Demystifying the connection between Austrian Economics and Ayn Rand’s Objectivism

Tldr; The connection is tenuous at best. Austrian Ec is not Objectivism, nor is Austrian Ec the same as Objectivism. And fundamentally, they’re incompatible.

People keep coming into this subreddit with one of two very bad assumptions:

Austrian Economics is the same thing as libertarianism. It’s the same thing as Objectivism, or is derived from, Atlas Shrugged.

There are a few other bad misconceptions but these are the main two. I want to talk about the second one because the people who in here thinking that, are ruder of the two groups. It doesn’t help on a personal level that I often agree with their assessment of Rand and her ideas. But guys, you’re in the wrong forum.

There are three very slight connections between Objectivism and Austrian Praxeology, one being an influence on Objectivism, one being a very brief alliance between Rand and Rothbard, and the final one being an essay that many young objectivists read where she lists Mises as an influence. I think the third one causes the most confusion, but I’ll take these in historical order.

Ludwig von Mises wrote Theory of Money and Credit in 1912, and it was translated into a number of languages including English and Russian. Rand undoubtedly read this book and it clearly had an influence. She referenced ideas of inflation and fiat versus commodity money in Atlas Shrugged, and it seemed she understood at least parts of the theory. But not all of it. Nor was this the core of her philosophy. Rand said there is an objective reality in existence, and that humans could through reason understand this objective reality perfectly – objective metaphysics and objective epistemology.

The trouble however is that objective epistemology doesn’t work on a number of levels. I won’t get into them all, but Rand’s own sad end to her life is proof that it is a crap way to look at life. What I will say however is that if any two people can have the same perfectly objective view of the world, they’re going to have a nearly identical value system, a conclusion that Rand herself came to and demanded in her followers, allowing only for minor differences in taste. For someone as anti-collectivist as Rand, it’s an odd jump into demanding a hive mind of like thinkers.

Austrian theory however starts branching off neoclassical economics with the works of Menger. Fundamental to his thinking, and a cornerstone of the Austrian school, is his Subjective Theory of Value. Every individual has their own subjective perspective and experience, he says, and so you cannot expect that any two people have exactly the same value system, quite a contrast to how Rand viewed her “ideal man”. Even worse, as a person’s experiences change across time, a person won’t even have the same value experience from moment to moment!

At one point, a character in Atlas Shrugged holds up a gold coin and says it has objective value. I don’t think Rand ever read Menger, or if she did, she didn’t take him seriously. Even worse, someone whose value system changes from day to day is committing the objectivist sin of living according to “the expediency of the moment”. A good objectivist can’t have that!

Not only did Rand not read Menger, I don’t think she really properly read Mises either. After Theory of Money and Credit, Mises was known for a few small essays but no major works until 1936 when he published Nationaleconomie (might have spelled that wrong). It was never translated into English, and probably not into Russian either. I doubt Rand ever read it. It never really required translation however because Mises rewrote the entire thing from scratch in English instead after he fled Austria (Human Action). But he didn’t publish that until Rand was deep into writing Atlas. I don’t think she ever got the full brunt of Austrian economics until she met Rothbard.

Which brings me to the second connection. Rothbard was a writing dynamo of ideas, including a passionate defense of a 100% gold dollar. They were introduced to each other on these grounds as people with common interests. Rand was immediately disappointed by Rothbard. From his vigorous writing she was expecting a tall athletic John Galt type. Instead, Rothbard was short, balding, a little Jewish guy with a wisecracking sense of humor and a razor wit. He was irascible and irreverent, and a blast at parties, a huge contrast to the objectivists who tried to take everything dealt seriously. They didn’t get along so well. Especially when Rothbard, to the horror of Rand’s followers, started interrupting her and correcting her economic misconceptions. They tried to maintain a cordial but strained relationship and Rand even invited Rothbard to contribute an essay to one of her books.

It ended very shortly. The last straw was when Rothbard’s wife Joy refused to renounce her presbyterian religion to Rand’s collective. He was expelled with pomp and ceremony. Rand’s next book contained an essay on why Rothbard was worse than Marx and Immanuel Kant and people who talk at the theater.

Rothbard however just laughed it off. Later he wrote a one act play on what it was like to meet Rand and her collective. It’s an epic roast, and hilarious. You can find a live performance on YouTube, and it’s sometimes performed at Austrian economics events.

The third connection is the biggest one. A lot of people who come to the Austrian school, often enter because they discover Ayn Rand at a young age, and dig deeper. One essay of hers, I can’t remember which one, recommends experts in non philosophical fields. Remember, Rand titled herself a philosopher and acknowledged no influence in that field aside from Aristotle. But she could acknowledge Victor Hugo as an influence in literature, Maria Montessori in education, and Mises in economics. Pretty much everybody knows who Hugo is, and most people have heard of Montessori schools, but who the hell is Mises. That’s the question that starts off a lot of objectivists into this school. Most leave objectivism behind when they can’t reconcile the inconsistencies. This is actually how I got into this wonderful body of ideas myself.

So there it is. Three connections, each one very weak. But they’re absolutely not the same things. If you’re going to criticize Austrian Economics at least make sure you are aiming at the right target.

Written on my phone, please excuse any typos.