Politics, as philosophy, grows out of the broader field above it, ethics (or morality).
While ethics presents a wide view of what behaviour’s proper for humans in relation to themselves and other individuals, politics provides the outline for a proper social system.
Ayn Rand explains the basis of how morality relates to others in The Objectivist Ethics (the quotes that follow also comes from here):
The basic social principle of the Objectivist ethics is that just as life is an end in itself, so every living human being is an end in himself, not the means to the ends or the welfare of others—and, therefore, that man must live for his own sake, neither sacrificing himself to others nor sacrificing others to himself.
Since people exist for themselves, not to sacrifice or to be sacrificed to others, their interaction should be voluntary. Ayn saw the nature of this interaction as trade, not just in material values, but all others, such as friendship.
What’s more, she recognised free, voluntary trade as the foundation of justice:
The principle of trade is the only rational ethical principle for all human relationships, personal and social, private and public, spiritual and material. It is the principle of justice.
Since trade has to be voluntary to be just, the basis of Ayn’s political system is that:
no man may initiate the use of physical force against others. No man—or group or society or government—has the right to assume the role of a criminal and initiate the use of physical compulsion against any man. Men have the right to use physical force only in retaliation and only against those who initiate its use. The ethical principle involved is simple and clear-cut: it is the difference between murder and self-defense.
The political system that realises this non-aggression principle, as well as the principle of trade, is capitalism.
Usually defined in terms of ownership and control of the means of production, Ayn looked back through history and asked whether that definition captured its essential characteristics.
Her answer was, no. The usual definition completely disregards the wider significance of capitalism and instead takes a narrower economic view. Instead, to Ayn, rights and property are the foundation of capitalism. As a result, in What Is Capitalism?, she defined capitalism this way:
a social system based on the recognition of individual rights, including property rights, in which all property is privately owned.
This is laissez faire, or ‘pure’ capitalism.
Clearly, not all property is privately owned anywhere in the world, so capitalism is only partially realised.
Societies at present oversee varying mixtures of private ownership and state control, captured in the term mixed economy.
As Ayn’s definition of capitalism suggests, however, this combination extends beyond the economy, to a mix of personal rights and state control.
She believed this was a volatile mixture, railed against crony capitalism, and any form of business that trampled on the rights of people.
The only legltimate reason for a state, Ayn maintained, was to control the use of force and uphold objective law.
Consequently, the only roles of government that didn’t interfere with rights—in fact, buttressed them—were those of the police, military and law.
Her ideas suggest the right course for people isn’t to try to ‘dismantle capitalism,’ but to fully realise it.
For her, true capitalism was an an “Unknown Ideal.“