How Capitalism Works

Capitalism is the way Western countries create their wealth and this system relies largely on the consumer who make decisions about what to buy and what is popular. Other economic systems like Communism rely more on the Government about what can be bought. In today’s complex world, large countries are not 100% Capitalist (the Government has regulations to control what you can sell and what is available for purchase) or 100% Government Regulated (in foreign countries they can buy American products).

To be a rich person in a Capitalist country, you have to make more money than you spend as a person. When you think of the difference between two people, a person who makes more money needs the same amount of food and energy to live as the person who makes less money.

In the book Fortune’s Children, it tells the story of how the Vanderbilts lost their fortune because they spent lavishly and more than their businesses made in money.

Money is not only used in a Capitalism country because money is a way for a country’s people to make the best use of their skills and talents, so many countries use money even non-Capitalist countries. Not everyone is good at everything so they need money in order to get things they can’t make themselves. Education, like money is also important in many countries, because it lets you be good at something that people will spend money for.  The better you are the more people will want to pay for your time doing it. Education and wealth is connected.

Things that break this formula include racism, fraud and corruption. Fraud happens when you get less than what you spend, sometimes nothing at all. Racism is when others like you are favored over your person, not for skill, but for being born some way.  Corruption happens when the person choosing for the group, using the groups money, makes decisions for selfish gain and not for the group.

4 City of Toronto managers no longer employed amid police bid rigging investigation

The most assured way to get richer than yesterday is to save your money. The bank pays interest for your savings account. There are many other ways to be richer faster, where your money will grow quicker in one day than in one day at the bank. But these ways are riskier and are not guaranteed even when the odds are in your favor. Most people will follow the majority of people, but in recent history, the sub-prime mortgage crisis where people followed the herd lead to the recession.


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