Markets

What is the economic system of capitalism?

What is the economic system of capitalism?

Economically, when freedom under the rule of law is applied to the sphere of production and trade, its result is the free market in goods, services, relationships, and ideas.

Economics

Economics

Economics is the science of production and trade under a division of labor (market) society.

Economic Actor

Economic Actor

The economic actor — the entity that performs all economic decisions and actions — is the individual.

Economic Value

Economic Value

The economic value of a good or service is what an individual would exchange for a given good or service.

Production

Production

Production is the act of creating — shaping materials into values –– goods and services for future consumption.

Consumption

Consumption

Consumption is the act of consuming or using (up) values.

Wealth

Wealth

Wealth is a material good or service that has value to human life (that has economic value.)

Division of Labor

Division of Labor

In a division of labor society, individuals create values for future trade as opposed to self-consumption.

Trade

Trade

Trade is the act of voluntarily exchanging one value for another. (Theft is when the value is exchanged involuntarily).

Prices

Prices

The price of a good or service are the values it is exchanged for.

Money

Money

Money is an asset used in a division of labor society as a medium for indirect exchange.

Free-Market

Free-Market

A free-market is a market free from the intiation of physical force, where all exchanges are voluntary.

Business Enterprise

Business Enterprise

A business (enterprise) is an organization that creates products/services to sell on the market with the goal of making a profit for its owners.

Profit and Loss

Profit and Loss

A business makes a financial profit/loss when its revenues are more/less than its costs.

Savings

Savings

Savings is wealth that is not consumed.

Capital

Capital

Capital is savings from production reinvested in an industry to produce wealth.

Entrepreneur

Entrepreneur

A capitalist (or entrepreneur) invests (and risks) capital in a business concern in the hopes of earning a profit in the future.

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