Alan Greenspan 1.3 (Rand vs Greenspan)

Alan Greenspan and Ayn Rand contradict each other when explaining commodity based currencies.

Greenspan starts by describing money. “… Durable…In a primitive society of meager wealth, wheat might be sufficiently durable to serve as a medium…”ⁱ “More importantly, the commodity… must be a luxury… Wheat is a luxury in underfed civilizations… The term “luxury” implies scarcity and high unit value.”ⁱⁱ

Rand starts by describing the need of the individual for food to survive and the importance of savings. “You need the saved harvest of your good years to carry you through the bad ones; you need your saved seed to expand your production”ⁱⁱⁱ. Rand’s story is about coping with productive abundance. “Grain and foodstuffs are perishable and cannot be kept long”^iv, however “you don’t have to expand your storage, you can trade your grain for a commodity which will keep longer and which you can trade for food when you want it.”^v.

In Rand’s example, the disposition of abundant food was the necessary cause of the monetary system. Increased production is funded by surplus. The goal is for people to have food to eat, in accordance with a person’s “ultimate value… the (person’s) life”^vi.

In Greenspan’s example, the institution of a monetary system is a given. The material circumstances are irrelevant except for how they serve the requirements of the economy. If food has high unit value, hungry people are not to eat the food, but use it as money. Scarcity creates wealth. The goal is an efficient economic system. Feeding hungry people is not a factor.

Greenspan and Rand disagree on the fundamental purpose of an economy. Greenspan and Rand disagree on the function of food in an economy. Greenspan and Rand disagree on the value of human life.