t accept what they’re all accepting—Francisco, it’s the thing we thought so monstrous, you and I!—the belief that disasters are one’s natural fate, to be borne, not fought. I can’t accept submission. I can’t accept helplessness. I can’t accept renunciation. So long as there’s a railroad left to run, I’ll run it.”

“Dagny,” he said slowly, “I know why one loves one’s work. I know what it means to you, the job of running trains. But you would not run them if they were empty. Dagny, what is it you see when you think of a moving train?” She glanced at the city. “The life of a man of ability who might have perished in that catastrophe, but will escape the next one, which I’ll prevent—a man who has an intransigent mind and an unlimited ambition, and is in love with his own life ... the kind of man who is what we were when we started, you and I. You gave him up. I can’t.” He closed his eyes for an instant, and the tightening movement of his mouth was a smile, a smile substituting for a moan of understanding, amusement and pain. He asked, his voice gravely gentle, “Do you think that you can still serve him—that kind of man—by running the railroad?” “Yes.” “All right, Dagny. I won’t try to stop you. So long as you still think that, nothing can stop you, or should. You will stop on the day when you’ll discover that your work has been placed in the service, not of that man’s life, but of his destruction.” “Francisco!” It was a cry of astonishment and despair. “You do understand it, you know what I mean by that kind of man, you see him, too!” “Oh yes,” he said simply, casually, looking at some point in space within the room, almost as if he were seeing a real person. He added, “Why should you be astonished? You said that we were of his kind once, you and I. We still are. But one of us has betrayed him.” “Yes,” she said sternly, “one of us has. We cannot serve him by renunciation.” “We cannot serve him by making terms with his destroyers.” “I’m not making terms with them. They need me. They know it. It’s my terms that I’ll make them accept.” “By playing a game in which they gain benefits in exchange for harming you?” “If I can keep Taggart Transcontinental in existence, it’s the only benefit I want. What do I care if they make me pay ransoms? Let them have what they want. I’ll have the railroad.”

If it’s not right for me to own a car until I’ve worked myself into a hospital ward, earning a car for every loafer and every naked savage on earth—why can’t he demand a yacht from me, too, if I still have the ability not to have collapsed ? No? He can’t? Then why can he demand that I go without cream for my coffee until he’s replastered his living room? ... Oh well ... Well, anyway, it was decided that nobody had the right to judge his own need or ability. We voted on it. Yes, ma‘am, we voted on it in a public meeting twice a year. How else could it be done? Do you care to think what would happen at such a meeting? It took us just one meeting to discover that we had become beggars—rotten, whining, sniveling beggars, all of us, because no man could claim his pay as his rightful earning, he had no rights and no earnings, his work didn’t belong to him, it belonged to ’.the family,‘. and they owed him nothing in return, and the only claim he had on them was his ’.need’ -so he had to beg in public for relief from his needs, like any lousy moocher, listing all his troubles and miseries, down to his patched drawers and his wife’s head colds, hoping that .‘the family’ would throw him the alms. He had to claim miseries, because it’s miseries, not work, that had become the coin of the realm—so it turned into a contest among six thousand panhandlers, each claiming that his need was worse than his brother’s

In the old days, it used to be said that the Twentieth Century Motor trademark was as good as the karat mark on gold. I don’t know what it was that the Starnes heirs thought, if they thought at all, but I suppose that like all social planners and like savages, they thought that this trademark was a magic stamp which did the trick by some sort of voodoo power and that it would keep them rich, as it had kept their father.

It was the only country in history where wealth was not acquired by looting, but by production, not by force, but by trade, the only country whose money was the symbol of man’s right to his own mind, to his work, to his life, to his happiness, to himself.

There was nothing to support her but the beat of the engine and the minds of the men who had made the plane. But what else supports one anywhere?—she thought.

When she saw the lights of a town, like a handful of gold coins flung upon the prairie, the brightly violent lights fed by an electric current, they seemed as distant as the stars and now as unattainable. The energy that had lighted them was gone, the power that created power stations in empty prairies had vanished, and she knew of no journey to recapture it. Yet these had been her stars—she thought, looking down—these had been her goal, her beacon, the aspiration drawing her upon her upward course. That which others claimed to feel at the sight of the stars—stars safely distant by millions of years and thus imposing no obligation to act, but serving as the tinsel of futility—she had felt at the sight of electric bulbs lighting the streets of a town.

house that stood on a ridge above the valley. She saw a man walking down a path, ahead of them, hastening in the direction of the town. He wore blue denim overalls

“You’ve mapped this route deliberately, haven’t you? You’re showing me all the men whom”—she stopped, feeling inexplicably reluctant to say it, and said, instead—“whom I have lost?” “I’m showing you all the men whom I have taken away from you,” he answered firmly. This was the root, she thought, of the guiltlessness of his face: he had guessed and named the words she had wanted to spare him, he had rejected a good will that was not based on his values—and in proud certainty of being right, he had made a

“They’re all aristocrats, that’s true,” said Wyatt, “because they know that there’s no such thing as a lousy job—only lousy men who don’t care to do it.”

Wealth, Dagny? What greater wealth is there than to own your life and to spend it on growing? Every living thing must grow. It can’t stand still. It must grow or perish. Look—” He pointed at a plant fighting upward from under the weight of a rock—a long, gnarled stem, contorted by an unnatural struggle, with drooping, yellow remnants of unformed leaves and a single green shoot thrust upward to the sun with the desperation of a last, spent, inadequate effort. “That’s what they’re doing to us back there in hell. Do you see me submitting to it?” “No,” she whispered.

she knew that there was no meaning in motors or factories or trains, that their only meaning was in man’s enjoyment of his life, which they served—and that her swelling admiration at the sight of an achievement was for the man from whom it came, for the power and the radiant vision within him which had seen the earth as a place of enjoyment and had known that the work of achieving one’s happiness was the purpose, the sanction and the meaning of life.

They are counting on you to go on, to work to the limit of the inhuman and to feed them while you last—and when you collapse, there will be another victim starting out and feeding them, while struggling to survive—and the span of each succeeding victim will be shorter, and while you’ll die to leave them a railroad, your last descendant-in-spirit will die to leave them a loaf of bread. This does not worry the looters of the moment. Their plan—like all the plans of all the royal looters of the past—is only that the loot shall last their lifetime. It has always lasted before, because in one generation they could not run out of victims. But this time—it will not last. The victims are on strike. We are on strike against martyrdom—and against the moral code that demands it. We are on strike against those who believe that one man must exist for the sake of another.

“Will you give me time?” “Your time is not ours to give. Take your time.

“She can live through it, Miss Taggart, because we do not hold the belief that this earth is a realm of misery where man is doomed to destruction. We do not think that tragedy is our natural fate and we do not live in chronic dread of disaster. We do not expect disaster until we have specific reason to expect it—and when we encounter it, we are free to fight it. It is not happiness, but suffering that we consider unnatural. It is not success, but calamity that we regard as the abnormal exception in human life.”

Sebastián d‘Anconia committed one error: he accepted a system which declared that the property he had earned by right, was to be his, not by right, but by permission.

Dagny, do you remember that my ambition was to double my father’s production of copper? Dagny, if at the end of my life, I produce but one pound of copper a year, I will be richer than my father, richer than all my ancestors with all their thousands of tons—because that one pound will be mine by right and will be used to maintain a world that knows it!”

Her life and her values could not bring her to that, she thought; she had never found beauty in longing for the impossible and had never found the possible to be beyond her reach. But she had come to it and she could find no .answer.

That special pleasure she had felt in watching him eat the food she had prepared—she thought, lying still, her eyes closed, her mind moving, like time, through some realm of veiled slowness—it had been the pleasure of knowing that she had provided him with a sensual enjoyment, that one form of his body’s satisfaction had come from her. . . . There is reason, she thought, why a woman would wish to cook for a man . . . oh, not as a duty, not as a chronic career, only as a rare and special rite in symbol of ... but what have they made of it, the preachers of woman’s duty? ... The castrated performance of a sickening drudgery was held to be a woman’s proper virtue—while that which gave it meaning and sanction was held as a shameful sin . . . the work of dealing with grease, steam and slimy peelings in a reeking kitchen was held to be a spiritual matter, an act of compliance with her moral duty—while the meeting of two bodies in a bedroom was held to be a physical indulgence, an act of surrender to an animal instinct, with no glory, meaning or pride of spirit to be claimed by the animals involved.

Whether it’s a symphony or a coal mine, all work is an act of creating and comes from the same source: from an inviolate capacity to see through one’s own eyes—which means: the capacity to perform a rational identification -which means: the capacity to see, to connect and to make what had not been seen, connected and made before.

“Every man builds his world in his own image,” he said. “He has the power to choose, but no power to escape the necessity of choice.

Oh, if only I didn’t have to hear about it! If only I could stay here and never know what they’re doing to the railroad, and never learn when it goes!” “You’ll have to hear about it,” said Galt; it was that ruthless tone, peculiarly his, which sounded implacable by being simple, devoid of any emotional value, save the quality of respect for facts. “You’ll hear the whole course of the last agony of Taggart Transcontinental. You’ll hear about every wreck. You’ll hear about every discontinued train. You’ll hear about every abandoned line. You’ll hear about the collapse of the Taggart Bridge. Nobody stays in this valley except by a full, conscious choice based on a full, conscious knowledge of every fact involved in his decision. Nobody stays here by faking reality in any manner whatever.” She looked at him, her head lifted, knowing what chance he was rejecting. She thought that no man of the outer world would have said this to her at this moment—she thought of the world’s code that worshipped white lies as an act of mercy—she felt a stab of revulsion against that code, suddenly seeing its full ugliness for the first time-she felt an enormous pride for the tight, clean face of the man before her—he saw the shape of her mouth drawn firm in self-control, yet softened by some tremulous emotion, while she answered quietly, “Thank you. You’re right.”

she had seen, with the sudden, immediate vividness of sensory perception, an exact picture of what the code of self-sacrifice would have meant, if enacted by the three of them. Galt, giving up the woman he wanted, for the sake of his friend, faking his greatest feeling out of existence and himself out of her life, no matter what the cost to him and to her, then dragging the rest of his years through the waste of the unreached and unfulfilled -she, turning for consolation to a second choice, faking a love she did not feel, being willing to fake, since her will to self-deceit was the essential required for Galt’s self-sacrifice, then living out her years in hopeless longing, accepting, as relief for an unhealing wound, some moments of weary affection, plus the tenet that love is futile and happiness is not to be found on earth—Francisco

There is no conflict, and no call for sacrifice, and no man is a threat to the aims of another—if men understand that reality is an absolute not to be faked, that lies do not work, that the unearned cannot be had, that the undeserved cannot be given, that the destruction of a value which is, will not bring value to that which isn’t.

“It’s the chance dangers that I’m afraid of—the senseless, unpredictable dangers of a world falling apart. Consider the physical risks of complex machinery in the hands of blind fools and fear-crazed cowards. Just think of their railroads—you’d be taking a chance on some such horror as that Winston tunnel incident every time you stepped aboard a train—and there will be more incidents of that kind, coming faster and faster. They’ll reach the stage where no day will pass without a major wreck.” “I know it.” “And the same will be happening in every other industry, wherever machines are used—the machines which they thought could replace our minds. Plane crashes, oil tank explosions, blast-furnace break-outs, high-tension wire electrocutions, subway cave-ins and trestle collapses —they’ll see them all.

“Suppose I were to tell you that my decision is final and that I am never to join you?” “It would be a lie.” “Suppose I were now to decide that I wish to make it final and to stand by it, no matter what the future?” “No matter what future evidence you observe and what convictions you form?” “Yes.” “That would be worse than a lie.”

Dr. Stadler felt certain that this small-time shyster had had as little to do with the Project as any of the movie-usher attendants, that he possessed neither the mind nor the initiative nor even the sufficient degree of malice to cause a new gopher trap to be brought into the world, that he, too, was only the pawn of a silent machine—a machine that had no center, no leader, no direction, a machine that had not been set in motion by Dr. Ferris or Wesley Mouch, or any of the cowed creatures in the grandstands, or any of the creatures behind the scenes—an impersonal, unthinking, unembodied machine, of which none was the driver and all were the pawns, each to the degree of his evil.

If anyone wished to oppose a government policy, how would he make himself heard? Through these gentlemen of the press, Dr. Stadler? Through this microphone? Is there an independent newspaper left in the country? An uncontrolled radio station? A private piece of property, for that matter—or a personal opinion?” The tone of the voice was obvious now: it was the tone of a thug. “A personal opinion is the one luxury that nobody can afford today.”

He was young; his movements and voice had that swift, sharp clarity which belongs to competence; among his aged, corrupt, favor-ridden and pull-created colleagues, he had managed to achieve the rank of elite of the political press, by means and in the role of a last, irresistible spark of ability. His eyes had the look of an eager, unfrightened intelligence; they were the kind of eyes Dr. Stadler had seen looking up at him from the benches of classrooms.

“Now tell me, what is the Railroad Unification Plan?” “It’s ... Oh, do you mind?—let Jim tell you. He

“Why?” “Dagny, .‘why’ is a word nobody uses any longer.”

We are those who do not disconnect the values of their minds from the actions of their bodies, those who do not leave their values to empty dreams, but bring them into existence, those who give material form to thoughts, and reality to values—those who make steel, railroads and happiness

I rebelled against the creed that virtue is some disembodied unknowable of the spirit—but I damned you, you, my dearest one, for the desire of your body and mine. But if the body is evil, then so are those who provide the means of its survival, so is material wealth and those who produce it—and if moral values are set in contradiction to our physical existence, then it’s right that rewards should be unearned, that virtue should consist of the undone, that there should be no tie between achievement and profit, that the inferior animals who’re able to produce should serve those superior beings whose superiority in spirit consists of incompetence in the flesh.

“People think that a liar gains a victory over his victim. What I’ve learned is that a lie is an act of self-abdication, because one surrenders one’s reality to the person to whom one lies, making that person one’s master, condemning oneself from then on to faking the sort of reality that person’s view requires to be faked.

Don’t speak of atonement, you have not hurt me, your mistakes came from your magnificent integrity under the torture of an impossible code—and your fight against it did not bring me suffering, it brought me the feeling I’ve found too seldom: admiration.

Looking up at his face, she realized that for the first time he was what she had always thought him intended to be: a man with an immense capacity for the enjoyment of existence.

in anger at a universe where some malevolent power would not permit him to find enjoyment without the need to know what he wanted or why.

He had never intended going anywhere, he had wanted to be free of progression, free of the yoke of a straight line, he had never wanted his years to add up to any sum—what had summed them up?—why had he reached some unchosen destination where one could no longer stand still or retreat?

“I’ve never tried to hide that I came from the slums,” she said in the simple, impersonal tone of a factual correction. “And I haven’t any sympathy for that welfare philosophy. I’ve seen enough of them to know what makes the kind of poor who want something for nothing.”

embarrassed you? Tonight?” “You did!” “How?” “If

You think that running a railroad is a matter of track-laying and fancy metals and getting trains there on time. But it’s not. Any underling can do that. The real heart of a railroad is in Washington. My job is politics. Politics. Decisions made on a national scale, affecting everything, controlling everybody. A few words on paper, a directive—changing the life of every person in every nook, cranny and penthouse of this country!”

For the flash of one instant, she grasped the unthinkable fact of a man who was guilty and knew it and was trying to escape by inducing an emotion of guilt in his victim.

“I did love you once,” she said dully, “but it wasn’t what you wanted. I loved you for your courage, your ambition, your ability. But it wasn’t real, any of it.”

“You’re not capable of love, you cheap little gold-digger!” he cried suddenly, in a tone stripped of all color but the desire to hurt. “Yes, I said gold-digger. There are many forms of it, other than greed for money, other and worse. You’re a gold-digger of the spirit. You didn’t marrv me for my cash—but you married me for my ability or courage or whatever value it was that you set as the price of your love!”

“Whenever anyone accuses some person of being ‘unfeeling,’ he means that that person is just. He means that that person has no causeless emotions and will not grant him a feeling which he does not deserve. He means that .‘to feel’ is to go against reason, against moral values, against reality.

“Well, observe that you never hear that accusation in defense of innocence, but always in defense of guilt. You never hear it said by a good person about those who fail to do him justice. But you always hear it said by a rotter about those who treat him as a rotter, those who don’t feel any sympathy for the evil he’s committed or for the pain he suffers as a consequence. Well, it’s true—that is what I do not feel. But those who feel it, feel nothing for any quality of human greatness, for any person or action that deserves admiration, approval, esteem. These are the things I feel. You’ll find that it’s one or the other. Those who grant sympathy to guilt, grant none to innocence. Ask yourself which, of the two, are the unfeeling persons. And then you’ll see what motive is the opposite of charity.” “What?” she whispered. “Justice, Cherryl.”

“Dagny, how did you do it? How did you manage to remain unmangled?” “By holding to just one rule.” “Which?” “To place nothing—nothing—above the verdict of my own mind.”

he was discovering the pleasure of full perception—

You could save us now, you could find a way to make things work—if you wanted to!” She burst out laughing. There, she thought, was the ultimate goal of all that loose academic prattle which businessmen had ignored for years, the goal of all the slipshod definitions, the sloppy generalities, the soupy abstractions, all claiming that obedience to objective reality is the same as obedience to the State, that there is no difference between a law of nature and a bureaucrat’s directive, that a hungry man is not free, that man must be released from the tyranny of food, shelter and clothing—all of it, for years, that the day might come when Nat Taggart, the realist, would be asked to consider the will of Cuffy Meigs as a fact of nature, irrevocable and absolute like steel, rails and gravitation, to accept the Meigs-made world as an objective, unchangeable reality—then to continue producing abundance in that world. There was the goal of all those con men of library and classroom, who sold their revelations as reason, their “instincts” as science, their cravings as knowledge, the goal of all the savages of the non-objective, the non-absolute, the relative, the tentative, the probable—the savages who, seeing a farmer gather a harvest, can consider it only as a mystic phenomenon unbound by the law of causality and created by the farmer’s omnipotent whim, who then proceed to seize the farmer, to chain him, to deprive him of tools, of seeds, of water, of soil, to push him out on a barren rock and to command: “Now grow a harvest and feed us!”

“Dagny”—his voice was the soft, nasal, monotonous whine of a beggar—“I want to be president of a railroad. I want it. Why can’t I have my wish as you always have yours? Why shouldn’t I be given the fulfillment of my desires as you always fulfill any desire of your own? Why should you be happy while I suffer? Oh yes, the world is yours, you’re the one who has the brains to run it. Then why do you permit suffering in your world? You proclaim the pursuit of happiness, but you doom me to frustration. Don’t I have the right to demand any form of happiness I choose? Isn’t that a debt which you owe me?

“Henry, I want a job. I mean,

“It’s a moral imperative, universally conceded in our day and age, that every man is entitled to a job.” His voice rose: “I’m entitled to it!” “You are? Go on, then, collect your claim.” “Uh?” “Collect your job. Pick it off the bush where you think it grows.” “I mean—” “You mean that it doesn’t? You mean that you need it, but can’t create it? You mean that you’re entitled to a job which I must create for you?” “Yes!”

joy is the goal of existence, and joy is not to be stumbled upon, but to be achieved, and the act of treason is to

You’ve never suffered, the dead stare of the eyes was saying, you’ve never felt anything, because only to suffer is to feel—there’s no

She had thought that industrial production was a value not to be questioned by anyone; she had thought that these men’s urge to expropriate the factories of others was their acknowledgment of the factories’ value. She, born of the industrial revolution, had not held as conceivable, had forgotten along with the tales of astrology and alchemy, what these men knew in their secret, furtive souls, knew not by means of thought, but by means of that nameless muck which they called their instincts and emotions: that so long as men struggle to stay alive, they’ll never produce so little but that the man with the club won’t be able to seize it and leave them still less, provided millions of them are willing to submit—that the harder their work and the less their gain, the more submissive the fiber of their spirit—that men who live by pulling levers at an electric switchboard, are not easily ruled, but men who live by digging the soil with their naked fingers, are—that the feudal baron did not need electronic factories in order to drink his brains away out of jeweled goblets, and neither did the rajahs of the People’s State of India. She saw what they wanted and to what goal their “instincts,” which they called unaccountable, were leading them. She saw that Eugene Lawson, the humanitarian, took pleasure at the prospect of human starvation—and Dr. Ferris, the scientist, was dreaming of the day when men would return to the hand-plow.

“Don’t try to tell me what I’m going to think. Give me the facts.” “It is a plan which is fair, sound, equitable and—”

“All we want is—” He stopped. “All you want is production without men who’re able to produce, isn’t

heard Francisco’s voice, asking him quietly in the ballroom of this building, yet asking it also here and now: “Who is the guiltiest man in this room?” He heard his own answer of the past: “I suppose-James Taggart?” and Francisco’s voice saying without reproach: “No, Mr. Rearden, it’s not James Taggart,”—but here, in this room and this moment, his mind answered: “I am.” He had cursed these looters for their stubborn blindness? It was he who had made it possible. From the first extortion he had accepted, from the first directive he had obeyed, he had given them cause to believe that reality was a thing to be cheated, that one could demand the irrational and someone somehow would provide

He thought of all the living species that train their young in the art of survival, the cats who teach their kittens to hunt, the birds who spend such strident effort on teaching their fledglings to fly—yet man, whose tool of survival is the mind, does not merely fail to teach a child to think, but devotes the child’s education to the purpose of destroying his brain, of convincing him that thought is futile and evil, before he has started to think. From the first catch-phrases flung at a child to the last, it is like a series of shocks to freeze his motor, to undercut the power of his consciousness. “Don’t ask so many questions, children should be seen and not heard!”—“Who are you to think? It’s so, because I say so!”—“Don’t argue, obey!”—“Don’t try to understand, believe!”—“Don’t rebel, adjust!”—“Don’t stand out, belong!”—“Don’t struggle, compromise!” —“Your heart is more important than your mind!”—“Who are you to know? Your parents know best!”—“Who are you to know? Society knows best!”—“Who are you to know? The bureaucrats know best!”—“Who are you to object? All values are relative!”—“Who are you to want to escape a thug’s bullet? That’s only a personal prejudice!”

“All the men who have vanished, the men you hated, yet dreaded to lose, it is I who have taken them away from you. Do not attempt to find us. We do not choose to be found. Do not cry that it is our duty to serve you. We do not recognize such duty. Do not cry that you need us. We do not consider need a claim. Do not cry that you own us. You don’t. Do not beg us to return. We are on strike, we, the men of the mind. “We are on strike against self-immolation. We are on strike against the creed of unearned rewards and unrewarded duties. We are on strike against the dogma that the pursuit of one’s happiness is evil. We are on strike against the doctrine that life is guilt.

centuries, the battle of morality was fought between those who claimed that your life belongs to God and those who claimed that it belongs to your neighbors—between those who preached that the good is self-sacrifice for the sake of ghosts in heaven and those who preached that the good is self-sacrifice for the sake of incompetents on earth. And no one came to say that your life belongs to you and that the good is to live it.

‘Value’ is that which one acts to gain and keep, ’.virtue’ is the action by which one gains and keeps it. ‘Value’ presupposes an answer to the question: of value to whom and for what? ’.Value’ presupposes a standard, a purpose and the necessity of action in the face of an alternative. Where there are no alternatives, no values are possible.

“Man cannot survive except by gaining knowledge, and reason is his only means to gain it. Reason is the faculty that perceives, identifies and integrates the material provided by his senses.

“All thinking is a process of identification and integration. Man perceives a blob of color; by integrating the evidence of his sight and his touch, he learns to identify it as a solid object: he learns to identify the object as a table; he learns that the table is made of wood; he learns that the wood consists of cells, that the cells consist of molecules, that the molecules consist of atoms. All through this process, the work of his mind consists of answers to a single question: What is it? His means to establish the truth of his answers is logic, and logic rests on the axiom that existence exists. Logic is the art of non-contradictory identification. A contradiction cannot exist. An atom is itself, and so is the universe; neither can contradict its own identity; nor can a part contradict the whole. No concept man forms is valid unless he integrates it without contradiction into the total sum of his knowledge.

“Thinking is man’s only basic virtue, from which all the others proceed. And his basic vice, the source of all his evils, is that nameless act which all of you practice, but struggle never to admit: the act of blanking out, the willful suspension of one’s consciousness, the refusal to think—not blindness, but the refusal to see; not ignorance, but the refusal to know. It is the act of unfocusing your mind and inducing an inner fog to escape the responsibility of judgment—on the unstated premise that a thing will not exist if only you refuse to identify it, that A will not be A so long as you do not pronounce the verdict ‘It is.’ Non-thinking is an act of annihilation, a wish to negate existence, an attempt to wipe out reality.

“You who prattle that morality is social and that man would need no morality on a desert island—it is on a desert island that he would need it most. Let him try to claim, when there are no victims to pay for it, that a rock is a house, that sand is clothing, that food will drop into his mouth without cause or effort, that he will collect a harvest tomorrow by devouring his stock seed today—and reality will wipe him out, as he deserves; reality will show him that life is a value to be bought and that thinking is the only coin noble enough to buy it.

To live, man must hold three things as the supreme and ruling values of his life: Reason-Purpose-Self-esteem. Reason, as his only tool of knowledge—Purpose, as his choice of the happiness which that tool must proceed to achieve-Self-esteem, as his inviolate certainty that his mind is

a concession to the irrational invalidates one’s consciousness and turns it from the task of perceiving to the task of faking reality—that

his refusal to sacrifice the reality of his own existence to the deluded consciousness of others.

the vilest form of self-abasement and self-destruction is the subordination of your mind to the mind of another, the acceptance of an authority over your brain, the acceptance of his assertions as facts, his say-so as truth, his edicts as middle-man between your consciousness and your existence.

to withhold your contempt from men’s vices is an act of moral counterfeiting, and to withhold your admiration from their virtues is an act of moral embezzlement—that to place any other concern higher than justice is to devaluate your moral currency and defraud the good in favor of the evil,

productive work is the process by which man’s consciousness controls his existence, a constant process of acquiring knowledge and shaping matter to fit one’s purpose, of translating an idea into physical form, of remaking the earth in the image of one’s values—that all work is creative work if done by a thinking mind, and no work is creative if done by a blank who repeats in uncritical stupor a routine he has learned from others—that

any value you might find outside your work, any other loyalty or love, can be only travelers you choose to share your journey and must be travelers going on their own power in the same direction.

“Pride is the recognition of the fact that you are your own highest value and, like all of man’s values, it has to be earned—that of any achievements open to you, the one that makes all others possible is the creation of your own character—that your character, your actions, your desires, your emotions are the products of the premises held by your mind—that as man must produce the physical values he needs to sustain his life, so he must acquire the values of character that make his life worth sustaining—that as man is a being of self-made wealth, so he is a being of self-made soul—that to live requires a sense of self-value, but man, who has no automatic values, has no automatic sense of self-esteem and must earn it by shaping his soul in the image of his moral ideal, in the image of Man, the rational being he is born able to create, but must create by choice—that the first precondition of self-esteem is that radiant selfishness of soul which desires the best in all things, in values of matter and spirit, a soul that seeks above all else to achieve its own moral perfection, valuing nothing higher than itself—

the good is not for him to understand, his duty is to crawl through years of penance, atoning for the guilt of his existence to any stray collector of unintelligible debts, his only concept of a value is a zero: the good is that which is non-man. . “The name of this monstrous absurdity is Original Sin.

The evils for which they damn him are reason, morality, creativeness, joy—all the cardinal values of his existence. It is not his vices that their myth of man’s fall is designed to explain and condemn, it is not his errors that they hold as his guilt, but the essence of his nature as man. Whatever he was—that robot in the Garden of Eden, who existed without mind, without values, without labor, without love—he was not man. “Man’s fall, according to your teachers, was that he gained the virtues required to live. These virtues, by their standard, are his Sin.

“They have cut man in two, setting one half against the other. They have taught him that his body and his consciousness are two enemies engaged in deadly conflict, two antagonists of opposite natures, contradictory claims, incompatible needs, that to benefit one is to injure the other, that his soul belongs

“The good, say the mystics of spirit, is God, a being whose only definition is that he is beyond man’s power to conceive—a definition that invalidates man’s consciousness and nullifies his concepts of existence. The good, say the mystics of muscle, is Society—a thing which they define as an organism that possesses no physical form, a super-being embodied in no one in particular and everyone in general except yourself. Man’s mind, say the mystics of spirit, must be subordinated to the will of God. Man’s mind, say the mystics of muscle, must be subordinated to the will of Society. Man’s standard of value, say the mystics of spirit, is the pleasure of God, whose standards are beyond man’s power of comprehension and must be accepted on faith. Man’s standard of value, say the mystics of muscle, is the pleasure of Society, whose standards are beyond man’s right of judgment and must be obeyed as a primary absolute. The purpose of man’s life, say both, is to become an abject zombie who serves a purpose he does not know, for reasons he is not to question. His reward, say the mystics of spirit, will be given to him beyond the grave. His reward, say the mystics of muscle, will be given on earth—to his great-grandchildren. “Selfishness—say both—is man’s evil

Sacrifice’ is the surrender of that which you value in favor of that which you don’t.

you wish to save the last of your dignity, do not call your best actions a ‘sacrifice’: that term brands you as immoral. If a mother buys food for her hungry child rather than a hat for herself, it is not a sacrifice: she values the child higher than the hat; but it is a sacrifice to the kind of mother whose higher value is the hat, who would prefer her child to starve and feeds him only from a sense of duty.

Matter has no value except as a means for the satisfaction of human desires.

“This much is true: the most selfish of all things is the independent mind that recognizes no authority higher than its own and no value higher than its judgment of truth.

Why is it moral to serve the happiness of others, but not your own? If enjoyment is a value, why is it moral when experienced by others, but immoral when experienced by you?

“If you heal your pain by your own effort, you receive no moral credit: your code regards it scornfully as an act of self-interest. Whatever value you seek to acquire, be it wealth or food or love or rights, if you acquire it by means of your virtue, your code does not regard it as a moral acquisition: you occasion no loss to anyone, it is a trade, not alms; a payment, not a sacrifice. The deserved belongs in the selfish, commercial realm of mutual profit; it is only the undeserved that calls for that moral transaction which consists of profit to one at the price of disaster to the other. To demand rewards for your virtue is selfish and immoral; it is your lack of virtue that transforms your demand into a moral right.

Your morality demands that you divorce your love from values and hand it down to any vagrant, not as response to his worth, but as response to his need, not as reward, but as alms, not as a payment for virtues, but as a blank check on vices.

“The mystics of both schools, who preach the creed of sacrifice, are germs that attack you through a single sore: your fear of relying on your mind.

“They claim that they perceive a mode of being superior to your existence on this earth. The mystics of spirit call it ‘another dimension,’ which consists of denying dimensions. The mystics of muscle call it ‘the future,’ which consists of denying the present.

“What is the nature of that superior world to which they sacrifice the world that exists? The mystics of spirit curse matter, the mystics of muscle curse profit. The first wish men to profit by renouncing the earth, the second wish men to inherit the earth by renouncing all profit. Their non-material, non-profit worlds are realms where rivers run with milk and coffee, where wine spurts from rocks at their command, where pastry drops on them from clouds at the price of opening their mouth. On this material, profit-chasing earth, an enormous investment of virtue—of intelligence, integrity, energy, skill—is required to construct a railroad to carry them the distance of one mile; in their non-material, non-profit world, they travel from planet to planet at the cost of a wish. If an honest person asks them: ‘How?’.—they answer with righteous scorn that a ‘how’ is the concept of vulgar realists; the concept of superior spirits is ’.Somehow..‘. On this earth restricted by matter and profit, rewards are achieved by thought; in a world set free of such restrictions, rewards are achieved by wishing.

“The restriction they seek to escape is the law of identity. The freedom they seek is freedom from the fact that an A will remain an A, no matter what their tears or tantrums—that a river will not bring them milk, no matter what their hunger—that water will not run uphill, no matter what comforts they could gain if it did, and if they want to lift it to the roof of a skyscraper, they must do it by a.process of thought and labor, in which the nature of an inch of pipe line counts, but their feelings do not—that their feelings are impotent to alter the course of a single speck of dust in space or the nature of any action they have committed.

“Your teachers, the mystics of both schools, have reversed causality in their consciousness, then strive to reverse it in existence. They take their emotions as a cause, and their mind as a passive effect. They make their emotions their tool for perceiving reality. They hold their desires as an irreducible primary, as a fact superseding all facts. An honest man does not desire until he has identified the object of his desire. He says: ‘It is, therefore

The law of causality is the law of identity applied to action. All actions are caused by entities. The nature of an action is caused and determined by the nature of the entities that act; a thing cannot act in contradiction to its nature. An action not caused by an entity would be caused by a zero, which would mean a zero controlling a thing, a nonentity controlling an entity, the non-existent ruling the existent—which is the universe of your teachers’ desire, the cause of their doctrines of causeless action, the reason of their revolt against reason, the goal of their morality, their politics, their economics, the ideal they strive for: the reign of the zero.

The corollary of the causeless in matter is the unearned in spirit.

“We are the cause of all the values that you covet, we who perform the process of thinking, which is the process of defining identity and discovering causal connections.

“When he declares that an axiom is a matter of arbitrary choice and he doesn’t choose to accept the axiom that he exists, he blanks out the fact that he has accepted it by uttering that sentence, that the only way to reject it is to shut one’s mouth, expound no theories and die.

seedy little smiling professor who assures you that your brain has no capacity to think, that you have no means of perception and must blindly obey the omnipotent will of that supernatural force:

At the crossroads of the choice between ‘I know’ and ’.They say,.‘.

To control the consciousness of others becomes his only passion; power-lust is a weed that grows only in the vacant lots of an abandoned mind.

“No matter whose welfare he professes to serve, be it the welfare of God or of that disembodied gargoyle he describes as ‘The People,’ no matter what ideal he proclaims in terms of some supernatural dimension—in fact, in reality, on earth, his ideal is death,

“It is a conspiracy without leader or direction, and the random little thugs of the moment who cash in on the agony of one land or another are chance scum riding the torrent from the broken dam of the sewer of centuries, from the reservoir of hatred for reason, for logic, for ability, for achievement, for joy, stored by every whining anti-human who ever preached the superiority of the .‘heart’ over the mind.

I saw that there comes a point, in the defeat of any man of virtue, when his own consent is needed for evil to win—and that no manner of injury done to him by others can succeed if he chooses to withhold his consent. I saw that I could put an end to your outrages by pronouncing a single word in my mind. I pronounced it. The word was .‘No.’

us to help you to live. “Did

I am the first man who told them that I did not need them, and until they learned to deal with me as traders, giving value for value,

You declare to your children that it is rational to loot, to torture, to enslave, to expropriate, to murder, but that they must resist the temptations of logic and stick to the discipline of remaining irrational—that skyscrapers, factories, radios, airplanes were the products of faith and mystic intuition, while famines, concentration camps and firing squads are the products of a reasonable manner of existence—that the industrial revolution was the revolt of the men of faith against that era of reason and logic which is known as the Middle Ages.

“Every act of man’s life has to be willed; the mere act of obtaining or eating his food implies that the person he preserves is worthy of being preserved; every pleasure he seeks to enjoy implies that the person who seeks it is worthy of finding enjoyment.

“Every form of causeless self-doubt, every feeling of inferiority and secret unworthiness is, in fact, man’s hidden dread of his inability to deal with existence.

The root of that legend exists, not in the past of the race, but in the past of every man. You still retain a sense—not as firm as a memory, but diffused like the pain of hopeless longing—that somewhere in the starting years of your childhood, before you had learned to submit, to absorb the terror of unreason and to doubt the value of your mind, you had known a radiant state of existence, you had known the independence of a rational consciousness facing an open universe. That is the paradise which you have lost, which you seek—which is yours for the taking.

“That choice is yours to make. That choice—the dedication to one’s highest potential—is made by accepting the fact that the noblest act you have ever performed is the act of your mind in the process of grasping that two and two make four.

Accept the fact that you are not omniscient,

“Just as man can’t exist without his body, so no rights can exist without the right to translate one’s rights into reality—to think, to work and to keep the results—which means: the right of property.

“The source of property rights is the law of causality. All property and all forms of wealth are produced by man’s mind and labor. As you cannot have effects without causes, so you cannot have wealth without its source: without intelligence

We, the men of the mind, we who are traders, not masters or slaves, do not deal in blank checks or grant them.

“So long as men, in the era of savagery, had no concept of objective reality and believed that physical nature was ruled by the whim of unknowable demons—no thought, no science, no production were possible. Only when men discovered that nature was a firm, predictable absolute were they able to rely on their knowledge, to choose their course, to plan their future and, slowly, to rise from the cave.

A farmer will not invest the effort of one summer if he’s unable to calculate his chances of a harvest. But you expect industrial giants—who plan in terms of decades, invest in terms of generations and undertake ninety-nine-year contracts—to continue to function and produce, not knowing what random caprice in the skull of what random official will descend upon them at what moment to demolish the whole of their effort. Drifters and physical laborers live and plan by the range of a day. The better the mind, the longer the range. A man whose vision extends to a shanty, might continue to build on your quicksands, to grab a fast profit and run. A man who envisions skyscrapers, will not. Nor will he give ten years of unswerving devotion to the task of inventing a new product, when he knows that gangs of entrenched mediocrity are juggling the laws against him, to tie him, restrict him and force him to fail, but should he fight them and struggle and succeed, they will seize his rewards and his invention.

All life is a purposeful struggle, and your only choice is the choice of a goal.

“If you had blood poisoning, would you adjust to it or act to change it?” “Oh, that’s different! That’s physical!” “You mean, physical facts are open to correction, but your whims are not?” “Huh?” “You mean, physical nature can be adjusted to men, but your whims are above the laws of nature, and men must adjust to you?”

Celebrations—she remembered her own words, with a stab of longing—should be only for those who have something to celebrate.

The most fraudulent part of the fraud was that they meant it. They were offering Galt the best that their view of existence could offer, they were trying to tempt him with that which was their dream of life’s highest fulfillment: this spread of mindless adulation, the unreality of this enormous pretense—approval without standards, tribute without content, honor without causes, admiration without reasons, love without a code of values.

My philosophy, in essence, is the concept of man as a heroic being, with his own happiness as the moral purpose of his life, with productive achievement as his noblest activity, and reason as his only .absolute.