INTELLIGENT SYSTEMS

 

Volume X, Number 4                                                                                                               October, 2008

 

A newsletter for clients and friends of Chenault Systems

Copyright © 2008 Chenault Systems, Inc.  All rights reserved.

 


Chenault Systems in expansion mode

Due to our entry into the oil & gas industry, along with several new clients, Chenault Systems is expanding in terms of personnel and office space.  Our philosophy of building custom-built systems, using our project management techniques, seems to be taking precedence over the expensive concept of packaged ERP systems.  In other words, one size does not fit all.

Our point-of-difference is objectivity.  Unlike the large institutional firms, we have no “strategic alliance” with any software vendors, only our clients.  In addition, all of our software development is done locally.

A new office has been opened up in the west Irving area for our software development staff.  The address is 2300 Valley View Lane, Suite 835, Irving, Texas 75062.  The corporate headquarters will remain in Carrollton at 2407 Glen Morris, 75007.

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Capitalist Heroes

By David Kelley

This article appeared in The Wall Street Journal on October 10, 2007.

Fifty years ago today Ayn Rand published her magnum opus, “Atlas Shrugged.”  It's an enduringly popular novel -- all 1,168 pages of it -- with some 150,000 new copies still sold each year in bookstores alone. And it's always had a special appeal for people in business. The reasons, at least on the surface, are obvious enough.

Businessmen are favorite villains in popular media, routinely featured as polluters, crooks and murderers in network TV dramas and first-run movies, not to mention novels.  Oil company CEOs are hauled before congressional committees whenever fuel prices rise, to be harangued and publicly shamed for the sin of high profits.  Genuine cases of wrongdoing like Enron set off witch hunts that drag in prominent achievers like Frank Quattrone and Martha Stewart.

By contrast, the heroes in “Atlas Shrugged” are businessmen -- and women.  Rand imbues them with heroic, larger-than-life stature in the Romantic mold, for their courage, integrity and ability to create wealth.  They are not the exploiters but the exploited: victims of parasites and predators who want to wrap the producers in regulatory chains and expropriate their wealth.

Rand's perspective is a welcome relief to people who more often see themselves portrayed as the bad guys, and so it is no wonder it has such enthusiastic fans in the upper echelons of business as Ed Snider (Comcast Spectacor, Philadelphia Flyers and 76ers), Fred Smith (Federal Express), John Mackey (Whole Foods), John A. Allison (BB&T), and Kevin O'Connor (DoubleClick) -- not to mention thousands of others who pursue careers at every level in the private sector.

Yet the deeper reasons why the novel has proved so enduringly popular have to do with Rand's moral defense of business and capitalism.  Rejecting the centuries-old, and still conventional, piety that production and trade are just “materialistic,” she eloquently portrayed the spiritual heart of wealth creation through the lives of the characters now well known to many millions of readers.

Her moral defense of the pursuit of self-interest, and her critique of self-sacrifice as a moral standard, is at the heart of the novel.  At the same time, she provides a scathing portrait of what she calls “the aristocracy of pull”: businessmen, who scheme, lie and bribe to win favors from government.

Hank Rearden, the innovator resented and opposed by the others in his field, has not created a new type of music, like Mozart; rather he struggled for 10 years to perfect a revolutionary metal alloy that he hoped would make him a great deal of money.  Dagny Taggart is a gifted and courageous woman who leads a campaign -- not to defend France from England on the battlefield, like Joan of Arc -- but to manage a transcontinental railroad and, against impossible odds, to build a new branch line critical for the survival of her corporation.  Francisco d'Anconia, the enormously talented heir to an international copper company, poses as an idle, worthless playboy to cover up his secret operations -- not to rescue people from the French Revolution, like the Scarlet Pimpernel -- but to rescue industrialists from exploitation by ruthless Washington kleptocrats.

Economists have known for a long time that profits are an external measure of the value created by business enterprise.  Rand portrayed the process of creating value from the inside, in the heroes' vision and courage, their rational exuberance in meeting the challenges of production.  Her point was stated by one of the minor characters of “Atlas,” a musical composer: “Whether it's a symphony or a coal mine, all work is an act of creating and comes from the same source: from an inviolate capacity to see through one's own eyes.  That shining vision which they talk about as belonging to the authors of symphonies and novels -- what do they think is the driving faculty of men who discovered how to use oil, how to run a mine, how to build an electric motor?”

As for the charge, from egalitarian left and religious right alike, that the profit motive is selfish, Rand agreed. She was notorious as the advocate of “the virtue of selfishness,” as she titled a later work.  Her moral defense of the pursuit of self-interest, and her critique of self-sacrifice as a moral standard, is at the heart of the novel.  At the same time, she provides a scathing portrait of what she calls “the aristocracy of pull”: businessmen, who scheme, lie and bribe to win favors from government.

Economists have also known for a long time that trade is a positive sum game, yet most defenders of capitalism still wrestle with the “paradox” posed in the 18th century by Adam Ferguson and Adam Smith: how private vice can produce public good, how the pursuit of self-interest yields benefits for all. Rand cut that Gordian knot in the novel by denying that the pursuit of self-interest is a vice.  Precisely because trade is not a zero-sum game, Rand challenges the age-old moral view that one must be either a giver or a taker.

The central action of “Atlas” is the strike of the producers, their withdrawal from a society that depends on them to sustain itself and yet denounces them as morally inferior.  Very well, says their leader, John Galt, we will not burden you further with what you see as our immoral and exploitative actions.  The strike is of course a literary device; Rand herself described it as “a fantastic premise.”  But it has a real and vital implication.

While it is true enough that free production and exchange serve “the public interest” (if that phrase has any real meaning), Rand argues that capitalism cannot be defended primarily on that ground.  Capitalism is inherently a system of individualism, a system that regards every individual as an end in himself.  That includes the right to live for himself, a right that does not depend on benefits to others, not even the mutual benefits that occur in trade.

This is the lesson that most people in business have yet to learn from “Atlas,” no matter how much they may love its portrayal of the passion and the glory possible in business enterprise.  At a crucial point in the novel, the industrialist Hank Rearden is on trial for violating an arbitrary economic regulation.  Instead of apologizing for his pursuit of profit or seeking mercy on the basis of philanthropy, he says, “I work for nothing but my own profit -- which I make by selling a product they need to men who are willing and able to buy it. I do not produce it for their benefit at the expense of mine, and they do not buy it for my benefit at the expense of theirs; I do not sacrifice my interests to them nor do they sacrifice theirs to me; we deal as equals by mutual consent to mutual advantage -- and I am proud of every penny that I have earned in this manner...”

We will know the lesson of “Atlas Shrugged” has been learned when business people, facing accusers in Congress or the media, stand up like Rearden for their right to produce and trade freely, when they take pride in their profits and stop apologizing for creating wealth.

David Kelley, author of A Life of One's Own: Individual Rights and the Welfare State (Cato Institute, 1998), is the founder of The Atlas Society.

Quotes Worth Noting

“Stop going for the easy buck and produce something with your life.  Create, instead of living off the buying and selling of others.” – Martin Sheen as Carl Fox in Wall Street (1987)

“Capitalism should not be condemned, since we haven't had capitalism.” – Ron Paul

“I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.” -- Thomas Jefferson, Letter to the Secretary of the Treasury Albert Gallatin (1802) 3rd president of US (1743 - 1826)