WHY DO YOU NEED CAPITALISM TO CREATE INNOVATION

This question is very subtle Capitalism is often vilified for being a zero sum game€ The idea is that if someone succeeds, someone else must necessarily fail This is a gross oversimplification of the way markets actually work Ironically, it is precisely because of capitalism that we have such a powerful engine of innovation in the first place The reason why so many of us have so many innovations to choose from is because capitalism is a market system that empowers entrepreneurs The marketplaces€ of ideas is constantly evolving and improving Societies that embrace capitalism will have the most powerful engine of human ingenuity, while those that reject capitalism will be left behind It is true that many innovations are the result of collaboration and thus have multiple innovators The most successful innovations were the result of many minds working on the problem together Sometimes, it is a matter of pure luck But we should not dismiss the role of pure innovation and entrepreneurship in the process Capitalism is the most empowering system for human ingenuity MARKETS AND CAPITALISM: WHAT ARE THEY? We’€™ve been using the words markets€ and capitalism€ interchangeably However, there is a subtle difference between the two Markets are everywhere Even in the most oppressive societies, there are marketplaces, with their own market forces But capitalism is a very specific type of market system The most important feature of capitalism is that it is a free market system Or, in other words, it is a system in which individuals have the freedom to act and to trade with other individuals In a free market system, property rights are protected, and the government does not interfere arbitrarily In other words, the government tax people and they do make rules In a free market system, people are free to choose what they want to produce There are no restrictions In a free market system, people are free to help each other by trading In a free market system, people are free to invent new products and services