In this chapter, Rand shows the cause-and-effect relationships between events in a country’s economy. Because the politicians previously choked off American copper producers, Rearden is unable to get copper when Ragnar Dannesjköld prevents Francisco’s ships from reaching American ports. Because Rearden cannot procure copper—and because he is prohibited by the Equalization of Opportunity law from mining it himself—he cannot manufacture the Rearden Metal rails needed by Taggart Transcontinental. Because the railroad can’t get the new track, it must keep using its decaying track, which causes endless train accidents. Because of poor freight service, shippers are unable to get their goods to market, and some go out of business. As a result of business shutdowns, there is no longer freight traffic on the John Galt Line and Dagny must close it, ripping up the track to support the transcontinental line. The events of this chapter provide a powerful indictment of the results of a country’s shift from a capitalist economy to a socialist one.
Augmenting this indictment is the inevitable corruption surrounding the government’s seizure of power. When private individuals aren’t free to set shipping costs and wage rates, the operation of the law of supply and demand is suspended. Taggart Transcontinental isn’t free to charge the shipping rates it requires to make a profit, and manufacturers aren’t free to ship by another railroad if it deems Taggart Transcontinental’s rates too high. Similarly, companies are not free to offer wage rates based on the value of labor, and workers aren’t free to accept or reject the proffered wage. When the government takes over an economic system, it determines such prices and rates by decree. The government attracts to itself the kind of power-seeking politicians who desire to rule men’s lives, and it then finds itself in the midst of a life-and-death struggle involving warring pressure groups. The railroads, shippers, and unions all clamor for contradictory measures, and the government dispenses favors to whichever group has the most influence, friends, votes, or pull at that moment.
When the government controls an economy, the buying and selling of economic favors becomes a logical inevitability. For example, to spring the next series of controls on Rearden, the politicians need to ensure that he doesn’t act “disruptively,” like he did at his trial. Therefore, the politicians go to James Taggart, believing that Rearden’s presence at his wedding celebration indicates that Taggart has some degree of influence over him. Taggart, needing some dirt on Rearden to trade to the politicians so they won’t lower shipping rates, goes to Lillian, who discovers that her husband’s mistress is Dagny Taggart. When Lillian turns this information over to Taggart, he has ammunition to use against the shippers in the ongoing battle to curry favor with the politicians. Because socialism makes man’s survival contingent not on production but on influence, it necessarily breeds significant political corruption.
