It is noted by John Stuart Mill in his essay On Liberty that, when the liberty of thought and discussion is compromised -
"We can never be sure that the opinion we are endeavouring to stifle is a false opinion; and if we were, stifling it would be an evil still."
We are blessed with the liberty of thought and discussion, which is vital for a healthy intellectual scene. Man moves forward at most speed when there exist people to argue both sides of every point with skill and conviction. This way, opinions and thoughts maintain their vitality as they are constantly challenged and opposed, and as their proponents discover new ways to defend them. Such is even the case with the concept of modern Western liberal democracies.
Ayn Rand's philosophy of Objectivism challenges the very foundations of our societies, cursing its laws and its morals as immoral and evil. My personal interest in Objectivism stems not from a belief in it, but a fascination with the consistent, intelligent but ultimately wrong system it presents. Objectivism takes a lot of criticism for being "evil", "heartless", "greedy" or "fascist"1.
Before responding to the above write-up or discussing the real problems with Objectivism, I'll discuss exactly what Objectivism is and how this relates to capitalism. To attack something with credibility and efficacy, it is necessary to have a complete understanding of it.
Objectivism is best understood in terms of rights - specifically, what rights it holds to be inalienable and inherent in man's nature, and what "rights" it holds to be a product of our culture and to actually be no rights at all. Rand holds that no man has the right to initiate force against another man. To quote her essay Man's Rights -
"There is only one fundamental right (all the others are its consequences or collaries): a man's right to his own life."2
She goes on to state -
"Thus, for every individual, a right is the moral sanction of a positive - of his freedom to act on his own judgement, for his own goals, by his own voluntary, uncoerced choice. As to his neighbours, his rights impose no obligations on them except of a negative kind: to abstain from violating his rights."
A man's right to dispose of his own life how he wishes is something almost everyone would recognize on some base level, but rarely do they think about its full consequences. Ayn Rand did. Like the Libertarians, Rand set about trying to describe how perfect individual freedom could be brought about in organized society. With skill and conviction, she argues that capitalism is the way to bring this about.
It is worth noting at this point one common criticism levelled against Objectivism: it is held to be "heartless". This is because it imposes no obligations of a positive kind on people, as this would violate their right to dispose of their own life as they see fit. This means if you see a man starving in the street, you are not morally obliged to give him food, even if you could easily afford to do so. Seems heartless? Maybe - but, the thing is, Objectivism doesn't morally oblige you not to give him food either. In fact, the only thing it does oblige you to do is what you want to do - so if you care about his predicament and would feel bad if you didn't help him, you are actually obliged to help him! Just because Objectivism doesn't force you to doesn't mean you can't - it just gives you free reign to do what you want.
Before examining capitalism, let us examine socialism3 and whether it is compatible with Objectivism. Says Rand -
"The right to life is the source of all other rights - and the right to property is their only implementation. Without property rights, no other rights are possible. Since man has to sustain his life by his own effort, the man who has no right to the product of his effort has no means to sustain his life. This man who produces while others dispose of his product, is a slave."
In socialism, the output of every man's efforts is at the disposal of the state. It does not belong to him, rather to the community of which he is a part. When his output is redistributed among his community, it amounts to forcible coercion - the other members of the community are taking away his property, what he has worked for, and disposing of it. This is clearly not compatible with the maxim that a man has the right to dispose of his own life free from coercion (again, nothing is stopping him giving his output away, if he wants to).
Capitalism is a system where any agreement is mutual between both parties - no coercion is involved whatsoever. Under true free market capitalism, one disposes of his own output and property how he wishes and free from interference from redistributive taxation4 or outright seizue of property. This is how Rand equates capitalism with freedom.
Having discussed the bare bones of Rand's philosophy and its relation to capitalism, we are ready to discuss the above write-up and true criticisms of Objectivism. The above write-up is a typical example of the straw man fallacy - although the direct point of the piece is not to say Rand endorses rape, the massive, emboldened paragraph along these lines leaves the reader with a distinctly unsavoury impression of Ms. Rand. What is even worse is that at no point has Ayn Rand ever tried to justify the free market along these lines! Proof by analogy is a fraud, and the argument "Man has always done X, therefore for that reason and that reason only, X is morally correct" is beneath even the most base of thinkers. I have attempted to define "the other reasons" for Rand's support of capitalism which the author asks for above, and for further explanation I suggest you read Capitalism: The Unknown Ideal.
So, what is the true "faulty reasoning of Ayn Rand types"? You'll actually be hard-pressed to find examples of Rand employing "faulty reasoning" - her system is consistent with itself throughout (Cletus the Foetus, among others, notes faults in Critique of Objectivism). However, it is an extreme view - in fact, an idealism. Idealisms sadly do not generally take into account human nature and its ability to corrupt Utopia, and this is why free market capitalism is an economic system unfit for man, as is utopian socialism. It is man that is greedy and heartless, not Objectivism - where Objectivism fails is that it does not take any measure to correct man's greed and heartlessness.