Below is a video showing the games opening and the introduction to the city of Rapture and its creator's philosophy.
The game is set in 1960, in the underwater city of Rapture - the utopian vision of an objectivist tycoon named Andrew Ryan, as a paradise away from oppressive political, economic and religious authorities and mandates.
"To build a city at the bottom of the sea! Insanity. But where else could we be free from the clutching hand of the Parasites? Where else could we build an economy that they would not try to control, a society that they would not try to destroy? It was not impossible to build Rapture at the bottom of the sea. It was impossible to build it anywhere else." - Andrew Ryan.
Rapture was built around the philosophies of objectivist thinkers such as Ayn Rand and Leonard S. Peikoff, intended as a place where artistic, industrial and scientific endevours could be pursued, however controversial, without moral or ethical restraint.
"My philosophy, in essence, is the concept of man as a heroic being, with his own happiness as the moral purpose of his life, with productive achievement as his noblest activity, and reason as his only absolute." - Ayn Rand, Atlas Shrugged (35th anniversary edition)
For several years, Rapture propsered as intended, a paradise of freedom and wealth. But ultimately, the very reason it was created - Ryan's hatred of authority - caused the downfall of both the city and of his ideals.
To keep his utopia a secret, Ryan passed a single law: contact with the surface was prohibited. This decision made smuggling profitable, resulting in the formation of a black market, which came to be dominated by a man with just as much determination as Ryan: Frank Fontaine.
Unlike Ryan, however, Fontaine wanted control. His wealth, combined with his monopoly on experimental genetic-mutation research, soon gained Fontaine enough power and followers to challenge Ryan for control of the city.
Ryan ultimately loses patience and has Fontaine killed, giving into the authoratative tendancies which he had created Rapture to reject. This hypocritical act sparks a civil war between Ryan and Fontaine's successor, Atlas, that eventually spreads to all of Rapture, crippling the city.
By the time the player enters Rapture, the city has long-since become a dystopia - a crumbling, art-deco husk, inhabited by only a handful of deranged survivors, and hordes of Atlas' "Splicers" (citizens with severe mental and physical problems caused by excessive gene-mutation), scavenging throughout the city.