The Sunday Times has a profile and short interview with social philosopher Charles Handy. At 87, he has a new book out.
Handy foresaw and defined the concept of a portfolio career. His Shamrock Organisation predicted the world of outsourcing, the gig economy and B2B freelancing in the manner of the sovereign professional.
So you think that money is the root of all evil? Have you ever asked what is the root of money? Money is a tool of exchange, which can’t exist unless there are goods produced and men able to produce them. Money is the material shape of the principle that men who wish to deal with one another must deal by trade and give value for value. Money is not the tool of the moochers, who claim your product by tears, or of the looters, who take it from you by force. Money is made possible only by men who produce. Is that what you consider evil?
When you accept money in payment for your effort, you do so only on the conviction that you will exchange it for the product of the effort of others.
Thus opens an eloquent defence of capitalism by the character Francisco d’Anconia in Ayn Rand’s Atlas Shrugged (Part II, Chapter II, pages 410-415 in the Penguin Modern Classics edition).
Ayn Rand and Objectivism
Ayn Rand has always been a divisive figure. Perhaps strangely in a world of increasing self-obsession, her philosophy of objectivism is denounced as selfish and amoral. But is this really the case?
To understand Rand’s philosophy, it helps to understand her background.
Born in Saint Petersburg in 1905, she was 12 when she saw her father’s business confiscated by the Bolsheviks in the Russian Revolution. The family fled to Crimea, later returning but suffering desperate privation. As an adult in the United States, Rand made several attempts to have her parents and sisters join her, but they could not obtain permission to emigrate. In a 1959 television interview, she said she didn’t know whether they had survived or not.
The Revolution opened universities to women, but Rand’s studies were interrupted when she and other “bourgeois” students were expelled. Only complaints from visiting foreign scientists enabled the students to graduate.
Rand’s subsequent antipathy towards the power of any state to interfere with the rights of the individual is understandable.
But, what is Objectivism, the philosophy Rand developed?
Work hard to achieve a life of purpose and productiveness.
Earn genuine self-esteem.
Pursue your own happiness as your highest moral aim.
Prosper by treating others as individuals, trading value for value.
Rand herself, in various interviews fuelled the fire with assertions that seemed sometimes to be wilfully provocative. But, in reality, is it any more than a blend of Aristotle, Stoicism and Adam Smith?
Aristotle and reason
Rand believed that man should “hold reason as an absolute” and claimed that Aristotle was the only philosopher to have truly influenced her:
I am not primarily an advocate of capitalism, but of egoism; and I am not primarily an advocate of egoism, but of reason. If one recognizes the supremacy of reason and applies it consistently, all the rest follows.
Stoicism, as summarised by the Daily Stoic holds that:
Stoicism has just a few central teachings. It sets out to remind us of how unpredictable the world can be. How brief our moment of life is. How to be steadfast, and strong, and in control of yourself. And finally, that the source of our dissatisfaction lies in our impulsive dependency on our reflexive senses rather than logic.
Stoicism doesn’t concern itself with complicated theories about the world, but with helping us overcome destructive emotions and act on what can be acted upon. It’s built for action, not endless debate.
Although the famous stoic Marcus Aurelius would place greater emphasis on duty and society than is apparent in Rand, he also believed in reason, reality and the self:
A little flesh, a little breath, and a Reason to rule all – that is myself. (Meditations, 2.2)
Adam Smith famously wrote of self-interest:
Every individual… neither intends to promote the public interest, nor knows how much he is promoting it… he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention.
“It is not from the benevolence of the butcher, the brewer or the baker that we expect our dinner, but from their regard to their own interest.”
Although, he had no truck with “selfishness” in the common understanding of the term:
How selfish soever man may be supposed, there are evidently some principles in his nature, which interest him in the fortune of others, and render their happiness necessary to him, though he derives nothing from it except the pleasure of seeing it.
So, perhaps we would be better served by understanding Rand’s philosophy as a blending of existing strands and by reading the novels for which she is most famous in that light.
Her most famous novels, The Fountainhead (1943) and Atlas Shrugged (1957), are fables. A tad longer than the standard set by Aesop, but fables nonetheless; simplified and exaggerated to emphasise their point.
Atlas Shrugged is 1,168 pages long. It opens, famously, with the question: “Who is John Galt?”
And, when the mysterious John Galt finally addresses his audience, the speech runs, non-stop, to 60 pages. In places, the book is turgid, laboured and leaden. The conservative author, and one-time associate of Rand, William Buckley said, “I had to flog myself to read it.”
But, it is an utterly memorable fable of strong characters driven by a deep integrity to do what is right in the face of a government seeking to stifle individual freedoms and harness its entrepreneurial talent, until that talent begins to disappear. It’s a fantastic tale, but not without lessons for today’s world.
In the UK, the top 1% pay 27.5% of all income tax (rising towards one third by the end of this parliament); the top 5% provide 47%. Just 1% of firms pay four fifths of all total corporation tax.
Atlas Shrugged is, just about, worth reading. If all else fails, you’ll have the gist of it in the first hundred pages, then read d’Anconia’s speech (as above) and resort to a synopsis for the rest.
Rand described this as “an overture to Atlas Shrugged”. At just 727 pages, it’s an easier read than its successor.
The book centres on an idealistic young architect unwilling to compromise on his beliefs or fall in line with the accepted world of compromise, pastiche and mediocrity.
That said, I’m not sure it stands the test of time as well. There are a couple of scenes that definitely don’t play well and seem only to support the worst accusations against Rand.
Again though, strong characters playing out a fable that has relevance for the world today.
So, Hero of the Sovereign Professional? Yes, because here are strong characters preaching self-reliance, looking to no-one to support them in the face of mediocrity and an unrelenting pressure to conform for an “ill-conceived greater good”.
Here’s Rand’s first ever television interview (from 1959):
Eighty years ago, in The Nature of the Firm, Ronald Coase (1910 – 2013) explained why firms exist. His answer (transaction costs) both explains the recent rise in the number of sovereign professionals and highlights the challenge faced in building a high-value sovereign professional business.
Essentially, Coase argued that firms exist where the cost of contracting individual tasks becomes too burdensome. It is relatively cheap and easy to contract simple tasks in the open market, such as taking a taxi or paying a window cleaner. However, the myriad subtle responsibilities of, say, a personal admin assistant are more effectively met by hiring someone on a contract of employment.
The rise of technology, especially smartphones, the web and cloud computing, has dramatically reduced transaction costs on both sides. Size matters less and it is easy for an individual to market themselves, to be found, engaged and for all the requisite admin to take place. Those relatively concrete transaction costs are clearly lower as a result. One could imagine such relationships reaching a new equilibrium where it is now economical effective to contract out a larger set of “tasks” to sovereign professionals.
However, building on Coase’s work, Sanford Grossman and Oliver Hart described two types of rights over a firm’s assets: specific rights, which can be contracted out and residual rights which cannot. The more a sovereign professional works on a client’s strategic projects, the closer he or she comes to those residual rights. At that point, as The Economist describes in Coase’s Theory of the Firm “a merger would make more sense” – i.e., that work may be better done by an employee.
The challenge for the sovereign professional is to build the sort of “trusted adviser” relationship that gives access to strategically important (and therefore valuable) projects while maintaining independence.
The philosophy asserts that virtue (such as wisdom) is happiness and judgment be based on behavior, rather than words. That we don’t control and cannot rely on external events, only ourselves and our responses.
That second sentence is key. We “cannot rely on external events, only ourselves and our responses.”
If you want to be sovereign, you recognise that your fate is in your own hands. Equally, you are no self-pitying victim. You don’t control external events, but you certainly control your response.
Marcus Aurelius, no passive, other-worldly sage in rags is a perfect role model. He was the most important and most powerful person in the known world. When he became emperor, Rome (as Republic and Empire) had stood for over 600 years. Sometimes, we talk of Ancient Rome like we do Victorian Britain or Soviet Russia; we forget it lasted a thousand years (in the west, and a further millennium, to 1453, in the east). Meditations tells us that Aurelius was a practising Stoic. His notes are not original philosophy. They are reflections and reminders, notes-to-self and admonitions. Indeed, the historian Mary Beard argues:
If a text like this were to be discovered today in the sands of Egypt, not tied to the name of an emperor, we would almost certainly interpret it as a set of fairly routine philosophical exercises – the kind of thing that a philosophically trained member of the Roman elite would compose to keep himself in good intellectual shape.
Meditations is Aurelius’ workbook, not his textbook. That’s where the value lies: practical philosophy for real life. Remarkably relevant and contemporary, despite being 1,800 years old.
Albrecht Dürer was a sovereign professional in so many ways. He was proudly independent. In an age when artists so often depended on patronage, he considered court painters to be parasites…
hanging round great men, waiting for a commission to fall from the lordly lips. He, by contrast, was an independent businessman. He made his money not by grovelling, but by selling copies of the woodcuts and engravings printed, since 1495, at his workshop in the centre of Nuremberg. He was not even a member of a guild, for there were no artists’ guilds in the city: he was a free individual, unaffiliated, making money and a reputation purely for himself.
Dürer was also keenly aware of his cost base (both the materials used and his limited time) and of the return on investment from various projects. Of his “Madonna of the Rose Garlands”, he wrote: “My picture … is well finished and finely coloured [but] I have got … little profit by it. I could easily have earned 200 ducats in the time.”
To a customer, he wrote, “I shall stick to my engravings, and if I had done so before I should be a richer man by 1,000 florins.”
By investing in his own printing press, Dürer was able to produce copies of his works and leverage his creative work more effectively whilst also maintaining control by producing the prints himself.
He also understood how to market his services. He understood the value of his brand, going to court in Nuremberg and in Venice to defend his trademark monogram.
Dürer took a strategic approach to levering his talent, he developed re-usable intellectual property and he built his own brand. He understood his business – his P&L – and his marketing. In every way, we have much to learn from Albrecht Dürer.
There’s a spin-off benefit, too. Even 500 years later, original Dürer prints are available on sites like Artsy for just a few thousand dollars. Not pocket-money, but not the mega-millions of original works either.
Thoughts on staying sane as an independent professional in a world of chaos and entitlement.