Ayn Rand, “What Is Capitalism?”

Executive Summary

Rand was world-famous for The Fountainhead and Atlas Shrugged when she turned to developing more systematically her philosophy in non-fiction form. In this 1965 essay, first published in The Objectivist Newsletter and later in Capitalism: The Unknown Ideal, Rand presents her philosophical and especially moral argument for capitalism.

1. “The magnificent progress achieved by capitalism in a brief span of time .. is a matter of historical record” (p. 28) But that progress depended upon an underlying philosophy, incompletely articulated, and a resurgence of anti-capitalist premises “engulfed philosophy in the nineteenth century” (p. 31). 
2. Rand defines capitalism as “a social system based on the recognition of individual rights, including property rights, in which all property is privately owned.” 
3. Capitalism  depends on conceiving of man as having a rational capacity of knowing objectively, acting as a free and independent individual, producing goods and services for voluntary trade and, as a matter of justice, deserving the results (pp. 16-17). 
4. But deep-rooted cultural beliefs—especially among intellectuals (pp. 12, 31)—in tribalism, altruism, irrationalism, the soul-body dichotomy, collectivism, and statism, undercut the progress of capitalism.
5. The USA was largely a capitalist nation, although much a mixed economy (p. 31), and its opposite was the Soviet Union (pp. 21, 29). The Soviet Union was widely admired by collectivist intellectuals, but its disastrous results—forced labor, impoverishment, and high death rates (p. 34)—illustrate philosophy’s practical importance.
6. To evaluate societies as good or bad, one must define the good. “There are, in essence, three schools of thought on the nature of the good: the intrinsic, the subjective, and the objective” (p. 21). Intrinsicist says the goodness exists in reality independently of man, subjectivists say we make up the good independently of reality, but “[t]he objective theory holds that the good is neither an attribute of ‘things in themselves’ nor of man’s emotional states, but an evaluation of the facts of reality by man’s consciousness according to a rational standard of value” (p. 22). 
7. While intrinsicism (e.g., Kantian, Marxist) and subjectivism (e.g., whim-worshipper) lead to anti-capitalism, “capitalism is the only system based on an objective theory of values” (p. 22). 
8. Rand integrates epistemology, human nature, values, and politics in this summary statement: “Since knowledge, thinking, and rational action are properties of the individual, since the choice to exercise his rational faculty or not depends on the individual, man’s survival requires that those who think be free of the interference of those who don’t” (p. 17). 
9. Consequently, “The free market represents the social application of an objective theory of values” (p. 24), and only such a society can integrate both moral principle and practical success.   

Read or listen to Ayn Rand’s “What Is Capitalism?” Summary by Stephen Hicks, 2021.

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See Next:

1. Stephen R.C. Hicks, "Ethics and Economics"

‍2. Robert Hessen, "Capitalism"

‍3. Murray Rothbard, "Free Markets"