The Company serves as a symbol of the, ahem, horrific ideals of Communism put into practice. By sheer narrative contrivance, Dagny eventually comes upon a bum who used to work there, who explains how everything went down. It's an enormously long speech, especially for one given by a weary vagrant, but the gist of it is the plant fell apart when the new ownership, the original owner's altruistic heirs, decided with a vote by the employees to change their compensation so that all worked according to their ability and were paid according to their need. The results were predictable:
“...The factory’s production had fallen by forty percent, in that first half year, so it was decided that somebody hadn’t delivered ‘according to his ability.’ Who? How would you tell it? ‘The family’ voted on that, too. We voted which men were the best, and these men were sentenced to work overtime each night for the next six months. Overtime without pay – because you weren’t paid by time and you weren’t paid by work, only by need.
“Do I have to tell you what happened after that – and into what sort of creatures we all started turning, we who had once been humans? We began to hide whatever ability we had, to slow down and watch like hawks that we never worked any faster or better than the next fellow. What else could we do, when we knew that if we did our best for ‘the family,’ it’s not thanks or rewards that we’d get, but punishment? We knew that for every stinker who’d ruin a batch of motors and cost the company money – either through his sloppiness, because he didn’t have to care, or through plain incompetence – it’s we who’d have to pay with our nights and our Sundays. So we did our best to be no good.Long story short, in four years the company goes bankrupt because no one's willing to do any work. The Twentieth Century Motor Company works as a half-accurate metaphor for the Soviet Union, which--to grossly simplify--was eventually bankrupted, but it fails in being representative of any car company or business that's ever existed. Simply put, no one would be so stupid. It's safe to say no company ever failed from adapting socialism. However, there abound stories of once-prosperous companies that are swiftly befallen by disastrous management of a most capitalist bent. Consider Georgetown Steel:
It was the early 1990s, and the 750 men and women at Georgetown Steel were pumping out wire rods at peak performance. They had an abiding trust in management's ability to run a smart company. That allegiance was rewarded with fat profit-sharing checks. In the basement-wage economy of Georgetown, South Carolina, Sanderson and his co-workers were blue-collar aristocracy.
"We were doing very good," says Sanderson, president of Steelworkers Local 7898. "The plant was making money, and we had good profit-sharing checks, and everything was going well."Great, right? A company producing a valuable good, in which both the management and the workers are happy with their compensation and the work they're doing, and providing much-needed jobs to boot. Capitalism at it's best.
In 1995 Georgetown Steel was purchased by Bain Capital, then run by Willard 'Mitt' Romney.
His specialty was flipping companies—or what he often calls "creative destruction." It's the age-old theory that the new must constantly attack the old to bring efficiency to the economy, even if some companies are destroyed along the way. In other words, people like Romney are the wolves, culling the herd of the weak and infirm.
His formula was simple: Bain would purchase a firm with little money down, then begin extracting huge management fees and paying Romney and his investors enormous dividends.
The result was that previously profitable companies were now burdened with debt....Bain would slash costs, jettison workers, reposition product lines, and merge its new companies with other firms. With luck, they'd be able to dump the firm in a few years for millions more than they'd paid for it.If investors are supposed to act as doctors bringing a patient back to health, Romney essentially made his patients lose weight by harvesting their organs and left them for dead. Market efficiency was never part of the equation, merely the shareholders' bottom line.
When Bain purchased the mill, Sanderson says, change was immediate. Equipment upgrades stopped. Maintenance became an afterthought. Managers were replaced by people who knew nothing about steel. The union's profit-sharing plan was sliced twice in the first year—then whacked altogether.
"When Bain Capital took over, it seemed like everything was being neglected in our plant," Sanderson says. "Nothing was being invested in our plant. We didn't have the necessary time to maintain our equipment. They had people here that didn't know what they were doing. It was like they were taking money from us and putting it somewhere else."This played itself out again and again, in Indiana, Missouri, Puerto Rico. Not all of the deals Romney and Bain engaged in were crooked, but neither were these incidents outliers:
[N]early one in three of the companies [Romney invested in] experienced severe financial trouble. One in five wound up in bankruptcy.
The more telling figure: Of Romney's 10 biggest moneymakers, he ultimately destroyed four of them, leaving bankruptcy judges to clean up the mess.Romney doesn't really talk about Ayn Rand, but his declaration that "I will not apologize for my success", with all its haughty arrogance and ignorance of fortune and privilege, is well in keeping with the spirit of Atlas Shrugged. Certainly Rand's defense of money as the root of all good is something to which Romney might nod in affirmation.
Yet, as has been pointed out, Rand would find little to like about Romney and his ilk in the financial industry. All of her heroes are creative, industrious individuals who are compensated for the services they provide. The Masters of the Universe on Wall Street who, for instance, bet $2 billion in derivatives aren't really providing a service. It's usury in all but name, gambling, creating money from money and dragging everyone down with them if a deal goes south. Theirs is a parasitic existence, surfeiting as they do on other peoples' cash and often by government subsidy.
Rand's former lover, acolyte, and number two man Nathaniel Branden once said, in a speech given after Rand's death, that:
...[I]in all the years I was associated with her I never saw big business do a thing to assist or support Ayn Rand in any way. I would say that for most businessmen her ideas were much too daring, much too radical. She believed in laissez-faire capitalism. She believed in a free market economy, I mean, a free free market economy. An economy in which not only were you to be unencumbered by regulations but so was everyone else. No special favors, no special protections, franchises, subsidies. No governmental privileges to help you against your competitors. Often I've had the fantasy of one day writing an article entitled "Big Business Versus Capitalism."All of which is to underscore, again, the fantastical nature of Ayn Rand's project. It's all well and good to celebrate virtue and rationality, but expecting and demanding people act in such a fashion is a recipe for failure. Rand's own life illustrated this, as do her most powerful standard-bearers and today's ultra-rich, who will do whatever they can to make as much money as possible. An absolute meritocracy is a lovely idea, but an idea is only as good as its implementation. If nothing else, Communism taught us that much.