If you have a bakery, chances are you have a lot of doughnuts that you don’t want all that much. If I have a job, chances are equally good that I have at least a few dollars I don’t want all that much. I would be happy to trade you one of my dollars for two of your doughnuts. Deal?
Capitalism allows people to trade away things that they don’t want in return for something that they do want, or to trade off their excess for something that they lack.
There are additional benefits to capitalism that are less obvious, but that distinguish it from other economic systems: Capitalism discourages laziness, while encouraging generosity, kindness, and progress in all things that make humans happy and comfortable.
All those benefits are probably the opposite of what you’ve been told, and even counter-intuitive at first pass. How can capitalism discourage vices and encourage virtues?
Capitalism encourages you to trade with other people for mutual benefit, just like the doughnuts. I gave up a dollar, and you gave up a doughnut. We both end up happier at the end of that transaction.
But in order to get that dollar, I had to do work. I traded my time and labor in return for money. My employer pays me $80/day to fix bicycles. At the end of each day, I have $80 more than I started the day with. My employer was able to spend his time selling new bicycles while I was doing repairs, so he was happy to pay me. Meanwhile, we’ve made our customers happy by fixing their bikes.
Do you suppose I would have spent my day fixing bicycles if I didn’t get paid for it? Not likely. Capitalism discouraged my laziness. And it didn’t just discourage laziness and get me to go do something for my own pleasure. Instead, it encouraged me to provide a product or service that makes other people happy. And in the morning, I can buy two more doughnuts from the baker, the baker can get his bicycle fixed, and we’ll all be happy.
Capitalism encourages us to do work that enriches the lives of others by providing food, housing, automobiles, entertainment, etc. The more we enrich others, the more we enrich ourselves. In an ideal capitalist setting, it would be impossible to get rich without making those around you a bit richer, too. Even in the absence of an ideal setting, capitalism is the best system for turning our vices into virtues.
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