This chapter shows readers the way things work in a mixed economy that's moving toward socialism. Private property exists nominally, but the state has steadily increasing control over its use and distribution. In such a system, productive businessmen like Hank Rearden and Dan Conway have no rights; they are at the mercy of any inferior competitor with political friends. Only capitalism provides the economic freedom that great producers like Rearden and Conway require. Under a capitalist society, their productive activities would be unrestricted by government bureaucrats and envious competitors.
The men who meet at the beginning of this chapter insist that the preservation of the steel industry "as a whole" is vital to the public welfare. Therefore, Boyle's virtually bankrupt company must not be allowed to fail. It must be propped up by stripping Rearden of his ore mines and turning them over to Paul Larkin, who will please the Washington planners by giving Boyle first priority for the ore. Rearden's productive company will be sacrificed to Boyle's unproductive one, in keeping with the moral premise underlying socialism, which states that the strong must serve the weak.
As the government acquires power over an economy, the level of corruption necessarily rises. This rise in corruption occurs because, as the state gains power to dispense economic favors, it attracts power-seekers like Wesley Mouch and enables incompetent businessmen like Jim Taggart and Orren Boyle to exist parasitically off of competent men like Rearden. In a free market, where customers can choose unrestrictedly among competitors, customers select companies like Rearden's and Dan Conway's because they get the job done. In a free market, businesspeople like Boyle and Taggart go out of business. But in a state-dominated system, unprincipled businesspeople curry favor with power-seeking politicians, brokering corrupt deals that allow them to stay in business by means of legislation.
