CHAPTER 1: SUPPLEMENTARY MATERIAL
Alan Greenspan and Ayn Rand’s Objectivism
It is interesting to note that Greenspan had intellectual leanings towards the self-oriented philosophy of Ayn Rand. As an author of some of the best-selling (but less read) novels of all time (e.g., The Fountainhead & Atlas Shrugged), Rand is best known for her philosophy of Objectivism. She espoused laissez-faire capitalism, which she defined as the system based on individual rights. In place of collectivism, she argued for a new morality based rational self-interest. Objectivism holds the notion of “the concept of man as a heroic being, with his own happiness as the moral purpose of his life, with productive achievement as his noblest activity, and reason as his only absolute”. The idea that one should put the interests of others over one’s own was seen by Rand to be irrationally and morally reprehensible. Alan Greenspan was a devotee of Rand's philosophy of Objectivism and was one of her inner circle. It can only be speculated how this influenced shaped the policies he pursued when Chairman of the Federal Reserve.
The 2008 financial crash and Keynes
As noted by Richard Thaler in 2015 (July 10, Financial Times), the financial crash would not have surprised the great economist John Maynard Keynes who, in addition to believing that “animal spirits” moved the financial markets (see Chapter 2), understood the role played by psychology. As Thaler stated:
“Keynes is remembered for his view that governments should spend money in recessions to regain full employment, an argument made famous in The General Theory of Employment, Interest, and Money (1936). Few, however, realise that Keynes was a true forerunner of behavioural finance. Had more people, including Greenspan, studied the chapter of The General Theory on financial markets, the crisis might have been avoided.”