Rand calls her philosophy Objectivism as she declares this moral philosophy is wholly & entirely rational and that the world has an objective character: It is out there.
Hume, on the other hand dismisses all objective moral philosophies through the is-ought challenge which he described in his Treatise to Human Nature:
In every system of morality, which I have hitherto met with, I have always remarked, that the author proceeds for sometime in the ordinary way of reasoning, and establishes the being of a God. or makes observations concernine human affairs: when of a sudden I am surprised to find, that instead of the usual copulations of propositions, is, and is not. I meet with no propositions that is not connected with an ought or an ought not….it is necessary that [this deduction] should be observed and explained;…for what seems altogether inconceivable, [is] how this new relation can be a deduction from others, which are entirely different from it.
That is how can one in a deductive manner move from a proposition described using is to a proposition described using an ought; that is to move from the sphere of existence to the sphere of ethics in a deductive manner; in brief, one cannot move from facts to values.
However Rand argues in The Virtue of Selfishness:
In answer to those philosophers who claim that no relation can be
established between ultimate ends or values and the facts of reality, let me
stress that the fact that living entities exist and function necessitates the
existence of values and of an ultimate value which for any given living
entity is its own life. Thus the validation of value judgments is to be
achieved by reference to the facts of reality. The fact that a living entity is,
determines what it ought to do. So much for the issue of the relation between
“is” and “ought.”
In Aristotelian terms, existence determines ethical essence. That is existence is ethical essence. She doesn’t notice this means that the ‘living entity’ must then come already equipped with its ethics, rather than deducing them from some factual sub-stratum.
The question is how fatal is this to her ethical project? One might suppose that it is no flaw as no other moral philosophy bridges this gap, but then again they do not choose facts as their grounding; for example Kants Categorical Imperative, his foundational moral axiom is an ought.
There are three key concepts involved in Objectivism when tackling the is-ought problem. They are “Man” (referring to mankind, but in terms of the individual person), “Value”, and “Morality.” Understanding these concepts, in addition to every concept upon which they depend as Objectivists define them, will help you understand how Objectivism dispenses with the is-ought.
Objectivism maintains that concept formation is heirarchical, so these three concepts depend upon a great deal of more fundamental foundational concepts. Defining what every concept that these key concepts depends upon would require hundreds of pages to type out so I’ll have to refer you to Leonard Peikoff’s work “Objectivism: The Philosophy of Ayn Rand.” Specifically look at the first five chapters which cover Reality, Sense Perception, Volition, Concept Formation, Objectivity, and Reason. Chapters 6-9 really would be required reading as well because these lay the foundation for understanding Man, The Good, Virtue, and Happiness.
It’s not a very good answer to simply reply “read this book” but because the scope is so broad in this question I’ve limited the response for the sake of brevity (believe it or not) to the essential interplay between these key concepts at the highest level of abstraction. The important thing to understand is that it is quite impossible to grasp these concepts fully without the prerequisite framework in place upon which Objectivism depends (see Dr. Peikoff’s book). Pertaining to the discussion in the comments section of the main question, this is also why Sam Harris falls short of presenting a fully validated framework for an objective ethical system.
The concept of morality Rand describes,
The key phrase in that statement is “code of values.” Specifically what is “value?” This concept requires a little unpacking from the Objectivist perspective.
Ayn Rand is alluding to an even more fundamental realization when understanding the concept of value above and questions, “of value to whom and for what.” Essentially what she means by “where no alternative exists, no goals and no values are possible” is explained below…
Now with a rudimentary understanding of how the concepts of morality, value, and life interrelate your initial quote makes a little more sense… what can we say about what Objectivists think about “good and evil” or “moral and immoral?”
Note the phrase “ultimate value” she describes “for any given living entity is its own life.” This sets up a “standard of value” upon which to build a “code of values” (see the first quote again for “code of values”).
The specifics of this Morality (code of values) based on the standard of value (Life) can be unpacked further by looking at who we are as a species. What is man?
To answer your question, “How fatal” I would answer “Not at all.”
If human beings are understood as living organisms with specific requirements for survival (obvious), and that a code of values (morality) is a requirement and necessarily must be based on the ultimate value of ones own life (including achieving happiness throughout that life)… then the very concepts of what ought a person do can be easily answered and defended based on individual codes of value, within the context of the ultimate value of ones own life.
Lets better understand another piece of this quote now. My emphasis in bold, and commentary in ellipses.
This is also elegant and flexible enough (I believe) that it can’t be interpreted to mean “every human life must turn out the exact same and we must all have the same set of values.” The real beauty of Objectivism, in my opinion, is that it’s presentation of an objective moral framework accounts for and explains the illusion of moral relativism within the context of individualism (within the context of an individuals conditional and hierarchical code of values based on that individuals own life). While the “ultimate value” is always the same (that being ones own “life”), and the basic biological questions of what sustains survival are the same, farther removal from these more basic questions doesn’t diminish Objectivism’s ability to underscore an ought among alternatives… generally in the form of “If you value X over Y then you Ought to Z.”
“Proper” meaning “that which supports the life of a rational being” or “that which promotes the life of a rational being” etc…
One mathematical approach to working around Hume, is to mark ‘ought’ out as ‘cardinal modality’, and treat modalities as truths in possible worlds. In the case of ‘cardinal’ modalities, those would be worlds with different power and enforcement structures (If there is a Christian God, If Marx is right about State power, If we really are eventually going to live out the life of everyone else on the planet through reincarnation…).
In Objectivism, the only possible world is the actual one, so one needs to think of the actual different power and enforcement structures that apply to the person making the decision. ‘X ought to be’ in that context, is just “Such and such a power in your world will be less troublesome to you if you are adequately afraid whenever not-X”.
Given that translation, there is no problem with this gap.