Atlas Shrugged, by Ayn Rand and The Dismal Science by Stephen MarglinFlying and waiting in airports is conducive to reading.

I had never read Atlas Shrugged before. What I like is the “in your face” defense of businessmen and the unremitting attack on the “looters” of government. Rand is uncanny in her depiction of government involvement as a tar-baby phenomenon where “solving” each problem creates a worse one.

What I don’t like are three things.

1. The heroes are so humorless and self-absorbed that I cannot root for them.

2. The credo of “I will not live my life for any man nor ask any man to live his life for me” (I’m paraphrasing) sounds too much like a survivalist fruitcake holed up in a shack in the hills. Ironically, at the climax of the book, the heroes behave more in Three Musketeers fashion. Although of course they don’t say “one for all and all for one,” Rand is playing that tune on your emotional violin in the end.

3. The villains are clearly villains from the beginning. What would be really neat, particularly in a movie version, would be instead to start out as if you were following a conventional Hollywood script, and get the audience to root for the crusading politicians against the greedy industrialists. Then…gradually…let it become clear that it’s the industrialists who are the heroes and the politicians who are causing ever-greater harm.

Stephen Marglin was the first radical economist I ever read. I think Bernie Saffran introduced me to “What do Bosses do?” back in the mid-70’s, right around when the paper was published. In that paper, Marglin argues that bosses succeed by withholding information.

Think of an owner-chef of a restaurant, who needs assistants to help with the cooking. The owner doesn’t want any of the assistants leaving to start his own restaurant, so she breaks down the cooking tasks in such a way that none of the assistants is able to learn how to make a complete item.

It’s a clever theory, but I doubt its empirical relevance. It suggests that real-world businesses are complex not because that is efficient but instead because it reduces the bargaining power of workers. I’m sorry, but I think that if you look at, say, Wal-Mart, it is easier to believe the conventional explanation that the business has evolved a complex structure in order to achieve efficiency.

Marglin’s new book, The Dismal Science, expresses a couple sentiments which I share. One is a rejection of the nation-state as an embodiment of collective virtue. Another is a sympathetic treatment of Hayek and the problem of tacit knowledge. Marglin writes (p. 166)

If people really could formulate all their knowledge in algorithmic terms and calculate as economic theory assumes, there would be no need for real-life markets…The virtue of the real market is precisely that it calls forth knowledge that people cannot explain, justify, or defend intellectually. It calls forth this knowledge by the incentives it provides for action and the ruthlessness with which it weeds out error…

The Hayekian argument…is, I believe, a powerful defense of capitalism as an engine of growth…in marked contrast with the post-Lange, Arrow-Debreu defense that presupposes a static world of algorithmic knowledge and complete probability distributions.

Otherwise, however, the book is largely a grab-bag of criticisms of economics and modernity. His point is to blame the ideology of economics for some of the features of modernity that he laments.

A major theme is how economic thinking and economic growth undermine community. Marglin’s example of a community is the Amish. His example of their community spirit is an instance where they allowed an infant to die because they could not afford his medical treatment and they refused on principle to accept Medicaid.

I agree that close-knit tribal and village communities are incompatible with modern economies. However, I have absolutely no romantic sentiments for primitivism. Cato’s Tom Palmer speaks with eloquent sarcasm about Western tourists who lament when they see Guatemalan villagers wearing blue jeans instead of the native apparel that used to require hours of backbreaking labor to produce.

If you are going to accuse me as an economist of undermining primitive village societies, I am prepared just to plead guilty and move on.