Philosopher Ayn Rand argued that the decline of capitalism can be traced to the errors of post-Renaissance philosophers. In particular, the philosophy of Immanuel Kant in effect divorced the human mind from reality and divorced morality from the practical requirements of life. Although Kant's stated personal political beliefs conformed to the liberal ideas of his time, his theories of moral will and duty granted unlimited power to the state in principle. These theories were carried further in his Idealistic successors, including Hegel (who strongly influenced Marx), Thomas Hill Green, F. H. Bradley, and Bernard Bosanquet. Kant paved the way for later German philosophers who saw human behavior in purely materialistic or physiological terms. Once the Kantian mind/body dichotomy was accepted, the ideas of both Marx and the Aryan-supremacy theorists could pass as "scientific" in the eyes of intellectuals. Ideas have consequences in reality, and in the twentieth century these two schools of thought led to Soviet communism and Nazism respectively.

Rand's theory can be seen as embracing the other explanations in the above list. For example, the cost theory of value, which was the central error of classical economics, can be regarded as a variant of the Kantian mind/reality dichotomy. Although many historical details remain to be researched, Rand's theory is quite strong because it presents a unified explanation of the various trends discussed here. Moreover, Rand's full theory persuasively explains not only political and economic movements, but also developments in the arts, including literature and music, which are beyond the scope of this course.

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