Blogs > Liberty and Power > Peter Schwartz and the Abandonment of Rand’s Radical Legacy, Part III

Dec 10, 2004

Peter Schwartz and the Abandonment of Rand’s Radical Legacy, Part III

In part one and part two of this series, I outlined a few core points in Objectivist Peter Schwartz’s new book, The Foreign Policy of Self-Interest: A Moral Ideal for America. After discussing inadequacies in Schwartz’s analysis of the U.N. and U.S. foreign aid policy, I now turn to his examination of the problem of Saudi Arabia.

Saudi Arabia

The ever-expanding “neofascist” process that Rand identified in her critique of contemporary politics is further illustrated by the U.S. government’s socialization of corporate risk across the globe, granting corporations access to American taxpayer dollars—and the U.S. military if need be—to protect their foreign investments. Schwartz seems to approve of this. Looking at how Western-developed oil fields have been expropriated by foreign governments, such as Saudi Arabia, Schwartz would have us believe that it is the U.S. government’s duty to “safeguard American lives and property” abroad “by using retaliatory force against the initiators” (15). Hence, for Schwartz,

America could readily take over the oilfields [in Saudi Arabia] militarily (they properly belong to Western companies anyway, which developed them and from which they were expropriated decades ago by the Saudi state). The only explanation is that we have morally acquiesced to the Saudis. We are reluctant to pronounce judgment on them. We don’t believe we are entitled to assert our own standards. We have concluded that we must compromise those standards—i.e., that we have to give up some of our freedom—in order to accommodate the wishes of tyrants. (38)

Well, this is not “the only explanation.” Again, Schwartz misses the underlying dynamic at work in the current political system. That’s because, almost without fail, he focuses on moral issues acontextually; he insists on pronouncing sweeping moral judgments on various global phenomena but frequently brackets out any discussion of the actual history—the actual context—within which these phenomena have evolved. We are left, in the end, with moral generalizations that are disconnected from the concrete circumstances with which Schwartz attempts to grapple.

I’ve long argued that U.S. companies short-sighted enough to enter into contracts with foreign governments like those of the former Soviet Union or Saudi Arabia—which had/have a poor history of upholding private property rights—should not have the right to hold American taxpayers and lives hostage to their stupidity. “We” do not have an obligation to bail out Western oil companies whose property was “expropriated” by the House of Sa’ud. A cursory look at the history of oil development in Saudi Arabia would show us, in any event, that the Western oil industry has been in bed—“embedded” if you will—with their ‘expropriators’ from the beginning. Nothing much has actually changed since the Saudi government ‘took over’ the oil by successively increasing its share of the Arabian-American Oil Company (ARAMCO); U.S. administrators, technicians, and personnel are still firmly in place and U.S. oil companies like Exxon-Mobil remain at the forefront of all new oil exploration in the country.

As I’ve argued here, the formation of the Rockefeller-controlled ARAMCO depended upon a 60-year monopoly concession from the Saudi Arabian government; that government didn’t have the moral right to grant such monopoly concessions to begin with.

Let me emphasize a key point here: This was not homesteading. Western oil companies didn’t simply arrive on the Arabian peninsula so as to “mix their labor” with the land in order to attain Lockean acquisition rights. They were granted monopoly concessions in advance of drilling. Such concessions entail monopolizing all the oil in a vast land area through state force, which bars competing oil producers who might seek out oil in that area. The monopolist, in other words, uses the host government to gain control over a land mass through ownership claims granted by that government, which has no such legitimate authority to grant ownership rights (see Rothbard, The Ethics of Liberty).

ARAMCO, as such, was born of a political relationship. And the U.S. government facilitated this Saudi-Western oil arrangement over time. In the early days, the Rockefeller-influenced U.S. Export-Import Bank even paid $25 million to the Saudis to construct pleasure railroads, while Franklin D. Roosevelt provided $165 million in secret appropriations out of war funds to help in the construction of ARAMCO pipelines across Saudi Arabia. Over the years, the money made by the House of Sa’ud in granting the monopoly concession was pumped into the creation of institutions dedicated to the dissemination of fanatical Wahhabi ideology, which has been exported to the rest of the Arab world—fueling fundamentalism and terrorism throughout the region.

Schwartz himself bemoans this Saudi Arabia-U.S. alliance and the financing of “an array of Wahhabi indoctrination schools, or madrasas, where new crops of Islamic holy-warriors are continually cultivated ...” But instead of focusing on the money that drives the establishment and growth of these schools, Schwartz is simply disgusted by the “utterly perverse” U.S. “readiness to grant [the Saudis] a moral endorsement” (34). That “moral endorsement” goes hand-in-hand with a politico-economic endorsement. And this is why it is a virtual certainty that the Saudi government will never be touched by the U.S. in the current “War on Terror.” As I wrote in my essay, “A Question of Loyalty”:

And throughout this whole “War on Terror,” the poisonous soil from which Bin Laden emerged—Saudi Arabia—remains untouched. While the U.S. is busy fighting in Iraq, it sleeps with the Saudis, continuing a 60+ year-affair that most likely led the Bush administration to blot out 28 pages from a report on the failure of 9/11 intelligence, which might have embarrassed its Saudi “allies.” U.S. corporations engage in joint business ventures with the Saudi government—from petroleum to arms deals—utilizing a whole panoply of statist mechanisms, including the Export-Import Bank. The U.S. is Saudi Arabia’s largest investor and trading partner.

In the history of ARAMCO and the U.S.-Saudi partnership, we find the kind of “pull-peddling” that Rand condemned as “neofascist.” And it is the U.S.-Saudi-Big Oil Unholy Trinity that continues to sustain an autocratic, undemocratic Saudi regime, one of the breeding grounds of Islamic terrorism. Yes, that regime finds itself increasingly at odds with the fanatical elements in its midst. As I argued at length here, “the fundamentalist ideology that the House of Sa'ud has long funded and exported is now undermining its very rule. While the failure of the Saudi state at this point in time would be an utter catastrophe, those who would take power—the fanatical fundamentalists among them—are, to borrow a Randian phrase, 'the distilled essence of the [Saudi] Establishment's culture ... the embodiment of its soul' and its 'personified ideal'." (An interesting article on this subject,"Al Qaeda on the March" by Ehsan Ahrari, was published today.)

None of these complexities are even mentioned by Schwartz in his book.

Tomorrow: The History of U.S. Foreign Policy.

See also Part I, Part II, Part IV and Part V.

Check out Not a Blog.

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Andre Zantonavitch - 12/12/2004

In Part 3 of Chris Sciabarra's marvelous review, he makes an interesting point which might never have occurred to me. He disputes the contention of "Peter Schwartz," (what a dick! ;-)) and a few other Objectivists like myself, and argues that the oil doesn't really belong to the West. I think this view is considerably mistaken and vastly important. Indeed, the fact that we let these pitiful primitives and evil clowns ~steal~ Western and American oil is ~most~ of the current problem! Without their ill-gotten gains, moslem dictators and terrorists would have almost NO power to hurt their fellow moslems or us Westerners.

Despite many financial, business, and political irregularitites -- in the end, I think those Western and American oil companies brought their fairly high level of civilization/culture and respect for justice/property rights with them to the Middle East. Despite the genuine corruption and immorality of certain "monopoly concessions" which Chris outlines above, once they were in Arabia, the semi-civilized Westerners probably made the best, most normal, most moral deals they could under exceedingly difficult and strange circumstances. I imagine that in many cases they were utterly alone in a vast wasteland, and had to walk/ride for days until they found the nearest semi-official nomadic tribal leader or half-starving vagrant camel rider; then they offered to "buy" the land which that person "owned." No doubt the Arabian nomads looked at the Westerner like he was mad. Still, the wandering "chief" and/or nomadic "camel jockey" -- people Ayn Rand tended to refer to with exquisite political incorrectness as "savages" -- was probably more than happy to take the foolish Westerner's money and then sign some remarkably silly and useless piece of paper transfering "ownership" of "his" land to the Western oil company, businessman, or speculator/investor. All this rigamarol in a place which had almost no concept of private property rights.

Seen in extreme context, the above business transaction was legit. The Western businessman or company did, in fact, successfully negotiate a sale and now possessed full legit ownership. His government should therefore back him on this. Trillions of dollars in Western property shouldn't be lost to tribal savages via the magic of the criminal term "nationalization." Of course, considering the difficulties and expense involved in recovering this property, and the corruption alluded to above, this oil property probably now properly belongs to the US people and our government should now auction it off.

The key point here is that in some overall and contextual sense Western Civilization created great wealth in a place which was otherwise filled with nothingness, desert sands, and starving nomads. In NO sense is it just for the vagrants to suddenly become stunning millionaires at our expense. In NO sense is it practical for the West to transfer trillions in dollars to people of raw savagery and/or their dictatorial leaders and then not expect evil results to follow such as the OPEC cartel, all those wars against Israel, and 9/11.

People nowadays feel great despair and hopelessness when confronted with islamic fanaticism. They simply don't know what to do. Well, I know something to do: STOP giving trillions to raw evil, tyranny, and terrorism. This means: TAKE BACK OUR OIL!

Geoffrey Allan Plauche - 12/9/2004

"Or the Taliban's against the Soviet Union." Oops...I meant to write Mujahideen here. Silly me.

Geoffrey Allan Plauche - 12/9/2004

My apologies to Mr. Garret for mispelling his name. I inadvertantly added an extra "t".

Geoffrey Allan Plauche - 12/9/2004

I'm happy to oblige. ;o)

I wrote: "Mr. Schwartz's characterization of US foreign policy seems to me overly simplistic and in many respects mistaken." And Mr. Garrett replied: "Of course it is. He deals with fundamental principles. There can be nothing more mistaken than that. Right?"

There is a huge difference between dealing with fundamental principles and being overly simplistic. It's a pity so many Objectivists have trouble seeing that.

As it turns out, I do indeed know what nationalist, statist, and altruism means.

It seems to escape Mr. Garrett's notice that minarchists and anarchists will define statism somewhat differently. Both will likely conceive of statism on a continuum of more statist and less statist. An anarchist will have a broader conception of statism, i.e., his continuum will include a wider range.

As for altruism, I'd like to see a good argument for how the Cold War was purely altruistic and not pursued with any significant degree of self-interest. I mean, really, did the American government oppose the Soviet Union solely to save the rest of the world from falling under the sway of communism? Or did it do so in order to oppose an ideology that was seen as threatening the American way of life? To use another example, let's take the US government's support for Saddam Hussein in his conflict against Iran. Or the Taliban's against the Soviet Union. Or Korea. Or Vietnam. Altruistic? I think not. American policymakers were concerned with self-interest, with protecting "American" national interest and security abroad. Balance of power politics and the occasional move to appease Europe and/or the UN are at least in part tactics employed in support of the overrall strategic interest of furthering "American" interests. Sure there are altruistic reasons for pursuing many of these policies, but there are self-interested ones as well. Now, if one drops context, as Chris has argued that Schwartz does, then one may very well see such policies as self-sacrificial and therefore altruistic, but this is why Rand stressed the importance of context.

As I'm in the middle of finals week, I'll leave the rest until after Chris's final post in this series. It may answer the other charges for me.

I wrote: "I am a neo-Aristotelian/quasi-Randian/libertarian-anarchist" And Mr. Garrett replies: "Do you say that with a straight face?"; "I get a kick out of you libertarians."

Yes, I did. As Mr. Garrett is obviously not interested in serious intellectual discussion but only with insulting and making fun, unless he changes his tune this will be my last response.

P.S. I may be earning a Ph.D. in political science but I am not a mainstream political "scientist." My field is political philosophy and I reject most of what passes for science in my department as "scientism."

Pat Garret - 12/9/2004

"I am a neo-Aristotelian/quasi-Randian/libertarian-anarchist" Do you say that with a straight face?

"However, I do think, based on what I have seen from him, that he is a nationalist and a statist." Then you have no idea what those terms mean. Since you said that you are a poli-sci scholar, its not wholy unbelievable.

"Mr. Schwartz does seem to find altruism or compromised moral principles (but chiefly altruism) to be the hallmark of US foreign policy over the past century. I think he is woefully mistaken here..." Then you have no idea what altruism means and no understanding of how to detect its influence on history. But that's not surprising becaue you are a "neo-Aristotelian/quasi-Randian/libertarian-anarchist". If you were simply an Objectivist you would have no problem with this.

"Mr. Schwartz's characterization of US foreign policy seems to me overly simplistic and in many respects mistaken." Of course it is. He deals with fundamental principles. There can be nothing more mistaken than that. Right?

I get a kick out of you libertarians.

Geoffrey Allan Plauche - 12/9/2004

Well then, I must be a moonbat crazy libertarian. Or more precisely, I am a neo-Aristotelian/quasi-Randian/libertarian-anarchist. Which goes to show that some of us are none too clear on what libertarianism is. Interestingly enough, many Objectivists and even Rand herself would qualify as libertarians (with a small L). Indeed, libertarianism encompasses both minarchists and anarchists. So I hardly think it is fair to ascribe the admittedly radical beliefs of a crackpot such as myself to all libertarians. Or were the adjectives meant to distinguish me from more sensible libertarians? I think not, however. In any case, perhaps I did exaggerate in my characterization of Mr. Schwartz. However, I do think, based on what I have seen from him, that he is a nationalist and a statist. If and insofar as I did exaggerate in my characterization of him, it was a matter of degree and not of kind. I stand ready to be proven wrong though.

On a different note, as I mentioned in my original comment above, Mr. Schwartz does seem to find altruism or compromised moral principles (but chiefly altruism) to be the hallmark of US foreign policy over the past century. I think he is woefully mistaken here. Some particular policies may indeed have been pursued for altruistic reasons. Some may have involved compromises on moral principle. More often, however, US foreign policy seems to be predicated upon a mistaken notion of what the "national interest" is and how to secure it; or a pragmatic realpolitick that eschews "dogmatic" moral principle altogether (though one might call this compromising moral principle); or sheer greed and corruption. And let us not forget underlying notions of nationalism and American exceptionalism that many possess. Moreover, contrary to the way many scholars in my profession (political science) operate theoretically and methodologically, the state is not an individual actor. Mr. Schwartz's characterization of US foreign policy seems to me overly simplistic and in many respects mistaken.

Chris Matthew Sciabarra - 12/8/2004

Pat Garret, it's rather funny, because "Dr. Diabolical Dialectical" has almost always been accused of losing the trees for the forest---given all my emphases on integration and unity. Alas, I've also been accused of being a raving empiricist. :)

A few points in response:

First of all, I'm not an anarchist.

Second, I have been very respectful of Schwartz in my critique, and have a few very nice things to say about some of his arguments. Perhaps you might wait until the series is completed on Friday.

Third, it may be a given that there are plenty of statist businessmen out there and that Schwartz is aware of it. But anyone coming to this book from the outside will not find any such awareness in it.

Fourth, there is a big difference between Rand's radical take on foreign policy and Michael Moore's. Qua leftist, Moore practically equates capitalism with fascism; Rand understands that the statist businessmen who are benefiting from the interventionist system are the exact opposite of capitalism.

Fifth, it is not to be mired "in a million concretes" to focus on historical detail, especially when one is presenting a moral argument that allegedly stands in contrast to the given system. I'm well aware of the principle of abstraction, and devote more than a few sections to it in my book, Total Freedom. But part of the process of abstraction is the ability to understand a system on different levels of generality, from different vantage points, and by placing the units of that system in relationship to other units, and in relationship to the past, the present, and the possible future. Rand did all of these things. Schwartz doesn't do enough of it.

More to follow...

Pat Garret - 12/8/2004

"but I imagine you'll more explicitly elucidate Schwartz's unquestioning, nationalistic state idolatry in forthcoming posts"

You've got to be kidding me. State Idolatry? Only a moonbat crazy libertarian could write something like that. Schwartz's wole book is dedicated to reigning in the powers of the state and limiting its foreign policy to rational principles. But I forget myself. Libertarians dont really believe in a state. Just some fuzzy thing like "competing protection agencies." Oy Vey.

As for Sciabarra's criticism, well Sciabarra and Arthur Silber ought to start a club. Call it the "Wellfare / Warfare" club or the "down with Haliburton" club or something like that. I'll admit that Schwartz did not give enough historical backgroung material in his work. Many ARI Objectivists have criticized him for that. But Sciabarra's arguments are such straw men. Does he really thing that Schwartz doesn't know that on the opposite side of the altruist coin there are Wesley Mouches and Orrin Boyles waiting to cash in? Please. Its a given. But to suggest that this "good ole boy" business is driving foreign policy. Come on. Its not a far leap from that to Michael Moore.

Schwartz's book elucidates fundamental principles. It does not nor should it mire itself in a million concretes. It shows that altuism is at the philosophical root of current American foreign policy and has been for over a century. It didn't need to get into an exhaustive account of Saudi-American relations. Only a complexity worshiper like "Dr. Dialectical" would require that. In fact, Sciabarra's criticism of Schwartz underscores where he goes wrong with Objectivism. He refuses to grasp a principle. I think at root he denies man's power of abstratction. He always has to burry himself in the myriad details. In my opinion, he looses the forest for the trees. And when he comes up long enough to make a topographical map of the forest, he gets it wrong.

Schwartz's book could be a little more researched and contain more historical detail for better context and completeness, but its a good book. Binswanger is right. It should by the bible of American foreign policy.

Geoffrey Allan Plauche - 12/8/2004

Good points, and I agree. I look forward to the next instalments.

Chris Matthew Sciabarra - 12/8/2004


Thanks for your comments. I actually will be discussing this aspect of Schwartz's work in part 5 of my five-part series, so I'll hold off on commenting here.

There is something, however, that I do wish to comment on, and, perhaps, it is implicit in your observations here.

My own comments on the Saudi-U.S.-Oil Industry relationship are my views. I do not speak for Ayn Rand or for "Objectivism." But I do believe that my discussion of the statist character of the relationship is fully consistent with Rand's overall understanding of U.S. foreign policy and political economy.

I should point out, however, that when I say that I am battling for "Rand's radical legacy," there are clearly parts of her "legacy" that I do not regard as "radical" and with which I do not agree. These are aspects that I regard as quasi-conservative, if not in their basic premises, then certainly in their implications. Among those aspects are Rand's attitudes on such issues as "a woman president" or homosexuality, but there are other issues as well.

One area where Rand was not nearly as critical as she should have been was in her understanding of the history of the Middle East. A reader wrote to me and shared with me a transcript of one of Phil Donahue's interviews with Rand. Here's what Rand had to say, two years before she died, when, I might add, she was not at the "top of her game" so-to-speak:

MR. DONAHUE: All right. Okay. You also think if the Middle Eastern countries want to charge -- hold us up for the oil at $5 a barrel -- a gallon --Excuse me. Five dollars. Will that day ever be back? They ought to be able to do it. It's their oil. Is that your point?
MS. RAND: No. My point is, we should not have to admit it, altruistically, all those nations to nationalize what we built for them.
AUDIENCE: (applause)
MS. RAND: They took our oil.
MR. DONAHUE: Well, what do you mean? It's not our oil. It's not our — We don't own Saudi Arabia. they do.
MS. RAND: We own, by contract right, the installations which we devised to begin with, and we helped them to build.
MR. DONAHUE: But it sounds like you're saying because we exported our technology, therefore, they owe us — That sounds like the altruism that you condemned a moment ago.
MS. RAND: How? Altruism is the unearned, and this we earned, and they nationalized from us. They have no right to their soil, if they do nothing with it. Rights are not involved in those primitive societies. But they make a deal with us. They want to bring us in to develop their oil, and then, they try to exploit and to literally murder us by means of that oil. That is an unforgivable crime.
MR. DONAHUE: They would argue that — I mean, some in the Middle East would argue that it's -- First of all, it's their oil. They're grateful for whatever technology we were able to share with them, but they will claim that they paid for that -- That they responded by presenting us with monies that were appropriate to the services we tendered them, and that let's not expect any favors for them, and that the world markets -- laws of supply and demand should determine what the price of oil is.
MS. RAND: They wouldn't be in the position of monopolies, as they have today, if we hadn't calmly agreed to let them nationalize our oil production.
MR. DONAHUE: Okay. Then that's our problem. Then we should have been more foresighted when we —
MS. RAND: — Oh, certainly. I agree with you.
MR. DONAHUE: All right. Well, why should we make them pay now for what we failed to put into our contract with them?
MS. RAND: We're not making them pay. We're buying the oil---
MR. DONAHUE: — Well, we are if we're insisting on getting oil at a cheaper price.
MS. RAND: We merely bargain and give in every time. And in a proper society, a government would never let it come that far. But let me answer one point you made, that this is our oil. No, it isn't. It was there for centuries, and they didn't know what to do with it. We don't export our technology. We export our minds and our knowledge, without which they couldn't exist, and they admit it. They nationalize oil in a lot of those countries, and then want the Americans, or a few Europeans to come and help them run it. They can't even run the oil in, you see, after they copied everything from us. It can't be done. So they're expropriating, you see?

I think Rand would have been a much more careful observer of this reality in, say, the 1960s, than she was in 1980.

Here, Rand is obviously correct that the oil wells were developed by Western oil companies, by the minds, knowledge, labor both physical and mental, of those employed by these oil companies. What she fails to recognize is the ways in which those companies cashed-in on the monopoly concessions granted to them by the Saudis, or the ways in which "nationalization" did not alter significantly the politico-economic position of those companies. Rand makes the same mistake as Schwartz, in this instance, when she speaks of "we" this and "we" that. (And my reader observes that this blurs the distinction of what "we" refers to.)

In any event, Schwartz and some of Rand's other successors, clearly follow Rand in certain important respects. In my view, however, on these questions, they seem to be most in sync with Rand when Rand was wrong, and most out of sync with her when Rand was right.

More to follow...

Geoffrey Allan Plauche - 12/8/2004

It is curious that Schwartz should treat the subject as if American foreign policymakers were somehow either acting altruistically or compromising their moral standards by getting into bed with tyrants. What moral standards would those be? I hardly think the US government qualifies as "good Objectivists." In fact, it seems to me that neither are they acting altruistically nor are they compromising any high moral standards. Rather US foreign policy bears the markings of a pragmatic selfishness (in the base sense of the word). You've touched on this somewhat, Chris, but I imagine you'll more explicitly elucidate Schwartz's unquestioning, nationalistic state idolatry in forthcoming posts?