The significance of a correct theory of universals is that our knowledge, with the exception of proper names, is entirely in the form of universal concepts. If those concepts are not valid, they mean nothing when we move from epistemology to ethics and politics, and to all the special sciences, including psychology and economics. That is, we must be able to use and apply the theory of universals to validate science, especially our concept of human nature—to establish the foundations of psychology, to validate the concept of value to establish a theory of ethics, and to validate many other concepts to define the proper function of government. This last includes rights and freedom, along with such additional concepts as the nature and meaning of healthy and unhealthy motivation and behavior and the production of wealth in a social setting.
A correct theory of universals means our minds are competent to know reality and thus can guide us in our choices and actions to grow, thrive, and prosper.
Ayn Rand’s theory of concepts, which I will argue is a sound theory of universals, is her most important and significant contribution to philosophy, especially to epistemology. Only by making the theory widely known and understood can the free society be properly defended.
The present work is not a defense of capitalism per se. Ayn Rand and Ludwig von Mises provide unanswerable moral and economic justifications.[1] The subject of this book is epistemology and its importance in identifying the nature of science, basic and applied, with emphasis on the human sciences of psychology and economics. Its theme is that the essence of science is observation, not exact measurement, and that science employs as its primary and fundamental method the mental process of conceptualization: generalization from observation of particulars to identify universals, then application of previously formed universals to understand new particular cases. The issue of universals, based on Ayn Rand’s theory of concepts, runs throughout, providing the fundamental epistemological foundation for proper defenses of reason in philosophy, individualism in psychology, and capitalism in economics.
My audience, as a result, is laypersons and academics interested in the underlying epistemology of science, especially the human sciences that, when integrated with psychology and economics, provide the ultimate vindication of a free society and answer to such ill-founded theories as those of Plato, Hobbes, and Marx.
In chapter 1, using Rand’s theory of universals, or concepts as she calls them, I introduce her notion of measurement omission as the essence of abstraction to address the proper meanings of, and distinctions between, basic and applied science, theory and history, and the cognitive processes of generalization and application. Positivism—logical positivism or logical empiricism, as it is also labeled—and experimentation are discussed, followed by a presentation of what is called the problem of universals.
In chapter 2, I elaborate Rand’s theory of concepts as an improvement on Aristotle’s theory of form and matter by identifying concepts and essences as neither intrinsic, in the thing, as Aristotle taught, nor subjective as the nominalists assert. Rather, concepts and essences are epistemological, in our minds, created by us and are valid and epistemologically objective if they correctly identify the metaphysical referents on which they are based. I further discuss Rand’s important explanations of abstraction from abstractions and concepts of consciousness. In concluding the chapter, I elaborate Rand’s usage of the terms “metaphysical” and “epistemological,” ending with a presentation of what I consider her radical theory of logic as non-contradictory identification.
In chapter 3, I discuss several related philosophical issues using Rand’s theory to refute the bane of science, positivism, and to provide valid empirically-based explanations of Immanuel Kant’s allegedly innate “a priori” concepts—space, time, and causality—as well as a non-religious, non-Kantian empirical defense of free will. I continue with a discussion of the distinction between general knowledge, which we all possess to some degree and with some accuracy, and personal knowledge, which is unique to our own experiences. Finally, I conclude with a brief discussion of the role and importance of emotion in both science and our personal lives.
In chapters 4 and 5, respectively, I apply Rand’s theory to my understanding of psychology and economics as human sciences, with emphasis on the work of Sigmund Freud and Ludwig von Mises. Both Freud and Mises have been criticized as pseudo- or non-scientific for using “literary” (Freud) or “non-quantitative” (Mises) methods to establish their theories. To the contrary, I argue that the methods of both are models of conceptualization, which I contend is the fundamental method of science.
I became aware of the importance of conceptualization in science when I reread Edith Packer’s Lectures on Psychology after they had been made available as a Kindle book, in 2013, by her husband George Reisman. I realized after reading the book that conceptualization was what Dr. Packer was doing as a psychotherapist, and then realized that Mises, Dr. Reisman, Aristotle, and, when reading him later, Freud, were doing the same thing in their work. Masses of quantitative data and laboratory experiments, I realized, were not the essence of science.
In chapter 6, I conclude the work with a summary of its thesis, elaborating on what I call thinking in definitions and clarifying the meanings of scientific law and principle. Finally, statements about Kant’s legacy and, subsequently, Ayn Rand’s complete the book.
The significance of focusing on Freud and Mises is that they both provide fundamental concepts and principles for the foundation of a free society, Freud for the individual to pursue a healthy, happy, and psychologically independent life and Mises for individuals to cooperate with each other to achieve peace and prosperity. Both are experts on human nature, explicitly so for Freud, implicitly for Mises, and both, despite the comments of their critics, consider themselves to be scientists. This work aims to provide Freud and Mises a needed epistemological foundation.
The meaning of free society that I am using is Ayn Rand’s concept of laissez-faire capitalism as a social system, presupposing an ethics of rational self-interest. That is, capitalism is not just the private ownership of the means of production, as economists, Mises in particular, define it, but a system based on the primacy of individual rights, especially property rights, with all property privately owned, allowing social cooperation to be achieved by voluntarily trading value for value. Rights are freedoms of action—deriving from human nature as a rational being—to speak and write openly and to work with others to pursue property, careers, relationships, hobbies, education, and happiness without the interference of initiated physical coercion, that is, physical force, by the government or criminals. Self-defensive coercion is delegated to the government unless involved in an emergency situation.
The importance of defining capitalism as a social system is that it broadens the concept beyond economics alone. This is significant because totalitarian states are called such because they seek to and often do—in the name of an ethics of self-sacrifice—control every aspect of the individuals’ lives, not just their economic lives.[2] Totalitarianism means total control. Capitalism means total freedom—from direct or indirect initiated physical force of any type, economic or political.
A further point about the meaning of Rand’s concept of capitalism. It is not what we have today or had in the late nineteenth century, though Rand acknowledges the United States came close in those earlier years. Her concept is a goal, a moral and political ideal, to work toward to achieve at some point in the future. It is not Marx’s utopia or creation of a “new man,” as Marx said communism would give us. Capitalism requires hard work and self-responsibility with no one expected to provide handouts. The problems with the apparent capitalism that we had in earlier days, and have today, is that many big businesses and governments have colluded with each other to gain favors and wealth for themselves, ignoring everyone else. This is not capitalism, but corporatism or, more precisely, fascism.
For this reason, one of the best ways to describe capitalism is that it is a system in which business and state are completely separated in the same way and for the same reasons as we now have the (nearly) complete separation of church and state. And by “business,” I mean any organization that operates to earn a profit by offering value to paying customers. I include schools, roads, and utilities, today’s publicly owned and mixed institutions. I also believe that there should be no so-called nonprofit organizations. All societal institutions, business, church, or otherwise, should be privately owned and operated and expected to earn an excess of revenues or donations over expenses. If there is to be taxation to support the considerably limited government, it should be a flat tax applied to everyone, including to those so-called nonprofits. As Ayn Rand indicates, there are other options in financing government in a free society, but the issue is far removed from today’s problems. For the most part, it should be postponed for debate until we come closer to a truly free society.
An important note here is that Ayn Rand’s theory of concepts did not begin to be published until July of that year, and Dr. Peikoff’s teaching style was to present the best case he could for a viewpoint he did not accept, even bending over backwards to make it sound like he supported it. He knew Ayn Rand’s theory at this time but did not present it in the course.[4] Lively Q&A’s went on throughout the term, but no solution to the problem of universals was found. I concluded, reluctantly, that those of us most interested in the topic were left on the floor, desperately trying to find Aristotle’s intrinsic essences. After that quarter, Dr. Peikoff returned to New York City where he had lived for many years.
When Ayn Rand’s theory was published, I memorized key definitions to think about them, for example, when waiting for my next class.[5] In the ensuing years, my interest in epistemology and the problem of universals never waned. It was a treat to read the discussions of epistemology by Ludwig von Mises and, though not exactly a treat, my knowledge of epistemology helped me in graduate school to fend off the assaults of that god called positivism.
My thirty-six-year academic career was spent in the applied science of business marketing, teaching and writing about fundamental ideas—Ayn Rand’s, as well as those of psychologists and economists—applying them to the business disciplines and education.
