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Rand used the word "capitalism" to mean pure laissez-faire, and since this system has never existed, on what referents was the concept of "capitalism" formed?

asked Sep 23 '10 at 16:39

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edited Oct 04 '10 at 10:20

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Greg Perkins ♦♦


The referent here is composed of the component referents in the definition. We (presumably) know what a social system is, what property rights are, etc. There are also historical referents one can point to as a close approximation, namely the system that existed in the United States up through the early 20th century. One must also take note that she explicitly termed capitalism an unknown ideal, meaning that capitalism in its pure form has yet to be realized (though I can realistically envision it being realized within a generation or two, but that's a whole 'nother story).

(Sep 23 '10 at 16:55) Chris Cathcart Chris%20Cathcart's gravatar image

A great answer overall, but with one caveat. The fact that pure capitalism has never existed isn't the reason, at least not the only reason, Rand called it an unknown ideal.

In the introduction to Capitalism: The Unknown Ideal, she tells us, "The flood of misinformation, misrepresentation, distortion, and outright falsehood about capitalism is such that the young people of today have no idea (and virtually no way of discovering any idea) of its actual nature. . . .

(Sep 23 '10 at 17:49) Publius ♦ Publius's gravatar image

"But their silence--by their evasion of the clash between capitalism and altruism--it is capitalism's alleged champions who are responsible for the fact that capitalism is being destroyed without a hearing, without a trial, without any public knowledge of its principles, its nature, its history, or its moral meaning. It is being destroyed in the manner of a nightmare lynching--as if a blind, despair-crazed mob were burning a straw man, not knowing that the grotesquely deformed bundle of straw is hiding the living body of the idea."

(Sep 23 '10 at 17:49) Publius ♦ Publius's gravatar image
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Capitalism, in one sense, is a social system. But in another sense, it is a principle on which to base a social system. While, in the former sense, no (pure) capitalist system has actually existed, the principle has existed (if implicitly) for quite a while, and has been implemented, in greater and lesser degrees, in various societies.

Before the airplane existed, it was an idea. Then the idea was implemented. The same can be true of Capitalism.

Capitalism is a man-made thing. As such, the concept can exist before the referents.

answered Sep 24 '10 at 11:18

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John Paquette ♦

edited Sep 29 '10 at 15:37

John, I'm not comfortable with calling capitalism a 'system of government'. I believe, to be legitimate, a government can and must endorse capitalism as the only social system, but a freedom advocating government will always remain the organization that exercises force, hence, not compatible with 'laissez-faire in its own structure.

I consider the referents for the concept capitalism to be derived from the idea that actions are voluntary and rewarded. And the underlying acceptance of full, inherent equality supporting the delegitimization of force as an means to deal with others.

(Sep 29 '10 at 01:47) garret seinen garret%20seinen's gravatar image

I agree with one aspect of what you say: that capitalism is a social system rather than, fundamentally a "system of government". Though I would say that the most important aspect of a social system is the nature of its government.

The fact that a government must use force does not make it incompatible with laissez-faire. Laissez-faire means to let people alone until they resort to physical force -- not to let them alone, period.

A laissez-faire (or capitalist) government keeps a monopoly on the use of force, and applies force to criminals.

(Sep 29 '10 at 15:46) John Paquette ♦ John%20Paquette's gravatar image

If by "full, inherent equality" you mean that either everybody is in the government or nobody is, I don't agree. Properly, government officials are professional experts officially entrusted with applying the law to the act of retaliation. Not everyone must be, nor should be, such an expert.

(Sep 29 '10 at 16:05) John Paquette ♦ John%20Paquette's gravatar image

The idea, that it's good to eliminate some folk's misery by forcing those who are better off to bail them out, is steering us over the proverbial cliff. As such, we look at 'material' equality and ignore that you should not knee before me, nor I before you. A free society will elude us until human subservience is put in its proper place, the trash heap. Further, capitalism is the system of trade between equals, where the supplier of a good and the purchaser arrange the acceptable value between each other. All other economic systems regard inequality to warrant third party intervention.

(Sep 30 '10 at 13:37) garret seinen garret%20seinen's gravatar image

I don't disagree with the spirit of what you are saying, but I'm still unclear on whether you advocate the existence of a government.

(Oct 01 '10 at 09:34) John Paquette ♦ John%20Paquette's gravatar image

Sorry if I'm not being clear, but I see anarchy to be just as dangerous to man as totalitarianism. But the government we have now, that fails to acknowledge that individual's own their own effort, that unscrupulously penalize production at every source, is really also a criminal organization.

(Oct 03 '10 at 03:11) garret seinen garret%20seinen's gravatar image
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"Rand used the word "capitalism" to mean pure laissez-faire, and since this system has never existed, on what referents was the concept of "capitalism" formed?"

The question implies that 'in order for a concept to be valid, the item being conceptualized, as well as all of its referents, must have previously existed.'

Since this is a positive assertion about some aspect of the nature of reality (just like saying 'the sky is blue' is an assertion), disguised in the form of a question, I therefore conclude that the burden of proof lies with the person making the (implied) assertion. According to logic, the burden of proof does not fall on someone to dis-prove an assertion, but rather to prove a positive assertion.

I call on the person who asked the question to prove (or at least state) their implied assertion, so that we can comment on it further.

Regards, -Sev

answered Sep 28 '10 at 00:21

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Sev ♦

I think Ayn Rand's conception of capitalism was based on the United States of America, especially at its founding. Laissez-faire capitalism is just that system made fully consistent both politically and philosophically, based on the concept of individual rights.

answered Oct 01 '10 at 04:59

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jasoncrawford ♦

This is a really good point, but still, that's just one example for her to form the concept from. And that one example was based on an idea which is fundamental to capitalism: individual rights.

Again, individual rights (protected in practice) was a vision before it was a reality. The idea of freedom came before the fact. The declaration of independence was the means to the founding.

(Oct 04 '10 at 10:47) John Paquette ♦ John%20Paquette's gravatar image

As it happens, the concept of 'capitalism' was first formed by Marx! (The term 'capitalist' was first used by someone else, several decades earlier). He intended it as an insult, attempting to shame those who advocated the System of Natural Liberty (as it had previously been known as) by asserting that they were using liberty as a mask for self-interest. In delicious irony, he actually pointed out capitalism's true moral grandeur, so we capitalists now happily own the insult. Take that, ya mug!

The concept is valid precisely because it has always been of moral character as well as being applicable to social and economic issues. What Miss Rand did was go right to that moral core, identified essentials and derivatives, stripped away the nonsense generated to try to hide from the rational selfishness it depends on, and then, along with observations of various degrees of consistency with that moral core in socioeconomic practice, fully developed all that follows from that moral core in terms of practical consequences for both the individual and society. The result is the identification of a social system that is the consequence of the moral code that is proper for reasoning beings living in a fully causal world. Thus the concept is validly drawn from observations of the nature of man, the natures of morality and rights, and the correlations of self-interested morality, liberty, and economic success with each other.

IIRC, the attempt to strip reference to morality out of the concept came well after Marx. Others better versed in the details than I can answer better, but I think it was because, similar to Kant's evil motives for his Critiques, they recognised that they could not successfully attack capitalism so long as association with a reason-based individual-happiness-oriented morality was also held in mind by thinkers. Miss Rand rightly told them were to go and brought morality back to being the vanguard issue, where it belongs.


answered Oct 04 '10 at 02:27

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JJMcVey ♦

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Asked: Sep 23 '10 at 16:39

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Last updated: Oct 04 '10 at 10:48