The energy behind all human action is the desire to prosper, which can be satisfied either independently or via interaction with others. Prosperity manifests in different ways, and may be achieved via different means. Production and voluntary trade are the chief means among ethical humans, while theft and subjugation are the chief means among those unethical. Economics is the study of exchanges among humans.
Capitalism is the mechanism of trade among humans. The name arises from capital, the tools, man-made factors of production. All commodities are produced by some combination of land, labor, and capital. Multiple exchanges make a market, and multiple markets make an economy.
Competition is the magic of capitalism, naturally yielding lower prices and higher quality for a large variety of products. It is spontaneous, the very opposite of planned intervention.
Intervention is forceful, planned control of capitalism. Examples include, taxation, licensure, and other statutes which control exchange..
The degree of control is spread over a continuum where the poles are Free Market, absence of intervention, and Control Market, total intervention. Intervention diminishes competition. The differences in polar outcomes are easily identified.
|Free Market||Control Market|
|Increases general prosperity of productive humans||Increases selective prosperity of political humans|
|Products exchanged have higher quality and a lower price||Products exchanged have lower quality and higher price|
|Outcomes are spontaneously determined by the market participants||Outcomes are determined by plan of the rulers|
|Prosperity obtained using peaceful means, voluntary exchange||Prosperity obtained using political means, intervention and coerced exchange|
Perhaps the single most valuable truth which emerges from the study of economics is the characteristics of valuation. Value is subjective, and can only be measured ordinally. This completely discredits the concept a of a social welfare function, used to justify intervention.
Value can only be determined whenever an exchange occurs.