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A NEW CREDO OF FREEDOM 77
Paterson warned against “planning” and “technocracy,” invoking the
more commonly used collectivist buzzwords. She also advanced a different
kind of argument against organization. Rand used moral rhetoric
about individual rights to make her case, but Paterson tended toward the
practical, emphasizing that such planning simply could not work. There
were several reasons why. Planners could never hope to determine the
true value of goods and services, for such values were always in fl ux, as
economic actors made individual decisions about what they wanted and
how much they were willing to pay. Moreover, planning would interfere
with invention and innovation, the very engine of the economy; before
long, there would be nothing left to plan. And fi nally, Paterson worried,
who would do the planning?
Paterson’s particular preoccupation was energy. When she and Rand
fi rst met Paterson was working on the book that would become her only
work of nonfi ction, God of the Machine. She had been inspired by the
dolorous Education of Henry Adams, and like Adams, she used energy
as a central organizing metaphor. In Paterson’s scheme the dynamo was
individual man, who alone could generate energy through thought and
effort. Energy could never be created by governments, but it could be
directed—or misdirected—by state institutions and structures. More
often than not government gummed up the works and stanched the
fl ow of energy by interfering with individual freedom. Paterson hailed
American government as a triumph of engineering design, for the careful
balance of power between the states, federal government, and a free
citizenry maximized the long circuit of energy released by individuals.
She encouraged Rand to think not only about what made capitalism fail,
but what made it succeed.
Paterson also had a handy explanation for the Great Depression, one
that Rand would repeat throughout her later career. She was impressed
by the analysis of the fi nancial journalist Garet Garrett, who argued that
the economic crisis had been brought about by government action. In
the boom years of the crisis, Garrett argued, the Federal Reserve had
infl ated the money supply, leading to a speculative bubble that triggered
the Depression. 23 As Paterson watched the government’s efforts to repair
the damage she saw only more of the same. Government had mismanaged
the economy in the fi rst place and was now making the problem
worse through bungling efforts to fi x it. The myriad shifting policies
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