Ayn Rand on Economics: How Capitalism Hinges on Philosophy

Ayn Rand’s nonfiction book Capitalism has a subtitle that is truly startling. Rand held that capitalism is “The Unknown Ideal.” Capitalism is a social system so widely misunderstood and distorted and maligned that few understand its nature and history — let alone view it as morally good. Rand observed: “No politico-economic system in history has ever proved its value so eloquently or has benefited mankind so greatly as capitalism — and none has ever been attacked so savagely, viciously, and blindly.” Rand’s philosophic case for laissez-faire capitalism is the focus of a superb new collection of scholarly essays, Foundations of a Free Society, which explores her arguments in detail and relates them to the views of other ostensibly pro-freedom thinkers. Elan Journo sat down to talk with one of the book’s contributors, Rob Tarr, about Rand’s view of capitalism, its deep foundations in philosophy, and the interplay of philosophy and economic theory. Since capitalism is not only a social but also an economic system, there’s a profound question about how we should understand the nature of the economic value of goods and services produced in that system. In the interview, they explored why Rand held that “Capitalism is the only system based implicitly on an objective theory of values.” Tarr summarized Rand’s groundbreaking objective theory of value, and he contrasted it to prevailing conceptions of value that underlie major schools of thought in economics.