As has already been shown, the meaning of proper concepts is determined, not by social convention, but by an objective method of cognition. The assignment of specific words to each concept, on the other hand, reflects language's second purpose of communication—and hence is largely determined by social convention. For example, zoological examination can determine the boundaries of the concept "horse"—and those boundaries will be respected from language to language, at least among cultures that are familiar with equines. No amount of zoological inquiry, however, can deduce the correct Chinese word for "horse," since the latter is determined by cultural convention, together with linguistic principles.

In terms of Rand's file-folder analogy for concepts (p. 1.3:46), the word associated with a concept corresponds to the tab by which we label a folder. Convention determines which label we attach to each folder; if we labeled our "capitalism" folder as "socialism," then we should never be able to communicate! On the other hand, if we wish to understand the nature of the things we are examining or discussing, then the actual content of the folders will be determined by independent logic, and not by social convention. In other words, the politico-economic systems we place in the "capitalism" folder should exhibit some objective similarity in kind distinguishing them from other systems.