"Capitalism is a social system based on the recognition of individual rights, including property rights, in which all property is privately owned." (Ayn Rand Lexicon: Capitalism)
Is the United States a capitalist country? I think it's fairly indisputable that it was based on the recognition of individual rights, including property rights. On the other hand, not all property is actually privately owned.
In his or her answer to Is Laissez-faire capitalism a utopian fairy tale?, Life says that "America in the latter 1800s came very close to a system of laissez-faire capitalism, but not quite fully." Is the system coming very close to laissez-faire capitalism enough to count the system as a unit of the concept "capitalism"? I assume adding "laissez-faire" here is just redundant if we're talking about capitalism as Ayn Rand defined the term.
If capitalism didn't have any existents (by which I mean if no system which currently exists or ever existed were a unit of the concept), would that make "capitalism" a floating abstraction? OPAR, p. 96, as quoted by Life, defines floating abstraction as "concepts detached from existents, concepts that a person takes over from other men without knowing what specific units the concepts denote."
"Capitalism", like many words, may correspond to multiple concepts (i.e., may have multiple meanings or senses).
First, "Capitalism" may refer to a type of political theory. The units of this concept are those specific theoretical formulations that have been expounded by various persons across time. In particular, the distinguishing characteristics of these theoretical formulations that serve as units for "Capitalism" include that they advocate recognition of individual rights, including property rights, and privately owned property. Examples of these units may include the theoretical formulations of Locke, Smith, Rand, von Mises, Hayek, Friedman, etc. These theoretical formulations are actual existents in reality, and thus the units of the concept corresponding to this sense of "Capitalism" do in fact exist in reality.
Second, "Capitalism" may be used to refer to the idealized social system that is advocated by the theory of Capitalism. This idealized society is a theoretical construct, not an actual society that exists now or has existed. In other words, it is a description of what an ideal society would be like according to the theory...the ultimate goal of the theory. While no society corresponding to these idealized constructs does or has existed, the theoretical constructs themselves do and have existed qua theoretical construct, and it is these theoretical constructs that form the units of this sense of "Capitalism". For example, in Rand's formulations of the theory of Capitalism she described the ideal social system of that theory in certain ways, in von Mises's formulations of the theory of Capitalism he described the ideal social system of that theory in certain ways, and so on, and it is these descriptions of the ideal social system that form the units of this sense of "Capitalism". The distinguishing characteristics of these idealized social systems include that they are hypothetical social systems in which individual rights, including property rights, are recognized and all property is privately owned.
The questioner notes that no Capitalist social system has existed, and there is a question raised by implication (partially here and partially from other questions) about whether this fact means that the "units" of "Capitalism" do not exist in reality (and hence that "Capitalism" is a floating abstraction). However, this is only true if one assumes that the purported concept that "Capitalism" refers to must integrate only existing (or previously existing) social systems. One should not assume that the only way that one could form a concept like "Capitalism" is to note what types of social systems do exist now or have existed previously and then to classify those systems according to their similarities. One can also theorize about what types of social systems could be and ought to be. Once such theories about what social systems could be and ought to be have been formed, one can step back and look at the theories themselves and classify them according to their similarities, thereby forming concepts that, for example, integrate those theories that have essential similarities.
The assertion that "theories" and "constructs of theories" are existents may seem counter-intuitive at first. To understand this, one must recognize the distinction between (a) whether the substantive content of a theory corresponds to reality, and (b) whether the formulation of the theory itself exists qua formulation of a theory. A theory that has in fact been formulated by someone is an existent--it does, in fact, exist as a theory. This is true even if the substance of the theory is fantasy. Similarly, if a theoretical formulation includes a formulation of a particular construct (such as a hypothetical social system), that construct, qua construct, exists, even if there is no existent in reality corresponding to the construct. Of course, the value of a theory or a construct will depend on whether the substantive content thereof is reality based, but the existence of the theory itself or the construct itself does not.
Ideas raises the issue of only concretes existing, which I address briefly in a comment to his question. By saying that formulations of theories exist, I am not arguing that some archetypical essence that is "the theory of Capitalism" exists in a world of forms ala Plato. Instead, I am arguing that many concrete formulations do exist (e.g., Rand's formulation, Freedman's formulation, etc), and it is these concretes that we unite into a new mental entity--the concept "capitalism"--through a process of concept formation.
"Capitalism" is a higher-level abstraction, formed by "abstraction from abstractions" as discussed in ITOE (Chap. 3). It is not necessary to have any complete, fully formed instances of such a concept in order to form the concept, if the genus and differentia of the concept are objectively identifiable.
The question correctly states the Objectivist view of what capitalism is, in terms of its genus and differentia. In my understanding, this Objectivist identification is a refinement of other, older descriptions of "capitalism" that were not as well formed epistemologically, and which Objectivism's formulation endeavors to refine. Objectivist literature and other observers also use the expression, "laissez-faire capitalism," for emphasis and differentiation from non-Objectivist views of capitalism. For general background and history, Wikipedia has substantial articles on both "Capitalism" and "Laissez-faire."
Historically, a virtually complete instance of laissez-faire capitalism came close to existing in the U.S. in the late Nineteenth Century, as Ayn Rand explains in great detail in her book, Capitalism: The Unknown Ideal (CUI). The elements of capitalism that existed in that era were more than enough to form the concept of "laissez-faire capitalism," and eventually to identify the fact that non-laissez-faire "capitalism" isn't really "capitalism" at all in the purest, most essentialized and consistent sense of the concept.
Observers who use the term "capitalism" without knowing its objective roots in reality are usually either treating it as a floating abstraction (not tied to reality in their minds) or as an exercise in definition by non-essentials.
The question raises a narrow, technical point in epistemology:
If capitalism didn't have any existents (by which I mean if no system which currently exists or ever existed were a unit of the concept), would that make "capitalism" a floating abstraction? [This is followed by a reference to the discussion of floating abstractions in OPAR, p. 96, which mentions:] "concepts detached from existents, concepts that a person takes over from other men without knowing what specific units the concepts denote."
(Underlines added.) I see a potential confusion here between "existents" and "units." The two terms aren't exactly synonymous, such as when referring to a social system as an "existent." My own understanding is that the units of the concept "capitalism" are well defined (in Objectivism) because the genus and differentia are both objectively identifiable, thus allowing us to identify objectively whether or not any particular social system qualifies as a unit of "capitalism," even if no actual units have actually existed fully up to the present. We don't need to see a full instance of capitalism in advance of being able to project (from other known existents) what it would consist of and thus being able to form the concept of capitalism.
Update: To Exist without Existing
A historical comment by Curi, along with the original question and follow-up comments by the questioner, all taken together, ask, in effect and by implication: how can there be a history of capitalism if capitalism means laissez-faire and a fully consistent implementation of laissez-faire has never existed anywhere in the world? (At most, there allegedly could only be a history of the idea of capitalism.) And, how can it be said that America in the 19th Century was a capitalist system if there were also elements of statism in the system? Wouldn't it be a "mixed economy" rather than capitalism?
The answer is to be found by holding the context while studying CUI and the other major works in the literature of Objectivism. What existed in 19th Century America was, indeed, a mixture of capitalist and statist elements, a mixture of freedom and controls. But the capitalist elements were dominant. Statism rose to dominance in the next century. That is what CUI means by describing 19th Century America as "capitalism" (in a book whose title classifies capitalism as an "unknown ideal"). It means a mixed system in which the capitalist elements were dominant. And 19th Century America was, indeed, the closest approach to a system of pure, fully consistent, laissez-faire capitalism that the world has ever known, despite the system's lingering statist elements.
Remember, also, that a mixed economy is not a third type of system, in addition to capitalism and statism. Capitalism and statism are the two main alternatives; a mixed economy is merely a mixture of these fundamentally opposing elements. If the mixture happens to be "mostly capitalist," as it was in 19th Century America, then it is perfectly natural to refer to it simply as "capitalism" as long as the context of a mixture is kept in mind. CUI also emphasizes repeatedly that it was a mixture and that the evils and failures popularly ascribed to "capitalism" were actually caused by the statist elements. To restrict the term "capitalism" to a pure implementation only, would be to lose the historical context of what the capitalist elements actually accomplished (where they existed) and would continue to accomplish if brought to fully consistent implementation. Those who attack capitalism by attacking a mixture of freedom and controls are seeking to obliterate both the true nature of freedom and the actual history of it.
Further elaboration of Ayn Rand's usage of "capitalism" can be found in The Ayn Rand Lexicon under the topic of "Capitalism." Regarding 19th Century America, one passage in those excerpts observes:
The nineteenth century was the ultimate product and expression of the intellectual trend of the Renaissance and the Age of Reason, which means: of a predominantly Aristotelian philosophy. And, for the first time in history, it created a new economic system, the necessary corollary of political freedom, a system of free trade on a free market: capitalism.
(Excerpted from "Faith and Force: The Destroyers of the Modern World," in CUI.) Another passage in the Lexicon excerpts on "Capitalism" also reiterates:
It must be remembered that the political systems of the nineteenth century were not pure capitalism, but mixed economies. The element of freedom, however, was dominant; it was as close to a century of capitalism as mankind has come. But the element of statism kept growing throughout the nineteenth century, and by the time it blasted the world in 1914, the governments involved were dominated by statist policies.
(Excerpted from "The Roots of War" in CUI.)
In sum, Objectivist references to capitalism in a mixed-economy context refer to the capitalist elements in the mixture, and Objectivism does not apologize for the properly identified capitalist elements in any manner, directly or indirectly.
Update: Genus and Differentia
Comments by Anthony ask for clarification of genus and differentia regarding the concept "capitalism." An overview of genus and differentia in general can be found in The Ayn Rand Lexicon under the topic of "Definitions." A more extensive discussion can be found in ITOE Chapter 5.
The Objectivist definition of "Capitalism" is exactly as excerpted in the question: "Capitalism is a social system based on the recognition of individual rights, including property rights, in which all property is privately owned."
If it is asked additionally where or when did or does any such unit actually exist, the answer is that throughout history up to the present, only elements of capitalism have actually existed (predominantly so in 19th Century America), not the whole system in its fully consistent entirety, fully free of all statist elements. Refer to the preceding Update above for further discussion of the existence issue.
Update: What Exists
The Answer by Eric maintains that capitalism can "exist" as a theory even if it has never actually existed historically so far. A comment on Eric's Answer points out:
Ideas [for Life] is the one who said "only elements of capitalism have actually existed". I did not at any time agree with that. In fact, I challenged it: "Everything actually exists."
I have written (by implication) as if I hold that only concretes exist. I do hold that view, but I did not originate it. I got it from Ayn Rand, who got it from Aristotle. In ITOE Chap. 5, Ayn Rand observes:
It is Aristotle who identified the fact that only concretes exist.
In Journals of Ayn Rand, Chap. 3, in an entry dated May 15, 1934, an editor's comment explains, in regard to Ayn Rand's early notes comparing concepts to the relation between algebra and arithmetic:
We can see the first seeds of AR's later theory of concepts in her identification of the relation between abstractions and concretes as similar to that between algebra and arithmetic. Her primary concern here is to reject the Platonic rationalism that detaches abstractions from concretes, and affirm the Aristotelian premise that only concretes exist.
My understanding is that Plato regarded abstractions as having an existence of their own, apart from (and superior to) concretes. This is the classic foundation for a dual-reality metaphysics, with abstractions as existing in a whole separate "dimension" or "realm" of "reality." Kant, too, had a philosophical "field day" with that kind of metaphysics.
In Chapter 16 of the Journals, in an entry dated June 19, 1958, Ayn Rand wrote:
Aristotle established the right metaphysics by establishing the law of identity—which was all that was necessary (plus the identification of the fact that only concretes exist).
Regarding the use of words to allow abstractions to be treated by man (cognitively) as if they were concretes, OPAR explains in Chap. 3, subsection titled, "Differentiation and Integration as the Means to a Unit-Perspective":
Only concretes exist. If a concept is to exist, therefore, it must exist in some way as a concrete. That is the function of language. "Language," writes Ayn Rand, "is a code of visual-auditory symbols that serves the ... function of converting concepts into the mental equivalent of concretes."
Regarding higher level concepts such as "organism," OPAR also explains in Chap. 3, subsection titled, "Concepts of Consciousness as Involving Measurement-Omission":
Only when the child has first conceptualized separately the various perceptually given entities is he capable of the more extensive acts of abstraction and integration that identify their common denominators. These latter are not available on the perceptual level, because only concretes exist: there are no such things as "organisms" to be seen—there are only men, dogs, roses.
Ayn Rand reiterates the point that only concretes exist in The Art of Nonfiction, Chap. 8:
When you write nonfiction, you are communicating knowledge. You are dealing with abstract issues, which you present by means of abstractions, i.e., words and sentences. However, you must remember that only concretes exist—that abstractions are merely a method of classifying concretes: Therefore, if you are writing an abstract essay, the question will necessarily arise: how and when do you tie what you are saying to reality?
Regarding a very high level abstraction such as "capitalism," OPAR explains in Chap. 11, subsection titled, "Capitalism as the Only Moral Social System":
Historically, pure capitalism has never existed. It was, however, approached by the West during the period of the Industrial Revolution; the best example was America in the nineteenth century. That was the closest men have yet come to an unbreached recognition of rights and, therefore, to a free market.
If the fact that this formulation comes from OPAR raises questions about its accuracy as a statement of Ayn Rand's views, consider the following excerpt by Ayn Rand in CUI Chap. 3:
A system of pure, unregulated laissez-faire capitalism has never yet existed anywhere. What did exist were only so-called mixed economies, which means: a mixture, in varying degrees, of freedom and controls, of voluntary choice and government coercion, of capitalism and statism. America was the freest country on earth, but elements of statism were present in her economy from the start.
I hope the foregoing adequately establishes what the literature of Objectivism means by something "existing" or not. The further question of how something that is only a potential existent and not yet an actual one can be conceptualized objectively has already been discussed earlier in this thread and in related discussions of other recent questions about floating abstractions.
Update: Existents and Concretes
My previous update, "What Exists," was predicated on my understanding of the terms "concrete" and "exist" as referring (in Objectivism) to perceptual concretes, i.e., to entities and phenomena existing entirely outside of man's consciousness, existing physically (non-mentally). On that understanding, the expression "concrete mental entity" is a contradiction in terms; that which is mental is not concrete.
This "physical" (non-mental) understanding of "existent" is reinforced by the following formulation in ITOE, excerpted in the The Ayn Rand Lexicon under the topic of "Existent":
The building-block of man's knowledge is the concept of an "existent" -- of something that exists, be it a thing, an attribute or an action. [Other passages in Objectivist literature also seem to include "relation" as a possible type of "existent," such as "taller than" in regard to physical entities such as trees and rocks, for example.] Since it is a concept, man cannot grasp it explicitly until he has reached the conceptual stage [of cognition]. But it is implicit in every percept (to perceive a thing is to perceive that it exists) and man grasps it implicitly on the perceptual level -- i.e., he grasps the constituents of the concept "existent," the data which are later to be integrated by that concept. It is this implicit knowledge that permits his consciousness to develop further.
Further reinforcement comes from the original definitive statement of the metaphysical axioms in Galt's Speech (excerpted in the Lexicon topic of "Axioms"):
Existence exists -- and the act of grasping that statement implies two corollary axioms: that something exists which one perceives and that one exists possessing consciousness, consciousness being the faculty of perceiving that which exists.
Incidentally, that same passage also explains:
Centuries ago, the man who was -- no matter what his errors -- the greatest of your philosophers, has stated the formula defining the concept of existence and the rule of all knowledge: A is A. A thing is itself. You have never grasped the meaning of his statement. I am here to complete it: Existence is Identity, Consciousness is Identification.
(My understanding of "existent" as perceptual also includes existents that man cannot perceive directly but can nevertheless discover through conceptual knowledge and experimentation and/or observation with specialized test equipment -- existents such as atoms, micro-organisms, radio waves, etc.)
The comments, however, have raised important questions about exactly what Ayn Rand actually meant by her statement:
Abstractions as such do not exist: they are merely man's epistemological method of perceiving that which exists -- and that which exists is concrete.
(See The Ayn Rand Lexicon, topic of "Abstractions and Concretes." The context of this formulation is the psycho-epistemological role of art in concretizing abstractions for more direct contemplation by man.)
As I indicated in my "What Exists" update, Ayn Rand wanted to differentiate her view from Plato's view of abstractions as existing in another dimension. For more on Plato, refer to the Lexicon topic of "Platonic Realism." For more on the broader topic of instrinsicism vs. subjectivism (vs. Objectivism's alternative to both), consider the following passage in ITOE2 Chapter 5, p. 53:
The extreme realist (Platonist) and the moderate realist (Aristotelian) schools of thought regard the referents of concepts as intrinsic, i.e., as "universals" inherent in things (either as archetypes or as metaphysical essences), as special existents unrelated to man's consciousness—to be perceived by man directly, like any other kind of concrete existents, but perceived by some non-sensory or extra-sensory means.
After reviewing the various usages of the term "concretes" in the literature of Objectivism more closely, I now see that Objectivism does, indeed, use "concrete" and "existent" to include states or processes of consciousness as well as perceptual concretes, provided that one always bears in mind a clear distinction between the mental and the physical, the conceptual and the perceptual. In particular, "concrete" is often used in the context of cognitive integration in human consciousness to refer to conceptual units that are closer to the perceptual level, as against "abstract" as referring to the product of a process of integrating the more concrete units into a higher level integration. The crucial caveat in such usage is emphasized by Ayn Rand in her answer to Prof. E in ITOE2, pp. 157-158:
Prof. E: Would it be fair to say that a concept qua concept is not a concrete but an integration of concretes, but qua existent it is a concrete integration, a specific mental entity in a particular mind?
The editors of ITOE2, Harry Binswanger and Leonard Peikoff, chose the following title for the Appendix section (pp. 153-158) in which this passage appears: "Concepts as Mental Existents."