It is often asserted that a system of free market capitalism reduces everyone to the level of animals, subject to the “law of the jungle”. Similar emotive epithets accuse capitalism of being little more than a “dog eat dog” or “winner takes all” economic system. However, as we shall see now, nothing could be farther from the truth.

Under a capitalist system all property is privately owned, and all legal exchanges must be voluntary, not coerced. However, for a voluntary exchange to occur both parties must expect to benefit from the exchange. If they did not expect to be better off then neither would have made the exchange. The exchange is therefore productive as it is designed to leave each party with something that they deem to be better than what they had before.

Once you extrapolate this to an entire economy, we can see that the very reason why capitalism is able to lift whole populations out of the slum of poverty is because people invest in the production of goods that other people want to buy. They then trade these goods for other goods that they themselves want. Everyone’s lives are better off – it is a plus-sum operation that creates more for everybody.

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