Rand’s concept of capitalism is overly broad according to her philosophy.
According to Rand’s philosophy, “The requirements of cognition forbid the arbitrary integration of concepts into a wider concept by means of obliterating their essential differences[1]”
She gives the example of running. Running is a characteristic. Running is not an entity in and of itself. People run. In her philosophy, classifying running people, running clocks and running stockings together as “running things” is an error because it makes the action of running the “higher order concept” over the entities with that characteristic .[2]
According to her, the consequence of this error is “the panic of facing an immense, undifferentiated chaos of unintelligible data – which means: the regression of an adult mind to the perceptual level of awareness, to the helpless terror of primitive man.”[3]
A business structure of capital investment is an activity characteristic of people in just the way running is. It is one of many very different activities in an economic system, which is one system among many in a society of very different people.
Rand proposes the capitalist attribute to be the entire economic system. By obliterating essential differences, she imagines a capitalist legal system, a capitalist medical system and a new entity, the capitalist state[4]; not merely operating on capitalist principles, but existing only as a function of capitalism. The state would be an attribute of the capitalist ideal.
Rand’s proposal is that the concept of capitalism is the higher order concept above the entities which have that characteristic. That is a violation of her philosophy.
[1] Page 95 the cognitive role of concepts
[2] Intro to Objectivist Epistemology pg 95
[3] Intro to Objectivist Epistemology pg 95
[4] The Virtue of Selfishness, The Nature of Government