Of all the economic systems, capitalism is the one that most fits.
I can say that breezily and without fear of contradiction because I am, of course, a complete amateur. Unrestricted by higher learning or dogma rammed down my neck by university-types, I’m free to figure stuff – and pontificate – away.
That, friends, is the nature of freedom.
But in this case I think I’m right. The basis of (pure) capitalism is the price-finding mechanism. Price is how we determine the value of something, whether it be a good, a service or something more abstract like happiness. This is not a perfect system. Ok, let me underline that: THIS IS NOT A PERFECT SYSTEM. No system is. But my observation of people’s behave over most of the continents leads me to this point.
Price is about normalization. When we say an orange is worth fifty cents, and a book is worth five dollars, we’ve normalized two completely different items. We can look at the relationship between them by saying, well, with this five bucks I can buy this book or I can have ten oranges. And vice versa. We bring a common denominator to bear.
There are a few big prerequisites for all this to work. We need an agreed transfer agent, in this case, currency. We need a ready way to exchange that currency. And for markets to be useful to everyone, the mechanism must be at least tacitly agreed. Your local supermarket works because we agree to swap currency for goods displayed at the stated price.
All over the world, this model occurs pretty much without anyone imposing it. We call it trade, but it’s really just shopping. Trade is at the heart of capitalism, because ultimately capital is useless without stuff to buy. You can’t eat capital. So the incentive for people to provide us with oranges and books and movies and iPads is because we have needs (and wants) and if we have the capital, we swap it for our stomach’s (and heart’s) desire. We get fed and entertained, they get some of our capital to do with as they choose.
It’s that simple.