The Objectivist Ethics in an Information Age Economy

The Business Revolution

Some years ago, I wrote that we had reached a moment in history when self-esteem, which had always been a supremely important psychological need, had become an urgent economic need – the attribute imperative for adaptiveness to an increasingly complex, challenging, and competitive world.

In this article, I want to show that, for essentially the same reasons, the ethics of Objectivism has a new relevance and a new urgency in our global, information-age economy.

The values and virtues that I have in mind include rationality, realism, respect for facts, self-esteem, independence, autonomy, initiative, creativity, innovativeness, self-responsibility, personal integrity – all of which are celebrated in “The Fountainhead” and “Atlas Shrugged”, as well as in Ayn Rand’s non-fiction writings.

To understand why I assert that these values and virtues have acquired a new urgency, we have to consider in what ways the world of work has changed.

In the past several decades, extraordinary developments have occurred in the American and global economies. The United States has shifted from a manufacturing society to an information society.

Mind work has replaced physical labor as the dominant employee activity. In addition, we now live in a global economy characterized by rapid change, accelerated scientific and technological breakthroughs, and an unprecedented level of competitiveness. Everyone recognizes that these developments create demands for higher levels of education and training than were required of previous generations. What is not generally recognized is that these developments also create new demands on our psychological resources. Specifically, these developments ask us to bring a greater capacity for innovation, self-management, and personal responsibility – a higher level of consciousness and rationality – to our work activities.

This is not just asked at the top. It is asked at every level of a business enterprise, from senior management to first-line supervisor, and even to entry-level personnel.

A modern business can no longer be run by a few people who think and many people who merely do what they are told-the traditional, military, command-and-control model. Today, organizations require not only a higher level of knowledge and skill among all those who participate in the process of production, but also a higher level of independence, self-reliance, self-trust, and capacity to exercise initiative. In a word, self-esteem.

This means that in the process of wealth-production, people with a decent level of self-esteem, who embody key Objectivist virtues (at least while on the job) are now needed in large numbers.

In order to put these new developments in perspective, and to make my thesis entirely clear, we have to take a fast look at the history of the world – or, to be slightly more restrained – the history of work, as it has evolved over the centuries.

From Hunter to Gatherer

Imagine that you live in a world that does not yet know agriculture — say, 20,000 years ago — when human beings lived as nomads and survived by gathering, foraging and hunting. This was the earliest manner of human survival.

In “The Ascent of Man,” Jacob Bronowski describes this form of existence as follows:

“It is not possible in a nomad life to make things that will not be needed for several weeks. They could not be carried. And in fact [nomads] did not know how to make the… There is no room for innovation because there is not time, on the move, between evening and morning, coming and going all their lives, to develop a new device or a new thought – or even a new tune. The only habits that survive are the old habits. The only ambition of the son is to be like the father.”

It is not a world in which your daily sense of self is challenged by new demands on your efficacy. In fact, in its modern meaning, it is doubtful that you yet have “a sense of self.” Concepts such as individuality or personal identity do not yet exist, although the feelings and images that are their precursors almost certainly lie submerged in your psyche. As best we can conjecture, there is nothing in your experience that will relate your ability to survive to your inventiveness or creativity, or that will raise the question, “Is my way of functioning appropriate to the requirements of my life and well-being?”

The basis for civilization began only with the change from a nomad existence to village agriculture – between ten and twelve thousand years ago – when groups of human beings settled in small areas and learned to extract their sustenance from the earth. Now began the agonizingly slow process of inventing the early agricultural tools. Life was still endless repetition, almost entirely devoid of change within the lifespan of individuals. Changes occurred not over years, but over hundreds of years, even millennia. The cultivation of wheat, the invention of the plow, the domestication of animals, the development of wheel and axle, each a landmark in our cultural history, are achievements separated by many centuries. For the average man or woman living ten thousand years ago, seven thousand years ago, three thousand years ago, or even a few hundred years ago, life and survival were still, as for the early nomads, a matter of mastering a few basic skills passed down for generations – of imitating motions that no one alive had originated.

It was only in Ancient Greece that reason and mind were for the first time identified explicitly. Prior to that philosophical achievement, there was consciousness, but not yet abstract self-consciousness. People thought, but they did not think about thinking. They made rational connections, but did not grasp the idea of integration. They did not identify mind as their basic tool of survival. The concept of efficacy lay in the distant future — as did the concept of self-esteem and its relationship to the task of meeting life’s challenges, including the challenge of survival itself.

In A.D. 1000, fully as much as in 1000 B.C., people expected their grandchildren’s lives to be the same as their own – and their own generally mirrored that of their ancestors.

In pre-industrial cultures – from the world of hunters and gatherers to that of feudal serfs – there was neither a market for the independent mind nor much (if any) economic need for self-esteem. There was no market demand for intelligence, self-responsibility, communication skills, inter-personal competence, innovativeness, creativity, or the entrepreneurial mentality.

Indeed, in medieval times, not only did traits such as self-esteem or self-assertiveness ordinarily confer no particular economic benefits – except, perhaps, for a handful of merchants, traders, explorers and artists — they could be positively life-endangering.

From Farmer to Laborer

Our idea of the individual as an autonomous self-determining entity, able to think independently and bear responsibility for his or her existence, emerged from several historical developments: the Renaissance in the fifteenth century, the Reformation in the sixteenth century, and the Enlightenment in the eighteenth century – and their two offspring – the Industrial Revolution and capitalism.

The essence of the Enlightenment was a celebration of reason, science, liberty (although with conflicting notions as to what these terms meant), and the values of secular existence – its esteem for life on earth.

The Industrial Revolution, the introduction of machinery into the process of production, was the expression of human intelligence now placed in the service of improving the conditions of material existence. The capitalist system that emerged with it was characterized by free markets and open competition, in which goods and services were produced for profit, labor was performed for wages, and the means of production and distribution were privately owned.

It was from this period forward that evidence began to accumulate illuminating the relationship between survival (or economic adaptiveness) and the creative exercise of mind.

With the birth of capitalism and the increasing emergence of merchants, shopkeepers, tradesmen and early American entrepreneurs, a number of shifts in people’s consciousness took place – shifts in the consciousness of the culture, one might say.

The question, “What has your birth determined you to be?” was replaced by the question, “What have you made of yourself?” Identity was no longer something you inherited, but something you created and were accountable for.

The idea of progress ignited people’s imagination. The mind was not yet fully understood to be the supreme capital asset – far from it – but nonetheless it had begun to move from background to foreground, sometimes under such names as competence or ability.

Self-reliance and self-responsibility were seen as appropriate to the new order of things, in contrast to the conformity and obedience more valued in earlier tribal societies.

Throughout the nineteenth century we remained predominantly an agriculture economy; most people earned their living off the land, and land was perceived as the chief source of wealth, as it had been for thousands of years. We began as a nation of farmers and small shopkeepers.

And the average farmer or shopkeeper was not an innovator. He was perhaps more self-reliant that his ancestors, more independent and resourceful – evidenced by the facts, among others, that he may have left his homeland in Europe to make a new life in America, and that the looser social structure in the New World threw him more on his own and demanded greater self-direction and therefore greater self-responsibility. But within the knowledge context of that period, economic adaptiveness demanded of him neither high levels of education nor of innovativeness. His mind, learning ability, and decision-making capabilities were not constantly challenged. He survived principally by performing simple and basic tasks he had been taught by others. The economic system did not require more of him than that for its effective functioning.

The individuals who did see themselves challenged in new ways and were inspired to meet the challenges – the entrepreneurs and inventors – were an infinitesimally small minority.

From Farmer to Laborer II

Compared with the rate of change today, change still proceeded very slowly (although it was proceeding very quickly compared with earlier centuries).

If you lived and worked in, say, 1905, the likelihood was that you earned your living either as a farmer or a domestic servant; this was how most people earned their living at that time. If you left the land or domestic service for a factory job, you found that industrial jobs required neither new skills you did not already possess, nor any specialized knowledge. Once again, you supported yourself by performing simple physical tasks exactly as you had been taught – with nothing more required intellectually or psychologically.

The requirements for intellectual adaptiveness had not significantly changed. It might take a farmer or a domestic servant a year or two to master the essentials of the work, whereas it took a machine operator only a few weeks. But, in either case, that was the end of it; no new learning was demanded. No innovativeness was expected. Obedience and reliability were at a premium, not resourcefulness.

To be sure, if you were an ambitious and imaginative person, with a good level of self-esteem, if you were more conscious, more self-assertive, and more self-responsible than those around you – you would very likely see possibilities for advancement that others did not. You might become the successful owner of your own business or enter a profession such as law or medicine. In a free or even semi-free society, self-esteem and independence always confer advantages. But you would still be one of the small minority. Your psychology was not yet what a business organization needed – in large numbers – to compete successfully.

As technology evolved, demand for the more advanced levels of skill in the operation of equipment increased. Yet there was no great demand for higher education or creative thinking or self-management – or autonomy. Such values might make a substantial personal contribution to your life, but not in terms of your income. Not in the 1950s or 1960s, at the climax of the industrial phase of our development, when the blue-collar worker was at the pinnacle of success. Then, most college-educated men and women did not earn more than a skilled machinist who was a high school dropout, often of quite limited intellectual development.

In the decades following World War II, the United States was the undisputed industrial leader of the world. We were at the height of our economic power. With the other industrial nations struggling to recover from the wreckage of the war, we had no competitors. Our economic complacency during the 1950s and 1960s was understandable yet dangerous. Challenges were coming, which we did not foresee and for which we were little prepared – not challenges from the Soviet Union and its satellites, which would collapse under the weight of their own contradictions and destructive policies, but from such inter-related phenomena as the invention of the microchip, the explosion in personal computing and telecommunications, and the emergence of a global economy.

From Laborer to Thinker

Welcome to the mind millennium.

One may summarize as follows the changes in the national and world economy that represented the greatest challenges to our resourcefulness and have the greatest significance for our self-esteem – and give the Objectivist ethics its new relevance:

1. The shift from a manufacturing to an information economy, the diminishing need for manual or blue-collar workers, and the steadily growing need for knowledge workers with verbal, mathematical, and social skills.

More and more, physical labor has been replaced with knowledge work. Today, in a complex business organization that orchestrates the knowledge and skills of financial, marketing and sales people, with engineers, systems analysts, mathematicians, chemists, physicists, researchers, health-care professionals, and experts of every kind — what we see is no longer management and workers, but an integration of specialists. Each of these specialists has knowledge and expertise not possessed by others in the organization, including the boss. Each is relied on to think, to create, to be innovative and to contribute. Workers have become “associates” in an atmosphere that is becoming increasingly more collegial rather than hierarchical.

Whereas independence, creativity, self-responsibility and interpersonal competence are at a high premium, mechanical obedience per se is worth very little. (It must be acknowledged that the Objectivist ethics has little helpful to say concerning interpersonal competence.)

2. A continuing and escalating explosion of new knowledge, new technology, and new products and services, which keep raising the requirements of economic adaptiveness.

From Laborer to Thinker II

Today, successful business organizations know that to remain competitive in the global markets, they need a steady stream of innovation in products, services, and internal systems that must be planned for as a normal part of their operations. Individuals know that if they wish to advance their careers, they cannot rest on yesterday’s knowledge and skills. Over-attachment to the known and familiar has become costly and dangerous; it threatens both individuals and organizations with obsolescence.

Scientific and technological discoveries are pouring from our research-and-development laboratories at an unprecedented rate – challenging us to do better and better and to think and respond faster and faster, and challenging our belief in our competence to do so.

3. The emergence of a global economy of unprecedented competitiveness – another challenge to our ingenuity and belief in ourselves.

By the 1980s, the United States was facing competition not only from Japan, but from other Pacific Rim countries as well: South Korea, Singapore, Taiwan, and Hong Kong. That was from the East. From the opposite direction, there was a reborn and regenerated Europe and, above all, an industrially powerful and fast-growing West Germany.

Global competition is a far more powerful stimulant to innovation than domestic competition. Other cultures have other perspectives, other ways of seeing things. Their ideas bring a richer mix to business thinking. But a higher level of competence and self-esteem are needed to play in this arena. We are now operating in a context of constantly escalating challenge.

4. The increasing demands on individuals on every level of a business enterprise – not just at the top, but throughout the system – with self-management, initiative, responsibility, self-direction, a high level of consciousness, commitment to innovation, and contribution as top priorities.

The older bureaucratic command-and-control pyramid, modeled after the military, has progressively given way to flatter structures (fewer levels of management), flexible networks, cross-functional teams, and ad hoc combinations of talents coming together for particular projects and then disbanding. The requirements of the flow of information and knowledge are determining organizational structure, rather than pre-conceived mechanical layers of authority.

From the boardroom to the factory floor, work is understood more as an expression of thought. As equipment and machinery have become more sophisticated, the knowledge required to operate them has risen accordingly. Employees are needed to monitor them, service them, repair them if necessary, anticipate needs – in a word, function as self-respecting, self-responsible professionals. Everyone is expected to think – optimally, not minimally.

From Laborer to Thinker III

5. The entrepreneurial model and mentality are becoming central to our thinking about economic adaptiveness.

In the last two decades there has been an explosion of entrepreneurship, almost entirely in small and medium-sized businesses. They led the way in showing the path big business must follow if it is to remain competitive. While many companies are still struggling with the problem of balancing traditional administrative management on the one hand and entrepreneurial management on the other – the first focused on protecting and nurturing what already exists, the second on making it obsolete – it is now increasingly obvious that entrepreneurship cannot be the prerogative of small or new business. It is imperative all the way up to organizations the size of General Motors – and right now GM is struggling with just this challenge.

The essence of entrepreneurial activity is endowing resources with new wealth – producing capabilities – that is, seeing and actualizing productive possibilities that have not been seen and actualized before. This presupposes the ability to think for oneself – to look at the world through one’s own eyes; a lack of excessive regard for the world as-seen-by-others – at least in some respects. We are talking about autonomy. And autonomy is intimately linked to self-esteem and to the Objectivist ethics.

6. The emergence of mind as the central and dominant factor in all economic activity.

In an agricultural economy, wealth is identified with land. In a manufacturing economy, wealth is identified with the ability to make things: capital assets and equipment, machines and the various materials used in industrial production. In either of these societies, wealth is understood in terms of matter, not mind; physical assets, not knowledge and information.

In a manufacturing society, intelligence is the guiding force behind economic progress, to be sure, but when people think of wealth, they think of material such as nickel and copper, and physical property such as steel mills and textile looms.

Wealth is created by transforming the materials of nature to serve human purposes. If all wealth is the product of mind and labor, of thought directing action, then one way to understand the transition from an agricultural to a manufacturing economy is that the balance between mental and physical effort is profoundly altered. Labor began to move along a declining arc of importance while mind began to climb.

From Laborer to Thinker IV

The climax of this process of development is the emergence of an information economy in which material resources count for less and less, and knowledge and new ideas count for almost everything.

The value of the computer, for instance, lies not in its material constituents, but in its design, in the thinking and knowledge it embodies – and in the quantity of human effort it makes unnecessary. Microchips are made out of sand; their value is a function of the intelligence encoded within them. A copper wire can carry forty-eight telephone conversations; a single fiber-optic cable can carry more than eight thousand conversations – yet fiber-optic cables are cheaper, more efficient, and much less energy-consuming to produce than copper.

Each year since 1979 the United States has produced more with less energy than the year before. The worldwide drop in the price of raw materials is a consequence of the ascendancy of mind in our economic life.

The mind has always been our basic tool of survival. But for most of our history, this fact was not understood. Today, it is obvious to (almost) the whole world.

And to Objectivists, this is a time of extraordinary opportunity – because if ever people might be open to understand the Objectivist ethics, it is now in the mind millennium.

However, should the Objectivist ethics ever gain widespread social acceptance, you may be sure of one thing – it will not be called “the Objectivist ethics.” It will be called, “Well, of course. It’s obvious. Wake up, man, don’t you realize this is the twenty-first century? What we’re talking about – it’s only common sense.”