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The society depicted in Anthem is a dystopia. The concept of individuality is forbidden, to the point that using the word "I" is punishable by death. People do not even have names that set themselves apart from others. The leading characters, for example, are named Equality 7-2521 and Liberty 5-3000. It is a society of complete and total collectivization, where people are forbidden to own private property. Even children are taken from their parents at a very young age and raised and educated in special homes. Human impulses like friendship, learning, and even love are discouraged or outlawed. As the narrator describes it, "We strive to be like all our brother men, for all men must be alike."
Rand was a radical libertarian, who tended to see all government action as tyranny. The setting for Anthem seems to be, in her mind, the logical conclusion of the use of state power.
As the other answer states, ANTHEM is clearly a work of dystopian fiction. The author was an avid proponent of individualism, capitalism and entrepreneurism, and passionately opposed to the edicts of socialism and Communism insofar as they caused humans to act out of weakness and fear (two human qualities the author abhorred, as evidenced in her longer and more well-known novels). In the short novel ANTHEM, there is a pervasive sense of dread and hopelessness, even as one main character struggles against the tyrannical system that seeks to erase individuality. But the main character also describes a great many insights and discoveries about their world as their situation grows more dangerous, and it is fighting against the system and status quo (constant themes for Rand throughout her books) that lends the story its suspense and urgency.
The fact that the book was written in 1937, but not published until 1946, clearly indicates the context for the story is the Second World War and the rise of the Third Reich in Germany and fascism in other parts of Europe, among other issues. Rand uses the term "Collectivism" to refer to the related concepts of socialism and Communism.
The book has the tone of a manifesto, with many concepts and names of various social entities being capitalized, as is often seen in manifestos, or in the Bible, wand indeed there is also a solemn, almost religious intonation throughout. This suggests the society that is its setting is one where joy, enthusiasm, humor and impulsiveness are at best frowned upon or at worst unknown. The emphasis upon work and absence of individual pursuit of pleasure also indicates a lack of awareness of or engagement with nature, and the sections where the main character is given an opportunity to interact with the natural world are very powerful.
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