The Literary Origins of Financial Crisis

In 2016's I Hate the Internet, Jarett Kobek gives Ayn Rand short shrift. 'It's arguable', he writes, 'that Ayn Rand's finest achievement was not the authoring of two shitty novels. It's arguable that Ayn Rand's finest achievement was crashing the economy twenty-five years after her death.'¹ Kobek's novel looks to the causes of the 2007–8 crisis and satirises the social effect of what he calls 'revitalization' (p. 130) in California: the gentrification of cities in the wake of the past decade's technology boom. Describing a process that has become familiar around the world, he lists five successive phases of 'revitalization': a technology behemoth's investment in a downtrodden area; the import of skilled workers; a rise in property prices; the subsequent displacement of the original population; and, finally, the emergence of an unintentionally ironic hipster aesthetic which financialises 'the artisan' and 'the local' as commoditised tokens, having neatly overwritten the authenticity it so desires to reproduce. That Kobek chooses Rand as his foil is not surprising: the pure capitalist ends of 'revitalization' would have pleased her immensely. Her Objectivist philosophy, disseminated to a crowd of eager followers during the middle years of the twentieth century, called for a starkly capitalist marketplace. It forbade charity and advocated the accrual of wealth, lauded the wealthy and denigrated the poor, and – paradoxically for a determinedly atheistic philosophy – created a deity of capitalism itself. To be sure, mourners who queued in the Manhattan cold in March 1982 to view Rand's body found her lying at rest beside a six-foot dollar sign.² She is, as Adam Weiner describes in the introduction to How Bad Writing Destroyed the World, 'our very own arch-capitalist' (p. 2). In his book, Weiner tasks himself with explaining how Rand's 'stillborn' ideas became the 'zombie' financial policy that triggered the most recent international financial crisis (p. 10). As Weiner traces the genealogy of Rand's philosophy to nineteenth-century Russia, he reveals a surprising network of contradictory and complementary ideas, each grounded in the 'bad writing' of his title.

Back to Kobek. In a passage of I Hate the Internet that identifies the progressive deregulation of financial markets as the cause of the 2007–8 financial crisis in the United States, blame is set squarely at the feet of Ayn Rand, by way of Alan Greenspan:

Ayn Rand's books told very rich people that they were good, that their pursuit of wealth was moral and just. Many of these people ended up as CEOs or in high levels of American government. Ayn Rand was the billionaire's best friend. …

Some of Ayn Rand's better-known followers included … Alan Greenspan, the chairman of the Federal Reserve from 1986 to 2006 [sic]. In his relative youth, Greenspan sat at the knee of Ayn Rand whilst she explained that poor people were garbage who deserved to die in the gutter.

(p. 37)

As the world's financial markets began to collapse in late 2007, the spectre of Rand's theories loomed large. Weiner describes Greenspan's uncritical acceptance of Rand's free-market ideology as 'worship' (p. 16). During his tenure as Chairman of the Federal Reserve (1987–2006), Greenspan pursued an aggressive deregulatory programme which left financial markets vulnerable to being rigged. In the absence of regulation, traders operating in these markets were rewarded for behaving dangerously. The archetypal example from the 2007–8 crisis is the sale of sub-prime debt: bad debt (originally sold to individuals likely to default), bundled together into packages for sale on the derivatives market. It would be enough to take this alone as the topic of a 218-page book on Rand, Greenspan, and the 2007–8 financial crisis; however, Weiner is more ambitious. Though he dedicates some time to these questions, the beginning and end of the book, How Bad Writing Destroyed the...