Sense and Sensibility: The Capitalisms of F.A. Hayek and Ayn Rand

There is a lot of hubbub over the economy and how that's being handled by our new(ish -- it's been a year already) presidential administration. "Socialism" and "planned economy" -- even "fascism" -- have once again become Republican invective and are being slung at the various initiatives Obama and his people have been putting into effect, or with the notable example of healthcare reform, been attempting to put into effect for months and months only to be stymied by all kinds of partisan bickering, which let's be honest, you'd expect that of our government. Capitalism all the while remains The American economic model, but I'm beginning to think that's not such a bad thing.

Not to be overly cynical, but the bloated perversion of healthcare reform we appear on the cusp of getting should do well at satisfying no one as it struggles to resemble what large numbers of people had ostensibly professed desiring with Obama's significant victory in November '08. But we people did want lots of stuff, so it's hard to be sure. All I know is I'm jaded enough. Or I should say I was jaded until I read Atul Gawande's article "Testing, Testing" in the recent December 14th issue of The New Yorker. I was even jaded for the first page of Gawande's article, when he wrote things of the health care reform bill like, "Does the bill end medicine's destructive piecemeal payment system? Does it replace paying for quantity with paying for quality? Does it institute nationwide structural changes that curb costs and raise quality? It does not." DAMMIT! I bellowed within earshot of my friend's cat whose expression chided me silently. Or perhaps that isn't a true thing that happened at all.

So I read some more. "Instead, what it offers is . . . pilot programs." Huh? Well, for fear this post will become too overwrought with healthcare reform info taken almost entirely from The New Yorker, I will sum things up like this: Gawande makes a compelling argument using the historical example of agriculture at the turn of the 19th century in the U.S. for why pilot programs may be the most fruitful course in effecting real change in health care today, with an appropriate level of government intervention. Read the article yourself, and see for yourself. I highly recommend that you do.

So then what? How does all this health care shinola apply to F.A. Hayek and Ayn Rand? It's all in the approach, I think. Ayn Rand has got a lot of cultural currency right now, one of those popular zeitgeists who always pops up, apparently, in times of great economic woe, especially when there's a president of startling contrary opinion like Obama in office (though he resembles a Randian protagonist in more ways than her adoring minions would probably want to admit). Hayek, meanwhile, is the sensible alternative to Rand and the man whose real-world influence has vastly exceeded her own, Milton Friedman. Friedman, who spawned neo-liberalism and all its glorious unrestraint and wrote an introduction to Hayek's seminal "The Road to Serfdom."

Full shocking disclosure: I've always been wary of capitalism. The idea of money in exchange for services or goods rendered is something I've long seen as convincingly logical but always cold and alienating. It's hard to be friends with the people with whom you share a vested monetary interest of some sort, say insurance salesman v. those (s)he insures. Even Ray Kroc, one of the preeminent capitalists of all time and certainly the last one hundred years, acknowledged that much, when for example he refused to act as supplier to his operators, worrying for good reason it would compromise their carefully established mutualistic relationship. As he put it, "There is a basic conflict in trying to treat a man as a partner on the one hand while selling him something at a profit on the other." But that isn't because he doesn't like them, just there'd be money that needed making, and so must be. He added, "The temptation could become very strong to dilute the quality of what you are selling him in order to increase your profit." Yup, I mean I guess that mildly impugns Kroc's character, but it's probably true and basically honest.

Kroc's McDonald's model is also representative of what I think works (and absolutely representative of what I abhor) with regard to capitalism. This is a form of capitalism I'll also add has been colored by my own way of thinking. So you know, you've now been warned. What worked with respect to McDonald's is what worked in the case of agriculture and pilot programs: a system of trial and error, with a largely hands off centralized force (in the case of McDonald's it was the corporation and in agriculture the USDA) offering opinions and coordinating the collective efforts of the component parts for the betterment of the whole. As Kroc said, he couldn't do what he did while simultaneously having a monetary relationship with his operators. The same is true of healthcare: and like it or not, a hands-off governmental approach has been shown to work in the past, provided it doesn't go too far. Maybe that's too much to ask but I don't think so.

What's also worth noting is that while all of these innovations required the kind of big-picture vision of a Ray Kroc they were surprisingly egalitarian, and combined the best elements of socialism and capitalism into one. Obviously, nothing's ever going to be perfect but that's exactly how Gawande describes these types of desultory, fluid circumstances defining health care, agriculture, and -- less so today, it would seem -- even McDonald's. He wrote, "There are, in human affairs, two kinds of problems: those which are amenable to a technical solution and those which are not . . . Problems of the second kind, by contrast, are never solved, exactly; they are managed [emphasis his]."

Now, as I say it won't be perfect. McDonald's for example is far from perfect, in part this is due to how far they've strayed from the spirit of the original business model due to their inevitable, massive expansion. Independent franchisees, while still playing a role, are not nearly as free to be entrepreneurial as they were before the process of McDonaldization became ossified, but it's the spirit of the enterprise that counts -- even if today's McDonald's would not be recognizable to the operators who played such an important role in its genesis, and wasn't when the transformation originally began to take place.

Ayn Rand's philosophy of Objectivism makes no room for an arbitrating entity like the government to intervene in the affairs of man. More full shocking disclosure: I profoundly dislike Objectivism. It reads to me like the hyper-masculine dreck that may prove useful in inspiring and coaching football players but question begs its way out of relevance in a real world setting, full of the shades of gray it rejects. Objectivism is presumptuous, oh yes. It presumes the irrelevance of determinism (i.e. factors such as upbringing, genes or economic conditions play no role in one's success or lack of success, with special emphasis on the latter condition). I'm fine with her rejection of all things spiritual (fate, religion), if I'm not totally in agreement with her there, either, but you don't need to read "Outliers" by Malcolm Gladwell to know that there is something deeply flawed in completely dismissing exterior factors as playing any role in one's chances for a "great" life, one marked by at least some significant monetary gain.

Explain to me why those (liberal, conservative, libertarian, et al) who have the means to will do everything they possibly can to send their offspring to better schools than, say, the school or schools they live nearest? And if you want to argue that it's merely harder to pull yourself out of those abject conditions, then you're already admitting that such circumstances at least play some part in one's chances, or you're racist / prejudiced and presume the true problem is something internal belonging to the broad impoverished segment of the global population. If anything the fact that certain people then do rise up out of their difficult circumstances and succeed belies Objectivism by putting at the fore the reality that there is nothing inherently lacking in these impoverished people. Plus if you admit the situation the child was put in by his or her parents is a factor, then once again you're conceding an element of determinism, i.e. pre-existing economic conditions, which might expand to a macro, sociological level of significance. Ignoring history as Objectivism presumes to is particularly irritating.

Let me make it clear that I think a healthy ego is important to the individual and his or her attaining the success he or she desires, but the unbridled ego that Objectivism in many ways presupposes and absolutely encourages is frankly horrible. Don't agree? First, imagine a conversation with an immodest professional athlete. Second, imagine everyone was like that athlete. Ok, so that's not necessarily how it would be. But seriously, it wouldn't be significantly less horrible than that. Would people at least be required to pretend like they weren't completely self-interested? ("Self-interest" is the single word Rand used to define Objectivism's ethics, so says my copy of "The Fountainhead.") I guess my biggest issue with Rand is that she proposed a capitalism of unchecked ego and excess. She proposed a capitalism that is damaging to the body politic. I'm inclined to think that others get to where they are with at least some help from their peers.

And I know I mention this book a lot, which even though I do it might be the least of the Walter Kirn I've read, but "Up in the Air" has an interesting part in which Ryan Bingham is dictating to his microrecorder a part of the preface to his allegorical-philosophical manifesto he titled "The Garage" -- yet another important component of the book that the movie abandons, but I'll say no more about that. In the preface he's dictating he says:

In 'The Garage,' I propose a bold new formula to replace lurching pursuit of profit: 'Sufficient Plenitude.' Enough really can be enough, that is. A heresy? Not to students of the human body, who know that optimum health is not achieved by ever-greater consumption and activity, but by functioning within certain dynamic parameters of diet and exercise, work and leisure. So too with the corporation, whose core objective should not be the amassing of good numbers, but the creation and management of abundance.

Never mind that this idea more or less runs contrary to the M.O. of Ryan Bingham, who is among other things dead set on achieving his goal of one million frequent flier miles. Bingham himself wonders, "Is it possible to be wiser on the page than you are in life?" So while I'm aware there might be a sarcastic and expedient quality to the above quoted elucidation, I think that it makes a sensible claim. It's a claim that runs contrary to Ayn Rand's and Milton Friedman's similar (and in Rand's case schmaltzy romantic) notion of capitalism.

F.A. Hayek, to return to the other individual for whom this post is written, is from my perspective also imperfect as concerns his economic theory (which is absolutely not the same as his being flatly wrong, I freely acknowledge I may well be wrong and need to amend my opinion in the future. I'm less certain Ayn Rand will one day produce in me this possible reevaluating effect, however). But Hayek was right about socialism, to the extent that certain untempered derivations (the Communist bloc nations, China, North Korea) became the same ossified, oppressive regimes which they vehemently opposed in the more forthrightly iniquitous fascist governments against whom the world went to war in the 1930s-40s. This is especially true where economic matters are concerned. The level of government control involved and necessary in planning the economy, as Soviet Russia and China did, necessarily precluded the freedom and free will of their peoples. On that Hayek and I are in full agreement. Of course there are social aspects that distinguish fascism from socialism more obviously, but in terms of economics the two forms of government are markedly the same. Hayek also saw the utility in involving a limited form of government into the affairs of the marketplace, which again I see as sensible and right. Here is how Hayek puts it in "The Road to Serfdom":

In all these instances there is a divergence between the items which enter into private calculation and those which affect social welfare; and, whenever this divergence becomes important, some method other than competition may have to be found to supply the services in question. Thus neither the provision of signposts on the roads nor, in most circumstances, that of the roads themselves can be paid for by every individual user. Nor can certain harmful effects of deforestation, of some methods of farming, or of the smoke and noise of factories be confined to the owner of the property in question or to those who are willing to submit to the damage for an agreed compensation. In such instances we must find some substitute for the regulation by the price mechanism (44).

My hope is that one day instead of the aggressive, unchecked mentality of ceaseless consumption that has colored our nation's (and similarly influenced other nations, such as the now, more or less, free market China) spending habits for so long we will see how by coordinating our efforts to some meliorative level of economic prosperity we will be far better off than at present. That relies on certain naively idealistic hopes for our current character, I admit, so I'll settle for a return to what is sensible, to making a better effort to base things around what seems to work best for all parties concerned and not what's simply best for you to get yours.

All right, that's all I've got for now, but I imagine this won't be the last time I refer to either Rand or Hayek. In fact, barring world-ending calamity, I guarantee it.

Old Bohemian Bones: The Burger Love Continues with Ray Kroc

Ray Kroc, or "Old Bohemian Bones" as I and I alone call him, sure created a fine mess. That's one thing you could call McDonald's, "a fine mess." Like, "fine" as in "really swell," and which "really swell" means that sure it's a mess in certain respects but it's good at being one. It does what it does "really swell," to quote myself. Ray Kroc, the man with the plan, was super psyched about McDonald's, though, but don't take my word for it -- read his autobiography "Grinding it Out: The Making of McDonald's" by Kroc with Robert Anderson (whoever that is -- I mean, besides his ghost writer). Kroc speaks of his enthusiasm for the restaurant chain on practically every page and in glowing terms usually reserved for one's offspring. He found a surrogate family in McDonald's, realized as closely to his idea of perfection as a family could be. He'll have you questioning (to an extent) whether that's such a bad thing by the time you've finished his autobiography, too.

Ray Kroc's last name, Kroc, is fun to write I think, so you'll be seeing more of it than you'd normally see of other names, for example -- Kroc, Kroc, Krocitty, Kroc, Kroc, Kraroo.

Let me start this thing off by saying that Ray Kroc does not seem to be as bad as the image in my head of "Captains of Industry." And when I refer to "Captains of Industry," I'm thinking of the 19th century classics like Andrew Carnegie, John D. Rockefeller and George Pullman -- all of whom can be cited at one point or another for the callousness with which they treated their labor in pursuit of certain great ends. There is a cutthroat mentality that all these men share. Daniel Day Lewis' scheming oil tycoon Daniel Plainview of "There Will Be Blood" is an adequate embodiment of this dark side. He is the misanthropic shadow of their collective character and the indefatigable yearnings that defined it. And I think in that dark side there are similarities to be drawn between Kroc and the Captains of Industry.

These were men enamored by a fantastic vision of what the sum of their designs could equal, Kroc very much included. Kroc's biography is oddly candid in this way, including details that don't shy away from his great propensity to get what he wanted no matter the costs and those who'd get in the way be damned (Josh Ozersky writes in "The Hamburger" Kroc once said of his rivals, "If they were drowning, I'd put a hose in their mouth." Words I can imagine being spoken by Daniel Plainview, as well), and his penchant for heated outbursts directed against those who under his employ had in their own right failed to live up to his expectations. Kroc was the man with a vision. The McDonalds brothers revolutionized the food service industry, but Mr. Kroc was the one who made it salable to the American people and beyond, being in the right place at the right time (not far from an aspect of the thesis of Malcolm Gladwell's "Outliers") and making full use of his years of accrued business experience, as Kroc himself says:

People have marveled at the fact that I didn't start McDonald's until I was fifty-two years old, and then I became a success overnight. But I was just like a lot of show business personalities who work away quietly at their craft for years, and then, suddenly, they get the right break and make it big. I was an overnight success all right, but thirty years is a long, long night.

Kroc seized the moment and history has rewarded him handsomely for it, but what has been the ultimate cost? Was Kroc's vision inevitable, and had he not been the one to carpe diem wouldn't someone else have? Certainly there were other models very relatable to McDonald's (I'm thinking Burger King, Big Boy, Jack in the Box and Burger Chef) that were coming into existence at essentially the same time. But McDonald's had the most invasive and sound business model, which prevented it from being absorbed by larger food distribution conglomerates, as was the fate of all the others. It's hard to say if anyone would have seized the opportunity quite as Ray Kroc had, with the noted financial wizardry of Harry Sonneborn, who is considered by many to be as essential to McDonald's growth and viability as Kroc had been.

Kroc championed the entrepreneurial spirit his system evoked, and the evidence of McDonald's success suggests this is very much the case, but the system as systems seem to inevitably promise has become ossified. It is a perversion of whatever noble free market dream had served as its impetus. Is it easy to sit and ridicule the McDonaldization of American and, concurrently, global culture, to lament its growing homogeneity? Yes, it is -- but I can't make myself comfortable with the fact that sameness predominates where local character once stood, and the disconcerting possibility that this combine might kill the creative spirit that, in some ways, begat it.

America Food: The Hamburger

Any semiotician can tell you, in America, a hamburger is not just a hamburger. And Josh Ozersky's The Hamburger: A History is full of gems and golden nuggets of hamburger-related info which provide testimony of exactly how true that statement is. For a variety of reasons I won't bother to get into, I've become an amateur hamburger-as-American-pop-cultural-icon historian in my own right. This isn't bragging, I swear. I'm just for those reasons I can't fully explain very fascinated by the subject and have culled a little knowledge of it as a result. So when I learned of The Hamburger, I of course giddily acquired and nerdily pored over it to its completion (only 130 pages, not very tough at all to get it read). Anyone looking for a good primer on the hamburger as an American pop culture mainstay and what it took to get there (and really who wouldn't be?), I politely encourage you to look no further than Ozersky's book.

Why? The Hamburger is edifying. How? In many ways -- for example, guided by Ozersky's central thesis, which to paraphrase is, the hamburger as we know it today is a uniquely American creation and over time has, both positively and negatively, come to emblematize the American way of life, one is led through a fascinating description of the nascency and evolution of the hamburger and, necessarily along with it, the hamburger stand. Thinking about the hamburger as an emblem of abundance, size, value, and multiple tiers of efficiency, to name but a few, Ozersky showcases through the hamburger's rise to prominence why it was and remains America's most ubiquitous sandwich.

He starts by providing some examples of the progenitors of the hamburger, citing a recipe in Hannah Glasse's Art of Cookery, Made Plain and Easy (1763), which describes the proper way to prepare a Hamburg sausage, a meat that hardly resembles anything we'd today refer to as a hamburger. But still as Ozersky notes, "Glasse's recipe is the Australopithecus of the hamburger family, a barely recognizable progenitor, primitive and inauspicious, but the missing link nonetheless -- the earliest shared ancestor." The Hamburg steak grew from the 18th century sausage, and was served minced or scraped according to Ozersky. It was affordable and similar to meats already popular in densely populated port towns like Hamburg, where scores of immigrants and citizens often had no choice but to eat standing. In New York City, the more wieldy Hamburg steak made that task far easier. Ozersky also disputes the claim that Hamburg steak was a German import by arguing first with the precedent of Glasse's 18th century English recipe and that:

". . . obviously, people from Hamburg wouldn't call their own brand of minced beefsteak Hamburg steak any more than a coffee shop in Dallas serves Texas chili."

He then offers background of the provenance of White Castle and the role the chain played in paving the way for McDonald's and the many, many others that followed. The history of the hamburger from that point onward becomes inextricably linked to the rise of America's fast food culture.

For better or worse, the hamburger is America's most recognizable food export, our beefy, bready ambassador athwart the globe -- sorry, apple pie enthusiasts. We export the hamburger (and the hamburger industry) better than we do democracy. But why hamburgers? As Ozersky contends it is in part because there are no apple pie-focused (or for that matter any other comestible) fast food restaurants defining the American fast food-selling landscape. Ray Kroc, then, is very arguably the man most responsible for the massive explosion of fast food eateries and the McDonald's phenomenon's widespread popularity and duplication, and thus the rise of the hamburger as America's staple food. The hamburger has succeeded where other foods failed owing in large part to the fact that it's very portable and can be eaten on the go, unlike chicken and various barbecued meats commonly available at the drive-ins and hodge-podge of casual dining restaurants that predominated before the arrival of the fast food method -- invented by the McDonalds brothers in the early 1950s. Considering the revolutionary business model of the McDonalds brothers, it's also important to note that the hamburger is well suited to being prepared in large quantities very quickly. And the simple fact is that the hamburger does in most people's opinion taste very good. Combined, these basic facts have contributed pronouncedly to the hamburger's great fame, and all the controversy that was certain to come with it.

Ozersky's book is fun.