Money and the entrepreneurial spirit
In this picture taken on May 24, 2012, Ayn Rand's novels are pictured as an Indian bookseller arranges books at his roadside stall in New Delhi. (AFP/MANAN VATSYAYANA)
In a scene from Atlas Shrugged, the movie based on Ayn Rand's famous novel, industrialist Hank Rearden is told by one of the characters: "... they say that you're intractable, ruthless and that your only goal is to make money."
Rearden smiles and responds: "But my only goal is to make money."
And yet, later in the movie, Rearden refuses to sell the rights to his newly developed metal even when he is offered on several occasions sizable amounts of money by government agents.
In order to understand his motivations, we need to understand the fundamental nature of money. Some elements of that nature are already well known by most people. Others, conversely, are fully grasped and appreciated only by a handful.
Indeed, you probably won't be surprised to read that money is a medium of exchange as well as a unit of account. For example, I give the grocer some precise amount of money, and, in exchange, I get a particular basket of goods I've selected.
But these two functions of money are no help in understanding the motivations of Hank Rearden. If he only "wants money," as he says he does, why won't he sell the rights to his new invention in exchange for a whole ton of it, especially in a context where there is a furious public campaign against his metal that could reduce the number of his potential future clients?
Money serves also as a store of value. If I work now in exchange for money, but save some of that money in order to exchange it for goods and services at a later date, the value of my work has been stored.
This third function of money offers us a path toward an explanation of Rearden's behaviour and actions. It is clear from numerous scenes that Rearden places an extremely high value on his creation. He is proud of his work, and he wants to see it out there in the world in the form of train tracks and bridges and other useful things.
For various reasons he believes that the value and the dignity of his work would be destroyed if he sold his rights to this particular government agency that has no intention of actually using his metal.
These types of concerns showed by Rearden (intrinsic value of one's work, pride in one's self, etc) may seem to contradict his initial statement, but note that he didn't say his only goal was to amass money, or to have money. He said his only goal was to make money. He is a creator, and the money he makes is a symbol of the wealth he brings into existence. In other words, it is not merely a store of value, but also of energy, and in this case of his energy.
We must realize that those who make money - the Rearden way - are creating wealth. For sure, some business people are crooks and become rich through various illegal (and sometimes legal) plundering ways or by using government powers and schemes against their competitors. True entrepreneurs, that is those who find new ways to respond to human needs and desires (even when the novelty is incremental or subtle), deserve our gratitude. But most of all, they should be proud of themselves.
- Michel Kelly-Gagnon is president of the Montreal Economic Institute (www.iedm.org). The views reflected in this column are his own.