Understanding Capitalism

Capitalism depends upon property rights, sound money, the freedom of exchange and choice, and the rule of law. Within these conditions, capitalism has produced greater human flourishing for more people than any other economic system.

Profit and loss are economic indicators of the success of our choices. In a free society, responsible choices produce profit while irresponsible actions incur loss.

Economic production refers to the production of value. As human innovation creates new forms of value, a division of labor emerges to meet the demand for these new goods and services.

Large operations tend to be more efficient at production, but they require greater investments in management and organization. Individuals and corporations maximize their efficiency by balancing the proper size and scope of their endeavors.

Trade allows men who specialize in the production of one good to exchange with men who specialize in the production of another. This increases total production and wealth.

Technology is the unique human ability to discover how to convert resources into useful implements. Economic resources are created by human ingenuity as we discover new uses for previously worthless materials.

Capitalism is not the simple pursuit of profit without regard for moral restraints. Capitalism produces wealth by serving the desires of society. A moral and free society will reward good economic activity, which in turn creates prosperity for the people.