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‘Capitalism’: When and How Ayn Rand Embraced the Term (Pt. 2)

When did Ayn Rand begin using the term “capitalism” to designate her political ideal? Shoshana Milgram, a scholar of Rand’s life and work, offers a biographical answer.

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Part 1 of this article is available here.


After she read Snyder (and perhaps, indeed, because she had read Snyder), she began to use the word “capitalism” positively in her own writing (though not in writing she published under her name). In 1941, she wrote “The Individualist Manifesto” and a condensed version of this manifesto, known as “The Individualist Credo.” This document, which she composed as a statement of principles to be circulated by a proposed individualist organization, presents capitalism as a specifically moral ideal.1 She made the point, in a letter to Channing Pollock (who had asked her to write it and who was to be the main public leader of the organization) that their organization needed to have (and to show that it had) a clear and distinct philosophical basis: “We must make it very clear that we intend to formulate and propagate a basic IDEOLOGY of Individualism and Capitalism, a complete philosophy of life restated in terms of the twentieth century.”2 In this text, her explicit praise of capitalism supplements the emphasis on individualism. In the title and the substance of this document, Ayn Rand underscores individualism as the opposite of collectivism. But she also makes the transition to the explicit defense of capitalism itself. For example:

When the industrial revolution brought the system of Capitalism it achieved what is still the miracle of history. It raised the standard of living of all men beyond any previous dreams, beyond all conceptions or comparisons. What made this achievement possible? The freedom of action given to the Individual. The machine was only his tool.3

Let us have the sense and courage to say it:


The basic economic principle of Capitalism is simple: a man makes money by giving people a product better and cheaper than that of his competitors. Thus a man’s private good becomes a public good at the same time. By working for his own profit, a man benefits all of society. By pursuing his own happiness, he helps toward the happiness of others. And this is done without violence, without compulsion. Society makes the final decision upon a man’s financial success. But not Society as an organized Collective with a single, tyrannical voice. Society as a group of free Individuals. Every man is free to decide what product he likes best and then to purchase it. A capitalist’s success is created in this manner.4

She defends capitalism against the abuses of which it has been accused, and explains:

The Capitalist System is still an ideal to be reached. From its very beginning the forces of Collectivism have been working within it. Not the socialistic brand of Collectivism, but the Collectivism of any combination of men united into a group for special privileges — and the Collectivism of the State, of government interference. The greatest enemies of Capitalism have been the capitalists.5

It is time, she says, to articulate and promulgate the moral defense that capitalism requires and has never had:

Capitalism has never found its “ideology.” . . . But the time has come for it to speak, to formulate its own faith and its own ideal. It is time for us to say that Capitalism is not a system of greed, money-grabbing and low materialistic pursuits. It is time to stop cringing, evading, apologizing and ascribing idealism to any system but our own, while mumbling feebly that ours is a “practical” system. It is time to say that ours is the noblest, cleanest and most idealistic system of all. We, its defenders, are the true Liberals and Humanitarians. We ask nothing of men and offer them nothing — save Freedom. But when that is given — everything has been given.6

In 1941, she is completely clear about her wish to defend capitalism explicitly in a moral and political context, and she does so in “The Individualist Manifesto.” Capitalism is “the only system based on Individual Freedom.” She defends capitalism on moral grounds, rather than “mumbling feebly that ours is a ‘practical’ system.” In stating that the “greatest enemies of Capitalism have been the capitalists,” she points out that some alleged capitalists have sought to gain spurious advantages by government interference. Their actions do not exemplify the freedom on which genuine capitalism relies and thrives, of capitalism as an ideal. Genuine capitalism is a system of moral nobility, and she insisted on saying so.

Recognizing the benefit of clarifying “capitalism” for the  contemporary American audience

Over the next sixteen years, she continued to advocate free enterprise in her public and private writing, though without featuring the term “capitalism” in her published writing. The meaning of the term, she recognized, was not clear to all readers, and, without the opportunity to make the meaning completely clear, she chose, in some contexts, not to use it.

She was, of course, eager to call attention to the idea and to the term — when she considered the opportunity to be right. In her letters, for example, she championed The God of the Machine (1943), a political treatise by her friend Isabel Paterson.7 This book not only referred frequently to capitalism, but stated that “capitalism is the economic system of individualism.”8 Paterson, like Snyder, linked creation, individualism, and capitalism. In the chapter on “Credit and Expansion,” Paterson wrote: “All the inventions of man have individualism as their end, because they spring from the individual function of intelligence, which is the creative and productive source.”9 Writing to Earle Balch, the editor at Putnam’s, Ayn Rand recommended publicizing the book through intelligent ads and through asking business leaders to promote it to members of their organizations. “It is,” she wrote, “the book on capitalism and individualism, the book that will give readers ammunition in any argument with collectivists, the book that will answer their every question and tell them everything they want to know about Americanism — philosophically, historically, economically, morally.”10

She herself, though, had not, in The Fountainhead, used “capitalist” or “capitalism” as terms of value. The word appears as a slur against Gail Wynand, who is termed “the pirate of capitalism.”11 Granted, the novel itself does not attack him as a capitalist, but it does not praise him on that ground, either. It does not defend by name “capitalism” as a system or “capitalists” as human beings. The Fountainhead is indeed a tribute to individualism, but it does not make explicitly the connection between individualism and capitalism that Ayn Rand had made in her “Individualist Manifesto.”

One of her fans, writing to her about The Fountainhead, wrongly assumed that she disapproved of capitalism and chose to inform her that he agreed with her reservations about it. He wrote that he commended her: “In the ferocity with which you have attacked the ideals of collectivism one feels that you have honestly tried not to voice an undeserved admiration for the capitalistic system, that you have not succumbed to the belief that it is the only alternative.”12 In other words, he believed that she had refrained from admiring capitalism, and he wished to applaud her restraint in this connection. He wanted to know what her political beliefs were. This fan was a Canadian teenager by the name of Nathan Blumenthal (who later renamed himself Nathaniel Branden, and was for several years a close intellectual and personal associate).13 She eventually replied, in a letter of December 2, 1949, to disabuse him of his misunderstanding. She wrote that she hoped he had learned by now that she believed in “complete, uncontrolled, unregulated, laissez-faire, private-property, profit-motive, free-enterprise Capitalism.”14 (She underlined “Capitalism” twice, for emphasis.) More than a year later, after he had asked additional (and better) questions, she informed him that his earlier letter had revealed “an appalling ignorance of Capitalism,” that she had the impression he had read “nothing on the subject except of Marxist or Leftist origin,” and that he should acquire some knowledge of the subject by reading Isabel Paterson and Henry Hazlitt.15 (He did so.)

“We choose to wear the name ‘Capitalism’ printed on our foreheads, proudly, as our badge of nobility.”

Given the extent of misinformation and misrepresentation regarding the facts about free enterprise (and the nature of capitalism), there was indeed a need for such books as Paterson’s The God of the Machine and Hazlitt’s Economics in One Lesson. Ayn Rand herself, in the time after the publication of The Fountainhead, worked on a nonfiction book, contracted to Bobbs-Merrill, tentatively titled “The Moral Basis of Individualism.” She described it as a sort of concise “sequel” to The Fountainhead, not a continuation of its plot, but rather “a short book, re-stating in non-fiction form, the morality of The Fountainhead.” She suspended the project because she recognized that it would be “totally useless to present a morality without a metaphysics and epistemology.” Judging from the outline and drafts, she sought to analyze the moral essence and consequences of individualism and collectivism, within the soul and within social systems, with reference to the nature of man (as a rational being and as creator). From the outline and the drafts, it is clear that she intended to describe and defend the proper moral society (“Traders, not servants”), and to refer to it, explicitly, as the capitalist system.16 But even a treatment of morality and politics may well have required more than a short book — and, in her judgment, she could not treat morality properly without a full philosophical system. Instead of writing the short book “The Moral Basis of Individualism” (and including within it an explicit defense of capitalism), she worked on the long project of Atlas Shrugged, which required a full philosophical system.17 She also worked on shorter projects of political activism.

In the writing she did in California for the Motion Picture Association for the Preservation of American Ideals, she criticized, in “Screen Guide for Americans” (1947), the attacks on businessmen and free enterprise, but did not, in this publication, use the word “capitalism.” In the series of articles constituting the Textbook of Americanism, published under her name in The Vigil, she provided questions and answers regarding individualism versus collectivism, but without referring by name to “capitalism.” The critiques she prepared of films that were subtly (but undeniably) promoting Communism made clear the principles at stake, but did not refer to capitalism.

The novel she was writing during these years, to be sure, made abundantly clear — in the narrative and in key speeches — her admiration for the world of business when business is conducted as trade, as voluntary exchange. Her defense of free enterprise was part of her overall advocacy of reason and of the moral code appropriate to man as a rational being. Yet even in Atlas Shrugged, she did not feature the term “capitalist,” limiting its use to an insult aimed at a positive character. A careful reader would notice that an insult aimed at a character the author admires needs to be interpreted as a compliment.18 The “laissez-faire” of “laissez-faire capitalism” was, to be sure, abundantly clear in the story line, in the speeches, and even in the colloquial defiance of “Get the hell out of my way!”19 But the word itself? Not yet.

“I am an advocate of laissez-faire capitalism”

But with the publication of Atlas Shrugged in October 1957, she not only became a public intellectual, but she made the word “capitalism” unmissable as part of her presentation of her ideas. She did so under circumstances that would allow her to provide an explanation of her meaning. At her publisher’s sales conference before the publication of the novel, she used “capitalism” as a one-word summary of her politics.20  And because she was not limited to a one-word summary, she made a point of explaining what she supported and why she supported it. She proceeded, in the years after Atlas Shrugged, to use the word “capitalism” frankly and frequently in her public lectures and published writings, and in the work of anyone representing her ideas. When, for example, her associate Nathaniel Branden organized a series of lectures, known as “Basic Principles of Objectivism” and first presented in January, 1958, the word was present right from the start. The first lecture identified “laissez-faire capitalism” as the “political-economic expression” of the principles of the philosophy. Other lectures were similarly explicit.21 

In becoming an outspoken advocate of capitalism, she seized the opportunity to specify what she meant by the word. She had seen the word used in a variety of senses. As she wrote in a letter in 1960: “people use ‘capitalism’ as a rubber word that can be stretched to mean anything, including the messiest types of ‘mixed economy,’ such as the one we have today. . . .  I am an advocate of ‘laissez-faire’ capitalism.”22 In a public lecture, “The Objectivist Ethics” (February 9, 1961), first delivered at the University of Wisconsin Symposium on “Ethics in Our Time,” she included a clear description of the essentials of what she meant by capitalism:

When I say “capitalism,” I mean a full, pure, uncontrolled, un-regulated laissez-faire capitalism — with a separation of state and economics, in the same way and for the same reasons as the separation of state and church.23

She went on to feature “capitalism” as the opposite of totalitarian statism. She did so in the speech “America’s Persecuted Minority: Big Business,” a major public address that she delivered at the Ford Hall Forum in 1961, at Columbia University in 1962, and, in 1963, to an audience of several thousand at McCormick Place in Chicago.24Businessmen are the one group that distinguishes capitalism and the American way of life from the totalitarian statism that is swallowing the rest of the world.”

She featured not only the idea, but the word in For the New Intellectual: The Philosophy of Ayn Rand. She did so in the title essay, stating that the Founding Fathers established a system of capitalism, though “it was not a full, perfect, totally unregulated laissez-faire capitalism.” She identified the nature, context, and consequences of capitalism:

Capitalism demands the best of every man — his rationality — and rewards him accordingly. . . . His success depends on the objective value of his work and on the rationality of those who recognize that value.” 25

In addition to the title essay, this book included major speeches from her four novels. In this context, she gave titles to the speeches from The Fountainhead and Atlas Shrugged, which did not have titles in the novels. In Atlas Shrugged (Part II, Chapter IV), Hank Rearden gives a speech at his trial for selling his metal in violation of a government edict: in For the New Intellectual, the title of this speech, significantly, is “The Moral Meaning of Capitalism.”26 Capitalism, in her sense, had been implicit in that speech. She had, in a book designated as a presentation of her philosophy, made the implicit explicit.

Five years later — in an echo of the language she had used (in “The Individualist Manifesto”) in describing capitalism as “an ideal to be reached” rather than an existing system — she referred to capitalism as the “unknown ideal,” in the title of a “collection of essays on the moral aspects of capitalism.” Capitalism: The Unknown Ideal contains essays (by Ayn Rand and Nathaniel Branden, Alan Greenspan, and Robert Hessen) in two categories: “Theory and History” (including “What Is Capitalism?” and “Theory and Practice”) and “Current State” (including current events and contemporary commentary). The first essay — “What Is Capitalism?” — not only explains the role of capitalism in recognizing and protecting “the basic, metaphysical fact of man’s nature — the connection between his survival and his use of reason,” but provides her formal definition of capitalism: “a social system based on the recognition of individual rights, including property rights, in which all property is privately owned.”27

Explicitly embracing “capitalism” as a “badge of nobility”

The story of Ayn Rand’s life, as I have tried to show, entails the personal history of how she became an advocate of capitalism. She did not always know that she was implicitly a capitalist. The process of discovery involved learning history, observing current events, and discerning the link between capitalism and individualism. In her political activism in 1941, she used the word “capitalism” in her “Individualist Manifesto.” After that, she promoted individualism and the American free enterprise system in her fiction and in her political writings, but, until after Atlas Shrugged, she did not explicitly mention the concept of capitalism positively in her writing for publication under her own name. Post-Atlas she not only used the word, but firmly cemented the link between individualism and the only moral social system for human individuals.

Ayn Rand was a philosopher-novelist, with a single career, notwithstanding the different genres in which she wrote. Capitalism: The Unknown Ideal, as she wrote in her introduction, was a “nonfiction footnote to Atlas Shrugged28 (somewhat the way that “The Moral Basis of Individualism” had been projected as a “sequel” to The Fountainhead). In the essay “The Obliteration of Capitalism” she not only attacked contemporary misrepresentations of capitalism, but stated, as part of her call to arms, that defending capitalism as it should be defended requires the heroism of the characters of Atlas Shrugged. She ends with a paraphrase of Owen Kellogg’s tribute (Part II, Chapter X) to the United States. In the novel, he speaks to Dagny Taggart of the American system and the sign of the dollar.29 When Ayn Rand paraphrases him in “The Obliteration of Capitalism,” she has him refer directly to capitalism — and thus to make the implicit defiantly explicit:

It is a battle only for those who know why . . . when moral issues are at stake, one must begin by blasting the enemy’s base and cutting off any link to it, any bridge, any toehold — and if one is to be misunderstood, let it be on the side of intransigence, not on the side of any resemblance to any part of so monstrous an evil.

It is a battle only for those who—paraphrasing a character in Atlas Shrugged—are prepared to say:

“Capitalism was the only system in history where wealth was not acquired by looting, but by production, not by force, but by trade, the only system that stood for man’s right to his own mind, to his work, to his life, to his happiness, to himself. If this is evil, by the present standards of the world, if this is the reason for damning us, then we — we, the champions of man — accept it and choose to be damned by that world. We choose to wear the name ‘Capitalism’ printed on our foreheads, proudly, as our badge of nobility.”30

*   *   *

Author’s Note: An earlier version of this article was delivered in a session titled “Ayn Rand and the History of Capitalism: Economy, Literature, Politics” at the 2012 Social Science History Association Conference on “Histories of Capitalism.” I thank Vojin Saša Vukadinović for inviting me to be part of the proposal for that session. The current article retains some of the flavor of an oral presentation; I have added the necessary documentation. Thanks to my daughters Genevieve (“Zelda”) Knapp and Rachel Knapp for comments on this version.


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  1. For an analysis of “The Individualist Manifesto,” see Jeff Britting (“Anthem and ‘The Individualist Manifesto,’” Essays on Ayn Rand’s “Anthem, edited by Robert Mayhew (Lanham, MD: Lexington, 2005), especially 72–77.
  2. Letter to Channing Pollock, May 27, 1941, Letters of Ayn Rand, edited by Michael S. Berliner (New York: Dutton, 1995), 47.
  3. Ayn Rand Papers 029_90A_003_014.
  4. Ayn Rand Papers 029_90A_003_020 and 029_90A_003_021.
  5. Ayn Rand Papers 029_90A_003_033.
  6. Ayn Rand Papers 029_90A_03_035 and 029_90A_03_036.
  7. During the months when she and Pollock were attempting to launch their organization, she became friends with Isabel Paterson, a novelist and a regular book reviewer and columnist for the New York Herald Tribune. She gave her friend credit for showing her how capitalism worked and had worked, in history and in the contemporary world. “I learned from you the historical and economic aspects of Capitalism, which I knew before only in a general way, in the way of general principles.” Letter to Isabel Paterson, May 17, 1948, Letters of Ayn Rand, edited by Michael S. Berliner (New York: Dutton, 1995), 215.
  8. Isabel Paterson, The God of the Machine (New York: Putnam, 1943), 227. See also “enterprise capitalism” (56), “private property and free individual enterprise, which is capitalism” (97), “free enterprise capitalism” (194).
  9. Paterson, God of the Machine (New York: Putnam, 1943), 228.
  10. Letter to Earl Balch, November 28, 1943, Letters of Ayn Rand, edited by Michael S. Berliner (New York: Dutton, 1995), 103.
  11. The Fountainhead (New York: Bobbs-Merrill, 1943), 519. (Part III, Chapter VII)
  12. Letter from Nathan Blumenthal to Ayn Rand, September 26, 1948, Ayn Rand Papers 019_01A_003_001.
  13. For a brief summary of that association and its end, see Shoshana Milgram, “The Life of Ayn Rand: Writing, Reading, and Related Life Events,” in A Companion to Ayn Rand, edited by Allan Gotthelf and Gregory Salmieri (Wiley/Blackwell: Oxford, UK, 2016), 30, 35–37, 42 (n. 47).
  14. Letter to Nathan Blumenthal, December 2, 1949, Ayn Rand Papers 019_01A_005_001.
  15. Letter to Nathan Blumenthal, January  13, 1950, Letters of Ayn Rand, edited by Michael S. Berliner (New York: Dutton, 1995), 464–65.
  16. For all of the outlines and drafts, see the following folders of the Ayn Rand Papers: 032_11A, 032_11B, 032_11C, 032_11D, 032_12A, 033_12B, 033_13A, 033_13B, 033_14A, and 033_14B. For references to capitalism, see, for example, 033_04A_004_001 and 033_04A_005_002.
  17. “When I say that these excerpts are merely an outline, I do not mean to imply that my full system is still to be defined or discovered; I had to define it before I could start writing Atlas Shrugged.”  Preface, For the New Intellectual: The Philosophy of Ayn Rand (New York: Random House, 1961), n.p.
  18. Francisco d’Anconia in Atlas Shrugged is similarly deemed, disparagingly, a “greedy capitalist.” Atlas Shrugged (New York: Random House, 1957), 123. (Part I, Chapter IV)
  19. Atlas Shrugged (New York: Random House, 1957), 1125. (Part III, Chapter VIII)
  20. “Introducing Objectivism,” Los Angeles Times, June 17, 1962, B3, rpt. Objectivist Newsletter 1.8 (August 1962), 5. In the column, she described laissez-faire capitalism as “the ideal political-economic system” and explained the principles of trade, the government as the protector of rights, and the prohibition against the initiation of force.
  21. For the brochure of the January 1958 course, see Ayn Rand Papers 117_06B_034_001 and 117_06B_034_002. For the quotation from the opening lecture, see Ayn Rand Papers 117_06B_002_003.
  22. Letter to Martin Larson, July 15, 1960, Letters of Ayn Rand, edited by Michael S. Berliner (New York: Dutton, 1995), 576.
  23. “The Objectivist Ethics,” The Virtue of Selfishness: A New Concept of Egoism (New York: New American Library [Signet], 1964), 33.
  24. She delivered the speech at Ford Hall Forum on December 17, 1961; she repeated it at Columbia University (February 15, 1962) and at McCormick Place in Chicago (September 29, 1963). “America’s Persecuted Minority: Big Business” is included in Capitalism: The Unknown Ideal (New York: New American Library, 1967).
  25. “For the New Intellectual,” For the New Intellectual: The Philosophy of Ayn Rand (New York: Random House, 1961), 24.
  26. For the New Intellectual (New York: Random House, 1961), 115.
  27. “What Is Capitalism?” Capitalism: The Unknown Ideal (New York: New American Library, 1967), 11.
  28. Introduction, Capitalism: The Unknown Ideal (New York: New American Library, 1967), ix.
  29. Atlas Shrugged (New York: Random House, 1957), 683–84. (Part II, Chapter X)
  30. “The Obliteration of Capitalism?” Capitalism: The Unknown Ideal (New York: New American Library, 1967), 192.
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Shoshana Milgram

Shoshana Milgram, PhD and associate professor of English at Virginia Tech, specializes in narrative fiction and film. Her scholarship includes introductions to Victor Hugo’s novels, a study of Ayn Rand’s life up to 1957, and articles on Dostoevsky, George Eliot, Nabokov, and others.

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