The Big Bad Wolf ...

 ... is not Capitalism:

A Story of Pies and Prosperity

Once upon a time in a small village, there lived a family: Mom, Dad, and their children. This family loved to bake pies. Dad provided the ingredients, Mom baked the pies, and the children helped out where they could. Each evening, they would sit around the table and enjoy the fruits of their labor. One day, they decided to invite guests over to share their delicious Lemon Meringue pie.

The Fixed Pie Myth

As the guests gathered, some started murmuring about the pie. "If Dad takes a bigger slice, there will be less for the rest of us," one guest said. This seemed logical at first glance. After all, if you have a pie and everyone wants a fair share, splitting it equally makes sense, right?

But what the guests didn't understand was where the pie came from. It didn't just appear out of nowhere. It wasn't a fixed entity that someone had a right to share however they pleased. Dad had to gather the ingredients, Mom had to bake it, and the children had to help. This pie existed because of their efforts.

Different Economic Models: The Pie Sharers

In this village, there were different ways of thinking about how to share pies.

Socialism: The socialist family believed that the pie simply existed and should be shared equally among everyone, regardless of who provided the ingredients or baked it. "It's our right to share this pie equally," they would say.

Communism: The communist family thought differently. In their home, no one owned anything. The ingredients and the work were shared equally. However, there were still issues as guests would demand an equal part of the pie even though they did not contribute. Eventually, the family became frustrated and stopped sharing their pies with people outside their family.

Capitalism: In the capitalist family's home, those who provided the ingredients and labor had significant control over how the pie was shared. If Dad provided the ingredients and Mom baked the pie, they decided how much each person would get, including their guests. However, they knew that sharing the pie and reinvesting in better ingredients and tools would allow them to make even more pies in the future.

Creating the Pie: The Role of Capital and Labor

One evening, as the family was preparing another pie, Dad explained to the children, "This pie doesn't just appear. We have to gather the ingredients, mix them, and bake them. It takes effort and resources."

Mom added, "In a free market, those who take the initiative to make the pie deserve a say in how it's shared. If we provide the ingredients and labor, we should be able to decide how to share it."

Normal Profit: A Reward for Investment and Risk

Dad continued, "We need to make sure that the effort and ingredients we put into making this pie are worth it. This is called normal profit. It's the minimum part of the pie that we, as investors and laborers, need before we're willing to make another pie. This ensures that our time and effort are compensated."

Mom nodded, "In a pure capitalist system, those who provide the ingredients and labor have full control over the sharing of the pie. But in a hybrid system, it's like me telling Dad, 'Regardless of who provided what, we will still share part of the pie with our guests.'"

Wealth Circulation and Utility Creation

Dad pointed out another important lesson, "Business owners can't get richer by hoarding wealth. To make more pies and grow richer, we must reinvest our profits. This means buying better ingredients, getting more efficient ovens, and improving our recipes."

Mom elaborated, "By turning something less useful into something more useful, we provide value to our guests. They enjoy our pies and are willing to pay for them, which helps us make even more pies. It's a cycle of growth."

The Interconnected Prosperity

As the family continued to bake and share their pies, they saw their village flourish. New businesses opened, new technologies were introduced, and everyone's standard of living improved. Critics of capitalism often overlooked these positive effects.

One guest remarked, "Thanks to your pies, we now have more jobs, better products, and improved services. The wealth created by your family benefits all of us."

Another guest chimed in, "By earning profits from selling your pies, you can now afford to buy chairs from the carpenter, cloth from the tailor, and tools from the blacksmith. This allows them to grow their businesses too, making our whole community richer."

Conclusion

Capitalism, or the free market, shouldn't be seen through the narrow lens of wealth inequality. It's a dynamic system that fosters innovation, rewards hard work, and creates opportunities for everyone. By understanding that the economy isn't a fixed pie but a continually expanding one, we can appreciate the intrinsic link between the prosperity of business owners and the improvement of living standards for clients.

In a truly free market, everyone can benefit from the collective growth and progress driven by entrepreneurial spirit and economic freedom. The concept of normal profit ensures that those who invest and take risks are rewarded, fueling a cycle of growth and innovation. By continually providing value and reinvesting in the economy, business owners like Mom and Dad not only enrich themselves but also contribute to the wealth and well-being of society as a whole.

And so, in this small village, everyone lived happily ever after, enjoying the ever-growing, delicious pies.