What is the philosophy of capitalism?

“I am not primarily an advocate of capitalism, but of egoism; and I am not primarily an advocate of egoism, but of reason. If one recognizes the supremacy of reason and applies it consistently, all the rest follows. This—the supremacy of reason—was, is and will be the primary concern of my work, and the essence of Objectivism.”[1]

— Ayn Rand


What is philosophy?

One’s view of what is the proper social system for human beings depends on how one views the nature of existence, how one grasps the world one lives in, and how one views human nature. It depends on one’s philosophy — an integrated, systematic view of existence.

According to philosopher Ayn Rand, philosophy consists of three primary branches:

  • Metaphysics is the branch of philosophy that studies the nature of reality (that which is); it answers the question: “what kind of world do I live in?”
  • Epistemology (epistēmē is the Greek word for knowledge) is the branch of philosophy that studies the nature and means of human knowledge, of grasping reality; it answers the question: “how do I know it?”
  • Ethics is the branch of philosophy that defines a code of values that one should live by. It answers the question: “what should I do?”

The answers to these fundamental questions will, in part, determine the answers to the branch of philosophy known as politics.

  • Politics is the application of ethics to social issues. Politics seeks to answer, “how should one live with other individuals in an organized society?”

(There is another key branch of philosophy – esthetics, the study of art – which deals with the cultural impact of those ideas — arts, painting, music, literature, sculpture, movies, etc. — which is not our primary concern here).

Why is philosophy important?

Capitalism is commonly taken as an economic system, that can be grafted onto any political system. Yet, economics is not a self-evident primary. An economic system (in our case, the free-market) does not exist in a vacuum but, like a house or skyscraper, is an expression of a specific intellectual foundation — a philosophy.

Philosophy is important. It is not a mere plaything of ivory-tower professors or a “…bauble of the intellect,” writes Professor Leonard Peikoff,

“…but a power from which no man can abstain. Anyone can say that he dispenses with a view of reality, knowledge, the good, but no one can implement this credo. The reason is that man, by his nature as a conceptual being, cannot function at all without some form of philosophy to serve as his guide.”[2]

If one’s philosophy is that one lives in a world of miracles (religion), where truth is by revelation (faith), and morality means sacrificing oneself for others (altruism), one’s politics will be very different from someone who believes in a world of cause and effect (science), that one can understand rationally (reason), to pursue and achieve personal happiness (self-interest). Philosophy is not a parlor game played by ivory tower academics: it is a matter of life and death.

To concretize this point further, observe that if one’s philosophy is that of a religious fundamentalist then abortion is murder, and an embryo and later fetus has the right to live in a woman’s body irrespective of the woman’s thoughts on the subject. Life comes from God, and what God giveth let no man (or women) take away.

If one is an advocate of statism, then the individual has no rights but lives by permission of the state, and the government can revoke (alienate) this permission at whim. The right to abortion becomes a matter of dictatorial vote, i.e., political might makes ethical right. The state may force one to have an abortion (as in communist China) or prevent one from having an abortion (as recently in State of Texas) as it sees fit for the “good of society.”

If one is an advocate of individual rights, abortion is an inalienable right, since there is no such thing as the right to live inside the body of another. The choice of whether to have an abortion or not is up to the individual (women) in question (clearly in the first three months of pregnancy, though one can raise arguments in the last trimester on its use).

Observe that on this political issue, the answer is not determined purely by “playing politics,” but is justified by one’s fundamental philosophy.

Politics is an inseparable branch of the tree of philosophy. Separate a fruitful political branch from the tree of a rational philosophy, and graft it onto the tree of irrational philosophy and that once fruitful branch will wither, crumble and die. It is on the withered dead tree of anti-reason, altruistic (self-sacrificial), collectivist philosophy that capitalism is being crucified.


What is the philosophy of anti-capitalism?

In philosopher Ayn Rand’s view, the reason why capitalism is attacked and misrepresented (even by its alleged defenders) is because of the anti-enlightenment philosophies that dominate our culture:

“It is often asked: Why was capitalism destroyed in spite of its incomparably beneficent record? The answer lies in the fact that the lifeline feeding any social system is a culture’s dominant philosophy and that capitalism never had a philosophical base. It was the last and (theoretically) incomplete product of an Aristotelian influence. As a resurgent tide of mysticism engulfed philosophy in the nineteenth century, capitalism was left in an intellectual vacuum, its lifeline cut. Neither its moral nature nor even its political principles had ever been fully understood or defined. Its alleged defenders regarded it as compatible with government controls (i.e., government interference into the economy), ignoring the meaning and implications of the concept of laissez-faire. Thus, what existed in practice, in the nineteenth century, was not pure capitalism, but variously mixed economies. Since controls necessitate and breed further controls, it was the statist element of the mixtures that wrecked them; it was the free, capitalist element that took the blame.

“Capitalism could not survive in a culture dominated by mysticism and altruism, by the soul-body dichotomy and the tribal premise. No social system (and no human institution or activity of any kind) can survive without a moral base. On the basis of the altruist morality, capitalism had to be—and was—damned from the start.” [3]

It is the altruist-collectivist moral base that capitalism must be “saved” from.

Laissez-faire capitalism is a political-economic system that requires a specific philosophical framework. If capitalism is built upon an improper philosophical base, it will be like a towering skyscraper built on quicksand.


What is the philosophy of capitalism?

What is the proper philosophical base? In the words of the American philosopher Ayn Rand:

“It is . . . by reference to philosophy that the character of a social system has to be defined and evaluated. Corresponding to the four branches of philosophy, the four keystones of capitalism are: metaphysically, the requirements of man’s nature and survival—epistemologically, reason—ethically, individual rights, politically, freedom.” [4]

This site holds that the philosophy that provides a proper foundation for capitalism is Ayn Rand’s revolutionary philosophy: Objectivism.

Objectivism holds that one should live by one’s mind and efforts, in the pursuit of one’s rational self-interest, neither sacrificing oneself to others, nor sacrificing others to oneself (ethics); that one can understand reality by reason and logic (epistemology), as one lives in a world of cause and effect where there are no contradictions (metaphysics).

A complete, systematic presentation of Objectivism is beyond the scope of this site. For a comprehensive presentation of Rand’s philosophy, I recommend Objectivism: The Philosophy of Ayn Rand by Dr. Leonard Peikoff.


[1] Ayn Rand, “Brief Summary The Objectivist (September 1971)

[2] Leonard Peikoff, Objectivism: The Philosophy of Ayn Rand

[3] Ayn Rand, “What Is Capitalism?” Capitalism: The Unknown Ideal, 30

[4] Ibid.