During the current debate over government regulation, it’s an opportune time to read the entry on “capitalism” in American Conservatism: An Encyclopedia (ISI Books, 2006).
Among the more interesting discussion points:
Market prices play a pivotal role in organizing this cooperative network of exchange relationships. If growers do not produce as many oranges as people would like to buy, prices and profits rise. This encourages existing growers to expand production, while it encourages others to start growing oranges, perhaps partly through shifting out of producing less profitable fruits. Areas of production in which profits are expanding attract new investment, while a contraction of profits discourages investment. Furthermore, a capitalist system encourages the invention and development of new products as part of the same quest to locate and exploit mutual gains from trade. Thus, the washing machine replaced the scrub board, the self-cleaning oven replaced scouring pads, and the bread machine replaced the need to roll and knead dough.